1 "OD BURTGEL AUDIT" LLC INDEPENDENT AUDITOR'S REPORT I THIRD SUSTAINABLE * LIVELIHOODS PROJECT * CREDIT N5487-MN, GRANT NTFOAO794-MN I Audited financial statements as at 31 December 2017 U Ulaanbaatar city IS AUDIT, ASSURANCE, ACCOUNTING, ADVISORY INDEPENDENT AUDITOR'S REPORT T0: ULZIISAIKHAN.1), PROJECT DIRECT OR OF THIRDI) SUJSTAINAIBLE LIVELIIIOODS PROJECT We have atudited the Financial Statements conmprisilng Ille I alance Sheet. tle Statements of Projeet Sources and Uses o Funds. the Statemenits ofl Uses o F Fuds by Project Activity. ile Disbursement reports and t]ie Designated Account Statements of Third Sustalnable I. ivelihoods prøject funded by International Development Association (Credit No: 5487-MN) and S\iss Agency for Development and Cooperation (Grant No: TF0A0794-MN) for te year ended December 31. 2017. The project management is responsible for the preparation and presentation of' the iinancial Statements according to tie requirements ol tie International Public Sector Accounting Standards (ideboek. the IDA Financing Agreement. the (ant Agreement. the Projeet implemtentation manual and other relevant instruelIons and procedLures. T hese resionsibil ities include responsibility for Ie establishmtent. imtplementation and application of internal controls relating to tie prepanaLion and presentatten el the Finncil Stateimenis free of material misstatement that iay arise from fraid and error. We wýill be responsible for mauking a conclusion on the Financial Statenteuts based nil ouir aud it Nork. We conducted our audit accordance with International Standards on Auditing issied by the [nternational Auditing and Assurance Standards Board of the International Federation ef Accountants. These standards require that we plan and periorm ie audit to ebtain reasonable assnrance about whether the Financial S tateienis ane Live of material misstatementi. An audit includes exalining onl lest basis. evidenec supporting the amoIuns and disel osures in the Finaneial Stitements. An audit also ieludes assessing the accounting prineiples used and significant estiiates iade by manaement as vell I as evaluatin te Overall stateiment presentaion. We believe our andit procedure provides a reasonable basis and evidences for our opinion. Tlhe image ment poliey of Thiird Sustaliable Livelihkoods project is to pepar the FinanLcial Stateiments on Ille cash receipts and paymtents basis in conformity with Internaiiioiial Public Sector Accounting Standards (]PSAS). C)n this basis casli receipts recognized ven reeixved and cask expenditures are recognized wvhen paid rather than xvwen incurred. Au1Iditor's opinion In ou r opinjon. tle Financial Statemenis oF Third SustaiinabIle Livesihods ijct as at December 31. 2017. has ben aculrately and )bjectively diselosed in accordance \wit the requirements of International Public Sector Accounting Standard issued bx- the Public Sec[or Committee oU the Federation of Accountants, the Financing Agreements (I DA Credi( 5487- MN & SDC Grant TF0A0794-MN). the Project Iviplementation manual and other relevant guideliles and prcedures. GENERAL DIRECTOR OYUNAA.U uaelp 2.04 "Tiri s i 9inabsf'e Liselihossi Projress sed slit JO; 7- IlN &8< Grant :TF.tA>79I MIN II issnsiss slt:simen'sts [sir the i i year iI lind ' D ebe u1t 20 The (ov er'nmin ut of Mongolia The International Development Association THIRD SUSTAINAULE LIVELIlIOODS PROJECT IDA Credit 5487-MN & SDC Granf TF0A0794-MN BALANCE SHEIET For tie ya ended December 31, 2017 lnis Note 2017.12.31 2016.12.31 -(inl USD) (inl USD) ASSETS CURRENT ASSETS cASIl ON lAND 75.72 1,84 P)etty* casi - Cdii 4 70.10 1.84 Petv casslh - Girat 4 5.62 CASHI IN BANK 3,632,565.85 3,487.383.35 Designated acciinit I - IDA 3.323.745.52 3.303.041 .29 Designatel accoiiit 2 - SDC 26 1.176.08 144.252.84 Operating bank accouit - Credit 4 914.17 23 ,194.11 Operasting bank accouni - (ilait 779.49 16.895 I1 Treasty accoun-Crcdit 4 23.904.52 Treasury account-Grani I 8.227.39 LoCal opeting bank account-SDC 4 3, 88.68 TOTAL CURRENT ASSETS 3,632,641.57 3,187,385.19 NON CURRENT ASSETS I EXP1EINDI|URES 4,961,746.14 1,043,121.61 (ioodIs 182,590.40 100.359.08 Consiltiancy services 1.186.688.67 83 1605.85 Tain in 299.613.76 25.828.08 Ineremental operating costs 27 1.307.05 85.328 60 Good] govrnance Performancc-Based grant 3,021.546.26 - TilE 11R E`lXPLNDITURFS 92,301.79 68.75 Otheur expenise . 13ank clhargl 248.91 68.75 I DA I7.1 16.41 I oai-SDC 74,936.47 TOTAL NON CURRENT ASSETS 5,0541,047.93 1,043,1190.36 T OTAL ASSEITS 8.686,689.50 4,530,575 5 "0l) BURTGEL AUDIT" LLC -Ihi " I 9Immin2 dbel .N Cl i kniet U'Pro Fdi 1: 5 Ii1ii-7 M IiN I Gr' ': TøX11FI7 it N LIABILITILS AND FUNDS LIABILITIES Accoul |ay ables Ior inCremniaI o¯tCrao lil eost TOTAL L[ABILITIES FUNDS AND EQUITY FUNDS 8,583,826.13 452 191.94 IDA credil [nd 6.955.774,54 3657.844. 