The Pianning Institute of Jamaica FOUNDATIONS FOR COMPETITIVENESS AND GROWTH PROJECT Loan no. 8408-JM FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2017 (Expressed in United States dollars) . . . ... . . . . ... . . . .. ... . . . , . ÿþThe Planning Institute of Jamaica Foundation for Competitiveness and Growth Project Loan no. 8408-JM Year ended March 31, 2017 TABLE OF CONTENTS Number Independent Auditor's Report I Financial Statements Statement of Sources and Uses of Funds 5 Statement of Cumulative Investments 6 Special Account Statement 7 Notes to Financial Statements 9 f ; г � t ; � ) 5 i 1 1 1 � � � AUDITOR GENERAL'S DEPAI . NT 40 KNUTSFORD BOU I &RD P,O. d 1455 ANY REPLY OR SU13SEQUENT REFERENCE KING A N it) TO THIS COMMUNICATION SHOULD BE pu I,, -ICA ADDRESSED TO THE AUDITOR GENERAL I I AN D NOT-T0 ANY OFEIGER BY NAME Tel. No. 926-8309/926-5963/1, 5 AN D TH E FOLLOWING REFERENCE Fax Number 5 3' 690 QUOTED:- audeeti0auditorizener I V.1m. INDEPENDENT AUDITOR'S REPORT To the Board of Directors Planning Institute of Jamaica LOAD[ Np. 4Qfl-JM Name of Pro!= -FOUNDATIONS FOR COMPETITIVENESS AND-GRO-WTH-EHO I ECT Effl-od ending Marcb 31, 2 017 Opinion I have audited th e accompanying Financial Statements o f the Foundatio ns for Competitiveness aj t, Growth Project, set out on pages 9 to 13, which comprise the Statement of Sources and Uses Funds, as at March 31, 2017, Statement of Cumulative Investments by Categories and Designat Account Reconciliation Statement forthe year then ended, and a summary of significant accounti policies and other explanatory notes, In my opinion, the appended Statements 1-2 and Supplementary Financial Information reflectk A fair presentation of the transactions of the Project forthe period under review and the transactio ill conformed to the terms of the GrantAgreement and complied with the International Public Sectoid Accounting Standards (IPSAS) Cash Basis. Basis for Opinion The audit of the Project was conducted in accordance with: 0 Article III Section 3.01 - Projectof standard conditions for Agreement between the Governme -1 of Jamaica (GOJ) and the International Bank for Reconstruction and Development (IBRD) dat: di September 3, 2014. International Standards of Supreme Audit Institutions (ISSAls). My responsibilities under ISSAIs are further described in the Auditor's Responsibilities for thel Audit of the Financial Statements section of this report. We are independent of the Project It accordance with the International Ethics Standards Board for Accountants Code of Ethics f ii Professional Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities I accordance with the IESBA Code. I believe that the audit evidence we obtained is sufficient ai appropriate to provide a basis for my opinion. 2 1 v- Audit Matters 1 audit matters are those matters that, in my professional judgment, were of most significance i) Aty audit of the financial statements of the current period. I have determined that there are no l audit matters to report for the period. S agement's Responsibility for the Financial Statements '1 e executing agency, the Planning Institute of Jamaica (P10J), is responsible for the preparation a fair presentation of these financial statements, in accordance with International Public Sector .cIunting Standards (IPSAS) Cash Basis. This responsibility includes: designing, implementing and r -taining internal controls, relevant to the preparation and fair presentation of financial s b Iments that are free from material misstatement, whether, due to fraud or error; selecting and a ying appropriate accounting policies that are reasonable in the circumstances. The Planning I tute of Jamaica is also required to present audited financial statements to the IBRD. '1 attached financial statements and supplementary financial information which are described b under were submitted to me by the Project Execution Unit (PEU) to reflect the transactions of t roject for the period April 1, 2016 to March 31, 2017. Statement 1 Statement of Sources and Uses of Funds Statement of Cumulative Investments by Categories Designated Account Reconciliation Notes to the Financial Statements Ax itor's Responsibility for the audit of the Financial Statements M responsibility is to express an opinion on these Financial Statements based on my audit. I c: 1lucted my audit in accordance with the auditing standards issued by the International Ct nization of Supreme Audit Institutions (INTOSAI). Those standards require that I comply with el :al requirements; plan and perform the audit to obtain reasonable assurance about