The Federal Democratic Republic of Ethiopia Audit Services Corporation INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OF THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA MINISTRY OF HEALTH MILLENNIUM DEVELnPMENT GOALS (MDG)POOLED FUND We have audited the financial statements of Millennium Development Goals (MD) Pooled Fund of the Federal Democratic Republic of Ethiopia, Ministry of Health, which comprise the balance sheet as at 7 July 2015, and the statement of sources and uses of funds and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements The Ministry of Health is responsible for the preparation and fair presentation of these financial statements in accordance with the Ethiopian Government's Manual of the Federal Accounting System based on a modified cash basis of accounting and for such internal control as the Ministry 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 on Auditing Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control 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 expressing an opinion on the effectiveness of the entity's internal control. An audit also includes 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 financial statements. We believe that the audit evidence we have obtained is sufficient nd appropriate to provide a basis for our audit opinion. 51-01 -5515222 Fax 251-011-5513083 E-mail: AS(iethionet com 5720 25 1-011 t55350l12 25 1-0 I -5535015 251-011-5535016 Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Millennium Development Goals (MDG) Program of the Federal Democratic republic of Ethiopia, Ministry of Health as at 7 July 2015 and of its financial performance and its sources and uses of funds for the year then ended in accordance with the Ethiopian Government's Manual of the Federal accounting System based on a modified cash basis of accounting. Reports on other requirements As required by the terms of reference and the World Bank guidelines we report that, to the extent we can assess: a) All external financing has been used in accordance with the conditions of the relevant financing agreements, with due attention to economy and efficiency, and only for the purposes for which the financing was provided; b) Designated Accounts have been maintained in accordance with the provisions of the relevant financing agreement and funds disbursed out of the Account were used only for the purposes intended in the financing agreement; c) financial performances of both the Program and of implementing partners are satisfactory; d) National laws and regulations have been complied with and that the financial and accounting procedures approved for the Programme were followed and used; e) The internal control over Non expendable equipment of the program in our opinion was not satisfactory. 21 April 2016 2 MINISTRY OF HEALTH MILLENNIUM DEVELOPMENT GOALS POOLED FUND BALANCE SHEET AT 7 JULY 2015 2014 Notes Birr Birr ASSETS CURRENT ASSETS Advance payments 3 3,974,342,877 3,945,529,647 Sundry receivables 4 1,023,122 746,612 Cash and bank balances 3.740,393.347 2,041,003,198 7,715,759,346 5,987,279,457 CURRENT LIABILITIES Sundry creditors 5 3133,893 2,055.087 NET CURRENT ASSETS I5224.370 REPRESENTED BY FUND BALANCE 6 7.712I625453 5,985.224,370 The notes on pages 5 to 8 form an integral part of these financial statements. 3 MINISTRY OF HEALTH MILLENNIUM DEVELOPMENT GOALS POOLED FUND STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 7 JULY 2015 Cumulative from 15 April Year ended 2009 Yearended 7 July 2015 to 7 July 2015 7 July 2014 Notes Birr Birr Birr FINANCING Spanish Government 22,793,300 529,971,141 38,975,650 DFID 2,033,499,058 8,973,111,246 2,724,543,807 Irish Aid 274,610,810 536,738,654 104,339,724 UNFPA - 84,308,779 38,099,300 WHO - 27,492,614 2,830,500 UNICEF 9,973,050 53,679,860 16,978,860 Australian Aid - 455,538,771 96,112,054 Italian Co-operation 71,349,000 137,091,375 - World bank 690,275,416 1,350,756,536 184,588,804 Netherlands Embassy 299,259,264 537,148,932 134,280,148 GAVI-HPF - 703,050,776 645,326,145 European union 151,661,554 151,661,554 - Gain on foreign exchange 164,865,883 442,611.589 103,523.579 3,718287,335 13,983,161,827 4,089,598,571 PROJECT EXPENDITURE Construction, training and others 7 370 704,202 746,068,263 176,535,936 Goods and equipment 8 872.015,397 2,633,271,948 986,284,484 Operating costs 9 764,695,838 2,907,725,348 1,357,944,639 2,007,415,437 6,287,065,559 2,520,765.059 EXCESS OF FINANCING OVER EXPENDITURE 0.696,096,268 2 The notes on pages 5 to 8 form an integral part of these financial statements. 