SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) SPECIAL PURPOSE FINANCIAL STATEMENTS For the period from 01 January 2018 to 31 December 2018 In USD Contents: INDEPENDENT AUDITORS’ REPORT 3-5 SUMMARY OF SOURCES AND USES OF FUNDS 6 USES OF THE WORLD BANK’S FUNDS ON THE PROJECT’S COMPONENTS 7 SCHEDULE OF WITHDRAWALS FROM THE GRANT ACCOUNT 8 STATEMENT OF WITHDRAWALS THROUGH THE SUMMARY OF STATEMENTS OF EXPENDITURES 9 RECONCILIATION BETWEEN RECORDS OF PIU AND THE BANK 10 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS 11 WORLD BANK AUDIT DOCUMENTATION CHECKLIST 13 2 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) SUMMARY OF SOURCES AND USES OF FUNDS For the period from 01 January 2018 to 31 December 2018 In USD Actual For the Total period Opening balance Special account – USD - Current account – UAH - - Sources of funds: Grant of the International Bank for reconstruction and Development 201,067 528,717 Total financing: 201,067 528,717 Project expenditure: Category 1: Goods, non-consulting services, consultants’ services, Training and Incremental Operating Costs under the 201,067 528,717 Project Total Project expenditure: 201,067 528,717 Closing balance Special account – USD - - Current account - UAH - - - - Notes on pages 11 – 12 are an integral part of these financial statements. 6 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) USES OF THE WORLD BANK’S FUNDS ON THE PROJECT’S COMPONENTS For the period from 01 January 2018 to 31 December 2018 In USD Total for the period from 01 January Total under 2018 to 31 December 2018 the Project component Procurement Planned Actual Deviations Plan, USD Component А: EITI Implementation Support 335,661 337,641 1,980 481,400 Component С : Communications and Outreach - - - - 193,045 191,076 -1,969 298,600 Component D: Project Management Total Project expenditure 528,706 528,717 11 780,000 Notes on pages 11 – 12 are an integral part of these financial statements. 7 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) SCHEDULE OF WITHDRAWALS FROM THE GRANT ACCOUNT For the period from 01 January 2018 to 31 December 2018 In USD Payment USD Date of Application number Category withdrawal Currency Equivalent Equivalent 60 1 25.01.2018 UAH 44,721 1,561 61 1 25.01.2018 UAH 44,721 1,561 62 1 25.01.2018 UAH 44,721 1,561 63 1 25.01.2018 UAH 27,951 976 64 1 22.02.2018 UAH 46,185 1,711 65 1 22.02.2018 UAH 46,185 1,711 66 1 22.02.2018 UAH 46,185 1,711 67 1 22.02.2018 UAH 28,865 1,069 68 1 04.04.2018 UAH 42,889 1,636 69 1 04.04.2018 UAH 42,889 1,636 70 1 04.04.2018 UAH 26,806 1,023 71 1 04.04.2018 UAH 42,889 1,636 72 1 04.04.2018 UAH 1,513,399 57,741 73 1 04.04.2018 UAH 114,040 4,351 74 1 12.04.2018 UAH 26,301 1,016 75 1 12.04.2018 UAH 42,082 1,625 76 1 12.04.2018 UAH 42,082 1,625 77 1 12.04.2018 UAH 42,082 1,625 82 1 08.06.2018 UAH 1,508,570 58,134 87 1 21.06.2018 UAH 288,200 11,042 78 1 09.07.2018 UAH 42,033 1,606 79 1 09.07.2018 UAH 42,033 1,606 80 1 09.07.2018 UAH 42,033 1,606 81 1 09.07.2018 UAH 26,271 1,003 83 1 09.07.2018 UAH 41,839 1,598 84 1 09.07.2018 UAH 41,839 1,598 85 1 09.07.2018 UAH 41,839 1,598 86 1 09.07.2018 UAH 26,149 999 88 1 25.07.2018 UAH 41,982 1,581 89 1 25.07.2018 UAH 41,982 1,581 90 1 25.07.2018 UAH 41,982 1,581 91 1 25.07.2018 UAH 26,239 988 92 1 29.08.2018 UAH 27,093 971 93 1 29.08.2018 UAH 43,348 1,554 94 1 29.08.2018 UAH 43,348 1,554 95 1 29.08.2018 UAH 43,348 1,554 96 1 03.10.2018 UAH 89,801 3,177 97 1 03.10.2018 UAH 89,801 3,177 98 1 03.10.2018 UAH 89,801 3,177 99 1 03.10.2018 UAH 56,126 1,985 100 1 14.12.2018 UAH 88,880 3,206 101 1 14.12.2018 UAH 88,880 3,206 102 1 14.12.2018 UAH 88,880 3,206 103 1 14.12.2018 UAH 55,550 2,004 Total: 201,067 Summary schedule by categories: Category 1 total 201,067 Total: 201,067 Notes on pages 11 – 12 are an integral part of these financial statements. 