WORLD BANK PROJECTS YEAR ENDED 21 DECEMBER 2017 Pagc I of4 . .... . ..... Supreme Audit Office Governnient of Islamic Republic of Afghanistan AUDITORS' REPORT To, Dated: 27 October 2018 H li Ministry of Finance Coverniment of Islanic Republic of Afghanistan Kabul. Independent Auditor's Report on the Financial Statements 1We c audited the accompanying statements of Cash Receipts and Pavments (the 1 inancial Statements") of Financial Sctor Rapid Response Project. Grant Number: TFO Il- 7320-A K 1-8930 and D-1400. World Wank Project ID: P 19047. (hereinafter referred to as Ilie froject') lor the financial year ended 30 Qaws ol Solar Year 1396 (21 December 2016 to 21 December 2017). and the summar ol siifilicaiit accounting policies and other explanatory notes. Tlie Nlinistry of Finance's Responsibility for the Financial Statements 2. lie Ministry of Finance (the -Ministry') is responsible tor preparation and fair presentation ol the Financial Statements in accordance witi International Public Sector Accountin Standards -Financial Reporting under Ilie Cash Basis of Accounting Ihis responsibility inlu Ides designing. implementing and naintaining internal control relevant to the preparation and fir presentation of tlie inancial statements which are free From material nisstatement, whetlier duc to frand or error: selecting and applyiing appropriate accounting policies: and making accounting estimates that are reasonable in the circumstances. n. ln addiin to the responsibilitor the preparation and presentation o' the financial statements deseribed above. the Ministry's policy is also responsible for ensuring that the activities, financial transactions and information refleeted in the financial statements are in comiipilance with Ilie Grant Agreement Hl -7320-AF, 11-8930 and D1400 entered into between Ilie Islanic Republic of Afghanistan and tie International Development Association acling as admiiiistrator of urant lnids lor the provision of USD 45.7 Million íu teet 1aL 2 o14 Auditur's Responsibhility 1. Our responsibility is to express an opinion on i}hese Financial Statements based on our audit, We have conducted audit of the financial statemenis. projeet operations and related internal controls in accordance with the International Standards of Supreme Aud institutions "IS SA s). Those standards require that SAO comply with Ilie ethical regnulations and plan and perform tlie audit to obtain reasonable assurance of the financial statements being free firom material misstatemeni. Those Standards require that SAO express its opinion on w\ hether ilie linaucial statemenis present lairi. in all material respeets, the cash receipts and payments of the Projct In addition to the responsi bllity to express an opinion on the financial statements described above, our responsibility ineludes expressing an opinion on whether tIlie aciivities. linancial transactions and information reflected in the financial statements are, in all rnaterial respcets in compliance with the Project's Grant agrcements. Tihis espensibilitv ineludes perlormi ing procedures to obtaiii audit evidence about wihether all payments and receipts are in compli ance with the ternis and condit ions of tlie ( irant Agreeienits. 6. An audit involves performing procedures to obtain suffieent and appropriate audit evidence about ilie amoant sand diselosures in the financial statements. [he procedtres selected depend on the auditr's judgeienL ineluding Ilie assessment of the risks of iiaterial mi,sstatement of te financial statements. wfhetlher duc to fhaud or error. In making Ilie risk assessments. internal controls relevant to tbe entity's preparation and presentation of linancial statemeltnts are considered in order to design audit procedures that are appropriate in the cirenumstances, but not for tle purlposes of expressing an opinion on the elTet iveness of internal control. An audit alsO iInclides evaluating Ilie approprialeness of accountintig policies osed. the reasonableness of accountilng estiiates made by management, as well as evalnating Ilie presentation of tle Iinancial statements. 7. We belleve that Ilie audit evidence we have obtained is reasonable and appropriate to provide a basis for our opinion. Opin1ion1 2. ln our opinion. the Financial Statements present fairly, in all material respeets, cash receipts and payments of the Financial Seetor Rapid Response Project Il) nuniber 1-119047 1ianced under Grant Numbers: Il-7320-AF. 11-8930 and D1400 för Ilie Inancial vear ended 30 Qaxs of Solar Year 1396 (21 December 2016 to 2 1 December 2017) in accordance witi Internatlonal Public Sector Accounting Standards "[Financial Reporting under thle Cash Basis of Accounting.' 