JAMAICA SOCIAL INVESTMENT FUND JAMAICA INTEGRATED COMMUNITY DEVELOPMENT PROJECT (8356-JM) JAMAICA DISASTER VULNERABILITY PROJECT (8581-JM) RURAL ECONOMIC DEVELOPMENT INITIATIVE 2 PROJECT (9017-JM) FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2021 (Expressed in United States dollars) Jamaica Social Investment Fund Integrated Community Development Project (JM-8356) Jamaica Disaster Vulnerability Project (JM-8581) & Rural Economic Development Initiative 2 Project (9017-JM) Year ended March 31, 2021 TABLE OF CONTENTS Page Independent Auditor's Report 1-4 Financial Statements Statement of Sources and Uses of Funds 5 Statement of Cumulative Investments 6-7 Designated Account Reconciliation Statement 8 Notes to Financial Statements 9-25 Audit of Statements of Expenditure (SOE) Procedures 26- i'17Y AUDITOR GENERAL'S DEPARTMENT 40 KNUTSFORD BOULEVARD P.O. BOX 455 ANY REPLY OR SUBSEQUENT REFERENCE KINGSTON 10 TOTHIS COMMUNICATION SHOULD BE JAMAICA ADDRESSED TO THE AUDITOR GENERAL AND NOTTO ANY OFFICER BY NAME Tel. No.: 926-8309/926-5963/926-5846 AND THE FOLLOWING REFERENCE Fax Number: 968-4690 QUOTED:- audgen@auditorgeneral.govjm. INDEPENDENT AUDITOR'S REPORT To the Board of Directors Jamaica Social Investment Fund JAMAICA INTEGRATED COMMUNITY DEVELOPMENT PROJECT (8356-JM) and JAMAICA DISASTER VULNERABILITY PROJECT (8581-JM) RURAL ECONOMIC DEVELOPMENT INITIATIVE (9017-JM) Period ending March 31, 2021 Opinion I have audited the accompanying Financial Statements of the Jamaica Integrated Community Development Project, Jamaica Disaster Vulnerability Project and the Rural Economic Development Initiative Project, set out on pages 5 to 25, which comprise the Statement of Sources and Uses of Funds, year ending March 31, 2021, Statement of Cumulative Investments Disbursement by Categories and Designated Account Reconciliation Statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. In my opinion, the Statement of Sources and Uses of Funds, Statement of Cumulative Investments and Supplementary Financial Information reflects a fair presentation of the transactions of the Project for the period under review and the transactions conformed to the terms of the Loan 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: * The standard conditions for Agreement between the Government of Jamaica (GoJ) and the International Bank for Reconstruction and Development (IBRD) for the projects signed on. - Jamaica Integrated Community Development Project dated May 6, 2014; -Jamaica Disaster Vulnerability Project dated July 1, 2016; and - Rural Economic Development Initiative Project dated March 3, 2020. * International Standards of Supreme Audit Institutions (ISSAls). 2 My responsibilities under ISSAIs are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of this report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. I believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for my opinion. 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. I have determined that there are no key audit matters to report for the period. Management's Responsibility for the Financial Statements The executing agency, the Jamaica Social Investment Fund (JSIF), 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 that are reasonable in the circumstances. The Jamaica Social Investment Fund 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 Execution Unit (PIU) to reflect the transactions of the Project for the period April 1, 2020 to March 31, 2021. Statement 1 Statement of Sources and Uses of Funds Statement of Cumulative Investments by Disbursement Categories Designated Account Reconciliation Notes to the Financial Statements 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; 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 3 As part of an audit in accordance with ISSAls, we exercise professional judgment and maintain 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 related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in my 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 to the Jamaica Social Investment Fund 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 THE LOAN AGREEMENTS COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS AND FINANCIAL CLAUSES OF THE LOAN AGREEMENTS During the period under review, I examined compliance by the PlU of the Executing Agency with the applicable laws and regulations related to the Project's financial activities and with the accounting/financial/ management clauses of the Loan Agreements. 