FINANCIAL STATEMENTS OF THE RESOURCES MANAGED BY UWI CONSORTIUM FOR THE CARIBBEAN MOBILE INNOVATION PROJECT UNDER EPIC TRUST FUND INFODEV GRANT NO. TF017431 FOR THE YEAR DECEMBER 1, 2017 TO NOVEMBER 30, 2018 TABLE OF CONTENTS Page Number Independent Auditor's Report 1-5 Financial Statements Statement of Sources and Uses of Funds 6 Statement of Cumulative Investments 7 Special Account Statement 8 Notes to Financial Statements 9 - 14 11 L1 AUDITOR GENERAL'S DEPARTMENT 40 KNUTSFORD BOULEVARD P.O. BOX 455 KINGSTON 10 JAMAICA Tel. No.: 926-8309/926-5963/926-5846 Fax Number: 968-4690 Email: audgen@auditorgeneral.gov.jm INDEPENDENT AUDITOR 'S REPORT GOJ/IBRD GRANT AGREEMENT TF017431 University of the West Indies (UWI) Consortium Caribbean Mobile Innovation Prowect (CMIP) Period December 1, 2017 - November 30, 2018 Opinion I have audited the accompanying financial statements for the Resources Managed by University of the West Indies (UWI) Consortium - Caribbean Mobile Innovation Project (CMIP), set out on pages 1 to 14, which comprise the Statement of Sources and Uses of Funds, as at November 30, 2018, Statement of Cumulative Investments, Designated Account Reconciliation Statements for the year then ended, and a summary of significant accounting policies and other explanatory notes. In my opinion, the appended Statements 1-2 and Supplementary Financial Information reflect a true and fair view of the transactions of the Project for the period under review and the transactions conformed to the terms of the Grant Agreement and complied with the International Public Sector Accounting Standards (IPSAS) Cash Basis. Basis for Opinion The audit of the Project was conducted in accordance with: * Article II Section 2.07 (b) of the Standard Conditions for Grant between the University of the West Indies Consortium and the International Bank for Reconstruction and Development (IBRD) dated July 17, 2014. * International Standards for Supreme Audit Institutions (ISSAls). 2 KEY AUDIT MATTERS Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. These matters were addressed in the context of the financial statements as a whole and in forming my opinion there on. The following key matters were brought to the attention of management by way of the Audit Completion Report dated May 2019. Key Audit Matters How my audit addressed the KeyAudit Matters' There was a breakdown in the overall We reviewed the terms and conditions of governance of the Project due to several areas of the grant agreement; reviewed prior year non-compliance with the contractual clauses reports and held discussions with the outlined in the grant agreement. management to determine if there were any These include: updates based on previous years' findings. a) Inadequate evidence of guidance and strategic direction from the Advisory Board as it met only once since the inception of the Project b) the absence of a revised business plan and operating plan in keeping with the requirements of the grant agreement. The Project ended on November 30, 2018. MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The executing agency, the LUMIN (formerly University of the West Indies Consortium) Consortium Incorporated, is responsible for the preparation and fair presentation of these Financial Statements, in accordance with International Public Sector Accounting Standards (IPSAS) Cash Basis. This responsibility includes: designing, implementing and maintaining internal controls, relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether, due to fraud or error; selecting and applying appropriate accounting policies. The Executing Agency is also required to present audited Financial Statements to the IBRD. The attached Financial Statements and supplementary financial information which are described hereunder were submitted to me by the Project Implementation Unit (PIU) to reflect the transactions of the Project for the period ended December 1, 2017 to financial year at November 30, 2018. 3 Statement 1 Statement of Sources and Uses of Funds Statement 2 Statement of Cumulative Investments by Disbursement Category Statement 3 Designated Account Reconciliation Statement as at November 30, 2018 Notes to the Financial Statements In preparing the financial statements, management is responsible for assessing the Project's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless there are plans to liquidate the Project or to cease operations, or has no realistic alternative but to do so. AUDITOR'S RESPONSIBILITY FOR THE AUDIT OF THE FINANCIAL STATEMENTS My responsibility is to express an opinion on these Financial Statements based on my audit. I conducted my audit in accordance with the auditing standards issued by the International Organization of Supreme Audit Institutions (INTOSAI). Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAls will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISSAls, I exercised professional judgment and maintained professional scepticism throughout the audit. I 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 my 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 in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. * Evaluate the appropriateness of accounting policies used and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists 4 related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in the auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. The conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the Project to cease to continue as a going concern. * 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 presents a true and fair view. I have communicated with the World Bank regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that was identified during the audit. REPORT ON ADDITIONAL REQUIREMENTS OF GRANT AGREEMENT NO TF017431. COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS AND FINANCIAL CLAUSES OF THE GRANT AGREEMENT During the period under review, I examined compliance by the Project Implementation Unit of the Executing Agency with the applicable laws and regulations related to the Project's activities and with the accounting/financial/ management clauses of the Grant Agreement No. TF017431. There was general compliance with the following articles contained in the Grant Agreement mentioned: Article I - Section 1.01; 1.02 Standard Conditions; Definitions Article II - Section 2.01: Project Execution Section 2.03: Institutional and Other Arrangements Section 2.05: Project Monitoring, Reporting and Evaluation Section 2.06: Financial Management Section 2.07: Procurement Article III - Withdrawal of Grant Funds NON-COMPLIANCE TO CLAUSES IN GRANT AGREEMENT The CMIP did not implement the following as stipulated in the grant agreement: a. A Project Operations Manual to guide the operations of the Project; b. Annual revised Business Plan was not submitted to IBRD for approval; and c. Only four of the required six (6) m-Hubs were implemented. 5 OPINION - GENERAL In my opinion, the PIU maintained an adequate accounting system based on separate and clearly identifiable accounts which enabled the recording, monitoring and reporting of the operations and costs under the programme in accordance with satisfactory accounting/financial/management practices and standards as required by Article II Section 2.06 (a) of the Grant Agreement. AUDIT OF THE SPECIAL BANK ACCOUNT I have examined the appended Special Bank Account Statement - Statement 3, reflecting the movement in the Special Bank Account for the period ended November 30, 2018. The Special Bank Account No. 3687-8499 is maintained in United States Dollars in the name of the University of the West Indies Consortium. My examination was made in accordance with the standards of the International Organization of Supreme Audit Institutions (INTOSAI) and accordingly included such tests of the accounting records and other procedures I considered necessary. OPINION - SPECIAL BANK ACCOUNT In my opinion, the Special Bank Account Statement reflects the balance in the Special Bank Account at November 30, 2018 as well as the transactions made during the period December 1, 2017 to November 30, 2018 in conformity with International Public Sector Accounting Standards (IPSAS) Cash Basis. Auditor General of Jamaica Datn . Date 5a 7 FAUDITOR GENERAL'S DEPARTMENT SoVa o14PEOPa 40 KNUTSFORD BOULEVARD P.O. BOX 455 KINGSTON 5 JAMAICA Tel. No.: 926-8309/926-5963/926-5846 Fax Number: 968-4690 Email: audgen5@cwjamaica.com IBRD GRANT AGREEMENT No. TF017431 UNIVERSITY OF THE WEST INDIES CONSORTIUM CARIBBEAN MOBILE INNOVATION PROJECT (CMIP) Period December 1, 2017 - November 30, 2018 AUDIT OF STATEMENTS OF EXPENDITURE (SOE) PROCEDURES In the course of the Audit of the Resources Managed by the University of the West Indies (UWI) Consortium - Caribbean Mobile Innovation Project (CMIP) for the year ending November 30, 2018, 1 examined the following statements of expenditure submitted to the IBRD during the financial year under review in support of applications for advance of funds from the Grant Account in accordance with the Grant Agreement: Application Date Advanced Amount (USS) Number TF -17431/WA 