4 MINISTRY OF HEALTH MILLENNIUM DEVELOPMENT GOALS POOLED FUND NOTES TO THE FINANCIAL STATEMENTS 7 JULY 2015 1. BACKGROUND The Millennium Development Goals Fund is a pooled funding modality which is being managed by the Federal Ministry of Health on the basis of procedures followed by the Government of Ethiopia (GoE). Within the framework of its being Ethiopia's International Health Partner (IHP), it provides flexible resources which are consistent with a one Plan, one Budget and one Report concept with a view to secure additional finance to the Health Sector Development Program (HSDP). It is one of the Government's preferred funding modalities for scaling up development partner's assistance in support of the HSDP, which became effective as of 15 Aprl 2009. 2. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted by the Program are stated below. These policies are consistent with those applied in the preceding year. a) Basis of preparation These financial statements have been prepared in accordance with the Ethiopian Government Manual of the Federal Accounting System based on a modified cash basis of accounting. b) Currency These financial statements are presented in Birr. Transactions in foreign currency are translated into Birr at the approximate rate of exchange prevailing at the date of the transaction. 5 MINISTRY OF HEALTH MILLENNIUM DEVELOPMENT GOALS POOLED FUND NOTES TO THE FINANCIAL STATEMENTS (continued) 7 JULY 2015 3. ADVANCE PAYMENTS 2014 Birr Birr Advance to Regions 484,784,060 282,530,461 Pharmaceuticals Fund and Supply Agency 2,282,781,208 3,416,663,634 UNICEF 292,343,741 66,502,735 UNOPS 688,798,897 171,305,610 Purchase advance 217,048 5,521 Advance to contractors 11,846,833 5,514,710 Advance to suppliers 213,571,090 3,006,976 3.974,342.877 3,945.529&4 4. SUNDRY RECEIVABLES 2014 Birr Birr UNFPA 7,355 188,116 JICA International Fund 2,545 2,545 Staff debtors 1,013,222 555, MINISTRY OF HEALTH MILLENNIUM DEVELOPMENT GOALS POOLED FUND NOTES TO THE FINANCIAL STATEMENTS (continued) 7 JULY 2015 5. SUNDRY CREDITORS 2014 Birr Birr Pooled Account (GAVI) 285,513 - VAT payable 1,202,498 1,805,268 Withholding tax payable 970,933 249,379 Other payable 674.949 440 6. FUND BALANCE Birr Balance at 7 July 2014 5,985,224,370 Add: Excess of financing over expenditures for the year 1 710,871,898 7,696,096,268 Adjustment - refund from supplier 16.529.185 7,712JS25,453 7. CONSTRUCTION TRAINING AND OTHERS Cumulative Year ended from 15 April 2009 Year ended 7 July 2015 to 7 July 2015 7 July 2014 Birr Birr Birr Construction of health centers 251,030,426 454,201,666 30,272,209 Advocacy and training 119,673,776 291.866,597 146,263,727 Q7042 746.068,263 1 MINISTRY OF HEALTH MILLENNIUM DEVELOPMENT GOALS POOLED FUND NOTES TO THE FINANCIAL STATEMENTS (continued) 7 JULY 2015 8. GOODS AND EQUIPMENT Cumulative Year ended from 15 April 2009 Year ended 7 July-2015 to 7 July 2015 7Jul 2014 Birr Birr Birr Medical equipment 805,958,714 1,724,547,472 688,564,263 furniture - 144,681 48,500 Motor vehicles 66,056,683 908.579,795 297.671.721 9.9 9. OPERATINGI COSTS Cumulative from Year ended 15 April 2009 Yearended 7 July 2015 to 7 Juy 2015 7 July 2014 Birr Birr Birr Travel and perdiem 61,991,966 150,666,051 46,567,640 Medical supplies 580,627,905 2,517,339,060 1,273,891,363 Printing and stationery 14,389,080 75,768,546 9,336,488 Fuel and lubricants 14,996,318 28,069,340 7,373,534 Advertising 2,035.773 6,782,415 3,539,832 Bank charges 859,046 12,252,037 473,290 Uniforms 116,808 354,387 50,556 Office supplies 1,504,940 4,501,507 1,318,621 Vehicles maintenance 8,593,276 12,439,601 2,690,560 Rent 25,489,216 29,839,948 844,463 Audit fee - 69,000 - Community health insurance 41,372,051 46,940,340 2,765,749 Contribution and Subsidy to Hospitals 6,681.246 13,681,246 7,000,000 Miscellaneous 6.038213 9,021,870 2092,543 023 $Q4IZ~~S 1,357L244,39 10. DATE OF AUTHORIZATION The Ministry's Finance and Procurement Directorate Director authorized the issue of these financial statements on 21 April 2016. 8