8 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) STATEMENT OF WITHDRAWALS THROUGH THE SUMMARY OF STATEMENTS OF EXPENDITURES For the period from 01 January 2018 to 31 December 2018 In USD Application number Category 1 Total 1. Applications submitted to the World Bank and reimbursed during the period 01.01.2018 - 31.12.2018 60 1,561 1,561 61 1,561 1,561 62 1,561 1,561 63 976 976 64 1,711 1,711 65 1,711 1,711 66 1,711 1,711 67 1,069 1,069 68 1,636 1,636 69 1,636 1,636 70 1,023 1,023 71 1,636 1,636 72 57,741 57,741 73 4,351 4,351 74 1,016 1,016 75 1,625 1,625 76 1,625 1,625 77 1,625 1,625 82 58,134 58,134 87 11,042 11,042 78 1,606 1,606 79 1,606 1,606 80 1,606 1,606 81 1,003 1,003 83 1,598 1,598 84 1,598 1,598 85 1,598 1,598 86 999 999 88 1,581 1,581 89 1,581 1,581 90 1,581 1,581 91 988 988 92 971 971 93 1,554 1,554 94 1,554 1,554 95 1,554 1,554 96 3,177 3,177 97 3,177 3,177 98 3,177 3,177 99 1,985 1,985 100 3,206 3,206 101 3,206 3,206 102 3,206 3,206 103 2,004 2,004 Total 201,067 201,067 2. Expenditures factually incurred for the period from 01 January 2018 to 31 December 2018 From the Grant account 201,067 201,067 From special accounts - - From current accounts in national currencies - - Total 201,067 201,067 3. Table of differences in Project costs between the World Bank records and PIU for the period from 01 January 2018 to 31 December 2018 Reimbursed according to IBRD information 201,067 201,067 Amount of costs not provided for reimbursement as at 31.12.2018 - - According to PIU data 201,067 201,067 Notes on pages 11 – 12 are an integral part of these financial statements. 9 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) RECONCILIATION BETWEEN RECORDS OF PIU AND THE BANK For the period from 01 January 2018 to 31 December 2018 In USD Grant amount 780,000 Subtract: Project costs: Category 1: Goods, non-consulting services, consultants’ services, Training and Incremental 528,717 Operating Costs under the Project Total: (528,717) Special account – USD - Current account – UAH - Total available funds: - Total withdrawals: (528,717) Balance as at 31 December 2018 251,283 Notes on pages 11 – 12 are an integral part of these financial statements. 10 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS For the period from 01 January 2018 to 31 December 2018 In USD 1. Project Description In accordance with the Letter of Agreement dated 14 January 2016 and Additional Agreement No. 1 to the Letter of Agreement dated 17 May 2017, the International Bank for Reconstruction and Development and the International Development Association (“World Bank”) , acting as administrator of grant funds provided by Australia, Canada, Finland, Germany, Norway, Switzerland and the United Kingdom under the Extractives Global Programmatic Support Multi-Donor Trust Fund, proposes to extend to the Recipient, a grant in an amount not to exceed seven hundred eighty thousand USD (780 000 USD). The estimated number of contracts in force during the same period is 7. The objective of the Project is to assist the Recipient in implementing its EITI agenda. The Grant consists of the following parts: Component А: EITI Implementation Support Provision of consultants’ services for the preparation of report(s) covering all extractive industries for the calendar years 2014, 2015 and 2016. Component В: Capacity Building Provision of training to recipient’s public institutions, state agencies and companies operating in the extractive industries to deepen their knowledge on issues associated with resource management, EITI Standard, overall transparency in the sector and training to investigate journalists on the reporting of the extractive industries and EITI. Component С: Communications and Outreach Provision of support for the implementation of the EITI Communication strategy, including print and visual media, outreach campaigns, organization of awareness raising events, and internet and social media activities. Component D: Project Management Provision of support to the EITI National Secretariat, including Incremental Operating Costs. 2. Significant Accounting Policies Basis of Preparation The special purpose financial statements were prepared under the cash basis. Accounting policies were applied consistently during the entire period of the Grant funds use. Reporting Period This report covers the period of the Grant funds usage from 01 January 2018 to 31 December 2018. The closing date of the Grant is 31 December 2019 or such later date as established by the Bank. Reporting Currency According to the requirements of the World Bank, the reporting currency is US dollar. 