18 SDC trust und l628.051 .59 844,3i 7.76 OT1 [lR INCOME 102,863.37 28,383.61 1lu1erest Carned on Bank balance 98.549.79 24.880.36 Net exchange rate gain (koss) 1.711 .29 900.96 (Sher revenue 2.602.29 2.60229 OTAL FUN DS 8,686,689.5 4530.575.55 TOTAL IÅABITIES ANID FUN DS 8,686,689.50 4,530,575.55 Prepared by: Approved hy: Khoro?rnaa! B Ulziishaikhan.L Ac-ing filnanciat mangement Oficer Project director "O) BURTGEL AUDIT" LLC h ii~( i AUDIT, ASSLRANCE, ACCOUNTING, ADVISORY INDEPENDENT AUDITOR'S REPORT TO: ULZISAIK AN.1), PROJECT DIRECTOR OF TIIIRI) SUSTAINABLE LIVELIHOODS PROJECT \We have audited the aceompanying Statenents of Project Sources and Uses of Funds of Third Sustainable Lvetiheods project funded by- International Development Association (Credit No: 5487-MN) and Swiss Agency for Development and Cooperation (Grunt No: TF0A0794-MN) for the year ended December 31L 2017. The project managenent is responsible for the preparation and presentation of tlie Statements of Projeci Sources and Uses of lunds in accordance with the requirements of the IDA Financing Agreemeni, the Grant Agreement. the Project implenientation nianual and other relevunt guidelines and procedures. iese responsibilities include responsibility for the establimet iplenetaion. and applicatii of internal controls relating to the preparaton and presentation of the Statenents of Project Sources and Uses of Funds fre of materida nisstateient that nay arse frUom raud and error. We wvil be respoisible för making a conclusion on the Statenents of Project Sources and Uses of Funds based on our audit work. We conducted our audit accordance with International Staindards eln Auditing issued by the International Auditing and Assurance Standards Board of the International Federation of Accountant s. 1These standards require that we plan and perforn the audit to obtain reasonable assurance about whetlier the Statemetits of Project Sources and Uses of lunds are free of material nisstateienl An audit inclides exint ing on test basis. evidence supportng the amiiounts and disclosures in Ilie Stateien ts of Project Sources and Uses of Funds, We believe our audit procedure provides a reasonable basis and evidences för our opinion. Auditur's ipinion In our opinion. the Statenents of Project Sources and Uses of Funds of Third Sustainable Livelihoods project as at December 31. 2017. has been accurately and objectively disclosed in accordance vith the requireniets of tie Fina g ing greements (IDA Credit 5487-MN & SDC Grant TF0A0794-MN). the Projeet iiplenieiition maniual and other relevant guidecilinies and procedures, GENERAL DIRECTOR OYUNAA.U Date: 1 87j bN &n Gllrnt Il TFM1 ,fml u m t fi 7e yå-, MNed D)i1iit Association THIRD SUSTAINABLIC LIVEILHOODS PROJECT IDA Credit 5487-MN & SI)C (Grant TF0A0794-NJN STATEMENT OF PROJECT SOURCES AND ISES OF FUNDS (TOTAL) For the year ended December 31, 2017 (in USI1) Items Cuiniula itie 2017.01.01 Cninuative to 2017.12.31 201 7.12.31 to 2016.12.31 Beginning bulance Casli in State bank (DA) 3347.294,.13 3.447.294. 13 Cash in State bank (OBA) 40.089.22 40.089.22 Petty Cash 1.84 1.84 TOTA L, OF ` BEGINNING BALANCIE 3.487,385.19 3,487,385.19 Cash rCecip( 1 inan cin 8.583,826 13 4.08 1 631. 19 4,502. [91.94 inter est revenue 98.549.79 73.669.43 2.880.36 Other incoie 2.60229 - 2.602.29 Total of rash receipi 8.684,978.21 4,155,303.62 4,529.674.59 Disbur iseimeint Goods 182.590.40 82.231.32 10011359.08 Consultant services 1.186.688.67 355.082,82 83 1.605.85 Tara n 299.6 3.76 273.785.68 25.828.08 Inereniental operatlin cost 27 1.307.05 185.978.45 85,328 60 Good eovernance Perfornance 3 -Biased financing 3,02 1,516.26 3,021,546.26 - Total of cligibili(y expenditures 4.961,746. 14 3,918,624.53 1,043.121.61 Bank charu 218,.9 180.16 68.75 Loan-S DC 74.936.47 74.936.47 1 oan-IDA 17,116A1 17.116.41 Ixchange rate loss (gain) (1.71 1.29) (8 10 33) (900.96) Total of (isbursement 5.052.336.64 4.010.047.24 1.,042,289.40 "0l> BURTGEL AUDIT" LLC Tii , iib : h T li h o i ml Pr >voj ( , Ieu i t f-7-N 'J Grn , M1 j: TVFOA\0,794fN En ding ba lanice Cash in State bank (DA) 7.032.2 15.73 3.584.921.60 3:A47.294.I3 Cash iii State bantk (OBA) 4 1782.88 1,693.66 4 0.089.22 Cash iii Treasury fund (OBA) 42.131.91 42.13 191 Casl iii Local Operatinag baak (OBA) 3.8 18 .68 38 18.68 Petty cash 77.56 75.72 1.81 TOTA L OF ENDING BA LANCE 7,120,026,76 3,632,641.57 3,487,385.19 Prepared by: Approved by: Khoroltmaa.B U1lz.11ii ishaikhlta,D Acling financial ianagement officer Project director "01) BURTGIFIL AJD)IT" LLC hi i d,rgA:s lìnab I)f Jìi liho od P''1reef- The Goverimient of Mongolia The Iiiernational Developmnent Association TIIRI) SUSTAINABLE LIVELIO11001)S PROJECT IDA Credit 5487-MN PROJECT SOURCES ANI) USE,S OF FUNDS (IDA) For the year ended Decenber 31, 2017 (in USD1) CunuIlativc to 2017.01.01 - Cuinilative lo Items 2017.12.31 2017.12.31 2016.12.31 liegi nning ha lance Casl in Siate bank (DA) - .303.O4i 29 Cash in State hank (OBA) - 23.194. Il Pectty caslh *. 84 TOTA L 0F BICGINNING 1ALANCE - 3,326,237.24 Cash receipt iiancing 6.955.774.54 3.297,930,36 3.657.8 4.18 interest revenue 78,917.79 66.373. 17 12.571.62 Other iicome 2.602.29 - 2,602.29 Total of caish reccipt 7,037,324.62 336-1,303.53 3,673,021.09 Disbursemielit Goods 182,590.40 82,231 32 I 00.359.08 Consultant services 183.319.74 3,675.06 179.644 68 Non consuliaint services - Trainign 34.38 - 338 incremental operating cost 227.697.69 160.3 I 8,8) 67.3 78.8 Glood -,overnance riormance 3.02 1.546.26 3. 