. Telephone: 233-302-665949 MINISTRY OF LANDS AND Tel/Fax: 233-302-666896 Email Address: info@mlnr.gov.gh NATURAL RESOURCES P. 0. Box M 212 Accra. In case of reply, Website: www.mlnr.gov.gh the number and date of this letter should be quoted. 28th June, 2019 Our Ref. No'.?..~f..(.-:.:hi;i~ J ............................ 20 ......... .. Your Ref. No ................................... . REPUBLIC OF GHANA THE TASK TEAM LEADER GHANA FOREST INVESTMENT PROJECT WORLD BANK OFFICE ACCRA Dear Sir, GHANA FOREST INVESTMENT PROJECT FINANCIAL STATEMENTS AND THEIR RELATED MANAGEMENT LETTER AUDIT: 31 8T DECEMBER, 2018 The Ghana Audit Service has completed the audit of the Financial Statements of the Ghana Forest Investment Project for the year ended 31st December, 2018. Attached, herewith, is a copy of the Audit Report and its Management letter. Yours faithfully, ~J~ JOHN WALLACE KOOMSON FINANCIAL CONTROLLER FOR: MINISTER Cc: Project Co-ordinator - FIP Ghana Audit Service MINISTRY OF LANDS & NATURAL RESOURCES • P.O. BOX MB 212 ACCRA REPUBLIC OF GHANA • • • • • GOVERNMENT OF GHANA FOREST INVESTMENT PROGRAMME (GFIP) • MINISTRY OF LANDS AND NATURAL RESOURCES {MLNR) [STRATEGIC CLIMATE FUNDED GRANT No. TFIBB42] • • PROGRAMME FINANCIAL STATEMENTS 31 DECEMBER, 2018 • • • • • TABLE OF CONTENTS PAGE REFERENCE • GENERAL INFORMATION 1 ... INDEPENDENT AUDITOR'S REPORT ON PROJECT FINANCIAL STATEMENTS 2-4 • STATEMENT OF FINANCIAL POSITION 5 STATEMENT OF RECEIPTS AND EXPENDITURE FOR THE YEAR 6 STATEMENT OF CHANGES IN NET ASSETS/EQUITY 7 STATEMENT OF ACTIVITY AND VARIANCE REPORT 8 NOTES TO THE FINANCIAL STATEMENTS 9 - 13 • "" • • 1 - . GENERAL INFORMATION II PROJECT BACKGROUND Objective: The Ghana Forest Investment Programme (GFIP) is a targeted program under the Strategic Climate Fund (SCF) to finance efforts to address the underlying causes of deforestation and forest degradation and to overcome barriers that have hindered past efforts. As well as to strengthen institutional capacity in forest resources management, improve governance, strengthen the regulatory mechanisms, streamline tenure and tree rights, improve local livelihoods and enhance resilience to climate change. Key components: • Component 1: Policy Reforms and Institutional Strengthening Component 2: Pilot Investments for Improved Forest and Landscape Management Component 3: Innovation, Capacity Building and Communications Component 4: Project Management, Monitoring and Coordination Source of funding: The GFIP is financed primarily through a grant agreement between Government of Ghana and the International Development Association (IDA), acting as an implementing entity of Forest Investment Programme • under the SCF. Grant Amount: US$29,500,000.00 Start date: April 2015 ' • End date: June 2020 Implementation Agencies: • Ministry of Lands and Natural Resources (MLNR) • • Forestry Commission (FC) • COCOBOD • Forestry Research Institute of Ghana (FoRIG) • PROJECT MANAGEMENT TEAM Prof. Patrick Agbesinyale - Chief Director, MLNR Mr. Abdul - Karim Mohammed - Director, Finance & Admin. Mr. Musah Abu-Juam (Project Coordinator) Mr. Tabi Agyarko (Project Manager) Mr. John Wallace Koomson (Financial Controller) Mr. Joseph Abbey (Procurement Manager) Mr. Mathew T. Ababio (Director PPMED) Mr. Jospeh Osiakwan (Policy & Communication) Mr. Aminu Abdulai (Project Accountant) Mr. Daniel Nsowah (Safeguard Focal Person) • ADDRESS Ghana Forest Investment Program Management Unit Ministry of Lands & Natural Resources (MLNR) P. 0. Box MB 212, Accra • AUDITORS Ghana Audit Service Post Office Box MB 96 Accra, Ghana BANKERS Bank of Ghana • 1 AUDIT SERVICE I In case of reply the • • number and date of the letter should be quoted DAG/FAH/GFIP/FY18/03 My Ref. No:................................... . ' Good Governance M.96 II Your Ref. No~ ................................ . and Accountability P.O.Box........................................................... . Tel: 233 (0) 302 664920/28/29 ACCRA Fax: 233 (0) 302 6751495 Website: www.ghaudit.org 28 JUNE 19 ...........................................................20 ............. . • INDEPENDENT AUDITOR'S REPORT 1 • TO THE CHIEF DIRECTOR, MINISTRY OF LANDS & NATURAL RESOURCES REPORT ON THE PROJECT FINANCIAL STATEMENTS • We have audited the accompanying project financial statements of the Ghana Forest Investment Programme (GFIP) which comprise the statement of financial position for the period ending 31 December, 2018, and the statement of sources and uses of • funds for the period ended, as well as a summary of significant accounting policies as set out in Note 1. Management's responsibility for the project financial statements The financial statements are the responsibility of the Project Coordinating Unit (PCU) under the Ministry of Lands and Natural Resources (MLNR). The GFIP-PMU is responsible for the preparation and fair presentation of these Project Financial . Statements in accordance with generally accepted accounting standards and provisions of the Grant Arrangement (SCF Grant No. TF018842) as well as the selection and application of accounting policies set out in Note 1. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation of the GFIP financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the • circumstances . Auditor's responsibility ... Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards of Supreme Auditing Institutions (ISSAls) and the Grant Agreement and World Bank Project Implementation guidelines. Those standards require that we comply with the ethical requirements, and plan and perform the audit to obtain reasonable assurance whether the project financial statements are free from material misstatement whether caused by fraud, other irregularity or error . • . 2 • •1 • '* ti .. An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the project financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the project financial statements, whether due to fraud or error. In making those risk ' ii assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the project financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management team, as well as evaluating the overall presentation of the financial statements. We believe that we have obtained sufficient appropriate audit evidence to provide a basis for our audit opinion. Basis of opinion • The World Bank financial reporting framework provides for a special purpose financial statements on the basis of accounting information to present and report the project ' • financial position, project progress, and implementation of the loan/grant agreement, and is composed mainly of the project financial position, summary of Sources and Uses of Funds by project component, Statement of Implementation of Loan/Grant Agreement, Special Account Statement, and notes to the financial statements. The 2018 financial Statements prepared was not consistent with the required special ' • purpose financial statements framework of the Bank. We noted specifically that the classification of the various expenditures was not in terms of the Project components and this constitutes a departure . • In forming our opinion on the financial statements, we have considered the amount of 'ff US$1,475,608 as prior year adjustment. However, there were no supporting details on • the amount. ·~ In our opinion, except for the above reservations, the Project financial statements • present fairly, in all material respects, the financial position of GFIP as at 31 December, 2018, and the results of its operations for the period and the accounting policies set out • in Note 1 of the Project financial statements as well as GFIP Grant Arrangement (Grant • No. TF018842). ! Report on compliance • In addition, the PCU has complied, in all material respects, with the covenants of the I GFIP Grant Arrangement (Grant No. TF018842) and Government rules and regulations A for the period ended 31 December, 2018. I • Ii 3 I • Restriction of use • This report is intended solely for the use of the Management of the project, IDA, and the Government of Ghana, and should not be used for any other purpose. I I Signed by: / I • PATRICK NEE YE DIRECTOR OF AUDIT FOR: AUDITOR-GENERAL • ' • ' • • . • -- 4 - .. - GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES • STRATEGIC CLIMATE FUNDED GRANT No. TF18842 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER, 2018 2018 2017 • NOTES US$ US$ . Non-current assets Current assets Bank balances 10 1,000,541.39 1,141,887.40 - Advances to Implementing Agencies Net Total Assets 9 2.602,659.91 1,069,384.50 3,603,201.30 2,211,271.90 Financed by • Accumulated Fund 3,603,201.30 2,211,271.90 • Signed: • Chief Director Financial Controller Prof. Patrick Agbesmyale Mr. John Wallace Koomson Date: Date: ·~ • • • The attached notes 1 to 10 form an integral part of these financial statements. 