4 There was general compliance with the following articles contained in the Loan Agreements mentioned: Article I - Section 1.01 - 1.02: General Conditions; Definitions Article 11 - Section 2.01- 2.07 (- 2.08): Loan (ICDP & JDVRP respectively) Article Ill - 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: Representative; Addresses OPINION-GENERAL In my opinion, the Project Implementation Unit 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 project in accordance with satisfactory accounting/financial/management practices and standards as required by the Loan Agreements. AUDIT OF THE DESIGNATED BANK ACCOUNT I have examined the appended Designated Account Reconciliation Statement, reflecting the movement in the Designated Bank Account for the period ended March 31, 2021. The Designated Bank Account is maintained in United States Dollars in the name of the Ministry of Finance and Planning. My examination was made in accordance with the standards of the International Organisation of Supreme Audit Institutions (INTOSAI) and accordingly included such tests of the accounting records and other procedures I considered necessary. OPINION - DESIGNATED BANK ACCOUNT In my opinion, the Designated Account Reconciliation Statement reflects the total amount advanced to the Designated Account as at March 31, 2021 and has reconciled to the outstanding (undocumented) amount advanced to the account as at March 31, 2021 in conformity with IPSAS Cash Basis and IBRD guidelines. Auditor General of Jamaica 202 September 29 Date 5 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM), Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Statement of Sources and Uses of Funds Year Ending March 31, 2021 ICDP (JM 83560) JDVRP (JM 8581) REDI 11 (JM 9017) Cumulative Cumulative as Cumulative as Cumulative as Cumulative as Cumulative Year Ended as at March at March 31, Year Ended at March 31, at March 31, Year Ended at March 31, as at March Notes March 31, 2021 31,2021 2020 March 31, 2021 2021 2020 March 31, 2021 2021 31, 2020 US$ US$ USS US$ US$ USS US$ US$ USS SOURCES OF FUNDS World Bank Designated Account 7,8 3,818,467 40,910,824 37,092,357 4,930,468 12,818,533 7,888,065 549,682 549,682 Advance - Government of Jamaica 8a 243,316 243,316 - 41,838 41,838 - 31,733 31,733 Front End Fees - 105,000 105,000 - 75,000 75,000 100,000 100,000 - Total Receipts (A) 4,061,783 41,259,140 37,197,357 4,972,306 12,935,371 7,963,065 681,415 681,415 USE OF FUNDS Component 1 3,894,466 28,175,241 24,280,775 575,096 1,419,856 844,760 25,547 25,547 Component 2 202,269 6,793,601 6,591,332 5,024,119 9,874,415 4,850,296 187,004 187,004 Component 3 399,048 1,060,256 661,208 - - - 282,318 282,318 Component 4 546,748 4,385,334 3,838,586 513,133 985,278 472,145 - - - Direct Project Expenditures 9 5,042,531 40,414,432 35,371,901 6,112,348 12,279,549 6,167,201 494,869 494,869 Front End Fees - 105,000 105,000 - 75,000 75,000 100,000 100,000 - Total Expenditures (B) 5,042,531 40,519,432 35,476,901 6,112,348 12,354,549 6,242,201 594,869 594,869 - RECEIPTS LESS EXPENDITURES Net Change in Cash (A - B) (980,748) 739,708 1,720,456 (1,140,042) 580,822 1,720,864 86,546 86,546 - Foreign Exchange adjustment-gain/(loss) 74,671 130,077 s'serv (52,961) (56,387) (3,426) (2,798) (2,798) - (906,077) 869,785 1,775,862 (1,193,003) 524,435 1,717,438 83,748 83,748 Opening Cash Balances Designated Account 486 - - 353,960 - - - Project Accounts 1,775,376 - 1,363,478 - - Total Opening Balance 11 1,775,862 - - 1,717,438 - - - - Net Funding Available as at Year End 869,785 869,785 1,775,862 524,435 524,435 1,717,438 83,748 83,748 Closing Cash Balances Designated Account 449,361 449,361 486 2,286 2,286 353,960 3,311 3,311 - Project Accounts 420,424 420,424 1,775,376 522,149 522,149 1,363,478 80,437 80,437 - Total Closing Balance 11 869,785 869,785 1,775,862 524,435 524,435 1,717,438 83,748 83,748 - Approved for issue on behalf of Project on September 22, 2021 and signed on its behalf by: Chairman Managing Director The accompanying notes pages 9 to 25 form an integral part of the statements. 6 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Statement of Cumulative Investments by Disbursement Categories Year Ending March 31, 2021 Integrated Community Development Project (8356-JM) Current Current Year Prior Year No. Categories Year Actual Cumulative Cumulative US$ Us$ US$ Goods, works, non-consulting services, consultants' services I and operating costs for parts 1(a) through to (h), 2,3 and 4 of 4,916,001 40,149,118 35,233,117 the Project. Goods to serve as RB Incentives for NSWMA under Part 2 1(h)(4)(A) of the Project. 