whether the fiiancial statements as a whole are free from material misstatement, whether due to fraud or error, a to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of a 1rance, but is not a guarantee that an audit conducted in accordance with ISSAls will always do:ct a material misstatement when it exists. Misstatements can arise from fraud or error and are ci§v idered material if, individually or in aggregate, they could reasonably be expected to influence the conomic decisions of users taken on the basis of these financial statements. A§ ],art of an audit in accordance with ISSAls, we exercise professional judgment and maintain pt fssional scepticism throughout the audit. * dentify and assess the risks of material misstatement of the financial statements, whether due o fraud or error, design and perform audit procedures responsive to those risks, and obtain audit vidence 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 3 error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, o I override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design a t procedures that are appropriate in the circumstances, but not for the purpose of expressin opinion on the effectiveness of the Project's internal control. * Evaluate the appropriateness of accounting policies used and related disclosures mad management. * Conclude on the appropriateness of management's use of the going concern basis of accoun. and, based on the audit evidence obtained, whether a material uncertainty exists related to ev s or conditions that may cast significant doubt on the Project's ability to continue as ag g concern. If we conclude that a material uncertainty exists, we are required to draw attentic my auditor's report to the related disclosures in the financial statements or, if such disclos are inadequate, to modify my opinion. The conclusions are based on the audit evidence obta d up to the date of my auditor's report. However, future events or conditions may cause the Pr6 to cease to continue as a going concern. * Evaluate the overall presentation, structure and content of the financial statements, includin I e disclosures, and whether the financial statements represent the underlying transactions inj events in a manner that presents a true and fair view. I have communicated with the Planning Institute of Jamaica regarding, among other matters, planned scope and timing of the audit and significant audit findings, including any signif! It deficiencies in internal control that was identified during the audit REPORT ON ADDITIONAL REQUIREMENTS OF THE LOAN AGREEMENT NO. 8408-LM COMPLIANCE WITH APPLICABLE LAWS. REG.LATIONS AND FINANCIAL CLAUSES OF THE LOAN AGREEMEN. During the period under review, I examined compliance by the PEU of the Executing Agency witI.t applicable laws and regulations related to the Project's financial activities and with q accounting/financial/ management clauses of the Loan Agreement No. 8408-JM. There was gen; compliance with the following articles contained in the Loan Agreement mentioned: Article I - Section 1.01 - 1.02: General Conditions; Definitions Article II - Section 2.01- 2.07: Loan Article III - Section 3.01 - 3.02: Project Article IV - Section 4.01 - 4.02: Remedies of the Bank Article V - Section 5.01- 5.03: Effectiveness, Termination Article VI - Section 6.01 - 6.03: Recipient's Representative; Addresses 4 NION - GENERAL 1 y opinion, the Project Execution Unit maintained an adequate accounting system based on I arate and clearly identifiable accounts which enabled the recording, monitoring and reporting of operations and costs under the project in accordance with satisfactory * sunting/financial/management practices and standards as required by the Loan Agreement. IT OF THE DESIGNATED BANK ACCOUNT ave examined the appended Designated Account Reconciliation Statement, reflecting the i rement in the Designated Bank Account for the period ended March 31, 2017. The Designated ink Account No. 810134 is maintained in United States Dollars in the name of the Ministry of i nce and Planning. My examination was made in accordance with the standards of the rnational Organisation of Supreme Audit Institutions (INTOSAI) and accordingly included such 1 s of the accounting records and other procedures I considered necessary. IION - DESIGNATED BANK ACCOUNT 14y opinion, the Designated Account Reconciliation Statement reflects the total amount advanced t :he Designated Account as at March 31, 2017 and has reconciled to the outstanding (documented) amount advanced to the account as at March 31, 2017 in conformity with IPSAS Basis and IBRD guidelines. iitor General of Jamaica AUDITOR GENERAL'S DEPARTM 4 40 KNUTSFORD BOULEV i P.O. BOX;5 KINGSTO ?. 