5 • GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES STRATEGIC CLIMATE FUNDED GRANT No. TF18842 STATEMENT OF RECEIPTS AND EXPENDITURE FOR THE YEAR ENDED 31 DECEMBER, 2018 ... 2018 2017 Cumulative NOTES US$ US$ US$ RECEIPTS SCF Grant Funds 2 6,000,000.00 3,100,000.00 18,948,544.00 EXPENDITURE Operating Cost 3 1,274,766.00 1,199,313.00 3,342,237.00 - Training Tour and Workshops Consultancy Services 4 5 767,018.00 619,738.00 870,231.00 546,995.00 2,481,313.00 1,177,924.00 Non- Consultancy Services 6 2,825,107.00 1,673,968.00 5,099,414.00 • Goods and Supplies Civil Works 7 8 584,405.00 12,643.00 2,296,216.00 162,846.00 1,738,088.00 2,981,975.00 ' • Total Expenditure 6,083,677.00 6. 749,569.00 16,820,951.00 Surplus/(Deficit) for the year (aa.§zz.aai (a.'1~&.5iUM!Ql 2.l 2Z.5&a.gg ' • • • I The attached notes 1 to 10 form an integral part of these financial statements. I 6 I I I GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES STRATEGIC CLIMATE FUNDED GRANT No. TF18842 I STATEMENT OF CHANGES IN NET ASSETS/EQUITY ACCUMULATED FUND FOR THE YEAR ENDED 31 DECEMBER, 2018 I 2018 2017 ! Balance as at 1st January, 2018 US$ US$ 2,211,271.00 5,860,840.00 Prior Year Adjustments: FC 2,117,121.00 COCOBOD ' (205,616.00) • FORIG (435,897.00) • Deficit for the Year (83,677.00) (3,649,569.00) Balance as at December 2018 3,603,201.00 2,211,271.00 •' The attached notes 1 to 10 form an integral part of these financial statements . . 7 GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES • STRATEGIC CLIMATE FUNDED GRANT No. TF18842 . STATEMENT OF ACTIVITY AND VARIANCE REPORT BY EXPENDITURE CATEGORY FOR THE YEAR ENED 31 DECEMBER, 2018 Budget Actual Variance Project Budget Expenditure Category US$ US$ US$ ... 1.1 Civil Works 565,000.00 12,643.00 552,357.00 1.2 Goods and Supplies 1,440,000.00 584,485.00 (855,956.00) • 1.3 Consulting Services 6,134,417.00 3,444,845.00 2,689,572.00 - 1.4 Training, Tours and Workshop 2,841,000.00 767,018.00 2,073,982.00 - 1.5 Operational Cost Grand Total 1,348,833.00 1,274,766.00 12.239.250.00 6.083.677.00 74,067.00 6,245,573.00 • • • • I I 8 I I • • GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES STRATEGIC CLIMATE FUNDED GRANT No. TF18842 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2018 1. Significant Accounting Policies ' • The following is a summary of the significant accounting policies adopted in the preparation of the financial statements: Basis of accounting The financial statements of GFIP are prepared on cash basis and under historical cost convention. I Under the historical cost convention, assets and liabilities are reflected or disclosed in the financial reports at the cost incurred or price paid at the time of transaction. ' • Property, plant and equipment Property plant & equipment acquired by PCU are stated at cost and shall not be depreciated. Cost of I repairs and maintenance incurred on any fixed asset shall be expensed in the period during which it was paid. Receipts and payments Revenues are recognised when funds are received from the International Bank for Reconstruction and Development (World Bank) acting as Implementing Agency of the SCF and expenditures are accounted for in the year when goods and services are incurred and paid. Non capital expenditure This reflects actual cash expenditure accounting for expenses such as consultancy, trainings or ... seminar and operating costs incurred during the period . fl' • 2. Receipts • Ace Code 2018 US$ 2017 US$ Cumulative US$ • SCF Grant 2010 6,000,000.00 3, 100.000.00 18,948,544.00 9 I I 3. Operating Expenses I This relates to the