021 546.26 Totai of cligibility expenditures 3,615,468.47 3,267,771.53 347,696.91 3ank clhare 72.91 21.16 48.75 Other expeiscs - I oani-S DC 74.936.47 74.936.47 Exclhang rate loss (cain ( I,7873) (825.70) (96 1.8 i Total o disbursement 3,688,690.31 3,341,906.46 346,783.85 "1) BURIGEL AUDI' LLC Fidilig batfllce (ash in State bank (DA) 3323745.52 3.323.745.52 3.303.04.29 Cash in State hank (013A) 94 17 914.17 23.194.11 Cash in Treasury Rind (OBA ) 23 90,4.52 23.904.52 ctiy casli 70.10 70.10 .814 TOTAL OF ENDING BALANC, 3,348.634.31 3,348,634.31 3,326.237.24 Prepared by: Approved by: Khorolmaa.Bz khin 11 Acting financial rnanagement officer Project dircetor "01) BURTGEL AUDIT" LLC ogsl ra Anwr n o n mInt for thel year nd 1b ri M 0 -1 The Government of MVongolia The Infernational i)evelopm1inieiit Association TIIIRD SUSTAINABLE LIVELILIOODS PROJECT SDC Grant TFOA0794-MN PROJECT SOURCJES AND JSES OF 1UNDS (SDC) For the year eiled December 31, 2017 (in UJSD) Ctumiulative 2017.01.01 - Ciimiiative to tems o 2017.12.31 2017.12.31 2016.12.31 Beginning balance Casi in State bank (DA) - 144.252.84 Casi ii State bank (OBA) - 16.895. I1 Pety cash- TOTAL OF B3EGINNING 1BALANCE - 161,147.95 Cash I-eceipt V inancing 1.628.05 1.59 783.703.83 844-34(7.76 fiterest revelne 19.602.00 7,296.26 12.305.74 Total of cash receipt 1,647.653.59 791,000.09 856,653.50 )is)1rIsCmi enit Goods - Consultant services 1 ,003,368.93 351.407.76 651.961 .1 7 Non consultant services - - Trail ing 299,299,38 273,785.68 25,51 3.70 licielenta l operating cost 43,609.36 25.659.56 1 7.949.80 Good gOvernance rforiance IBased fiinaincig Tolail of eligibility expenditu res 1,3446,277.67 650,853.00 695,424,67 Bank charge 176.00 1,56.00 20.00 Oftlici. C\I)CIiscs CredI-IDA 17.1 16.41 17.1 16.41 - Exchange irte loss (gain) 76.25 15.37 60.88 Total of d isburseimeiit 1,363,646.33 668, 140.78 695,505.55 "01D BURTGEL AUDIT" LI T 1" i I i , tuain b le L iliivelihlooKK I n l tatIeentN for the~ '.a nd |li DecembierH At Enidiig balaiicc Casl iii State bank (DA) 26 1. 176,08 26 1.17 6.08 144.252.8,1 Casli in State bank (OSA) 779.49 779.49 16.895.1| Casli in Treasun [ind (OBA) 1 8.27.39 18.227.39 Cash in Local Operating bank (OBA) 3.818.68 3,818,68 Petty cash 5.62 5.62 TOTAl OF ENDING BALANCE 284,007.26 284.007.26 161,147.95 Prepared Iy: Approved by: olmaa.Bll 1liiishikhLDllI) Aeling fi nancial maniagement olicer Project director "01) BURTGEL AUDIT" L LC1, AUDIT, ASSURANCE, ACCOUNTING, ADVISORY INDEPENENT AUDITOR'S REPORT TO: UJLZIISAIIHAN.1), PROJECT DIRFCTOR OF TIIRD SUSTAINABLE LIVELIHOODS PROJECT We have audited the accoipanying Stateienis of Uses of Funds by Project /\ctivity of Third Sustainable Livelihoods projcct funded by International Development Association (Credit No: 5487-MN) and Swiss Agency fr Development and Cooperation (Grant No: TF0A0794- NIN) for the year ended December 31. 2017. The project management is responsible for the preparation and presentation of the Statenents of Uses of Funds by Project Activity in accordance with tie requirements of the IDA Flinancin Agreement, the Grant Agreeient. the Project inplenentation nianual and other relevant guidelines and procedures. T hese responsibilities include responsibililty for the establishnenl implementatiLo. and appl ication of internal controls rel ati ng to the preparation and presentation o I the S tatenients oF Uses of Funds by Project Activity frec of materik misstatement that may anse from fraud and error. Wc will be responsible for making a conclusion on the Statements of Uses of Funds by Project Activity based on our audit work. We conducted our audit accordance with Iiternational Standards on Auditing issued by the International Auditing and Assurance Standards Board of the International Federation of Accountanits. These standards require that we plan and perform the audit to obtain reasonable assurance about whetler the Statenmenits of Uses of Funds by Proljeet Activity are free of material missiatenient. An audit includes examining on test basis. evidence supporting the amounts and diselosures in the Statements of 1ses of Funds by Project Activity. We believe our audi procedure provides a reasonable basis and evidences for our opinion. Auditor's opinion In our opinion. the Statements of Uses of Funds by Project Activity of Third Sustainable Livelihoods project as at December 31. 2017. has been accurately and objectively diselosed in accordance with the requirements of the Financing Agreements (IDA Credit 5487-MN & SDC Grant TF0A0794-MN). the Project implementation manual and other relevant guidelines and procedures. GENERAL DIRECTOR DYUNAAU Date: . ThMi il i.iiiinlIe I,i\fIl iInd Projt,'i" iw i nirment fo r th year eI,n edl Dec mb 3 1% Goveriment of Mongolia The International Developient Association TIIIRD SUSTAINABLE LIVELIHOODS PROJECT 1IDA Credit 5487-NIN and SDC Grant TF0A0794-MN STATEMENT OF USES OF FUNDS BY PROJECT ACTIVITY (TOTAL) For tie year ended December 31, 2017 (in USD) .roject Activities C uiitilative to 2017.01.01 - C1nmulative to Po Acve2017.12.31 2017.12.31 2016.12.31 Component 1l. Capacily building for 1oeal 997,971.52 431,828.56 566,142.96 governianice and livCliloo(Is Goods - - Consultane on Med-term plumning. CoImmuitl parlicipation. Budget preparation, Budget execuiioii. 