AUDIfT RAL S OFFICE Phone: (+675) 3012200 Fax: (+675) 325 2872 Email: agopng@ago.gov.pg Website: ww.ago.gov.pg The Secretary Date: 26 June 2017 Department of Provincial & Local Government Affairs Kitpeng Building PO Box 1287 BOROIKO, NCD. Papua New Guinea Dear Sir, SUBJECT: AUDIT CERTIFICATE FOR RURAL SERVICEDELIVERY & LOCAL GOVERNANCE PROJECT 1PREPARATION GRANT TF 122493 & IMPLEMENTATION GRANT TF 15507 FOR FINANCIAL YEAR ENDING 31 DECEMBER, 2015. The authorised auditor Ernst & Young Accountants were contracted to do the audit of the Financial Statements for the abovementioned project. The audit was completed and the Management Letter including the supporting documents was submitted to this office for our review and subsequently the review had been done. All audit issues noted in the Management Letter were appropriately cleared by the Project Management Unit. As a result, an unqualified audit report is now being issued for financial year ending 31 December 2015. The Rural Service Delivery & Local Governance Project ITIF 12493Preparation Grant & TF 15507 Implementation Grant] for the year ended 31 December 2015 is funded by the World Bank. Two grants were given to the GoPNG by the World Bank. The initial Grant of US$300,000.00 was further increased to US$3,200,000.00 TO achieve the objectives of the project. The PNG SDP has contributed as part of GoPNG counterpart component to this project. The pilot projects are currently carried out in two provinces, namely; Central and Western Provinces in their selected four LLGs each. The Audit Certificate is supported by the Audited Financial Statements and the Management Letters. Yours faithfully, S.MAMU KOLIS-MITILIU Assistant Auditor-General (Projects) For: THE AUDITOR-GENERAL Level 6 PO Box 423 TISA Investment Haus WAIGANI, NCD Kumul Avenue, NCD Page 1 of 1 Papua New Guinea Audit procedures were performed to assess whether, in all material respects, the financial statements present fairly, in accordance with the Public Finances (ManagementJ Act, 1995, Accounting Standards and other mandatory financial reporting requirements. a view which is consistent with my understanding of the Project's financial position and the policy on the management of the project is to prepare the accompanying project financial statement in accordance with International Accounting Standards (lAS) as adopted by the Accounting Standards Board of Papua New Guinea and the requirements of the Grant Agreement of the Rural Service Delivery & Local Governance Project (Preparation Grant TF12493 & Implementation Grant TF 15507) dated October 10, 2012 and of its performance as represented by the results of its operations and cash flows. I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for this report. OPINION In my opinion:- (a)the financial statements of the Rural Service Delivery & Local Governance Project for the financial period ending 31 December 2015 are based on proper accounts and records; and (b) except as noted under Other Matters paragraphs. the financial statements are in agreement with those accounts and records and show fairly the state of affairs of the Project and the results of its financial operations and its cash flows for the year ended December 31, 2015. OTHER MATTERS In accordance with the Audit Act, 1989 (as amended). I have a duty to report on significant matters arising out of the financial statements, to which the report relates. I draw attention to the following internal control issues; 1. Disbursement by the World Bank With respect to disbursement by the World Bank paid on the basis of Certified Statements of Expenditure (SOE), adequate supporting documents were maintained to support the claims to the World Bank for reimbursements of expenditure incurred and the expenditures concerned are eligible for financing under the Preparation Grant TF12493 & Implementation Grant TF 15507. 2. World Bank Imprest Account The World Bank Imprest Account gives a true and fair view of the receipts collected and payments made during the year ended and the status of the Imprest Account as at 31 December 2015. PHILIP AUGA Auditor- eneral 12 June 2017 Page 2 of 2 CONTFNTS PAGE NO. Man!iagenItiS sateleiit Manlaei ni s Dec da ation 2 indepeident auditoKs rejpori 3 Stalement of Receipts and Payeits 5 Notes te the Statement 01 Receipts and Payments 69 RURAL SERVICES DELIVERY AND LOCAL GOVERNANCE PROJECT MANAGEMENT'S DECLARATION Vor Iie Yeaf Ended 31 Decemibei 20'5 ln Ime p'mon of the Piujet i Management team of the Rural Se vices Deveiy and Local Govemnce Picf,c, tlhe silatemieit of receipts and paymslenlts is drawn Lp to give a true and tar, view of the 1 amial resuLts of tlie PIojecl fol thle 12 iontlis f im Januar y 1 2035 to De eitbei 3.1 20)5 1he atcounits have been inade oul in accordance with tie accounting standaids, to the extenl applicalfe io cash basis of account ing and in line wikh ! be Publit Fsnan e Managerent ACI The Pi ojert has, in espert ol the financial yea: (ii) Kept such accounting as to tor rectly iecord and explaini the io