CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEM LI FOR THE YEAR ENDED 07 JULY 2019 C, S4-. CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS ACRONYMS AND ABBREVIATION SFR Statistics for Results Project CSA Central Statistics Agency OICD Organizational and Infrastructure Capacity Development in the National Statistics IDA International Development Association SDDM Statistical Data Development and Management SMSD Statistical Methodology, Standards and Data Quality Assurance and Information PM Project Management ETB Ethiopian Birr 1 CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 07 JULY 2019 TABLE OF CONTENTS Pages PART 1 INTRODUCTION 1.1 Background 3 1.2 Project objectives 3 1.3 Audit objectives 3 1.4 Audit scope 3 1.5 Audit methodology 4 1.6 Results of the audit 4 PART 2 STATEMENT OF MANAGEMENTS' RESPONSIBILITIES 5 PART 3 INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS 3.1 Independent auditors' report 6-7 3.2 Statement of Receipt and Expenditure 8 3.3 Statement of Financial Position 9 3.4 Summary of Activity in the Designated Account 10 3.5 Notes to the financial statements 11-13 PAR 4 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE 14 PART 5 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL Tee 15 0 CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PRO3ECT NO. TF A5617 INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENED 07 JULY 2019 1 INTRODUCTION 1.1 Background Statistics for Results project is established under the auspices of the Central Statistics Agency (CSA) to facilitate the modernization and revitalization of CSA through capacity building of its staff and its model of functioning. The project is established as part of the National Statistical Development Strategy to assist the National Statistical System in capacity building, monitoring and evaluation. The SFR project is an integral part of the National Statistics Development Strategy which is planning to fund some USD 80 million towards modernization of the CSA's organizational and data development capability and infrastructure at head office and selected branch offices. The project was designed based on the grant agreement entered between IDA and the government of Ethiopia to finance the activity of the project with USD 15.5 million. The project has four components designed to support the implementarion of activities drawn from strategic themes of the national statistical development strategy namely: a) Organizational and infrastructure capacity development in the national statistical system b) Statistical data development and management c) Statistical methodology, standards and data quality assurance and information dissemination; and d) Monitoring and evaluation 1.2 Project Objectives The project aims to enhance the capacity of the CSA aL the urganizational, human and physical levels in order to produce and disseminate reliable, accessible and timely statistics. The target beneficiaries of the project will be both the Government and the general public and stakeholders. 1.3 Audit objectives The objective of the audit is to express an opinion on the Project's financial statements for the year ended 07 July 2019. The audit includes but not limited to the following tasks: a) Give comments and observations on the accounting records, systems and controls that were examined during the course of audit; b) Identify specific deficiencies or areas of weakness in systems and controls, and make recommendations for their improvement; c) Report on the degree of compliance of each of the financial covenants in the financing agreement and give comments, if any, on internal and external matters affecting such compliance; d) Determine whether the management and financial systems, including internal controls, within the components are adequate for efficient and prudent management of funds; e) Comment on the use of funds vis a vis approved budgets in relation to the agreement between the organization and donors; f) Assess the compliance with administrative/legal/fiscal issues regarding local employees contracted under the organization; and g) Recommend possible improvements and/or actions in any area on financial management and especially areas where weaknesses were noted. 1.4 Audit scope The audit scope required us to carry out sufficient audit steps and procedures to ensure that the audit objectives were met for the d 07 3uly 2019. Details of the steps and procedures are described in note 1.5. he I 3 CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 07 JULY 2019 1.5 Audit Methodology We conducted the audit in accordance with International Standards on Auditing and in compliance with the accounting policies and agreed terms between Central Statistics Agency (CSA) and IDA (International Development Association - World Bank). 1.5.1 Internal controls We have evaluated significant internal controls to obtain sufficient understanding of the design of relevant controls, policies and procedures and whether they have been in operation during the period under review. 1.5.2 Compliance with terms agreement and applicable laws and regulations We have reviewed, assessed and reported on compliance with the terms and conditions of the aoreements. 1.5.3 Representations by grantees We have obtained specific written representations from management. 