675.43 7.05 133.777.53 54 1.659.52 M ntrigevaluation, Pasturing± plarnning and Training on Med-lerm planning Coimunllity participation. Budget preparation. Budget 278.929.17 271.516.21 7.412.96 execulton. Montornng, evaluation. Plasturing planning and managemenit Iciremeital operat ing cosi 43.60530 26. 534 82 17.070, 18 Component 2. Good governancc 3351,01705 3 14,91,14 136,105.91 per-formIIance-bas, ed su1 pport programl Good ove ialice performace- 3.02 1.546.26 3 02 1.546.26 - based 1 nanIici]g Anual leiirioranee assessment 320.3 12.78 9 1.095.4 129.217.37 ( ConsulItancy) Traininil to Good goivermance 9.158.01 2.269.47 6.888.54 peifIormanice-basecl -inancin (omponent3. Projecl management and 612.757.57 271,884.83 340,872.7 monitoring and evaluation Operating expenses 128.731.79 64.373.56 64.358. 23 S(aT afsa lary 2 80.6 12.41 119.883.8 60.728.96 St alf Training 11.526.58 - I 1.526.58 lnformation dissemilnation 5.621.30 1.721.41 3.899.89 Molnitoring and evaluation - - Financial manageient (audit) 3.675.06 3.6705.06 Goods 182.590.40 82.231 .32 100.359.M8 Total 4,961,746.14 3,918,624.53 1,043,121.61 "01) Bl RTEL Al)I- LL( "OD IBURTGEL AUDMT LLC h Ird ntl iuiin le I ii PIio s Proj r 5@-N &ý Grn t M: T 0% N Govertiment of Mongolia The International Developimient Association THIRI) SUSTAINABLE LIVELIO110 DS PROJECT IDA Credit 5487-IN STATINIENT OF USES OF FUNDS 13V PROJECT ACTIVITY (IDA) For the year ended December 31, 2017 (in USD) . 2017.01.01 cumulative Project Activitis 2t17.1o31 - 2017.12.31 2016.12.31 Componenit 1. Capacity building for 18915.72 - 18,915.72 Iocal gm criance and livelihiood.S Gooids Consullanc oin Mdc-term p lan n. Comunìity part[icipation). i precpaìcvration. Bììldci Budtprepn. BudgeiZCti. 18.915.72 - I8.915 72 execution. monlitormng evaíIluln PìsIurimng planniiÌg an nanagement Traiinìimg on Med-lcrmn planning. Cojmmuniy participation. Budget preparation. Bulgct cxecution. N'luìitoringì cvaiuatiì. Pasturing pIlanin and mnemcent Increiental operating cost - Component 2. Good governance 302 1,546.26 3,021.546.26 performalce-based support progran Good g-overnanlce perlformance- .2l51 961562 Geni evrnìnc rrlriui-3.02 [54 6li 3.02 1.546 26- based nacg Annual performance assessment (C oisuIIicmy) I rainiig1 to Good governnc pìerIformanice-baìsed liinanìcingc Component3, Project maaeetand (Inourngand eva](It ioang 575,006.49 246,225.27 328,781.22 non iton ing and1 evaluai un OpertIIing expenscs 102. 192.9 I 38.7 14.00 63.478.9 l Staff salary 280.612.44 1 9.883.48 1 60.728.96 Staftrìaining 314.38 314.38 infolrmation dissemination 5.621.30 1.721.4 I 3.899.89 Mioninii and evaluation - - I-inancial managmc n[ (audJit) 3,675.06 3.675.06 Goods 182.590.40 82.23 1 .32 1001.359.08 I otal 3,6 15,468.47 3,267,771.53 347M696.9-I "01) BUGE L AUDIT" LLC T l iid 'll"l :il h li I2 N i c li (o 1, IJ 4V l? v( ' fN &t GW7- M TFN7 nniiia %imniiiii for the yeir iendeu Diecemiberuo IPrepared( I)y: App)roveLd by Khorolmaa.BUzisak D Acting fincial mangement o1f1icer Project director "1) BU iRTGL V A U) IT" L LC PT 'F il K,Ie icAmnts l e ii f s:r Ini D ecuuemer 31i ,i, Governimnit of Miongolia The International Developient Association THIRD SUJSTAINABLE LIVELIMOODS PROJECT SDC Grant TF0A079-M-NIN STATEMENT OF USIES OF FUNDS BY PROJECT ACTIVITY (SDC) For tlie year ended December 31, 2017 (in USD>) cumiulative to 201 t 1.01 Ctimiiulalvi e to 2011 2017. 2016.12.31 __________________________2017.12.31 Component 1. Capacity building for loca 979,0550 431,828.56 547,227,2- gover'Iu e and liv elih oods Goods Consultancy on Med-term planiing. communllity participation. Budget prepaiation. 3udget excecutI on 656.521 .33 133.777.53 52 2.713.80 momlitor evluatioin. Pasturing planning d manageilnlCllClt T roining on Med-term planning. Conomniniy participatom. Budget preparation. I3udget exeutioI. 273.929,17 27 1.5 6.2 1 7.4 12.96 Mvonitoning evaluatioin. Pasturmge plannin andm manaogteen luicreuciital operatilg cst 43.6(5.30 265 3. 82 17.070.48 Component 2. Good governance performance- 329470.79 193,36,1.88 136,105.91 based support program Good governance pcrformance-based linancing2 Anial no i-ii-iec ,issessillelit 320.3 l 2.78 l 9 1.095.41 1 ?9.2 17 37 (Consultalnc) Traiving 1 Good gyovernnce 9.158.0 1 2.269.47 6.888 54 perfIormianice-baised inncn C(omponntiii13. Project managiement and aiiind evaILlation 37,751.08 25,659.56 12,091.52 Operating expeISS 26 538.88 25.659.56 879.32 Staff trainiin1 1. 12.20 - 1 1212.20 Tola 1,3-16.277.67 650,853.00 695,424.67 "0) IlURTGEL AUDIT" LLC Khorolmaa.B U shaIk bn.D \cting fnancial management o(1-leer Project d1irector "OD BURTGEL AUDIT" LLC AUDIT, ASSURANCE. ACCOUNTING, ADVISORY INDEPENDENT AUDITOR'S REPORT F1: ULZIISAIKHIAN.I), PROJECT DIRECTOR OF TI-HIRD SUSTAINABLE LIVELIHOODS PROJECT We have audited the acconipanyign Statements of Expenditires (SOs) ol Third Sustainable Livelihoods prject funded by International Development Association (Credit No: 5487-NIN) and SwN-iss Agency for Developient and Cooperation (Grant No: TFOA0794-MN) lor tlie year ended Deceiber 31. 