1) JAMAl Tel. No.: 926-83091926-5963/926-if Fax Number 968-( - Email: audgen5@cwjamaic .c LOAN AGREEMENT No. 8408-JM Foundations for Competitiveness and Growth Project . Period endingpMarch 31, 2017 AUDIT OF STATEMENTS OF EXPENDITURE (SOE) PROCEDURES in the course of the Audit of the Foundations for Competitiveness and Growth Project for the period e:d March 31, 2017, 1 examined the following statements of expenditure submitted to the IBRD during the fina i 1 year under review in support of applications for advance of funds from the Loan Account in accordance 1th the Loan Agreement: Date of Disbursement Disbursement Number Request US$ FCGP WA7 June 03, 2016 279,171 FCGP WA6 August 29, 2016 1,514,619 FCGP WAS December 22, 2016 2,107,022 Total 3,900,812 The examination was done in accordance with generally accepted auditing standards and procedures preset d by INTOSAI and accordingly, included such tests as the verification of the internal control systems and ofI accounting records, tests of the origin and eligibility of expenditures, certification and procurement proced for goods and services, filing of supporting documents and such other auditing procedures as I considi necessary in the circumstances. Opinion In my opinion, the statements of expenditure and the annexes submitted in support of them, together wit, l internal controls procedures used in their preparation can be relied upon to support the applications for adv in conforming to the requirements of the Loan Agreement. Auditor General of Jamaica Date I- 5 The Planning Institute of Jamaica Foundation for Competitiveness and Growth Project Loan no. 8408-JM Statement of Sources and Uses of Funds Year ending March 31, 2017 April 1, 2016 CUMULATIVI i to March 31, CUMULATIVE March 31, 201 i Notes 2017 to March 31,2017 (Restated) Uss USS US$ SOURCES OF FUNDS World Bank Designated Account 5 3,621,641.00 11,157,585.00 7,535,941 Direct Payment 5 279,171.00 279,171.00 Front End Fees 0.00 125,000.00 125,00( 4 Interest earned 10 1,225.49 2,695.08 1,46 5S Total Receipts (A) 3,902,037.49 11,564,451.08 7,662,41 USE OF FUNDS Component 1 - Enhancing Competition in the Business Environment 52,904.46 345,099.14 292,19( Component 2 - Facilitating Large Scale Private Investments 440,404,59 671,345.98 230,94 Component 3 - Supporting Small and Medium Enterprises (SME) Capabilities and Finance 6,574,598,44 7.560,384.81 985,78( 7 Component 4 - Project Implementation and Monitoring 480,990.43 1.043,573.11 562,58: W3 Front End Fees 0 00 125,000.00 125,000 C Total Espenditures (B) 7 7,548,897.92 9,745,403.04 2,196,50 12 RECEIPTS LESS EXPEN 1)1 IT,URES Net Change in Cash (A - B) (3,646,860.43) 1,819,048.04 5,465,90 47 Foreign Exchange adjustment-gain/(loss) 53,809.83 (6,602.42) (60,412. (3,593,050.60) 1,812,445.62 5,405,49(122 Opening Cash Balances Designated Account 410,799.07 0.00 Project Accounts 4,994,697.15 0,00 (V ) Total Opening Balance 8 5,405,496.22 0.00 (.Wl Closing Cash Balances Designated Account 961,683.56 961,683.56 410,799 D1 Project Accounts 850,762.06 850,762.06 4,994,697 11 Total Closing Balance 8 1,812,445.62 1,812,445.62 5,40,49 Approved for issue on behalf of Project on ..% '.I. and signed on its behalf by: 4 . Director .. . .... Director Dr. Wayne pI y ark Tracey The accompanying notes pages 9 to 13 form an integral part of the statements. rms "I -, ,- a a s" e- a - - ,- - s" s - i. - -, - a - s" s - a - - ,- - a - •1" s W wa - A-lar e- ,a a - s" se-g swa - s'M- - a - s" s - swa - - ,- - i a - s" s - swa - - ,- a - s" x - swa - - ,- - s" s -¿ av - -, ,- - s" s - , - - - - - s" - swa - - ,- - s s - , - Wrr,- "I i § - x" e-ga ÿþ6 The Planning Institute of Jamaica Foundation for Competitiveness and Growth Project Loan no. 8408-JM Statement of Cumulative Investments by Categories Year ended March 31, 2017 CURRENT CURRENT P YEAR YEAR YEAR C ILATIVE No. Categories ACTUAL CUMULATIVE tated) US$ Us.s Goods, non-consulting services, training and consultants services for Components 1 and 2B (i) 66,276.79 476,451.78 10,174.99 Goods, non-consulting services, training and consultants services for Components 2A, 2B (ii) and 2B (iii) and 3 excl. SME sub-loans and 2 a) matching grants 458,443.07 579,725.27 1,282.20 2 b) SME sub-loans 6,287,028.02 7,236242.43 49,214.41 2 c) SME matching grants 2,819.00 2,819.00 0.00 Goods, non-consulting services, training and consultants services for 3 Components 2B (iv) and 4 and operating costs for all components 734,331.04 1,325,164.56 )0,833.52 4 Front end fees 0.00 125,000.00 5,000.00 TOTAL 7,548,897.92 9,745,403.04 2P6,505.12 The accompanying notes pages 9 to 13 form an integral part of the statements. i 7 The Planning Institute of Jamaica Foundation for Competitiveness and Growth Project Loan no. 8408-JM Designated Account Reconciliation Statement Year ended March 31, 2017 USS I Total Advanced by The World bank 11,157,58 . 