13 October 9, 2018 81,443.33 The examination was done in accordance with generally accepted auditing standards and procedures prescribed by INTOSAI and accordingly, including such tests as the verification of the internal control systems and of the accounting records, tests of the origin and eligibility of expenditures, certification and procurement procedures for goods and services, filing of supporting documents and such other auditing procedures as I considered necessary in the circumstances. Opinion In my opinion, the statements of expenditure and the annexes submitted in support of them, together with the internal controls procedures used in their preparation can be relied upon to support the applications for advance in conforming to the requirements of the Grant Agreement. Auditor General of Jamaica Date 6 RESOURCES MANAGED BY LUMIN CONSULTING INCORPORATED CARIBBEAN MOBILE INNOVATION PROJECT InfoDev GRANT NO. TF017431 UNDER EPIC TRUST FUND STATEMENT OF SOURCES AND USES OF FUNDS FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2018 Period Ending Cumulative to Cumulative balance to Note November 30, 2018 November 30, 2018 November 30, 2017 u-$ UsS uSS Sources of Funds World Bank Designated Account 5 81,443.33 1,500,000.00 1,418,556.67 Total Funds Received 6 81,443.33 1,500,000.00 1,418,556.67 Uses of Funds Grant Categories Phase 1: Ideation to Pitch 191,112.50 952,397.18 761,284.68 Phase 2: Pitch to Market 6,149.37 118,387.24 112,237.87 Phase 3: Market to Maturity - 51,849.19 51,849.19 Virtual Community 17,484.41 67,684.62 50,200.21 Monitoring & Evaluation 60,711.99 284,482.89 223,770.90 Business Model & Sustainability - 4,515.40 4,515.40 Total Loan Expenditures 7 275,458.27 1,479,316.52 1,203,858.25 Net Cash Movement (194,014.94) 20,683.48 214,698.42 BANK BALANCES Opening.Cash Balances Designated Account 214,698.42 214,698.42 - Main Project Bank Account - - Total Opening Balance 214,698.42 214,698.42 - Closing Cash Balances Designated Account 20,683.48 20,683.48 214,698.42 Main Project Bank Account - - Total Closing Balance 8 20,683.48 20,683.48 214,698.42 Available Cash Balance as at November 30, 2018 20,683.48 20,683.48 214,698.42 Cl u ine Hylton - P jAccuntant Melis a hnson - Project Manager Lia Cu mins Executive Director - UWI Consortium The accompanying notes on pages 9 -14 form an integral part of the financial statements 7 RESOURCES MANAGED BY LUMIN CONSULTING INCORPORATED CARIBBEAN MOBILE INNOVATION PROJECT InfoDev GRANT NO. TF017431 UNDER EPIC TRUST FUND STATEMENT OF CUMULATIVE INVESTMENTS BY DISBURSEMENT CATEGORY FOR THE TWELVE MONTHS ENDED NOVEMBER 30, 2018 Cumulative to Cumulative to Current Year US$ November 30, 2018 November 30, 2017 Category # Description LS$ USS 1 GO; CS; NCS; TRN; OP 275,458.27 1,479,316.52 1,203,858.25 2 Research Grant under p.4(a) of the Project - 3 Scholarship under pl(g) of the Project - Total 275,458.27 1,479,316.52 1,203,858.25 Claudine Hyltok -r rject Accountan'1,_ Meliss h,Inson -P-roject Manager Lisa Cummins Executive Director - UWI Consortium The accompanying notes on pages 9-14 form an integral part of the financial statements 8 RESOURCES MANAGED BY LUMIN CONSULTING INCORPORATED CARIBBEAN MOBILE INNOVATION PROJECT InfoDev GRANT NO. TF017431 UNDER EPIC TRUST FUND DESIGNATED ACCOUNT RECONCILIATION AS AT NOVEMBER 30, 2018 Bank Account #3687-8499 - CITI Bank; Kgn. US$ 1 Total advanced by World Bank 1,500,000.00 Less: Eligible expenditure for the current year ended November 30, 2018 documented by 2(a) the World Bank (245,524.98) Less: Cumulative eligible expenditure for prior periods ended November 30, 2017 2(b) documented by the World Bank (1,113,792.04) 3 Present Outstanding Amount Advanced to the Designated account (1-2) 140,682.98 4 Balance of USD Designated Account per attached bank reconciliation statement as 20,683.48 at November 30, 2018 Plus: Eligible expenditure for the current period documented after the current 5 period ending November 30, 2018 (WA 14 a) 119,999.50 6 Plus: Total amount withdrawn and not yet claimed Reason: - 7 Plus: Amounts claimed in previous applications not yet credited at the date of the bank statement 8 Less: Interest earned - 9 Total Advances Accounted for (#4 through #9) 140,682.98 10 Discrepancies between (#3 & #9)- see explanation below - Claudine Hylt - Project Accoun'int Melissa 6nson - Project Manager Lisa Cummins Executive Director - UWI Consortium The accompanying notes on pages 9 -14 form an integral part of the financial statements 9 RESOURCES MANAGED BY UWI CONSORTIUM FOR THE CARIBBEAN MOBILE INNOVATION PROJECT INFODEV GRANT NO. TF017431 UNDER EPIC TRUST FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR DECEMBER 1, 2017 TO NOVEMBER 30, 2018 (EXPRESSED IN UNITED STATES DOLLARS) 1. IDENTIFICATION The LUMIN Consulting Incorporated (formerly University of the West Indies (UWI) Consulting) is an international company incorporated in St, Lucia with offices at the University of the West Indies Regional Headquarters, 2a Hermitage Road, Kingston 7, Jamaica. Through a consortium agreement dated 12t" May, 2014; UWI Consortium was established and consisted of three parties namely, UWI Consulting Incorporated, Mona School of Business and Management and the Mona Business Support Services. 