2017. Ile projeet management is responsible for the preparation and presentation of the Statements of lxpenditures in accordance vit the requirenients of the IDA financing Agreeiient. [ie Grant Agreenent, the Project impleiientation manual and other relevant guidelines and proecdlures. Ihese respoisibilities include iesponsibility for the establishment- implementatio. and application of internal controls relating to the preparation and presentation oj' Ilie SOEs free of material isstatenient that may arise from fraud and error. We ill be responsible fr iiiaking a conelCusion on Ilie SOEs based on our audit work. We CoidIUCted OLI audit accordance with International Standards on Auditing issued by ilie International Auditing and Assurance Standards Board of the International Federation of Accountants. These standards reui6re that we plan and perforii tie audit to obtain reasonable assurance about whether the SOEs are frec of material nisstatementL A audit ineludes examining on test basis. evidence supporting the amounts and diselosures in the SOks. We believe our audit procedure provides a reasonable basis and evidences [r our opinion. Auditor's opinion li our opinion. the Statenents of Expenditures of Third Sustainable Lvelihoods project as at December 31. 2017. has been accurately and objeetively disclosed in acordance wth Ilie requireients of the Financing Agreements (IDA Credit 5487-NN & SDC Grant TF0A0794- IMN). the Projecet iiplementation ianual and oher relevant guidelines and procedures. GENERAL. DIRECTOR YUNAA.U D ate ..... .. . juhi> se'eINnble (Lirihn .M14 Y4?i 1 Ilhe Government of Mongolia The International I)evelopienit Association TIIIRD SUSTAINABLE LIVEL1HOODS PR 1 7XOJECT iDA Credit 5487-MN STATENIENT 01F EXPENDITURES (IDA Withdrawats) For the year ended December 31, 2017 (in USD) V-A iia ined C redited Amount Aniioint D[erenc App11cation typ jdate dale claimed credited Up to December 31, 2016 -3,657,844.l8 3,657,44.18 d kl)leni isIl en 2017,06.2 1 2017.06,27 189,181.36 1 89.181.36 \ A-5 Replenishmflent 2017. 10.18 20 17.12.20 3. 108 749.02 ) l 08.749.02 For the reporting_period, 2017 (WA 4-5) 3,297,930.38 3,297,930.38 Jp to December 31, 2017 (SVA 1-5) 6,955,774.56 6,955,774.56 . The expenditure of USD 189.181.36 expensed in 2016. was elaimed and Credited thirougli WA-4 in 2017. Prepared by: Approved by: Khorolmaa.B Ulzi shaikhan.D Acting linancial managemient officer Project director "ni) BiURTGEL AUDI" LLC io e < l 4 mc for th1 ye1 l. e m r 3 . i, TIhc (;ovieirnmiient of Miongolia The International Development Association TIHIRD SUSTAINABLE LIVII AHOODS PROJECT SDC Grant TF0A0794-NIN STATEMINT OF EXPENDITURE 'S (SDC Withdrawals> For the ycar ended December 31, 2017 (in] US) WA Applicatio Ciiiedote Credited Anmiunt Amount iference iniIrs ty pe date cla icned Credited Up Io December 31, 2016 (WA-I) 844,347.76 844,347.76 WVA -2 lReplenislhment 2017.06.13 2017.06 29 551.076.9 1 551.076.91 WA-3 Replciiisliinent 2017.11.18 2017.12.1] 232.626.92 232.626,92 For the reporting period, 2017 (WA 2-3) 783,703.83 783,703.83 Up to December 31, 20 [7 (WYA 1-3) 1,628,051.59 1,628,051.59 1 . The expenditure of USD 551.076.91 expensed in 2016. was claned and creditel through WA-2 in 2017. 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ГJ I'-� `v "'Т' �_ . _. .. . -� lJ � �Г� � S,л J . ,._i � . -'� `� , , i � � �}� ;г. q) .. J � � � ` /., V �� � -1 ГJ �' 1 ��.J ,, г- f s ,�г 'r � Г1 г^, _ .� � й Ё С � _ ... ... г i , - ��.. � �i -- ,.. ..----.. .... . . . _ � . ..... 1....� �I 1 t �1` '11� ��� �I i AIDIT, ASSLSANCE, ACCOITNITING, AMISORY INDEPENDENT AUDITOICS RU TO: ULZIISAIKUAYD, PROJECT DIRECTOR OF TIIIRD SUSTAINABLF LIVFLIHOODS PROJECT M`C have illieliteel Ilie Iccollll)ýiýiyiilL,7 Designated Account Slatcillellts o1-1,11i1.11 SustainIWC 1,1\ýcillioo(ls proJect CLInded by, International Development Association (Credit No: 5487-N/IN) ,iiiel S iss Agency, 1`0r Developnient ancl Cooperallon (Grant No: TFOA0794-1KIN) fin- Ilie year encled Deceniber 31. 2017. 1,112 projeet Inanagenicill is f-()r the preparation ancl presentation ol.,tllc Accouint Statcinents in accordancc witli Ilie requirements oi'tlic IDA Vinancin- A,,t-ceiiielit. Ilie Gralit /\ý37i,ecillellt. Ilie ProJect implenlentation nutillial and olfler relevallt plidelincs alill proceckires. TIICýc lýcsl)otlsil)ilities inclucte i,esl)c)jisibilltv [,or Ilie ilillgleillelýtýýtioll, 1111(1 application oj- internal controls relatilig to Ilie preparation and presentation ol, Ilie Designaled Accomit Statements witliout material misstatement that mav arise from Craud and error, Wc will bc responsible lor inakin- n conclusion on Ilie Designaled Account Statements based 011 0111, alidit Nvork. Mie concilleted 0111- iilcllt Iccý)1.clýtilcc Nvitli Interillitional Slandards on Atiditing issucel by: Ilie International Auditing and Assurancc Stýiiielýii-els Boarcl of' Ilie Inicrnational Vecteration ol' Accolilltýillts. These slandard's require tllýlt Nve plan and pel-Corm Ilie audit to obtaiii reasonable assurancc about whetlier Ilie Desi,iýcitc(1 Account S liieiiieilt.,; are 1,1-ce ol, Inaterial iiiisstatenient. An atidit includes examining on test basis. evidencc supporting the U1110LItits and cliSCIOSLWCS in Ilie Desi-,iiýited Account Wc believe our audit procedurc provides a reasonable basis ancl evidences 1'0r our op1111011. Auditor's opinion Iii our opinion. the Designaled Account Statements oVVIIII-d Sustalnable I,IN7CIllioo(IS proljcct as al December 3 1. 