2 Less: Eligible expenditure for the current year ended MARCH 31, 2017 documented by world bank (7,269,72( . Less: Cumulative eligible expenditure for the prior periods ended MARCH 31, 2017 documented by (2,071,50 world bank PRESENT OUTSTANDING AMOUNT ADVANCED TO THE DESIGNATED ACCOUNT (1 1,816,35 -2) 4 Balance of Designated Account per Bank Reconciliation Statement at March 31, 2017 961,68 .pli Balance of other project Accounts per Bank Reconciliation Statement at March 31, 2017 850,76 5 LESS: Interest Earned Credited to Account (2,691, 6 Total Advance Accounted for (No. 4 through No. 5) 1,809,75 7 Difference (3 - 6) 6,60 8 Explanation ofdifference shown in Line 7 The difference represents the cumulative foreign exchanges - sa. sta. - a - a - - " - - - - - a - - - a - - - a - --- - a - - - i a - s" s - a- a - - Am"a - i a - s" , - i. - A -J - i a " - - - - - '. E a - s" r, - - -se i e'. - a - s" - - - - - i a - s" - a- as - - - i a - s" - - - - - a - s" s - a- a - a day . - " g-ga ÿþm to cn 2 t' z e-CD i The Planning Institute of Jamaica Foundation for Competitiveness and Growth Project Notes to the Financial Statements Expressed in USD 1. IDENTIFICATION General background On September 3, 2014, the Government of Jamaica signed a loan agreement with The W 1 Bank to secure funding of US$50M for the Foundations for Competitiveness and Gro I Project (the Project). The closing date of the loan is June 30, 2020. Implementing organisations The Project is being implemented by the Planning Institute of Jamaica (PIOJ) in conjunctl: with lead coordinating agencies Jamaica Promotions Corporation (JAMPRO) and hg Development Bank of Jamaica (DBJ). 2. OVERVIEW The Project Development Objective (PDO) is to strengthen the business environment i Jamaica for private sector investment. The primary project beneficiaries will be private firms operating in Jamaica. Both existing a I new firms will benefit from streamlined business regulations that save costs and decre incentives for rent-seeking. Large foreign and domestic investors will benefit from appropri L preparation for Public-Private Partnerships (PPPs), divestments, and other strate investments that help bring deals to market. Small and Medium-sized Enterprises (SM benefiting from skills training, supply chain linkages, and financing will be able to incre private investment in knowledge and physical capital, thereby raising productivity, sales, jobs, including by linking with new large foreign and domestic investors supported by project. Impacts on these beneficiaries will be closely tracked through project indicators Monitoring and Evaluation (M&E). The program is structured in four components PROJECT COMPONENTS Funding is allocated to three primary components and an oversight component as follows: 1. Enhancing competition in the business environment - The component will provI technical assistance (TA) and implementation support to address critical business regulatc and procedural issues that constrain firm entry, operation and expansion, competition, I trade and logistics. JAMPRO will be the LCA for this component. 2. Facilitating strategic private investments - This component will finance feasibility other related studies and TA to enable the government to prepare for and close investm I transactions with private sector participation in a way that enables transformational gro I impacts. DBJ will be the LCA for this component. - 4 - - - a - - - " - - i. - " - - - - - " - i. - - - " - - a - - war - " - - a P - " - 21. a - Je - - r a - - - " - a - - - " a- - - E - " - a - - - " - - -trata-al ÿþThe Planning Institute of Jamaica Foundation for Competitiveness and Growth Project Notes to the Financial Statements Expressed in USD PROJECT COMPONENTS (Cont'd) 3. Strengthening SMEs' (Small and Medium Enterprises) capabilities and Finan SMEs' investments- This component will fund a combination of supply chain learn ' skills upgrading, and finance for SMEs. DBJ will be the lead coordinating agency . component has two sub-components which are component 3A - co-financing anch firms' supply chains through a matching grant program and Component 3H- an on-len facility through the Approved Financial institutions to Small and medium entities in o to support competitiveness and growth within the Private sector. 