AUDITOR GENERAL'S REPORT Integrated Public Financial Management Reform Program (IPFMRP) For the fiscal Period 2014/2015 December 2015 Yusador S. Gaye, CPA, CGMA Auditor General, R. L. www.gac.gov.lr Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 INDEPENDENT AUDITOR’S REPORT December 31, 2015 Bernard Jappah National Coordinator Reform Coordination Unit Ministry of Finance and Development Planning Broad and Mechlin Street We have audited the Balance Sheet for the Grant No.: TF12390, IDA 50260 & AfDB 5900155003731 “Integrated Public Financial Management Reform Project” as at June 30, 2015 and the related statement of Receipts and Payments for the year then ended. Management responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards of Supreme Audit Institutions (ISSAI). Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depends on the auditor’s judgement, including the assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 1 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 Opinion In our opinion, the accompanying financial statements present fairly in all material respects the financial position of the Grant No.: TF12690, IDA 50260 & AfDB “Integrated Public Financial Management Reform Project” as at June 30, 2015 as well as for the revenue collected and expenditures paid by the project during the fiscal year then ended in accordance with the International Public sector Accounting standards (IPSAS) cash basis of accounting. Monrovia, Liberia December 2015 2 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 GRANT NO.: TF 12390, IDA 50260, & AfDB "INTERGRATED PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT" Project Financial Management Unit (PFMU) Statement of Financial Position For the Fiscal Year Ended June 30, 2015 June 30, June 30, Notes 2015 2014 Assets US$ US$ Cash and cash equivalent 620,134 790,417 Total Assets 620,134 790,417 Fund Balance Grants 620,134 790,417 Accumulated fund balance 620,134 790,417 The notes found on pages 13-16 are integral parts of these reports 3 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 GRANT NO.: TF 12390, IDA 50260, & AfDB "INTERGRATED PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT" Project Financial Management Unit (PFMU) Statement of Receipts and Payments For the Fiscal Year Ended June 30, 2015 June 30, June 30, Note 2015 2014 US$ US$ Receipts: World Bank-IDA, AfDB Grant 3 6,942,145 6,873,615 Other Income- Sale of bid documents 9 1,800 4,400 6,943,945 6,878,015 Payments Budget Planning System, Coverage and Credibility 4 279,908 1,062,213 PFM Legal Framework, Budget Execution, Accounting and Reporting 5 1,967,989 2,812,383 Revenue Mobilization and Administration 6 2,465,645 1,657,606 Transparency and Accountability 7 820,804 1,699,441 Program Governanace and Project Management 8 1,579,882 1,599,766 Total Payments 7,114,228 8,831,409 Excess of Receipts over Payments/ (Payments over Receipts) (170,283) (1,953,394) Fund Balance as at July 1, 790,417 2,743,811 Cumulative fund balance 620,134 790,417 The notes found on pages 13-16 are integral parts of these reports 4 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 INDEPENDENT AUDITOR’S REPORT ON THE STATEMENT OF EXPENDITURE December 31, 2015 Bernard Jappah National Coordinator Reform Coordination Unit Ministry of Finance and Development Planning We have audited the accompanying Statement of Expenditure of the Grant No.: TF12690, IDA 50260 & AfDB “Integrated Public Financial Management Reform Project ” for the fiscal period ended June 30, 2015. Management Responsibility for the Statements of Expenditures The management of the Project Financial Management Unit (PFMU) is responsible for the preparation and fair presentation of the Statement of Expenditure. Auditors’ Responsibility Our Responsibility is to express an opinion on the Statement of Expenditure based on our audit. We conducted our audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs) and in accordance with World Bank Guidelines. Those standards and the applicable World Bank guidelines required that we plan and perform the audit to obtain reasonable assurance about whether the Statement of Expenditure is free from all material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclo- sures in the financial statements. The procedures selected depend on th e auditor’s judgment, in- cluding the assessment of the risks of material misstatement of the Statement of Expenditure, whether due to fraud or error. In making those risk assessments, the auditor considers internal con- trol relevant to the entity’s preparati on and fair presentation of the Statement of Expenditure in or- der 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 in cludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the Statement of Expenditure. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 5 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 Opinion In our opinion, the accompanying Statement of Expenditure present fairly in all material respects the financial position of the Grant No.: TF12690, IDA 50260 & AfDB “Integrated Public Fi- nancial Management Reform Project” as at June 30, 2015 as well as for the revenue collected and expenditures paid by the project during the fiscal year then ended in accordance with the In- ternational Public sector Accounting standards (IPSAS) cash basis of accounting. Monrovia, Liberia December 2015 6 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 GRANT NO.: TF 12390, IDA 50260, & AfDB "INTERGRATED PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT" Project Financial Management Unit (PFMU) Statement of Expenditure For the Fiscal Year Ended June 30, 2015 Notes June 30, 2015 June 30, 2014 US$ US$ Expenditures: Budget Planning System, Coverage and Credibility 4 279,908 1,062,213 PFM Legal Framework, Budget Execution, Accounting and Reporting 5 1,967,989 2,812,383 Revenue Mobilization and Administration 6 2,465,645 1,657,606 Transparency and Accountability 7 820,804 1,699,441 Program Governanace and Project Management 8 1,579,882 1,599,766 Total 7,114,228 8,831,409 The notes found on pages 13-16 are integral parts of these reports 7 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 Independent Auditor’s Report on the Designated Account Statement December 31, 2015 Bernard Jappah National Coordinator Reform Coordination Unit Ministry of Finance and Development Planning We have audited the accompanying project Designated Account Statement of the Integrated Financial Management Reform Project (IPFMRP) financed by the IDA 50260, TF 12390, AfDB for the fiscal period ended June 30, 2015. Management responsibility for the Designated Account Statement The statement is the responsibility of the Project Financial Management Unit (PFMU) at the Ministry of Finance, Republic of Liberia. This responsibility includes: designing, implementing, and maintaining internal control relevant to the fair presentation of the Designated Account Statement that is free from all 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 opinion on the Designated Account Statement based on our audit. We conducted our audit in accordance with International Standards of Supreme Audit Institutions (ISSAIs) and also in accordance with applicable World Bank guidelines. These standards and the applicable IDA guidelines required that we plan and perform the audit to obtain reasonable assurance about whether the Designated Account Statement are free from all material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as evaluating the overall Designated Account Statement presentation. An audit involves performing procedures to obtain audit evidence about the amounts and disclo- sures in the financial statements. The procedures selected depend on the auditor’s judgment, i n- cluding the assessment of the risks of material misstatement of the Designated Account Statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal con- trol relevant to the entity’s preparation and fair presentation of the Designated Account Statement in order to design audit procedures that are appropriate in the circumstances, but not for the pur- pose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also i n- cludes evaluating the appropriateness of accounting policies used and the reasonableness of ac- counting estimates made by management, as well as evaluating the overall presentation of the Des- ignated Account Statement. 