administrative, field operating activities and office running cost of the PCU and other Implementation Agencies. I Acc. Code 2018 US$ 2017 US$ Stationery Stock 1440 44.00 7,366.00 I Other Income Workshops/Meetings 5001 6070 1,579.00 (3,493.00) 15.009.00 Vehicles' Operation and Maintenance 7001 945.00 117,501.00 I Fuel Repairs and Maintenance 7010 7020 135,842.00 14,130.00 27,281.00 Tyres 7030 12,783.00 I Vehicles Insurance Other Running Cost 7050 7060 52,943.00 46.00 61,559.00 1,014.00 Operations and Maintenance-Buildings 7080 697.00 I Operations and Maintenance-Equipment Salaries and Allowances-Contract Staff 7090 7110 238.00 9,383.00 6,037.00 Casual Workers Allowance 7120 46,172.00 91,869.00 I Other Allowances Sitting Allowance 7130 7140 14,869.00 263.00 35,478.00 Honorarium 7150 91.00 3,737.00 I Direct Research Expenses Other Research Expenses 7201 7202 951.00 83.00 480.00 125.00 DSA/Per diems 7301 906,118.00 674,498.00 I Travel/Transport Conference Facility 7310 7311 12,918.00 3,824.00 48,012.00 1,800.00 Incidentals 7312 3,759.00 3,432.00 I Hotel Accommodation Meals and Snacks 7320 7312 15,906.00 12,919.00 26,768.00 Vehicles Hiring 7325 6,376.00 404.00 I Adverts Subscription 7401 7410 3,644.00 8,789.00 10,809.00 Supplies and Consumables 7411 1,268.00 3,728.00 l Seedlings Publicity/Promotions 7412 7420 789.00 9,913.00 34,366.00 5,245.00 • • Office Supplies Stationery and Printing Cleaning and Sanitation Bank Fees and Charges 7440 7450 7601 7620 1,814.00 1,424.00 2,721.00 22.00 9,348.00 1,890.00 1,282.00 314.00 I Electricity and Water Charges Telephone/ Email/Fax/Postal 7630 7640 2,268.00 134.00 7650 2,283.00 273.00 I Meeting Expenses Total 1,274,766.00 1,199,313.00 I 10 I • I I 6. Non-Consulting Services. 2018 2017 Ace.Code US$ US$ I Local/Nat Consulting Fees-Others Local Training Fees 6010 6060 19,115.00 106,494.00 Fuel 7010 18,364.00 12,872.00 I Repairs and Maintenance Vehicle Insurance 7020 7050 1,231.00 38,285.00 98.00 Salaries and Allowances-Contract Staff 7110 3,243.00 6,421.00 I Casual Workers Allowance Honorarium 7120 7150 2,334,524.00 1,173,913.00 263.00 Other Allowances 7160 7,620.00 l DSA/Per diems Travel/Tran sport 7301 7310 84,558.00 29,154 1,866.00 Conference Facility 7311 171.00 Incidentals 7312 1,650.00 Meals/Snacks 7321 135.00 • I Seedlings Stationery and Printing 7412 7450 219,292.00 439,778.00 26.00 Total 2,825,107 .00.00 1,673,968.00 i 7. Goods and Supplies. 2018 2017 Ace.Code US$ US$ Office Equipment 1220 16,459.00 52,616.00 Forest Mensuration Equipment 1224 99,934 52,701.00 Heavy Duty Trucks 1230 941,727.00 Motor Vehicles 1240 13,754.00 • Forest Camp Equipment Stationery Stock 1246 1440 136.00 105,645.00 ·'YI Training and Study Tours 6030 364.00 Fuel 7010 10,905 1,112.00 • Repairs and Maintenance 7020 1,274.00 Tyres 7030 1,598.00 • Other Running Cost Casual Workers Allowance 7060 7120 364.00 18,555.00 Honorarium 7150 12,872.00 DSA/Per diems 7301 41,261.00 30,987.00 Travel ITran sport 7310 20,533.00 2,867.00 Conference Facility 7311 947.00 Incidentals 7312 364.00 Meals / Snacks 7321 11,538.00 33.00 Supplies and Consumables 7411 145,898.00 Seedlings 7412 353,397.00 244,779.00 12 • Supply of Farm Inputs/ Accessories 7414 609,952.00 Publicity/Promotions 7420 727.00 • Stationery and Printing 7450 14,605.00 67,120.00 Cleaning and Sanitation 7601 5,600.00 Total 1,274,766.00 1,199,313.00 "* ~ 8. Civil Work. 2018 2017 Ace Code US$ US$ Construction of Fire Rides 1245 12,643.00 162,846.00 9. Advances to Implementing Agencies . • a This represents unretired advances to Implementation Agents during the period. 2018 2017 I Implementation Agency Forest Research Institute of Ghana US$ 171,499.64 US$ 284,804.00 Forestry Commission 1,633,447.60 497,389.00 I Ghana Cocoa Board Service Deposit / Advance Total 436,726.27 360,988.00 2,241,673.51 287,190.00 1,066,558.64 - [ 10. Bank and cash balances. l Bank balances represents the available cash for project related disbursement activities. 2018 2017 US$ US$ • Designated Special Account (US$) 997,823.04 1,093,475.01 Sub Designated account (Cedi Account) 2,718.35 48,412.39 ,, i, Total 1,000,541.36 1,141,887.40 Ii I f, ' 13