1.5.4 Contractual obligations a) Appraised relevant documents such as agreements with donors; b) Verified compliance of organization's expenditures with relevant terms of agreements as well as all the applicable rules; c) Verified compliance of the recipient with the terms and conditions of the agreement with the donor; and d) Verified timely submission of interim and audited financial reports for the donor as stipulated in the agreement. 1.5.5 Receipts and disbursements Verified compliance with the disbursements and procurement procedures set up for the organization. 1.5.6 Implementation a) Examined whether the expenditures are classified in accordance with the budget; b) Reviewed bank statements and other relevant books of accounts and assessed whether they show a complete view of the income received and expenditure incurred; c) Verified and confirmed that all commitments are genuine, with the relevant agreements disclosed within the financial records and are for the pursuance of agreed Project objectives; and d) Examined a representative sample of payments transactions including accuracy and completeness of records. 1.5.7 Other income sources Established whether other income generated by the project, such as sales of items, exchange gains, etc.; have been used in furtherance of the project's objectives. 1.6 Results of the audit 1.6.1 Summary of results by audit objectives i) Reach an opinion as to the validity of the financial statements. In our opinion, the financial statements give a true and fair view of the sources and uses of funds in accordance with the funding agreement and accounting policies stated in note 3.5. ii) Report on the financial management and internal control findings We reviewed the internal control structure and concluded that the system was adequate to meet the needs of the program. We have not observed reportable deficiency or material weaknesses on the internal control of the project. .0 4 ~ ~iot~3a- CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 INDEPENDENT AUDITORS' REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 07 JULY 2019 2 STATEMENT OF MANAGEMENTS' RESPONSIBILITIES The management of Central Statistics Agency - Statistics for Results Project are responsible for the preparation of the financial statements for each financial year which gives a true and fair view of the Project as at the end of the year and of the operating results for that year. The management of the project are required to keep proper accounting records which disclose with reasonable accuracy at any time the financial position of the project. Management are also responsible for safeguarding the assets of the project. The management are responsible for the preparation of financial statements that gives a true and fair view in accordance with the funding agreement between Central Statistics Agency and International Development Association and the accounting policies stated in Note 3.5 of this report and for such internal controls as the management determine are necessary to enable the preparation of the project financial statements that are free from material misstatement, whether due to fraud or error. The management accept responsibility for the financial statement which has been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates. The management believe the project's financial statements give a true and fair view of the state of the financial affairs of the project for the year and of its financial position as at 07 July 2019. The management further accept responsibility for the maintenance of accounting records which may be relied upon in the preparation of the project financial statements, as well as adequate systems of internal financial control. The management certify that, to the best of their knowledge, the information furnished to the auditors for the audit was correct and is an accurate presentation of the project's financial transactions. Management also acceot resoonsibilitv for: i) Designing, implementing and maintaining such internal control as they determine necessary to enable the presentation of financial statements that are free from material misstatement, whether due to fraud or error; ii) Selecting suitable accounting policies and applying them consistently; and iii) Making accounting estimates and judgements that are reasonable in the circumstances. Management acknowledge that the independent audit of the financial statements does not relieve them of their respopsibilities. Signed aob half of the management by: lemaltssen Addisu Abebe Proje t Implementation unit Mana r Financial Management Specialist 3 March 2020 March 2020 5 HST General Partnership Ethio-China Avenue; Wollo Sefer Mina Building 5th Floor P.O. Box 1608 Addis Ababa Ethiopia Chartered Certified Accountants and Authorized Auditors Tel: +251 115 527666/67 V'+a()hAT(V MI W-k-P;Fax: +251 115 628384 CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 FOR THE YEAR EDNED 07 JULY 2019 3.1 INDEPENDENT AUDITORS' REPORT Opinion We have audited the accompanying financial statements of Central Statistics Agency - Statistics for Results (SFR) Project No. TF A5617 financed by International Development Association (IDA) set out on pages 8 to 13, which comprises the Statement of Financial Position as at 07 July 2019, Statement of ReceipLs and Expenditure and the statement of Summary of Activity in the Designated Account for the year ended 07 July 2019 and the related notes to the financial statements, including summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the cash receipts and expenditure of the project for the year ended 7 July 2019 and the funds at 7 July 2019 and were utilized for the purpose defined in the funding agreement and in accordance with the accounting policies set out in note 3.5 to the financial statement and the financial reporting provisions of the donors. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matter The financial statements of the Project for the year ended 07 July 2019 were audited by another auditor who expressed an unqualified opinion on the financial statement on 19 December 2018. Managements' responsibilities for the project financial statements Management are responsible for the preparation and fair presentation of the financial statements prepared in accordance with the funding agreement between Central Statistics Agency and International Development Association and for such internal control as management determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The management of the Project are also responsible for overseeing the Project's financial reporting process. Auditors' responsibilities for the audit of the project financial statements Our objectives are to obtain reasonable assurance about whether the financial statements are free from material misstatement, whether due to fraud or error, and to issue an auditors' 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken based on these financial statements. P Partners: Tekeste Gebru; Solomon Gizaw; Getu Jemaneh; Yonas Ha Solomon Melaku CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 FOR THE YEAR EDNED 07 JULY 2019 3.1 INDEPENDENT AUDITORS' REPORT (Continued) Auditors' responsibilities for the audit of the project financial statements (Continued) As part of an audit conducted in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout 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 to design audit procedures that are appropriate in the circumstances, but not for expressing an opinion on the effectiveness of the Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. * 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 communicate with management 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. The engagegint partner on the audit resulting in this independent auditors' report is Yonas Harun. Yonas Harun Audit artner Registered Auditor, HST Geneieral P4rtnershjp, Chartered Certified Accountants and Authorize Auditors (Auditors of CSA,SFPR project) Addis Ababa 3 March 2020* 7 CENTRAL STATISTICAL AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 STATEMENT OF RECEIPT AND EXPENDITURE FOR THE YEAR EDNED 07 JULY 2019 Notes 2019 2018 ETB ETB RECIEPT Fund receipts during the year 3.6 93,433,406 87,635,906 Other income 3.7 342,186 2,735,743 93,775,592 90,371,649 EXPENDITURE Total expenditure during the year 3.8 109,889,220 87,258,884 Excess expenditure (receipts) (16,113,628) 3,112,765 Fund balance at 8 July 26,175,300 23,062,535 Fund balance at 7 July 10,061,672 26,175,300 8 CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 STATEMENT OF FINANCIAL POSITION AS AT 7 JULY 2019 ASSETS Notes 2019 2018 ETB ETB Current assets Receivables 3.10 10,852,444 21,375,292 Cash and bank balances 3.9 5,918,455 7,422,366 Total assets 16,770,899 28,797,658 FUND BALANCE AND LIABILITES Fund balance 10,061,672 26,175,300 CURRENT LIABILITIES Payables 3.11 3,863,411 2,622,358 Taxes payable 3.12 2,845,816 - 6,709,227 2,622,358 Total liabilities and fund balance 16,770,899 28,797,658 The financial statements on page 8 to 13 were approved and authorized for issue by the management on 3 Marc 020 and were signed on its behalf by: Jem I Hassen Addisu Abebe Pro ct Implementation Unit Manager Financial Management Specialist 9 CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 3.4 SUMMARY OF THE ACTIVITY IN THE DESIGNATED ACCOUNT FOR THE YEAR ENDED 07 JULY 2019 USD Bank Account (a/c#'0100451300020): National Bank of Ethiopia 2019 2019 USD ETB Opening Bank Balance 53,888 1,470,433 ADD: Receipts Fund received from IDA 3.5.3 3,332,332 93,433,406 Gain on foreign exchange 3.7 - 328,935 Funds available for use 3,386,220 95,232,774 Less: Transfers and Expenditures/payments Expenditures/payments 3,340,158 93,899,886 Closing Balance 46,062 1,332,888 *0 4, jcw 10 CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 7 JULY 2019 3.5 ACCOUNTING POLICIES 3.5.1 Basis of preparation The financial statements have been prepared on modified cash basis of accounting whereby income is recognized when cash is received and expenditures are recognized when incurred. 3.5.2 Budoet The budget is developed on the same accounting basis, same classification basis, and for the same period as for the financial statement. The budget was approved as required by the standard conditions of the grant and work-plan as approved by the World Bank and then proclaimed in the budgets of the Federal Government in the name of CSA. 3.5.3 Funds Receipt Fund receipt is recognized to the extent of credit extended by the Bank to the project's designated account. Funds received and direct payments during the year are as follows: Received Confirmed (USD) (USD) Cash transfer 3,332,332 3,332,332 3,332,332 3,332,332 3.5.4 Expenditure Expenditure represents amounts disbursed and costs incurred denominated in ETB. 3.3.5 Taxation Income received by the donor is not subject to tax. 3.3.6 Foreicn currency transactions Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the organization operates ('the functional currency'). The financial statements are presented in Ethiopian Birr ("ETB") which is the Project's functional currency. Transactions and balances Cash receipts and payments arising from transactions in a foreign currency are recorded in the financial statements using the actual rate of exchange. Foreign currency transactions are translated into the functional currency of the Project using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in statements of receipts and payments. 