THE WORLD BANK MULTI-SECTORAL CRISES RECOVERY PROJECT (WORLD BANK ASSISTED) FINANCIAL STA TEMENTS FOR THE YEAR ENDED 31sr DECEMBER, 2018 AUDITED BY OFFICE OF THE AUDITOR-GENERAL FOR THE FEDERATION Plot 273, Samuel Ademulegun Street, Central Business District, Abuja MULTI-SECTORAL CRISIS RECOVERY PROJECT (MCRP) (P157891) FINANCIAL STATEMENT FOR THE YEAR ENDED 31st DECEMBER 2018 TABLE OF CONTENTS CONTENT PAGE Grant Information Profile 2-4 Auditor's Report 5-7 Statement of Financial Position 8 Statement of Cash Receipts and Payments 9 Statement of Cash Flow 10 Notes to the Financial Statements 11-14 MULTI-SECTORAL CRISIS RECOVERY PROJECT (MCRP) (P157891) GRANT INFORMATION PROFILE On October 20, 2017, International Development Association (IDA) and the Federal Republic of Nigeria (FRN) signed Agreement for financing to the FRN in the amount of 148.8 million Special Drawing Rights (XDR) equivalent to USD 200 million for the implementation of the project "Multi Sectoral Crisis Recovery Project (MCRP)" with the repayment term of 25 years including a 5years grace period. The FRN made a portion of the proceeds of the financing available to each North East (NE) participating state as a grant on a non-reimbursable basis under a subsidiary agreement between the FRN and each NE participating state. The Project Development Objective (PDO) are to: * Support to the Government of Nigeria towards rehabilitating and improving critical service delivery infrastructure, improve the livelihood opportunities of conflict and displacement-affected communities, and strengthen social cohesion in the North East Participating States of Borno, Yobe and Adamawa. * In the event of an Eligible Crisis or Emergency, to provide immediate and effective response to said Eligible Crisis or Emergency, through the proposed Contingent Emergency Response Component. Project Components The MCRP has four components: Transitional Support and stabilization with access to basic necessity kits and Component 1 US$ 30 productive assets Million: Strengthening Peace Community resilience and social cohesion initiatives that address key drivers of the Building, Stability and conflict and promote peacebuilding S e Government capacity building to improve Citizen-Government relationship and project delivery at local Government and community level. Rehabilitation and improvement of critical state transport infrastructure Component 2 US$ Reconstruction of water supply facilities, latrines, other sanitation infrastructure and 150 Million solid waste management Infrastructure Reconstruction of damaged school infrastructure, provision of educational facilities, habilisupplies and associated service delivery interventions. Service Delivery Rehabilitation of health care facilities buildings, provision of supplies, equipment and Restoration and associated service delivery interventions Improvement: Rehabilitation and reconstruction of damaged local Government buildings critical for restoring service delivery functionality Provision of implementation and performance management frameworks Component 3 US$ 20 Immediate-and medium-term implementation capacity building Million: Technical Assistance, Engagement of a project management as well as citizen engagement and third party Capacity Building and monitoring mechanisms. Program Management Program management and operational costs. Component 4 US$ 0 Contingent emergency response in accordance with OP/BP 10.00, paragraphs 12 and Million: 1 13 Contingency Emergency Response Provision for rapid reallocation of project funds in the event of natural or manmade Component (CERC) crisis during the lifetime of the project as approved by the World Bank. NB PCNI MCRP which is the Federal Unit of the project is implementing only component three (3). And the sum of $5million USD was earmarked for the Federal Unit over the life span of the project. MULTI-SECTORAL CRISIS RECOVERY PROJECT (MCRP) (P157891) THE GRANT MANAGEMENT TEAM * Tijjani M. Tumsah Vice Chairman PCNI * Ayaz Pavez Team Task Leader * Mohammed Danjuma Project Coordinator * Yusuf B. Muhammad Project Accountant BANKERS: Central Bank of Nigeria. PROJECT AUDITORS: Office of the Auditor General for the Federation. Audit House Plot 273, Samuel Ademulegun Street, Central Business District, P.M.B. 128, Garki, Abuja, Nigeria. 