2017. lias been accuratels. and obliectiN-c]NI (liscloscel in accoi-elýiiiec Nvith Ilie i-ccltili-ciiieiits of' the 1-'liiiiicliij Agreuments (IDA Credit 5487-MN K, SDC Grant TFOA0794-MN). the Project implementation inamial and otlicr relevarit guldellnes and procedlires. GI_`NI_`RAI, DIRECTOR MUNAA.1i H &9871N Gr hb : TFOAO74 NiX n i;11 ,KIemn i r j bi-e - veu ilded D c m e The1C Goverinmelt of Mongolia The International )evelopment Association TIHIRD SUSTAINAILE LIVILIOODS PROJECT IDA Credit 5487-MN DESIGNATED ACCOUNT STATIIENT (IDA) For the year ended December 31, 2017 At Dec 31,2017 At Dec 31, 2016 1 temis (in LUST) ___ (in USD>) Iairt A- Account transactions Beginning baTance 3,303.041.29 1o1tal amount deposited by [lie l DA 0r lie year 3,297.930.36 3,65 7. 841 18 T otal interest earned 65.459.00 1129) .52 Foricn excliatige gain Net lender material saile revenue Total cash receipt 3,363,389.36 3,669,143.70 1Deduict: Advance to operating accouit for lOC l 60.388.74 312.135.14 IDA credit expenditures Goods 82,23! .32 53.927 27 Colsu liancy 3.675.06 Noll coIsulItancy TVraininga - Inccvrietal operating cosi - . 3.021.546.2 Good goveIIaIIcc lerlormtanice-l3ascd filalcinu 1 6 Total for IDA cxpiedituires 3,267,841.38 366,062.11 lBank charge 20.00 40.00 Payable-SDC 74.823.75 '1otal aiount w itlidrawnl 3,342,685.13 366,102.11 Itdinig halancc 3,323,745.52 3,303,041.29 Parl. 11 - Account reconciliation A iomit advanced by the IDA 3-499.625.88 3.499.625.88 Bälance of the Designated 2ecount åt Ilie end of the year 3.323,745.52 3.303.041 .29 "1) BIUJIGEL AUDIT" LIC I2tf n nI l si tmed fI I h ea en e ì er i e 11 i0 I 7 Anioint wiiirawi and ini yei clainied i59.036.69 189 181.36 Bank cliarge 58.75 48.75 Credit-SDC 74.93637 Bulance ofiState i reasury Accouit 23.904.52 FrigCn cxchaliue oss 533,99 [alanee of OB3A 9i4. 17 23.1 94. 11 ialance of Pei[y casi 70.10 1.8 Totai 259,454.69 212,426.06 Ineresi Carned 78.947.79 12.571.62 Forein exclangC gain 3.245.79 1.886.10 Ofhcr revenue 1.380.75 1 380.75 TotaI 83,574.33 15.8.41.47 Toi tl adicane (o Ieignated account 3,499,625.88 3,499.625.88 Prepared by: Approved bv Acting fnanciaI managenent officer Projcct diirector OI) 11URT I, AlDi I" LLC EA'i l iainiiIbe 3ieliomN Projcl" The Goverinmeint of lonigolia The International I)evelopmieit Association TIIIRD SUSTAINABLE LIVEILHOODS PROJECT SDC Grant TF0A0794-NIN DESIGNATED ACCOUNT STATE ENTI (SIC) For the year ended December 31, 2017 At Dec 31, 2017 At Dec 31, 2016 _tems _(in USD) (iii USD) Pnrit A- Account Iransactions Beginning balance 144,252.84 Add: lotaT aiouit deposited y Ilie SDC foi thc yar 783.703.83 8 1.347.76 T otal inlerest carned 6.319.37 12. 168.89) Foreig1 exchallne gain Net tender material sale reveiue Total ensli receipt 790,023.20 856,516.65 duii ct: Advalce to operatillg account for 10C 378.544.63 59.9 16.0 l [DA credit expenditures (joods Consuhltaey 277,418.92 65 1,96 1.17 Non consultancy - T rainin - 366.63 lIciemenltal operatilng cost Good governance Per1omrance-ased Iinancin - Total for SI)C expenditures 655,903.55 712,243.81 Bank helarge 20.00 20.00 Payable-i [)A 17.1 16.41 - Total aniount withd ra wn 673,099.96 712,263.81 Eg balance 261.176.08 1.44,252.84 Part 1B - Accouitt reconciliation Anmunt adanced by the IDA 700,000.00 700.1000.00 Ba lace of the I)esigiated account at thle end of the year 261.176.08 144,252.84 "1) BURTGEL AUDIT" LLC 1 'ciov 1m10 W IJN ~ ~ Gr on l 1 071 N onnen1 en u or the 1ea end . een 11 2017 Airuit W\i[hIiitnii d not oet el ained il 8.25625 -S l (761. Credit-IDA 17.1 16.41 Bn cIhae 176.00 20 Fireigii enge loss 6 18 A2 61088 Blankuce o1lOBA 779.49 16.893 I Balance el' Skte Treasty accotilnt 1 8.227.39 Halance oF Local operatin bank iccout 3.81I 8.68 Balince of Petty ensh .62 Totl 458,998.26 568,052.9O Deduci: Net intelrest earned 19.602.17 12.30174 lorign exchange gain 512.17 Bank chagc 30.00 Total 20,174.34 12,305.74 tal advlnce to Desigiinted account 700,000,00 700.000.00 Prepared by: Approved hy Khorolmaa.B LzIiishaikhan.D Acting financial ninagement offlicer Projcct divector "01> BURTGEL AUDIT" LLC 7 Ptt I Twi d w~hnwbl Liveihoos Srjuer mir h J .5 IIN &l Grn l TFIVAM9 )1 f ir e W P em nts for Ih e I N 1k. il (in NOTES TO TIHE FINANCIAL STATEMENTS 1. Project Lackground )n January 30. 2015. the International Development Association and the Governinent of longolia (represented by the Miinistry of Finance) signed the Financing Agrement IDA (edit 5487-MN to assist in financing of Third Sustainable Livelihoods Projcct. Tie total credit amount is SDR 16.100.000.00 (cquivalent to $24.000.000.00). MorCover. on July 31. 