3.3.7 Non-current assets In accordance with lender's requirements, purchase of fixed assets is expensed on acquisition. CSA maintains an asset register that tracks all project fixed assets. 3.3.8 Currency The financial statements are recorded and presented in ETB. ,ell CENTRAL STATISTICAL AGENCY STATISTICS FOR RESULT PROJECT NO. TF A5617 NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 7 JULY 2019 2019 2018 3.6 RECIEPT ETB ETB Receipts 93,433,406 87,635,906 93,433,406 87,635,906 3.7 OTHER INCOME Gain on foreign exchange 328,935 2,735,743 Miscellaneous 13,251 - 342,186 2,735,743 3.8 OPERATING EXPENSES Organizational and Infrastructure Capacity Development in 66,644,700 77,375,541 the National Statistical System (note 3.8.1) Statistical Data Development and Management (note 3.8.2) 29,521,423 1,003,020 Statistical Methodology, Standards anud Data Quality assurance and information dissemination (note 3.8.3) Project Management (note 3.8.4) 7,923,805 7,364,383 109,889,220 87,258,884 3.8.1 Organizational and Infrastructure Capacity Development in the National Statistics System 2019 2018 ETB ETB Works-OICD 50,566,910 31,314,650 Goods -OICD 12,810,082 38,238,994 Consultant Service-OICD 2,646,409 3,446,857 Training and Workshops-OICD 615,867 4,114,390 Operating-OICD 5,432 260,650 66,644,700 77,375,541 2019 2018 3.8.2 Statistical Data Development and Management ET1 E01 ETB ETB Consultant Service-SDDM 6,263,313 144,440 Goods-SDDM 21,525,133 595,608 Training and Workshops-SDDM 1,732,977 262,972 29,521,423 1,003,020 3.8.3 Statistical Methodology, Standards and Data Quality Assurance and Information Dissemination 2019 2018 ETB ETB Works-SMSD 3,057,455 - Consultant Service-SMSD 2,018,536 Goods-SMSD 434,542 - Training and Workshops-SMSD 288,759 1,515,940 5,799,292 1,515,940 3.8.4. Project Management Operating-PM 7,060,520 6,380,190 Training and Workshops-PM 564,759 - Goods-PM 243,526 387,093 Consultant Service-PM- 55,000 597,100 7,923,805 7,364,383 12 CENTRAL STATISTICS AGENCY STATISTICS FOR RESULT PROJECT NOTES TO THE FINANCIAL STATEMENTS (continued) FOR THE YEAR ENDED 7 JULY 2019 3.9 CASH AND BANK BALANCES 2019 2018 ETB ETB Cash at bank 5,918,455 7,422,366 5,918,455 7,422,366 3.10 RECIEVABLES Purchase advance 5,223,860 15,395,524 Contractors 4,404,143 4,668,533 Sundry 746,520 733,314 Letter of credit 365,011 365,011 Advance to trainees 112,910 212,910 10,852,444 21,375,292 3.11 PAYABLES Retention 3,188,138 2,551,886 Contractors 550,766 - Sjndry 69,277 70,472 Pension 55,230 - 3,863,411 2,622,358 3.12 TAX PAYABLES Value Added Tax 1,802,050 - Income tax 892,598 Withholding tax 151,168 - 2,845,816 - 13 HST General Partnership Ethio-China Avenue; Wollo Sefer Mina Building 51h Floor P.O. Box 1608 Addis Ababa Ethiopia Chartered Certified Accountants and Authorized Auditors Tel: +251 115 527666/67 V-PaAIITO)- V%A41 A14P'Y5 V+1.4-XAfT M,+C' Fax: +251 115 528384 Central Statistics Agency Statistics for Results Project No. TF A5617 Addis Ababa Attention: Jemal Hassen Project Implementation Unit Manager Dear Sir, 4 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE We have audited the accompanying financial statements of SFR project No.TF A5617 financed by IDA set out on pages 8 to 13, which comprises the Statement of Financial Position as at 07 July 2019, Statement of Receipts and Expenditure and the Statement of Summary of Activity in the Designated Account for the year ended 07 July 2019 and the related notes to the financial statements, including summary of significant accounting policies. We conducted our audit in accordani-e with Internatinnal Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement resulting from violations of agreement terms and laws and regulations that have a direct and material effect on the financial statements. Compliance with the terms of agreement, laws and regulations, contracts and binding policies and procedures are the responsibility of the management of the Project. As part of our audit, we selected and tested transactions and records to determine the project's compliance with agreement terms, laws, regulations, contracts, binding policies and procedures. However, our objective was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. Material instances of non-compliance are failure to follow requirements or violations of the terms agreement and laws and regulations that cause us to conclude that the aggregation of misstatements resulting from those failures or violations is material to the financial statements. This report is intended for the information of CSA and IDA. The enqagement partner'on the audit resulting in this independent auditor's report is Yonas Harun. Yonas Haru Audit Partner Reg istered 'Audjtor', HST General Partnership, Chartered Certified Accountants and Authorized Auditors (Auditors of CSA - SFR) Addis Ababa 3 March 2020 Audit Tax Consulting Learning Solution Partners: Tekeste Gebru; Solomon Gizaw; Getu Jemaneh; Yonas Harun; Solomon Melaku