126,530 243,660 117,130 Salary supplement and goods and/or works under Sub- projects to serve as RB Incentives for Environmental 3 Wardens and Community Based Organizations, respectively, all under Part 1 (h)(4)(B) of the Project. - 21,654 21,654 Front-end Fee - 105,000 105,000 TOTAL EXPENDITURE (Note 10) 5,042,531 40,519,432 35,476,901 Jamaica Disaster Vulnerability Reduction Project (8581-JM) Current Current Year Prior Year No. Categories Year Actual Cumulative Cumulative US$ US$ US$ 1 Goods, non-consulting services, consultants' services for component 1, and training for component 1(a) to (c) and (e). 2 Training for component 1(d) - - - 3 Goods, works, non-consulting services, consultants' services 5,024,119 9,874,415 4,850,296 for component 2. 4 Emergency expenditures under component 3 - - - 5 Goods, non-consulting services, consultants' services, training and operating costs for component 4 513,133 985,278 472,145 Front-end Fee - 75,000 75,000 TOTAL EXPENDITURE (Note 10) 6,112,348 12,354,549 6,242,201 The accompanying notes pages 9 to 25 form an integral part of the statements. 7 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Statement of Cumulative Investments by Disbursement Categories Year Ending March 31, 2021 Rural Economic Development Initiative 2 Project (9017-JM) No. Categories Current Year Current Year Prior Year Actual Cumulative Cumulative Us$ US$ Us$ I Goods, works, non-consul ting services, consulting services, Training and Workshops, Operating Costs under Parts 1, 2 and 3 of the Project 494,869 494,869 2 Emergency Expenditures under Part 4 of the Project - - 3 Front-end Fee 100,000 100,000 4 Interest Rate Cap or Interest Rate Collar premium - - TOTAL EXPENDITURE (Note 9) 594,869 594,869 0 The accompanying notes pages 9 to 25 form an integral part of the statements. 8 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Designated Account Reconciliation Year ended March 31, 2021 ICDP JDVRP REDI II Notes US$ US$ US$ I Total Advanced by The World Bank 7,8 40,910,824 12,818,533 549,682 2 Total Advanced by The Government of Jamaica 8a 243,316 41,838 31,733 3 Less: Eligible expenditure for the current year ended March 31, 2021 documented by World Bank (11,427,442) (5,372,549) (80,969) Less: Cumulative eligible expenditure for the prior periods (26,859,641) (6,220,635) ended March 31, 2020 documented by World Bank (26,859,641) (6,220,635) - PRESENT OUTSTANDING AMOUNT ADVANCED TO 2,867,057 1,267,187 500,446 THE DESIGNATED ACCOUNT [1 - 2 (a)] 2,867,057 1,267,187 500,446 6 Balance of Designated Account per Bank Reconciliation 10 Statement at March 31, 2021 449,361 2,286 3,311 7 Balance of Project Accounts per Bank Reconciliation Statement 10 at March 31, 2021 420,424 522,149 80,437 Plus: Eligible Expenditure for the Current Year Documented After the Period End 2,127,349 686,365 413,900 9 Plus: Total Amount Withdrawn and Not Yet Claimed - - 10 Total Advance Accounted for (No. 4 through No. 7) 2,997,134 1,210,800 497,648 11 DIFFERENCE (5 - 10) Explanation of difference shown in Line 9: The difference (130,077) 56,387 2,798 represents the cumulative foreign exchange (gain)/loss. (130,077) 56,387 2,798 The accompanying notes pages 9 to 25 form an integral part of the statements. 9 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 1. IDENTIFICATION General background Jamaica Social Investment Fund (the company) is incorporated in Jamaica under the Companies Act as a company limited by guarantee. The company is the vehicle used to carry out all the activities of the Jamaica Social Investment Fund (JSIF). The registered office of the company is 11 Oxford Road, Kingston 5, Jamaica, W.I. The Jamaica Social Investment Fund (the Fund) is a temporary, autonomous Government of Jamaica (GOJ) sponsored project designed to assist the Government in its poverty alleviation programme. To achieve this, the Fund mobilizes resources from the GOJ, project donors and international lending agencies. The Company is the entity through which the Fund executes several projects and all expenses incurred by the Company are absorbed by the projects. 