4 THE AUDITOR-GENERAL FOR THE FEDERATION Audit House, Plot 273, Samuel Ademulegun Street, Central Business District, PM.B. 128, Garki - Abuja, Nigeria. The Project Coordinator, Multi-Sectoral Crises Recovery Project, Office of the Vice President, 13, Danube Street, Maitama District, Abuja. AUDIT OF THE MULTI-SECTORAL CRISES RECOVERY PROJECT PERFORMED BY THE AUDITOR GENERAL FOR THE EDERATION AUPITOR'S REPORT Opinion I have audited the financial statements of Multi-Sectoral Crises Recovery Project for the period ended 31st March, 2019. These financial statements comprise the Statement of Financial Position, Statement of Financial performance, Cashflow Statement and Statement of Net Assets/Equity for the year then ended, and a summary of significant accounting policies and other explanatory information. In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at 31st December, 2018, and of its Cash Receipts and Payments and its cash flows for the year then ended in accordance with specific purposes. Basis for Opinion I conducted the audit in accordance with International Standards for Supreme Audit Institutions (ISSAls). My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements Section of my report. I am independent of the entity in accordance with the Code of Ethics for Supreme Audit Institutions together with the ethical requirements that are relevant to my audit of the financial statements and I have fulfilled my other ethical responsibilities in accordance with these requirements and the Code of Ethics. I believe that the audit evidences obtained are sufficient and appropriate to provide a basis for my opinion. 5 Responsibilities of Management and Those Charqed with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with 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. In preparing the financial statements, management is responsible for assessing the Entity's_ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the entity's financial reporting process. Auditor's Responsibility for the Audit of the Financial Statements My objectives 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 my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with (ISSAls), 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 Financial Audit Methodology (FAM), which is consistent with the Fundamental Auditing Principles (ISSAls 100-999) of the International Standards for Supreme Audit Institutions, I exercise professional scepticism throughout the audit. I 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 my 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 controls. * 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. 6 * Evaluate the appropriateness of accounting policies uses and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence, obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. * 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. I 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 I identify during my audit. I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be brought to bear on my independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor's report unless law or regulation precludes public disclosure about the matter or, when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. A. M. AYINE, FCA Auditor-General for the Federation June 17, 2019 7 MULTI-SECTORAL CRISIS RECOVERY PROJECT (MCRP) (P157891) STATEMENT OF FINANCIAL POSITION AS AT 31T DECEMBER 2018 ASSETS NOTE (N) US$ CURRENT ASSETS Bank and Cash Equivalent 4 211,899,066.63 694,068.35 211,899%066.63 694,068.35 NON-CURRENT ASSETS PPE 5 93,631,225.00 306,685.96 93,631,225.00 306,685.96 TOTAL ASSETS 305,530,291.63 1,000,754.31 FINANCED BY: Loan 6 641,130,000.00 2,100,000.00 Deficit for the year (335,599,708.37) (1,099,245.69) 305,530,291.63 1,000,754.31 The Notes in Pages 11 to 14 form part of this Financial Statement. Mohammed Danjuma (Project Coordinator) ................. .Date ........ Yusuf B. Muhammad (Project Accountant) ........... .......Date .. Theresa Kyola Olajide (Asst. Project Accountant) a...... ..D te 8 MULTI-SECTORAL CRISIS RECOVERY PROJECT (MCRP) (P157891) STATEMENT OF CASH RECEIPTS & PAYMENTS FOR THE YEAR ENDED 3J1T DECEMBER 2018 NOTE (N) US$ RECEIPTS: Contribution from States 2 13,965,000.00 45,741.89 TOTAL RECEIPTS 13,965,000.00 45,741.89 PAYMENTS: Operating Expenditure 3 349,564,708.37 1,144.897.58 TOTAL PAYMENTS 349,564,708.37 1,144,897.58 RECEIPT LESS PAYMENTS (335,599,708.37) (1,099,245.69) Surplus/ (Deficit) from Operating Activities (335,599,708.37) (1,099,245.69) 9 MULTI-SECTORAL CRISIS RECOVERY PROJECT (MCRP) (P157891) STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31ST DECEMBER, 2018 N US$ Surplus (Deficit) per Statement of Financial Performance (335,599,708.37) (1,099,245.69) Net Cash Flow from Operating Activities (335,599,708.37) (1,099,245.69) Net Cash Flow from Investing Activities (93,631,225.00) (306,685.96) Net Cash Flow from Financing Activities 0 0 Net Cash Flow from All Activities (429,230,933.37) (1,405,931.65) Cash and Cash Equivalent as at 1/06/2018 641,130,000.00 2,100,000.00 Cash and Cash Equivalent as at 31/12/2018 211,899,066.63 694,068.35 10 MULTI-SECTORAL CRISIS AND RECOVERY PROJECT (MCRP) (P157891) NOTES TO THE FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2018. NOTE 1: STATEMENT OF ACCOUNTING POLICIES The following are the significant accounting policies adopted in the preparation and fair presentation of the financial statements. (a) The Financial Statements have been prepared under the historical cost convention. No adjustments have been made in respect of effect of inflation and rising prices. (a) STATEMENT OF COMPLIANCE WITH IPSAS The Financial Statements have been prepared in accordance with the requirements of International Public Sector Accounting Standards (IPSAS), following the cash basis and in compliance with the World Bank recommendations. (b) FUNDS All contribution by the financiers were only recognized when received and capitalized as Loan. Subsequently, the Fund is increased or reduced by surplus or deficit from the Statement of Cash Receipts and Payments. (c) RECOGNITION OF REVENUE/EXPENDITURE The Financial Statements are prepared on the basis of receipts and disbursements of cash items. Under this principle financing is recognized when it is received while expenses are recognized when they are paid. (d) FIXED ASSETS Fixed assets which are procured by the Project with the main purpose of effective achievement of the Project objectives are entered to the cost records right after being received. For the purposes of this financial reporting all Property, Plant and Equipment (PPE) are measured at cost and are not being depreciated. Fixed assets include assets purchased for the operational needs of the Project The Project vehicles and other assets were procured less than a year, consequently no depreciation policy has been agreed between the project and the Bank. (e) FOREIGN CURRENCY Transactions in foreign currencies are converted into Naira at the rates of exchange ruling at the date of each transaction. Balance in foreign currencies are translated into Naira at the exchange rates ruling at the reporting date. 11 Exchange differences arising from the foreign currency translations are also recognized. NOTE 2: Contribution from States The sums of N6,670,000.00 and