MINISTRY OF TREASURY AND FINANCE BOARD OF TREASURY CONTROLLERS EDUCATION INFRASTRUCTURE FOR RESILIENCE PROJECT Implemented by MINISTRY OF NATIONAL EDUCATION Financed Under World Bank Grant Agreement Numbered TF0A4341 As of December 31, 2019 and For the Year Then Ended Prepared by Ali (ALISKAN Tung ERSEVER Selguk KIRBAS Senior Treasury Controller Senior Treasury Controller Treasury Controller q. KURUt t. Report's Number 9 '136/6-54/4-38/2 0 INDEPENDENT AUDITOR'S REPORT August 28, 2020 CONTENTS EXECUTIVE SUM M ARY ....................................................................................................................................... 1 A. Project Sum m ary ......................................................................................................................................... 2 B. Objectives of Audit ......................................................u.t............................................... .................... 2 C . S c o p e o f A u d it .................... ........................... .......... ...................................... ....................... ........ 3 D . A u d it R e s u lts....................................................................................................... .. .................................... 3 E. M anagem ent Recom m endation ............................................................................................................. 4 INDEPENDENT AUDITOR'S REPORT & FINANCIAL STATEMENTS OF THE PROJECT............. 5 INDEPENDENT AUDITOR'S REPOR .................................................................................... -....... 6 O p in io n ............................................................................................................................................................. 6 B a s is o f O p in io n ........................................... ... .................................... .......... .................................... 7 Em phasis of M atter in the Financial Statem ent ............................................................................. 7 Goi ng Concern ............................................................................................................................................... 7 Responsibilities of Management and Those Charged with Governance or other appropriate term s for the Financial Statem ents.............................................................................. 7 Auditor's Responsibilities for the Audit of the Financial Statem ents.....................................8 ANNEX I: Financial Statem ents ..................................................................................................................... 10 EXECUTIVE SUMMARY REPUBLIC OF TURKEY MINISTRY OF TREASURY AND FINANCE Board of Treasury Controllers EXECUTIVE SUMMARY A. Project Summary The Grant Agreement between the Ministry of National Education and International Bank for Reconstruction and Development (World Bank) for Education Infrastructure for Resilience Project was signed on 27.01.2017. With the agreement numbered TF0A4341, the Ministry of National Education received a grant of 142.800.000,00 Euro. Project is financed by the EU Regional Trust Fund (FRIT) source and is implemented by the Ministry of National Education, Directorate for Construction and Real Estate. The objective of the Project is to support the Recipient in improving access to education by Syrians under Temporary Protection (SuTP) and Host Communities through the expansion of disaster resilient education infrastructure in Priority Provinces. The Project consists of the following parts: * Part A: Supporting School Infrastructure Investments * Part B: Enhancing Quality Learning Environment * Part C: Project Management and Technical Capacity Building for Infrastructure Within the scope of the Project, the following 2 Special Designated Accounts were opened in Vakifbank. * Non-interest bearing EURO Account which has TR38 0001 5001 5804 8016 4085 71 account number * Non-interest bearing TL Account which has TR13 0001 5001 5800 7305 4919 49 account number B. Objectives of Audit The objectives of our audit are; a) To give an opinion on whether the financial statements, prepared as of December 31, 2019 and for the period then ended, present fairly, in all material respects, the 2 REPUBLIC OF TURKEY MINISTRY OF TREASURY AND FINANCE Board of Treasury Controllers financial position of the project in accordance with the cash receipts and disbursements basis of accounting, b) To determine, as of December 31, 2019, whether the Ministry of National Education, Directorate for Construction and Real Estate has complied, in all material respects, with the rules and procedures of the Grant Agreement numbered TF0A4341, c) To examine whether adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred with respect to SOEs and evaluate eligibility of these expenditures for financing under the Grant Agreement. C. Scope of Audit We have performed an audit of financial statements of Education Infrastructure for Resilience Project as of December 31, 2019 in accordance with the cash receipts and disbursements basis of accounting. We have also performed a compliance audit on whether project activities are in line with the Grant Agreement and related World Bank Guidelines. Our audit was conducted in accordance with International Standards on Auditing published by International Federation of