11 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS For the period from 01 January 2018 to 31 December 2018 In USD Receipts and Expenditures Recognition The EITI National Secretariat in Ukraine keeps records and prepares financial statements under the cash basis. Receipts are recorded as they enter the bank accounts supported by advances from the IBRD. Expenditures are recorded on the date of cash withdrawal from accounts. The following methods of funding can be applied within the Grant:  Reimbursement of expenses;  Advance payments;  Direct payments. During the reporting period, the Ministry of Energy and Coal Industry of Ukraine used only direct payments from the Grant account within the Project implementation due to the fact that accounts in the State Treasury of Ukraine have the risk of being blocked at any time. This does not allow for the use of other methods of the Grant disbursement. The table below defines the categories of Eligible Expenditures that can be financed from the Grant (“Category”), the distribution of the Grant funds between the Cat egories, and the percentage of expenditures that can be financed by Eligible Expenditures in each Category: Percentage of Allocated funds of the Category expenditures being Grant (in USD) financed (including tax) (1) Goods, non-consulting services, consultants’ services, Training and Incremental Operating 780 000 100% Costs under the Project TOTAL 780 000 All products, consulting and non-consulting services required for the project, and those that are eligible for funding at the expense of the Grant, must be procured in accordance with the requirements described in such documents and the links contained therein:  Section І of the «Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers» dated January 2011 (revised July 2014) («Procurement Guidelines»), in the case of goods and non-consulting services;  Sections І and IV of the «Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers » dated January 2011 (revised July 2014) («Consultant Guidelines») in the case of consultants’ services. 3. Economic Environment The main economic activity is performed on the territory of Ukraine. The Ukrainian economy is in a protracted crisis, complicated by the military conflict in eastern Ukraine and the unrecognized separation of the Autonomous Republic of Crimea. Stabilization of the situation in Ukraine will largely depend on the government's actions aimed at resolving the military conflict, reforming the country's financial, administrative, fiscal and legal systems. To solve the above-mentioned tasks, the government of the country introduces rather severe and unpopular measures, such as partial mobilization of the population liable to military service, introduction of new taxes and fees, restrictions on cash and non- cash foreign currency transactions, etc. 12 WORLD BANK AUDIT DOCUMENTATION CHECKLIST Name of Loan/Credit: World Bank UKRAINE Loan/Credit # TF0A1759 Audit Report: Year ended December 31, 2018 Check if Check if Included N/A I. Audit report (Opinion): A. Applicable accounting standards noted X B. Applicable auditing standards noted X C. Opinion rendered on all forms of withdrawals: 1. Statement of Expenditures X 2. Special Account X D. All sources of financing for the project are noted X II. Financial Reports: A. Revenue Earning Entity (all of the following are required): 1. Balance sheet X 2. Cash Flow Statement X 3. Income Statement X B. Non-Revenue Earning Entity (all of the following are required): 1. Balance sheet X 2. Summary of Sources and Uses of Funds X C. If applicable (refer to Loan Agreement): 1. Statement of Expenditure (SOE) Statement X 2. Special Account Statement X III. Notes to the Financial Statements X IV. Reconciliation between World Bank records and project records X V. Management Letter X 13