the extent appucable i o cash basis of accounlting of the PIOrject; (h) Kept ts accounting records in such a mannci as would enable Pkie and Ii accoits of Ilie Projert to be prepared from time to fime;m and, (t ) Kept its ac counting records in such a manrii as oLd enable tike acconits of the Pr ojeck o be conveniently and properly audied Thie mat couning records have been properly pr epared by a competent per son For and on behalf of Rural Services Delivery and Local Governance Project Dicks Guira Gevo Mabolne P Narus Secretary / Assistant Director, Director, Local Governnient RSDLGP Supervisor External Liaison / Support Services Division RSDLGP Coordinator Signed at Kitperrg Building, Waigani Drive, Port Moresby on tie 27 day of April 2017 (1J RLJRAL SERVICES DELIVERY AND LOCAL GOVERNANCE PROJECT NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS uor lhe Year Ended 31 Decemuber 2015 1. GENERAL INFORMATION OF RURAL SERVICES DELIVERY AND LOCAL GOVERNANCE PROJECT Noture of Operation jF15507 m Grant The Woild Bank propoiusec to extend to the Recipient a giant in ant armoun not lo extcd US53201,0() to assist in the irnancing of the Pr oject Tie objective of tie Pr oject is to develop ai coi itimily-dr iven developmreii model te imtprove access to, and thie qtiality of, basic services iii iral womunities in the Recipient's tetitor y, that can be scaled-up The iProje1 ,onisis of the fotlowmg compoent. Systeis and Firanit:ing f Waid Developmeint Grants Provision of sit) granis to finance local secial and economic intrastruc lure Sub-projeuc.1s, such as construction of latsines, rehabibtation of local roads, or consttuction r repaiF o sthools ii) Capacity Biuildijig of National and Sub-nationral entities Cariyimgl out a programl of activities designed to st rengtihen rhe capacity of tlie nalional and sub-national governnent entities for nancagemnent and imnplemeiancmn Ihe liroj1.e and basit seivice delivery mr PiojeO Maragemein Carrying out a program of artivilies designed to strengthien the Projecl rnanagement team at the natiunal level and Project ianiagerirent teamis in tle tap;geted ouurxial admristrations for day to day management of the pr oject Ite TF15507 Project's dosing date is August 31. 20l6. TFI8447 - State and Peace Building (SPF) Multi-Donoi Trust Fund Tie it er rat ional Bank foi Reconst r uction and Deve loimlent and the n! er iat ona >pmeit Assouation, ac(ting as adin fistirator of grant tuntis provided by vauis droor s rrnder ie SPF, ploposed to et1iend to Ithe Recirrien1 a grant mi Ilie amounit not to exceed1 one niriroun eigiht htrimedl tI housand United States Dollar s (USS ,800,200, RURAL SERVICES DELIVERY AND LOCAL GOVERNANCE PROJECT NOTES TO AND FORMING PART OF FINANCIAL STATEMENTS or th Yea! Lnde(! 31 December 2015 6. FOREIGN CURRENCY CONVERSION Tiaisaktios comducted ii fweign cupren(y are translaled and reoilded in PGK by applyiig tle exchange rate prevailing daily published by ANZ 7. DETAIL STATEMENT OF INCOME AND EXPENDITURE (a) Component 1 2015 2214 Ceitral Province - Tapini LLG 2 51,769 Cenilrl Prov!nce - Kairuku LLG CPntr1al Province ligo Iland ILG Central Province Cloudy Bay LLG Wesiern Province - Lake Murray LLG Westerin Province - Kuinga Rural LLG Westein Province Oriorno-BuILri LIG Wsern Pronce - Kiwar LG[- 25),769 (b) Component 2 2015 2014 Dstrit and LLG Awareness 9,867 TOT Tiaining 22/Y120 (.omrunity Fac aililatoi rraining - 588,615 CommUlnity Ttaining on Project Planning 323,772 3i9,878 LLG Technical/Developmerit Comritee Training 67,188 42,999 (oinminity Training on Sub-ProJect Implementaliov 798,071 529 Caat ity Building Advisor 40,371I 11019 Comm11unity DevelopmentI Workets 45,370 135,476 1,274,771 1,432,2013 (c) Component 3 2015 Component 3A Component 3B Component 3C Consllats 157,015 196,744 ConliIng11 Films Goods 3635 77089 Non T,oining T avels 59,888 54392 Opefahig ExpFises BSS837,555 .39 ,6 32 924i/26i,093 357,857 2014 Component 3A Component 3B Component 3C Co '6sWantrs .128, 81 1 63.000 90,772 coosui wi; Fr lll 5, 124 G 0CIS9605,1 9,587 74346 No, i Tiai;iiiigavels %89 20,582 3,110 Ope"Ii EXeVIlses 1421,957 43 69 4293 I 6973,043 13,851 18J,525 41 RURAL SERVICES DELIVERY AND LOCAL GOVERNANCE PROJECT SUPPLEMENTARY INFORMATION F oi the Year Ended 31 Decemibei 2015 lTie following supplementary informationl for the yea ended 0ecember i, 2015 iS peeiled foi puiposes of pioviding additional information to the WorldBank, the Gove;mient of Papua New Cuinea and the Project Implementation Unit and is not a requied pait of the Sialements of Receipts andl Payments Such into;mation is the responsibility of the nanagenwrt of i3iial Set viues DeLvety and Local Goveiriance Project. The inforration has not heen subjected io the auditing procedures applied in the audit of the Sta!ement of Receipts and Payments. 1 TAX LIABILITY At cost Addition Payments Balance 1/1/2015 31/12/2015 Group lax Payable 173,305 9,848 (166,275) 16,878 2. UNDERPAID SALARIES At cost Addition Payments Balance 1/1/2015 31/12/2015 Underpaid salaries 18.150 (18,150)