Accountants (IFAC) applicable to the audit of financial statements and compliance auditing. There was no limitation in our scope for the Project's audit. D. Audit Results For the financial statements of the project; our audit resulted with an unqualified opinion. As of December 31, 2019, Ministry of National Education, Directorate for Construction and Real Estate has complied, in all material respects, with the rules and procedures of the Grant Agreement numbered TF0A4341. In addition, with respect to SOEs, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred; and 3 REPUBLIC OF TURKEY MINISTRY OF TREASURY AND FINANCE Board of Treasury Controllers which expenditures are eligible for financing under the Grant Agreement numbered TF0A4341. E. Management Recommendation Since we have not identified any finding during our audit, we have not issued a Management Letter. 4 INDEPENDENT AUDITOR'S REPORT & FINANCIAL STATEMENTS OF THE PROJECT REPUBLIC OF TURKEY %MINISTRY OF TREASURY AND FINANCE Board of Treasury Controllers INDEPENDENT AUDITOR'S REPORT TO MINISTRY OF NATIONAL EDUCATION Opinion We have audited the Statement of Sources and Uses of Funds, Statement of Cumulative Investments, Statement of Requests for Reimbursement (SOE Statement) and Statement of Special Account of the Education Infrastructure for Resilience Project as of December 31, 2019, and for the period then ended, and a summary of significant accounting policies and other explanatory information. The financial statements have been prepared by Ministry of National Education, Directorate for Construction and Real Estate based on financial reporting provisions of the Grant Agreement Numbered TF0A4341. In our opinion; a) The accompanying Statement of Sources and Uses of Funds, Statement of Cumulative Investments, Statement of Requests for Reimbursement (SOE Statement) and Statement of Special Account present fairly, in all material respects, the financial position and cash flows of the Education Infrastructure for Resilience Project as of December 31, 2019 and for the period then ended in accordance with the provisions of the Grant Agreement numbered TF0A4341. b) Ministry of National Education, Directorate for Construction and Real Estate, as of December 31, 2019 has complied with, in all material respects, the requirements of the Grant Agreement numbered TF0A4341. c) With respect to SOEs, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursement of expenditures incurred, and these expenditures are eligible for financing under the Grant Agreement Numbered TF0A4341. 6 REPUBLIC OF TURKEY MINISTRY OF TREASURY AND FINANCE Board of Treasury Controllers Basis of Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section of this report. We are independent of the Ministry of National Education, Directorate for Construction and Real Estate within the meaning of "IFAC Code of Ethics for Professional Accountants" and ethical requirements and have fulfilled our other responsibilities under those ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter in the Financial Statement Without modifying our opinion, we draw attention to Note "2" to the financial statements, which describe the basis of accounting. The financial statements are prepared to assist the Ministry of National Education, Directorate for Construction and Real Estate to comply with the financial reporting provisions of the grant agreement referred to above. As a result, the financial statements may not be suitable for another purpose. Going Concern The Project's financial statements have not been prepared using the going concern basis of accounting. The project will end on December 31, 2020. Responsibilities of Management and Those Charged with Governance or other appropriate terms for the Financial Statements Ministry of National Education, Directorate for Construction and Real Estate is responsible for the preparation and fair presentation of these financial statements in accordance with Grant Agreement numbered TF0A4341, 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. 7 REPUBLIC OF TURKEY MINISTRY OF TREASURY AND FINANCE Board of Treasury Controllers Those charged with governance are responsible for overseeing the Ministry of National Education, Directorate for Construction and Real Estate's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements The objectives of our audit are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit 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. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 8 REPUBLIC OF TURKEY MINISTRY OF TREASURY AND FINANCE Board of Treasury Controllers * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We are also required to provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Ahmet TUTAL Chairman of Board of Treasury Controllers. Akif Biflent BOYACIOLU (Audit Partner) Vice Chairman z~ Al ALl$KAN Tung ERSEVER Selguk KIRBAS Senior Treasury Controller Senior Treasury Controller Treasury Controller Date: 28/08/2020 Address: Ministry of Treasury and Finance Board of Treasury Controllers 06510, Emek, ANKARA/TCRKiYE 9 ANNEX 1: Financial Statements О R�V 0 N� о i� о о � с.� •- С:' � О 1И т О а0 О а0 О О � О а-- С� 01 о�� о� о �° о О о Й G �7. с D г г о (D � � ' t�o °а ,о� v й v � � ' г г0 {р 7 г N ' � д П1 V �'-., � � р Ф � М с ,� � _ _ ,J .✓ � °о, о�°о v о v о о� � о � о <'�� W � � О � О � о��. о� о�° а° о р° Й о �^�, !R О О � (О `:� � р р � � � а � � �. 