2. OVERVIEW The operations of the JSIF are partially financed by the following sources: (a) Loan No. 8356-JM between the International Bank for reconstruction and Development (IBRD), and the Government of Jamaica US$42.000.000 Loan agreement No. 8356-JM dated 6 May 2014 between the Government of Jamaica and IBRD for the financing of activities under the Jamaica Integrated Community Development Project (ICDP). The agreement had a closing date of I May 2020, subsequently extended to I May 2021. The financing of the Integrated Community Development Project (ICDP) is to be administered as follows: % of Expenditure Allocation of to be Expenditure Financed by Category US$ the Loan 1. Goods, works, non-consulting services, consultants' services and Operating costs. 41,430,726 100 2. Goods to serve as Results based Incentives for NSWMA 285,714 100 3. Salary Supplement and goods and/or works under subprojects to serve as Results Based Incentives for Environmental Wardens and Community Based Organizations respectively. 178,560 100 Front End Fee 105,000 100 42,000,000 10 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 2. OVERVIEW (CONT'D) (b) Loan No. 858 1-JM between the International Bank for Reconstruction and Development (IBRD) and the Government of Jamaica USM&Of Loan agreement No. 8581-JM dated 1 July 2016 between the Government of Jamaica and IBRD for the financing of activities under the Jamaica Disaster Vulnerability Reduction Project (JDVRP). The agreement has a closing date of 30 June 2022. The financing of the Jamaica Disaster Vulnerability Reduction Project (JDVRP) is to be administered as follows: % of Allocation of Expenditure to Expenditure be Financed by CategorV US$ the Loan 1. Goods, non-consulting services, consultants' services for component 1, and training for component 1(a) to (c) and (e). 3,465,000 100 2. Training for component 1(d). 350,000 100 3. Goods, works, non-consulting services, consultant services for component 2. 23,610,000 100 4. Emergency expenditures under component 3. - - 5. Goods, non-consulting services, consultants' services, training and operating costs for component 2,500,000 100 Front End Fee 75,000 100 30,000,000 11 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 2. OVERVIEW (CONT'D) (c) Loan No. 9017-JM between the International Bank for Reconstruction and Development (IBRD) and the Government of Jamaica US$40 000 Loan agreement No. 9017-JM dated 3 March 2020 between the Government of Jamaica and IBRD for the financing of activities under the Second Rural Economic Development Initiative Project (REDI II). The agreement has a closing date of 30 September 2025. The financing of the Second Rural Economic Development Initiative Project (REDI II) is to be administered as follows: % of Allocation of Expenditure to Expenditure be Financed by Category US$ the Loan 1. Goods, works, non-consulting services, consultants' services, training and workshops, operating costs under 39,900,000 100 Parts 1, 2 and 3 of the Project. 2. Emergency expenditures under Part 4 of the Project. - 100 3. Front End Fee 100,000 100 40,000,000 3. PROJECT COMPONENTS Integrated Community Development Project (8356-JM) The objective of the Project is to enhance access to basic urban infrastructure and services and to contribute towards increased community safety in selected economically vulnerable and socially volatile inner-city communities of the Borrower. The Project consists of the following parts: Component 1 - Basic Infrastructure and Access to Services: Developing infrastructure investments across Project Communities according to identified community priorities, including, inter alia: (a) Widening, rehabilitating and paving existing roads; (b) Improving storm water drainage; (c) Installing water supply and sanitation household connections and promoting behavioural change for the use and maintenance of water supply and sanitation infrastructure; 12 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 3. PROJECT COMPONENTS (CONT'D) Integrated Community Development Project (8356-JM) Component 1 - Basic Infrastructure and Access to Services (cont'): (d) Improving electricity connections and lighting through: (1) installing street lighting; (2) extending the electricity network and regularization of illegal electricity connections; (3) promoting behavioural change for the supporting environmentally sustainable lighting; (e) Rehabilitating educational facilities; (f) Removing zinc fences and replacing with permanent structures; (g) Constructing community integrated