8 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the receipts have been properly accounted for and withdrawals were made for the purpose of the project in accordance with the provisions of the Grant No.: TF12390, IDA 50260 & AfDB “Integrated Public Financial Management Reform Project ”. Monrovia, Liberia December 2015 9 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 Ministry of Finance INTEGRATED PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT GRANT NO.: TF 12690, IDA 50260, & AfDB Project Designated Account Statement For the Fiscal Year Ended June 30, 2015 Account No. 02/205/300001/68 Account Title: Integrated Financial Management Reform Project Account Type Current Account Bank: Central Bank of Liberia Notes June 30, 2015 June 30, 2014 US$ US$ Total Grant Received 3 6,942,145 6,873,615 Other Income-Sale of Bid Documents 9 1,800 4,400 Total Grant Income Reported 6,943,945 6,878,015 Less: Amount spent 7,114,228 8,831,409 Balance as at July 1 790,417 2,743,811 Balance as at June 30 620,134 790,417 The notes found on pages 13-16 are integral parts of these reports 10 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 GRANT NO.: TF 12390, IDA 50260, & AfDB "INTERGRATED PUBLIC FINANCIAL MANAGEMENT REFORM PROJECT" Project Financial Management Unit (PFMU) Statement of Fund Balance and Cash Status For the Fiscal Year Ended June 30, 2015 June 30, June 30, Notes 2015 2014 A. FUND BALANCE US$ US$ Balance of Project Fund 790,417 2,743,811 Add: Total receipts during the period 9 6,943,945 6,878,015 Total fund available for operations 7,734,362 9,621,826 Less: Total payments during the period 7,114,228 8,831,409 Balance of project funds at the end of the year 620,134 790,417 The notes found on pages 13-16 are integral parts of these reports 11 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 The notes found on pages 13-16 are integral parts of these reports 12 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 NOTES TO FINANCIAL STATEMENTS 1. Background and Information of the Project With support from the International Development Association, MTDF, and AfDB; the IPFMR-project is to strengthen the foundation of the overall PFM governance, ranging from planning, budgeting, accounting and reporting, internal audit and controls, public procurement, and revenue management, to external audit and legislative and public oversight. The IPFMR project was approved by the World Bank on December 11, 2011 with a grant amount of USD 28.549 Million. The aim of the project is i. Improvement in the efficiency and reliability of the Government’s accounting system; ii. Harmonize the project chart of accounts with the GoL chart of accounts; iii. Finalize the business processes for projects in IPFMR project; iv. Configure the IPFMR project; and v. Conduct testing 2. Use of Grant Proceeds The table below sets out the categories of items to be financed out of the grant proceeds, the allocation of the amounts of the grant to each category and the percentage of expenditures for items to be financed in each category: Category Amount of Grant % of allocated Expenditure to Expressed in US$ be Financed Budget Planning Systems, Coverage and Credibility 1,838,000 100 PFM Legal Framework, Budget Ex., Acct & Reporting 10,258,000 100 Revenue Mobilization and Administration 5,378,000 100 Transparency and Accountability 6,233,000 100 Program Governance and Project Management 4,844,000 100 Total 28,551,000 All categories of expenditure shown in these financial statements are fully financed based on the percentage below: % of Expenditure IDA grant 18 MDTF 66 AfDB 16 Total 100 13 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 NOTES TO FINANCIAL STATEMENTS (continued) 3. Significant Accounting Policies Basis of accounting The financial statements have been prepared in accordance with the Cash Basis International Public Sector Accounting Standards (IPSAS) and in the manner required by the Project Grant Agreement as required by the World Bank’s Operating Policies and Procedures and PFMU’s Financial Management manual. This implies that all expenditures are expensed whether they are revenue or capital in nature and income is recognized when funds are received from the World Bank. Reporting currency Financial reports have been presented in United States Dollars. Transactions denominated in other currencies are translated into United States Dollars and recorded at the rate of exchange ruling at the date of transactions. Balances denominated in other currencies are translated into United States Dollars at the rate of exchange prevailing on the reporting date. Grant Grant from IPFMRP is held in a