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NO: TR69 0001 5001 5803 8016 3123 23 - TR38 0001 5001 5804 8016 4085 71 *As of December 31, 2019 and for the Year Then Ended (in Euro) Operfing Balance 25. 87-348,33 Transfers to Special Account 69.436.783,40 a) Advance 0,00 b) SoE Procedures 69-436.783.40 c) Summarv Sheet 0,00 Refunds to Special Account 0,00 Other Incomes (Interest Incomes) 0,00 Special Account Total Amount 95.024.131,73 Expenditures 78.294.417.99 Commissions Paid to the Central Bank 0,00 Total Uses from Special Account 78.2 94.41 1TotaI Closing Balance 16.729.713,74 *The figures in the table indicates current period activities between 01.01.2019 and 31.12.2019. m t OR U Head of gonstruction Works Department Head of Constructit Estate Department MINISTRY OF NATIONAL EDUCATION Construction and Real Estate Department Education Infrastructure for Resilience Project Grant/Project No: TF0A4341 For the year ended 31.12.2019 NOTES ABOUT THE PROJECT FINANCIAL NOTIFICATION 1. PROJECT OBJECTIVE AND STRUCTURE Education Infrastructure for Resilience Project executed by World Bank under EU FRIT funds aims to support Turkey in improving access to education by Syrians under temporary protection (SuTP) and host communities through the expansion of disaster resilient education infrastructure in priority provinces. The project includes three components: (a) supporting school infrastructure investments; (b) enhancing quality learning environment; and (c) project management and technical capacity building for infrastructure. The Grant Agreement of Education Infrastructure for Resilience Project was signed on 27.01.2017 between Ministry of National Education and World Bank (WB) amounted to E142.800.000. The Project Closing Date is December 31, 2020. The Project is designated under the Construction and Real Estate Department and executed via the following officials and consultants under the coordination of the Head of Department. Order Title Number Type of Employment No 1 Head of PIU 1 Public Official 2 Project Director 1 Public Official 3 Project Coordinator 1 Public Official 4 Deputy Coordinator 4 Public Officials 5 Planning Unit 6 Public Officials 6 Tendering Unit 5 Public Officials 7 Monitoring and Evaluation 3 2 Public Officials, 1 Consultant (WB) Unit 8 Visibility Unit 4 3 Public Officials, 1 Consultant (WB) 9 Communication Unit 2 1 Public Official, 1 Consultant (WB) 10 Enviromental and Social 3 Public Officials ..-Impacts Units 11 Engineering Projects Unit 4 Public Officials 12 Implementation and Field Unit 6 5 Public Officials, 1 Consultant (WB) 13 Consultancy Unit 2 1 Public Official, 1 Consultant (WB) 14 Finance Unit 5 4 Public Officials, 1 Consultant (WB) 15 Contract Management Unit 3 3 Public Officials Toplam 50 2. PRIMARY ACCOUNTING POLICIES a) Project; is financed via the grant extended by the World Bank. b) Payments under the Project are made through Special Account to person or institutions providing the construction works, good and services. c) Funds for the Project will be used under the provisions of "Regulation on "Principles and Procedures on the Expenditures and Accounting of the Grants Transferred from the European Commission or International Organizations to Public Administrations" published by the Ministry of Finance" published in Official Gazette dated 27.11.2007 and No. 26713. d) The Construction and Real Estate Department keep all documents and records regarding to the Project. e) The financial tables are prepared in accordance with cash basis accounting. f) Accounting transactions are recorded in EURO which is the currency of the provided financing via the grant agreement signed between the World Bank and Ministry of National Education. Since almost all transactions are made in Turkish Lira, however, accounting records are also kept in Turkish Lira in parallel with the accounting records kept in EURO. g) Procured inventories or real assets are recorded as project components or general management costs over the cost amount received on the procurement date. There is no depreciation record regarding the project assets. Inventories or real assets obtained from the Project sources are reflected on the budget accounts and depreciation records are followed in the accounting records of the general budget. h) Transactions with currencies other than Euro are accounted for at the Bank's exchange rate at the time of the transaction. 3. FINANCIAL NOTIFICATIONS The utilization of Fund is restricted only with the project objective in compliance with the grant agreement between Ministry of National Education and the World Bank. The unused project funds at the end of the project shall be returned from the Special Account in compliance with the relevant provisions of the grant agreement. 4. GRANT OF WORLD BANK As the Grant Agreement signed between World Bank and Ministry of National Education in January 27, 2017 is financed by a Multinational Fund the Republic of Turkey is not obliged to any repayment regarding the grant except in cases related to ineligible circumstances. 5. STATEMENT OF THE SPECIAL ACCOUNT IN DECEMBER, 312018 The available balance in the special account in EURO in December 31, 2019 includes the following amounts (There is no bank vault or cash other than the balance in the bank special account): Special Account Balance (Vakifbank) 16.729.713,74 EUR TOTAL 16.729.713,74 EUR Fa h et ORUQ R Head f Co struction Works De artment Head of Constru and Real Estate Department