9. In our opiniou. in all material respeets. Ilie activiies, Inancial transactions and iiinteiation reflected in tile tinancial statements are in coiiiplian aice -frh hIlie u. rmis and c0nditions of tbc Grant Agreenent. 10. Management 1.etter. attached to this Audit Report. highl1igl s arcas ofdupoewi li nancial managenietit Including compliance vitb finane ial covei t Io th Grnt g i and of results of its operations for the financial year etided 30 a s 39e Y 0w 1 ( Påpe 3o1 ---- - - - - - - -- - - - --- --- IDecember 201) to 2 l December 2017). lhese observations and recommendalions have been ctuilìlln icted to aid discusewd will tlhe Irojeet and are inended to ilnol|ve inernal centre I and result in other operating efficiencies ot the Project. Dr. Møbi ium Shlarif "Sharifi" Aud ienieralolf AMghan istan upeeAudlit Office 0 (~9illKabIl MIghanistan Iae 4 of 4 Islamic Republic of Afghanistan Financial Sector Rapid Response Project World Bank Reference: Project ID Pl19047; Grant ID H7320 & H8930 Financial Statements for the year ended 3Oth Qaws 1396 (21st December, 2017) Financial Sector Rapid Response Project World Bank Reference: Project ID P119047; Grant ID H7320 & 118930 STATEMENT OF CASH RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017) 1396 1395 Cumulative To Date Receipts/ Receipts/ Payments Payments Controlled Controlled /' by entity by entity USD USD USD RECEIPTS Initial Advance - - 2,800,000 Replenishment - 1,170,287 10,726,409 TOTAL RECEIPTS - 1,170,287 13,526,409 PAYMENTS Disbursement Category: Goods. Non-Consulting Serveles, Consultants services, Incremental Operating Costs and Training (except APS) 1,138,263 1,225,070 12,933,743 Goods, Non-Consulting Servoies, Consultants' services, Incremental Operating Costs and Training (for APS) - Bank Charges - 100 625 TOTAL PAYMENTS 1,138,263 1,225,170 12,934,368 Increase/(Decrease) in Cash & Cash Equivalents (1,138,263) (54,883) 592,041 Cash and Cash Equivalaents at the beginning of the year 1,730,304 1,785,187 Increase/(Decrease) in Cash & Cash Equivalents (1,138,263) (54,883) Cash and Cash Equivalents at the end of the year 592,041 1,730,304 The accompanying notes form an integral part of this financial statement- Khalid Payenda Deputy Minister for Finance Ministry of Finance, slamic Republic of Afghanistan Dated: October 8, 2018 Financial Sector Rapid Response Project (World Bank Reference: Project ID P119047; Grant ID 117320 & 118930) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017) 1) LEGAL STATUS AND ACTIVITY a) The Financial Sector Rapid Response Project was set up on August 27, 2011. The project's objective is to assist the Da Afghanistan Bank to develop actions plans for improved banking supervision and implement a modern national payment system for efficient and transparent payment transactions. b) The project was initially funded by a grant bearing reference number H7320 from International Development Association in the amount equivalent to Special Drawing Rights (SDR) 11,900,000. In June 2014, another grant bearing reference number H8930 was provided in the amount equivalent to Special Drawing Rights (SDR) 4,400,000 and another grant bearing reference number D1400 has been provided during the financial year 1396 in the amount equivalent to Special Drawing Rights (SDR) 14.400,000, although there were no disbursements from it during the reporting period c) The project consists of the following parts: i) Audits of Commercial banks ii) Modernization of ANPS iii) Support to Afghanistan Institute of Bank and Finance ' * iv) Technical Assistance, Training and Project Implement tior d) The significant terms and conditions that determine or 'ie ava45 f he funding assistance are primarily the presentation of the eligible expendi k tJ1 the period as per and in accordance with the financing agreement. e) These financial statements of the Project have been prepared in accordance with the requirements of the Development Grant Agreements signed between the Government of the Islamic Republic of Afghanistan and the International Development Association for the project. 