2. OVERVIEW The Government of Canada under the support for Entrepreneurship Programme for Innovation in the Caribbean Multi Donor Trust Fund (EPIC TF) extended grant funds for the benefit of member countries within the Caribbean region. A grant amount of US$1,500,000 was awarded to the UWI Consortium for the execution of the Caribbean Mobile Innovation Project. The grant is being administered by the World Bank under the Technical Assistant Programme. The objectives of the Project are to strengthen the Caribbean mobile innovation ecosystem and enable growth-oriented mobile enterprises to grow rapidly. The target beneficiaries of the Project are mobile app innovators, aspiring and existing entrepreneurs from the CARICOM Region. The Project is aimed at increasing gender responsiveness of the mobile innovation ecosystem and encourages participation of women in the Project activities. PROJECT COMPONENTS The Caribbean Mobile Innovation Project under EPIC Trust Fund consists of six parts: Phase I - Ideation to Pitch Identify and mobilize the top mobile application developer and entrepreneurial talent in the region. Direct the top talent and their mobile products to the annual competition through local and regional activities. Also spark excitement and interest in mobile innovation in the region and help to develop the skills and knowledge of current and future competitors including: i) providing training-courses that cover building a start-up and product development; ii) organizing and running prototyping events and competitions (i.e. Hackathons); 10 RESOURCES MANAGED BY UWI CONSORTIUM FOR THE CARIBBEAN MOBILE INNOVATION PROJECT INFODEV GRANT NO. TF017431 UNDER EPIC TRUST FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR DECEMBER 1, 2017 TO NOVEMBER 30, 2018 (EXPRESSED IN UNITED STATES DOLLARS) PROJECT COMPONENTS CON'D Phase I - Ideation to Pitch Cont'd iii) hold a competition for developers and entrepreneurs to submit their mobile app business ideas, prototype or existing product/service in order to award prizes, (which could include further direct support through the project); and iv) organize the annual pitching event in which at least 25 finalists (with a minimum of 20% participation rate for women-led enterprises) from the competition pitch their business to a panel of judges. Phase II - Pitch to Market Focus on supporting the winners of the competition to launch their products, strengthen their market share and investment readiness, including: i) provide and manage seed financing to each of the winning teams; ii) match the winning teams from the competition with mentors; iii) provide the winning team access to selected facilities; iv) arrange networking events between the winning teams as well as other members of the Caribbean and international mobile innovation ecosystem; and v) implement the acceleration-type activities, including product development, investment readiness, and culminate with the opportunity for the winning teams to pitch at an international event. Phase III - Market to Maturity These activities may include: i) supervise the progress of the finalist and winning teams, including assisting them in applying to other financing mechanisms and matching the teams with other potential investors; and ii) maintain and develop the network of alumni to enable additional opportunities for networking and peer-to-peer learning. 