2015. International Development Association. International l)evelopmcnit Bank and Governnent of Mongolia (representing by the Ministry of F"ilnacile) had mutually signed on the Financing Agreement SDC' T0A0794-MN. The total grant amount is $1.365.000. Ihe project became effective on July 31. 2015 and closing date will be on October 3 1. 2020. 1The objective of the project is to improve governnce and coiiimunity participation 1or the planning and delivery of priority inveskments in ural aieas of Mongolia. Ilie prqject consists of the following parts: Component 1. Capacity building for Local (overnance and Livelihoods i. Provision. to local authorities and communilies. of training and technical assistance related to the implementation of the Local Development Fund. in the areas of inediuni term planning. community participation, budget preparation and adoption. budget execution ineluding procurement and supervision. reporting. inonitoring and evaluation and pastureland planning and management. 13. Provision of technical assistance to Ilie central public administraiion organizations in charge of economic and finance issues related to the dvc clopment and inplementation of the Local I)evelopmcnt Fund. Component 2.Good Governance Perforimance-Based Support Prograim A. As an incentive for good goxernanilce. provision of Good Governance Peforlimaiice-B3ascd Finaicig to Soums for te financing of activitics under the Local Dceclopieiit Fund. B. Carrying out of annual perbrnane assessments of Soums for the prposes of deternining the allocation of Good GoverIancee-ased Vinancing. C. Provisiion of training to Good Governanc Perforiaciiec Assessient leims. Ciomponent 3.Project management and Monitoring and Evaluation Provision of technical assistance and training and acquisition ofoffice and other equipnient to support iiplementation of the Sstainable L1velihoods Program, including support implementation for Project implenientation. staff training. information dissemination. nionitoring and evaluation. financial nianagemnent. and audit. of P>roject accouiits. 01) BURTGVL AUDIT LLC iiia ý4 ,o iinab le m ekvI lhool l.%PIoj-elr eif ýni t1 Xyl ' 1,1 ( ýu 9213 .4? M~ 1 onil akm mellt, for Ilhe year ei n D eme 3 1 0 2. Suimumary of significant accounting policies a) Stateient of Compliancc The Financial Statements comprise the Balance Sheet. the Statements of Prject Sources and 1 ses of Funds. the Statenients of Uses of lunds by Piojecet Activity. the Disbursement reports and the Designated Account Statcinents. The formats of these reports are agreed wxitih the VorLd Bank. b) Basis of preparadion Iie 1 Financial Statements are prepared in accordance xith the Internatienal Public Sector Accounting Standards (IPSASs) issued by tbc 1ternati onal Federation of Accountants. Cash basis of accounting bas been adopted. On this basis. receipts are recognized when receixed or direct payment to creditors are nide rather than whben incone is earned aiid disbursements are recognized when paid rather ilian wlhen expenses are inecurred. The Prjec-t has iis own Finaneal Management Mannal xwhich bas been accepted by the World lank and its financial inanagment system is being operated consistently in accordance with this financial manual. The Project utilizes financial sofxvare named "MIS'. wNhich is designed for aecouinting of project activity. e) Basis of measureiment Ilie Financial Statements are presented in UJS Doålars ("qS). xienditure transactions deiiominaied in currencies other than USD are translated at rates of the resiective fund transaction fron Designated Account to Operatiung Accounts. Any gains and losses are relected in the Statenent of Sources and Uses of Funds. lie Preject records tiransaetions on NIS in dual currencies. which are USD and MNT. d) Basis of )reseltationi Tlie account balances in Ilie Financial Statements as of December 31. 2017 [have been Comparis1-ed With such balances as of December 31. 20 16. e) Bank accounts and petty casi accounts 1. Designated accounts In accordance xith the Disbursenent Letter of Financing Agreenient IDA Credii 5487-MN. the project opened the Designated Account (DA) which is Ilie one segregated account for the Credit financing at the State Bank acceptable to the World Bank. Account number of the DA is 104900064444 nid it is inaintained in USF. The payments för the eligible expenditures ol procuring goods. consultanis 1ee aid trining are paid frmni Ilie DA account. The ceiling 01) BIRTGI. AUlDIT LLC tvm s? ånat bwmysem C-vill- ýari xii; o tle DA is USD 3.500.000 unlil Ilie end of the Aug. 2017. while from Sep 2017 to the end of he 2018 the ceilling amlouni t is de fined as iU SI) T000.000. In nccordance xiith the Disbursenent l etter of Financing Agreemneni SDC IF0A07914IN. the project opened the Designated Acconit (DA) wvhich is the one segregated acconit ler Ilie grant financing at the State Bank acceptable to the World Bank. Account nnmber of the DA is 102200463537 and it is maintained in USD. The payments for the eligible expenditures of procu-ing goods. consultants Eec and training are paid frmn the DA account. lie cciling of the DA is defined as $700.000. Ii. Operating accounts As specified in the