2) SIGNIFICANT ACCOUNTING POLICIES a) Basis of Preparation The financial statements are prepared under the historical cost convention and in accordance with Cash Basis IPSAS - Financial Reporting under the Cash Basis of Accounting issued by International Federation of Accountants (IFAC). b) Reporting Entity These financial statements are for the Project referred to in para 1(a) which is funded by the grants as specified in para 1(b) and encompass the operations of the project to the extent funded by those grants. c) Payments Payments made from Special Account are recognised in the financial statements based on the date the cheque is issued and direct payments by World Bank are recognised on the date on which the withdrawal application for the payment is submitted to the World Bank. However, Financial Sector Rapid Response Project (World Bank Reference: Project ID P119047; Grant ID 07320 & 118930) cheques or withdrawal applications that were ultimately rejected by the bank or the World Bank are reversed in the reporting period. d) Reporting Currency The reporting currency is US Dollars. Since US Dollars is the principal disbursement currency of the donor, the financial statements are not prepared in the Afghani which is the currency of Afghanistan. e) Currency translations Transactions in currencies other than the reporting currency are translated into US Dollar at the rate of exchange at which the transaction is actually executed. 3) NOTES TO ACCOUNTS a) Receipts These represent grants and aid received during the period. b) Initial Advance Initial advance represents the advance given by the World Ba ino the bank account(s) of the project. c) Bank Charges The Ministry of Finance has negotiated with Da Afghanistan Bank that bank charges will not be charged on the transactions in the US Dollar Special bank account of the grant. Bank Charges may be levied by intermediary banks on deposits into the Special Account and balances returned to the World Bank. d) Comparison of Budget and Actual Amounts The Project, being the reporting entity for the purpose of these financial statements, in its capacity as such does not make its annual approved budget publicly available nor is its budget explicitly available publicly in the compiled approved budget in a manner purposeful to the context of these financial statements. Thus, the requirement of presenting a comparison of budget and actual amounts is not considered contextually applicable. e) Authorisation Date These Financial Statements are authorised by the Deputy Minister for Finance, Ministry of Finance or any official acting on his behalf who has been so authorised to act on the date endorsed on the Statement of Cash Receipts and Payments. f) Appendices The accompanying appendices provide additional information and analysis and form an integral part of these notes, except as indicated otherwise. g) Others These Financial Statements are originally prepared in English and then translated into Dari. In the event of any inconsistency between the English and Dari versions, the English version shall be considered to be correct. Financial Sector Rapid Response Project Workl Bank Reference: Project ID PI19047; Grant ID H7320 & H8930 APPENDIX Al SUMMARY OF WITHDRAWAL APPLICATIONS FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017) Application Initial Description Number Advance Amount USD USD NIL /J~71 Financial Sector Rapid Response Project World Bank Referencc: Project ID Pi 19047; Grant ID H7320 & H8930 APPENDIX A2 US Dollar SPECIAL ACCOUNT SUMMARY FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017) Account No: 27419 Depository Bank: Da Afghanistan Bank (DAB) Address: Kabul USD Opening Balance as per Bank Statemen 1,730,304 Add-, Replenishment by World Bank 1! Total Additions C - Deduct: Payments for Project Expenditure 1,138,263 Bank Charges ' - Total Deductions 1,138,263 Closing Balance as per B.S 30 QAWS 1396 (21 DECEMBER 2017) 592,041 Financial Sector Rapid Response Project World Bank Reference: Project ID P119047; Grant ID H7320 & 18930 APPENDIX A3 US DOLLAR SPECIAL ACCOUNT RECONCILIATION FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017) Account No: 27419 Depository Bank: Da Afghanistan Bank (DAB) Address: Kabul USD Closing Balance as per bank statement - 30 QAWS 1396 (21 DECEMBER 2017) 592,041 Closing balance as per financial statements - 30 QAWS 1396 (21 DECEMBER 2017) 592,041 Financial Sector Rapid Response Project World Bank Reference: Project ID Pi19047; Grant ID H7320 & H8930 APPENDIX A4 COMPONENT-WISE DISBURSEMENTS FOR THE YEAR ENDED 30 QAWS 1396 (21 DECEMBER 2017) (not an integral pad of the Financial Statements) 1396 1395 Cumulative To Project Component Date USD USD USD Audits of Commercial banks 1,138,263 1,225,070 5,461,065 Modernization of ANPS - - - Support to Afghanistan Institute of Bank and Finance - 104,146 Technical Assistance, Training and Project Implementation - 7,368,532 Bank Charges - 100 625 TOTAL PAYMENTS 1,138,263 1,225,170 12,934,368 -~~ -~ tPN--... .....--------- .... . ..----- - ---- --------- _ � '-� с�з о� � � ц`�i г�д г�д � о ш c�r �t лk еа м б � tS cS3 б tD� ц7 т tl` � ��,, � ('+ Сц д' 4�Г7 �}" sT! 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