N7,295,000.00 totaling N13,965,000.00 was paid from MCRP Borno and MCRP Adamawa respectively for vehicle insurance which was centrally procured at the Federal Office. NOTE 3: OPERATING EXPENDITURES TAmount N Amount USD Rate Bank Charges 980.010.50 3,209 99 305.3 Operating Cost 65,643,642 25 215,013.58 305.3 Staff Allowances 281,289,806.35 921,355.41 305.3 Advances 1,651,249_27 5,408.61 305.3 Total 349,564,708.37 1,144.897.58 NOTE 4: BANK AND CASH EQUIVALENT BANK AND CASH EQUIVALENT NAIRA (N) US$ Balance in Dollar Account 73,841,384.50 241,865.00 305.3 Balance in draw down A/C (Naira) 138,057,682.13 452,203.35 305.3 211,899,066.63 694,068,35 NOTE 5: PPE S/N DESCRIPTION AMOUNT (N) AMOUNT US $ RATE 1 Being Payment for the supply of 63,126,000.00 206,767.11 305.30 office vehicles (1No;Toyota Prado and 1No;Toyota Corolla) 2 Being Payment for the supply 886,410.00 2,903.41 305.30 and installation of 1.5 KVA Power inverter system and VolP intercom Phones 3 Being payment for the supply 29,618,815.00 97,015.44 30530 and installation of Video Conferencing equipment and internet connection TOTAL 93,631,225.00 306.685.96 NOTE 6: LOAN Initial Advance 641,130,000.00 2,100,000.00 305.3 12 NOTE 7: UNREMITTED STAFF TAXES Month Amount N Amount Rate January-June 2018 9,534,623.33 31,2334 3053 July 2018 1,654,163.33 5,418.16 305.3 August 2018 832,473.33 2,726.74 305.3 September 2018 859,431.67 2,815 04 305.3 October 2018 830,316.67 2,719.67 3053 November 2018 830,316.67 2,719.67 305.3 December 2018 830,316.67 2,719,67 3053 TOTAL 15,371,641.67 50,349.29 The Project did not remit staff taxes because the staff had not obtained Tax Identification Numbers (TIN). NOTE 8: Set Up Costs The project set up cost amounting to N107,378,596.10 which is inclusive of the rent was paid by our Supervising Entity (Presidential Committee on the North East Initiative). We could not pay back the money to PCNI in 2018 because of some institutional arrangements and financial challenges. However, refunds shall be made this current year (2019). NOTE 9: Advances that remain unretired as at 31st December, 2018 Name Particulars AMOUNT (N) AMOUNT Rate Date (N) 7/11/2018 Dr. Francis Travel Mission for Borno MCRP Mission 235,500.00 771.37 305.3 Obiora 11-14 Nov. 2018 27/11/2018 Dr. Francis Advance Payment for Purchase of GRM 95,000.00 311.17 305.3 Obiora Set Up Items 30/11/2018 Dr. Francis Advance Payment of Travelling 332,500.00 1,089.09 305.3 Obiora Allowance to Borno 2-7 Dec. 2018 30/11/2018 Mr. Kayode Advance Payment of Travelling 235,500.00 771.37 305.3 Adewakun Allowance for Borno Trip 4-7 Dec. 2018 30/10/2018 Fatimah Advance Payment for Travel Expenses to 42,000.00 137.57 305.3 Shamah Adamawa C1 Support Mission 30 Oct to 2 Nov. 2018 7/11/2018 Mr. Ayo Advance Payment for Travel Expenses to 45,55.00 149.20 305.3 Olagunju Borno MCRP Mission 11-14 Nov. 2018 14/12/2018 Mamman Advance Payment for Travel Expensses 235,500.00 771.37 3053 Adamu for M & E Training in BAY States 12/10/2018 Said Dikko Advance Payment for Travel Expenses - 123,048.00 403.04 30S.3 Borno Support Mission 13 30/10/2018 Said Dikko Advance Payment for Travel Expenses to 4,151.27 13.60 305.3 Adamawa C1 Support Mission 30 Oct to 2 Nov. 2018 7/11/2018 Said Dikko Travel Expense for Borno MCRP Mission 133,500.00 437.27 305,3 11-14 Nov. 2018 7/11/2018 Nakama Ken Travel Expense for Borno MCRP Mission 30,000.00 98.26 305.3 11-14 Nov. 2018 12/10/2018 Dr. Francis Advance Payment for Travel Expenses 97,000 00 317 72 305.3 Obiora Borno Support Mission 30/10/2018 Dr. Francis Advance Payment to Yola for 42,000 00 137.57 305,3 Obiora Implementation Support 1,651,249.27 699,476.96 NOTE 10 The accounting period is January - December. However, funding from World Bank for this project commenced in June, 2018. Note that, the parent agency had financed the setup costs from January to May, 2018 which was not covered by the accounts. 14