deferred income account when received and are only recognized in the Project’s income statement when utilized. Grant Receipt 30 June 2014 30 June 2013 US$ US$ IPFMRP/MOF/009- TF 12690 4,603,951 IPFMRP/MOF/003- TF AfDB 2,338,194 IPFMRP/MOF/007- TF 12690 3,700,000 IPFMRP/MOF/006- IDA50260 3,173,615 6,942,145 6,873,615 14 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 4. Budget Planning Systems, Coverage and Credibility 30 June 2015 30 June 2014 US$ US$ Enhanced Macro-Fiscal Framework 31,318 238,863 Fiscal Reporting and Fiscal Policy Review 98,545 209,613 Fiscal Budget Framework 150,045 613,737 279,908 1,062,213 5. PFM Legal Framework, Budget Execution, Accounting and Reporting Review of PFM legal framework 0.00 25,235 IFMIS Rollout to M&As 1,670,618 2,461,319 Strengthening Financial Standards, Accounting and 30,090 59,705 Reporting Treasury, Cash, Debt and Aid Management 122,287 66,013 Establishment of County Treasuries 87,530 102,733 Donor Project Financial Management/Use of Country 57,464 97,378 Systems 1,967,989 2,812,383 6. Revenue Mobilization and Administration Capacity Development of Customs 0.00 107,582 Tax Automation (SIGTAS) 133,397 1,142,624 Establishment of Revenue Authority 2,332,248 407,400 2,465,645 1,657,606 7. Transparency and Accountability Strengthening Public Procurement Oversight 0.00 23,309 Strengthening Internal Audit and Controls 239,849 522,655 Strengthening External Audit 391,709 721,190 Enhancing Legislative Oversight 84,016 320,135 Civil Society and Social Accountability 105,230 112,152 820,804 1,699,441 8. Program Governance and Project Management Program Coordination & Financial Management 406,919 366,197 Institutional and capacity building 923,362 1,029,304 Monitoring & Evaluation/Change management 89,369 66,117 Project fiduciary 160,232 138,148 1,579,882 1,599,766 9. Cash receipts through grant and other Sources IDA grant - 3,173,615 MDTF 4,603,951 3,700,000 AfDB 2,338,194 - Sale of bid documents 1,800 4,400 6,943,945 6,878,015 15 Promoting Accountability of Public Resources Auditor General’s Report on the Integrated Public Financial Management Reform Program (IPFMRP) for the fiscal Period 2014/2015 10. Variance Analysis Annual Project Actual 2015 Budget 2015 Variance Allocation FY $ FY $ $ $ $ $ Component One: Enhanced Budget Planning System, Coverage & Credibility Enhanced Micro-Fiscal Framework 355,000 115,000 31,318 83,682 Fiscal Reporting and Fiscal Policy Review 292,000 80,000 98,545 -18,545 Enhanced Budget Framework 1,191,000 426,000 150,045 275,955 Sub Total 1,838,000 621,000 279,908 341,092 Component Two: Strenghtening PFM Legal Framework, Budget Execution, Accounting and Reporting Review of PFM Legal Framework 50,000 25,000 0.00 25,000 SIFMIS Rollout to M&As 8,220,000 3,084,500 1,670,618 1,413,882 Strenghtening Financial Standards, and Accounting 40,000 180,000 30,090 149,910 Treasury, Cash, Debt and Aid Management 614,000 368,000 122,287 245,713 Establishment of County Treasuries 494,000 367,000 87,530 279,470 Donor Project Financial Management/Use of Country Systems 840,000 208,000 57,464 150,536 Sub Total 10,258,000 4,232,500 1,967,989 2,264,511 Component Three: Revenue Mobilization and Administration Capacity Development of Customs 200,000 0.00 0.00 0.00 Tax Automation (SIGTAS) 4,218,000 2,868,400 133,397 2,735,003 Establishment of Revenue Authority 960,000 2,997,600 2,332,248 665,352 Sub Total 5,378,000 5,866,000 2,465,645 3,400,355 Component Four: Enhancing Transparency and Accounting Strenghtening Public Procurement Oversight 313,000 288,300 0.00 288,300 Strenghtening Internal Audit and Controls 1,555,000 694,000 239,849 454,151 Strenghtening External Audit 3,235,000 1,115,000 391,709 723,291 Enhancing Legislative Oversight 630,000 274,500 84,016 190,484 Civil Society and Social Accountability 500,000 172,000 105,230 66,770 Sub Total 6,233,000 2,543,800 820,804 1,722,996 Component Five: Program Governance and Project Management Program Coordination and Financial Management 645,000 75,000 406,919 -331,919 Institutional and Capacity Building 3,165,000 1,138,000 923,362 214,638 Monitoring and Evaluation/Change Management 462,000 84,000 89,369 -5,369 Project Fiduciary 572,000 0 160,232 -160,232 Sub Total 4,844,000 1,297,000 1,579,882 -282,882 Grand Total 28,551,000 14,560,300 7,114,228 7,446,072 16 Promoting Accountability of Public Resources