11 RESOURCES MANAGED BY UWI CONSORTIUM FOR THE CARIBBEAN MOBILE INNOVATION PROJECT INFODEV GRANT NO. TF017431 UNDER EPIC TRUST FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR DECEMBER 1, 2017 TO NOVEMBER 30, 2018 (EXPRESSED IN UNITED STATES DOLLARS) PROJECT COMPONENTS CON'D Virtual Community: Establish and maintain a virtual community in order to engage and connect all stakeholders in the Caribbean mobile innovation ecosystem. Monitoring & Evaluation: Establish a project monitoring system and collect and analyse the necessary data order to meet the reporting requirements of the World Bank. Business Model & Sustainability: i) review the activities delivered in order to identify any updates and adaptations to implementation approach and business model; ii) carefully track progress toward revenue targets specified in the Business Plan; and iii) revise and submit the Business Plan annually to the World Bank for approval. MANAGEMENT REPORT The Annual Report was submitted by management of the Caribbean Mobile Innovation Project for the period December 1, 2017 to November 30, 2018. 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. The Budget The budget is the approved budget allocation between the International Bank for Reconstruction and Development (IBRD) and UWI Consortium for the period December 1, 2017 to November 30, 2018 in the amount of USD182,514.67. 12 RESOURCES MANAGED BY UWI CONSORTIUM FOR THE CARIBBEAN MOBILE INNOVATION PROJECT INFODEV GRANT NO. TF017431 UNDER EPIC TRUST FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR DECEMBER 1, 2017 TO NOVEMBER 30, 2018 (EXPRESSED IN UNITED STATES DOLLARS) 3. Reporting Currency These financial statements are expressed in United States of America dollars. 4. Summary of Accounting Policies i. Basis of Accounting The Project Accounting Unit (PAU) uses the cash basis of accounting to record the project's transactions and these financial statements have been prepared in accordance with the International Public Sector Accounting Standards (IPSAS) - Cash basis. Under this basis, income is recognized when funds are received rather than when earned and expenses are recognized when payment is made rather than when they are incurred. Since the main objective of these financial statements is to disclose the sources and uses of funds, it is not necessary to present information for inflation. ii. Foreign Currency Translations Expenditure in Jamaica Dollars are paid from the United States Dollar Project Account (Designated Account) held with Citi-Bank, were converted at the rate of exchange applied by the bank at the date funds were withdrawn from the account. During the period, the rates of exchange applied by the bank ranged from J$123.00 to J$135.00 to US$1. iii. Fluctuation in exchange rates and fees All fees and charges for un-disbursed loan funds, as well as losses due to exchange rate fluctuations are not considered eligible project costs and are absorbed by LUMIN Consulting Inc. iv. Equipment and other fixed assets Equipment and other fixed assets procured with project resources are recorded at their acquisition cost at the date of purchase. Depreciation is not charged on these assets and is also not reflected in these financial statements. 13 RESOURCES MANAGED BY UWI CONSORTIUM FOR THE CARIBBEAN MOBILE INNOVATION PROJECT INFODEV GRANT NO. TF017431 UNDER EPIC TRUST FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR DECEMBER 1, 2017 TO NOVEMBER 30, 2018 (EXPRESSED IN UNITED STATES DOLLARS) 5. Disbursement Request Disbursement Request Date Disbursement Number Amount US$ October 9, 2018 TF -17431/WA 13 81,443.33 Total 81,443.33 This represents the total advance issued by the IBRD for the period ending November 30, 2018. 6. Source of Funds The amount of US$81,443.33 (cumulatively US$1,500,000) was received from the World Bank during the period under review. 7. Use of Grant Funding Total funds invested during the period amounted to approximately US$275,458.27 (cumulatively US$1,479,316.52). 8. Available Cash Balance The cash available to the Project as at November 30, 2018 was: US$ Special Account 20,683.48 Administrative Account - Total Closing Balances 20,683.48 The Caribbean Mobile Innovation Project funds were placed in a pooled special projects' account held by UWI. The Project received approval from the by way of Disbursement Letter dated June 15, 2015, to operate a Pooled Designated Account. UWI operates a system of fund accounting that is an integral part of the Banner Finance System. The system provides for segregated fund balances. 14 RESOURCES MANAGED BY UWI CONSORTIUM FOR THE CARIBBEAN MOBILE INNOVATION PROJECT INFODEV GRANT NO. TF017431 UNDER EPIC TRUST FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR DECEMBER 1, 2017 TO NOVEMBER 30, 2018 (EXPRESSED IN UNITED STATES DOLLARS) 9. Fixed Assets Assets held by the Project at November 30, 2018 include: Computer Equipment Furniture Total Balance at December 30, 2017 4,133.90 4,530.78 2,277.31 10,941.99 Additions - - - - Balance at November 30, 2018 4,133.90 4,530.78 2,277.31 10,941.99