4. Project and Implementation and Monitoring and Evaluation- This component finance the costs of project implementation arrangements through Component 4A, lec I PIOJ as the Implementing Agency. Component 4B will finance technical Assistance f communications and productivity evaluation support, in collaboration with the Statis Institute of Jamaica (STATIN) and the Jamaica Productivity Center (JPC). MANAGEMENT REPORT The Annual Report is submitted by management for the Foundations for Competitiveness Growth Project for the year ended March 31, 2017. AUDITING OF THE PROJECT The Project is currently audited by the Auditor General's Department. The Auditors, Auditor General's Department, 40 Knutsford Boulevard, Kingston 5, Jamaica. a" e a The Planning Institute of Jamaica Foundation for Competitiveness and Growth Project Notes to the Financial Statements Expressed in USD 3. SIGNIFICANT ACCOUNTING POLICIES 1) Basis of Preparation The Project Accounting Unit (PAU) uses the cash basis of accounting to account for' . project's transactions and these financial statements have been prepared in accord with International Public Sector Accounting Standards (IPSAS) Cash Basis. Under I basis, income is recognized when funds are received rather than when earned and expen are recognized when payment is made rather than when obligations are incurred. Si the main objective of these financial statements is to disclose the sources and use 4 funds, it is not necessary to present information adjusted for inflation. 11) Recording of Transactions Transactions are entered in local currency. However, transactions are converted into it i United Statement of America currency for preparation of the financial statements. Rec iv and expenditure in local currency are translated into US dollars, by applying the excha I rate at which the funds were transferred from the Designated Account. 1II) Fluctuation rate and fees All fees and charges for un-disbursed loan funds, as well as losses due to exchange i fluctuations are not considered eligible project costs and are absorbed by the Governn, of Jamaica. IV) Equipment and other fixed assets Equipment and other fixed assets procured with project resources are recorded at tlt acquisition cost at the date of purchase. Depreciation is not charged on these assets an also not reflected in these financial statements. V) Exchange Rate for the period Expenses paid from the Jamaican dollar project accounts held with First Caribb' 1 International Bank Limited and National Commercial Bank Jamaica Limited, a converted by applying the exchange rate at which the funds were transferred from Designated Bank account to the local Administrative bank accounts.  ÿþThe Planning Institute of Jamaica Foundation for Competitiveness and Growth Project Notes to the Financial Statements Expressed in USD 5. DISBURSEMENT REQUEST Disbursement Request Date Disbursement Number Amount US$ June 03, 2016 FCGP WA7 279,171 August 29, 2016 FCGP WA6 1,514,619 December 22, 2016 FCGP WA8 2,107,022 Total 3,900,812 This represents the total advance issued by the IBRD for the year ended March 31, 2017. 6. SOURCE OF FUNDS The amount of US$3.901 million (cumulatively US$11.561 million) was received from World Bank for the period reviewed. 7. USE OF GRANT FUNDING Total funds invested during the period amounts to approximately US$7.549 mill (cumulatively US$9.745 million). 8. CASH AVAILABILITY The cash available as at March 31, 2017, as expressed in US dollars is: Bank Accounts March 31,2017 March 31, US$ Designated Account #810134 961,683.56 410,7 J 7 Project Account P1OJ FCIB#1002-174-602 59,245.86 72,9 6 Project Account DBJ NCB#2111-18059 640,293.77 4,921,7 .9 Project Account JBF FCIB# 1002-207-634 151,222.43 - Available cash balance 1,812,445.62 5,405,4' 2 The De,signated account is used to hold deposits of amounts drawn from the Loan account for purposd of making payments for eligible expenses relating to the Project. a" The Planning Institute of Jamaica Foundation for Competitiveness and Growth Project Notes to the Financial Statements Expressed in USD 9. FIXED ASSETS Furniture, Fixtures Computer & Equipment Total Cost Balance at I' April 2016 111,948.23 14,783.98 126,732 Additions - 556.36 55( Balance at 31 March 2017 111,948.23 15,340.34 127,28 10. INTEREST EARNED The interest earned on the funds deposited in the Designated Bank account are paid over to Consolidated Fund; while the interest earned on the Operations Account is retained in the Account. I. I. I.