Disbursemeniit Letter of Financing Agreenent IDA Credit 5487-MN. the prject opened the Operating Bank Acconit (OBA) which is the one segregated account at the State Bank acceptable to the World Bank. Account rniuber of the ÖBA is 104900065283 and it is intainined in MNT. The payments Ibr the eligible ineremental operating costs are paid froni the OBA. The ceiling ofl ihe 0BA is USD 25.000. As specified in the Disbursenent Letter of Finaning Agreement SDC TF0A0794-MN. Ilie project opened the Operating Bank Aconäit (OBA) Wehic is Ilie one segregated accoit at Ilie State Bank acceptable to Ilie World Bank. Accon number of the OBA is 102200463545 and it is nintinaed in MNT. The pay miniis for the eligible incremental operating costs are paid froni Ilie OBA. Tlie ceiling of the Ol1A is USD 25,000. ilie Minister of Finance has enacied tie decision #357 on December 11. 2017. which delines all Ilie designated and operating acconits maintained in NNT of the Governnient projeets and actiities financed by foreign credits and graits shall be transferred to State Treasury Accounts operated by Mniistry of Fiance., in accordaice xwith tie decision #357 of the Minister of Vinance. Ilie Project had translried its OBAs into State lreasury Accounts. The accounts held at coniiercial banks shall be closed and aceounis lield at State Treasury shall be sed in further iransaetions. Details of State Treasury Acconts are shown below: Account number of tlie OBA which is state credit financing in Ilie tireasry is 1009000 1 108. Account niuniber of the OBA which is state eredit graniting is 100900011140 and it is iaintained in VNT. III. Local operating bank accounts lie Proj ect had financed its local units in eacli provinces tlirough local ÖRA that are iel at Staie Bank in accordance äith Disburseient Lettier of Financing Agreernent SDC. As specilfied by Ilie letIer. smal1 amount of incieiienta operating costs and taining costs are allowed to be disbursed throuigh tlie Local OBA. For Ilie year. eligible cosis w\ere disbirsed throughi the Local OBA and reporied in the flnancial statenients and WAs accordingly. OD HURTGEL AUDIT LLC paj' i! &M' Graa nYTFOAO79 MýIN Account desriplici /\rre v Accouti numiber a1 State Baik 1 Arkinca1 SST-SL II3 M NT 102200416-3602 2 Bayankhonor SST-SILP13 NINT 102200463628 Bayan-JIl,ii SST-SI P3 NI NT 1 022004636 1 4 Bulkani SST-SILP3 M NI 10220046363 1 5 Darkia-liul SS T -SLY3 IN 1 102200463666 6 Dornod SST-SLP3 NINT 102200463689 7 Dornioovi SS 1 -SLP3 MINT 102200463677 8 Dunduovi SST-SLP13 NIT 02200463690 9 Govi-Alai SS T -SLN3 M N 1 02200463644 10 Govi-Sumber SST-SLP3 MNT 02200463653 1I Khientii SS T-S[ÅP3 MI N 1 102200463809 12 Khovd SST -SIAP3 MNT 102200463788 [3 Kliuvsul SST-SLP3 MN F 102200463791 14 Orkhon SS T-SLP3 M NT 102200463716 15 Selenge SST-SLIP3 MN 1 102200463750 16 Sukhbaatar SST-SLP3 MlNT 102200463742 17 Tuv SS1-S.P-3 MNT 102200463769 18 tinuovi SST-SLP3 MINT [02200463734 19 Uvs SST -SLP3 MIN T 102200463775 20 Uvurkhangal SST-SI,P3 INI 102200463727 21 Zavkhan SST-SLP3 MNI 102200463703 IV. Pettv casli accounts As specilfied in the Financial Management Manual. the Project maintains two separate petty cash accounts by cach financing agreement (IDA Credit 5487-MN and SDC Grant TF0A0794- IN). Tlhe pettv cash accounts are osed in coveringe small and sundry payments for expenditures with the amount nolt execeding the maxinmum of ISD 300 or its equivalcnt. This cciling aniont is applicable for cach petty cash account. 3. I)isbursemient progress a) Disbursenent of IDA Credit 5487-MN As of December 31. 2017. the project had received USD 6.955.764.54 (28.85% of the total eredit) throigh the DA as nancing from IDA Credit 5487-IN and had disbursed USD 3615.467.23 (1 5% of tie total credit). I) I)isburseient of SDC Grant TF0A0794-MN As of December 31. 2017. the project had recelved 1SD 1.628.051.59 (14.43% of tlie total gralt) through Ilie DA as financing from SDC Grant TF0A0794-MN and disbursed 1 .346.277.67 (11.85% of tlie total grant). -1. Itens iii the balancc shcet 01) BURTGEL AUDIT LLC hinO i . e inabl i'4 eliiimlo I,rojve t nni mn for Ilhe N,ear end1ina IDh, imbver 3 ld 1 7 a) Cash and cash equivalents Sulnmary of tiransaction statements of Operatinig Bank Accounts and Petty Cash Accounts for tle period between 2017.01.01 and 2017.12.31 are indicated as follow: 1. A. Operating Bank Account of IDA Credit 5487-1N (1 eld at State Bank) 2017.01.01- 2015.07.31 - llems 2017.12.31 2016.12.31 (in USD) (in USD) Begiiiniiig balance (as of 2017.01.11) 23 194.11 Cash receipt: From IDA DA acconit 160.388,74 312.135.14 Inlterest revCiuC for ilie period 914,17 1275. l0 Other revenLIe - 2,573.37 Total cash receipt 161.302.91 315,983.61 Disbu rsenent: IDA credit expenditures Consultiancy 99.861.21 175.731 39 increiieintil operaing expelse 59.169.91 61.806.79 Traiilnrg 314.38 G oo dls - 46,43 1.81 Total of I)A credil expenditures 159,031.12 284.284.37 Transferred to State Tieasuiy account 23.904.52 Alvance to petty esli 1.355.34 4.999.3 1 Banik charge 4.16 8.75 Loan IDA 110.42 - Uirealized gaiii/loss 0n excliaingc rate dIifferenice (822.7 ) -979.09 Other expenise -4.A76.16 Total