spaces and mobile mediation centres; and (h) Improving the cleanliness of Project Communities through: (1) the provision of equipment; (2) the construction of skip enclosures around dumpsters; (3) the carrying out of clean-up and maintenance activities by Environmental Wardens; and (4) the provision of RB Incentives to: (A) National Solid Waste Management Authority (NSWMA) of the provision of waste collection and recycling services; and (B) Community-Based Organizations and environmental Wardens for the carrying out of litter management and collection; all located in RB Community Areas. Component 2 - Public Safety Enhancement and Alternative Livelihoods: (a) Supporting the development and roll-out of programs that focus on key safety concerns and high risk groups through, inter alia: (i) Implementing the Violence Interrupter Programs; and (ii) Strengthening school and commuity based violence prevention interventions in Selected Communities, including, inter aila: (1) the Safe Passages Program; (2) the Programme for Alternative Student Support; and (3) school-community and after-school programs. (b) Supporting alternative livelihoods through, inter alia: (i) Implementing programmes (selected pursuant to the criteria set forth in the Project Operational Manual) to engage youth in leadership and civic participation; 13 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 3. PROJECT COMPONENTS (CONT'D) Integrated Community Development Project (8356-JM) Component 2 - Public Safety Enhancement and Alternative Livelihood (Cont'd): (ii) Improving participation in community cleanliness through: (1) implementing cleanup programs (selected pursuant to the criteria set forth in the Project Operational Manual); and (2) strengthening public awareness programmes to improve the cleanliness of Project Communities. (iii) Strengthening micro-enterprises through: (1) designing a skills and knowledge transfer programme; and (2) providing training in the following areas: business plan development, operations, accounting, marketing, human resources and finance. (iv) Implementing youth eduation and recreation programmes (selected pursuant to the criteria set forth in the Project Operational Manual) to enhance learning and develop social and conflict mediation skills. Component 3 - Institutional Strenghtening for Urban Management and Public Safety: Supporting institutional strenghtening activities for selected entities of the public safety through, inter alia: (a) Carrying out capacity building activities for selected entities of the Borrower responsible for urban management through, inter alia: (i) providing technical assistance to the Ministry of Transport, Works and Housing (MTWH) to identify options for low-income housing in densely populated areas, including the development of a strategy to incorporate the private sector and Non-governmental Organisations (NGOs) in low- income housing development; (ii) providing equipment and technical assistance to the National Land Agency (NLA) through: (1) improving the systems to pre-check survey plans and cadastral maps for the general registration of land titles; and (2) preparing a national policy on land regularization; (iii)preparing an urban renewal plan for communities in and around downtown Kingston, including actions to address poor infrastructure and housing; (iv) preparing an urban renewal plan for inner city communities considering infrastructure and housing stock; 14 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 3. PROJECT COMPONENTS (CONT'D) Integrated Community Development Project (8356-JM) Component 3 - Institutional Strenghtening for Urban Management and Public Safety (Cont'): (a) Carrying out capacity building activities for selected entities of the Borrower responsible for urban management through, inter alia (Cont'd): (v) carrying out capacity building activities, as required, for the borrower's governmental agencies responsible for the operation and maintenance of basic infrastructue, including: roads, water pipelines, sanitation facilities, drainage works, educational facilities, community centers, public spaces, skips and drums. (b) Carrying out capacity building activities for selected entities of the Borrower responsible for public safety through, inter alia: (i) improving the coverage, range and distribution of data collected by the Crime Observatory, including, inter alia: (1) expanding coverage; (2) improving the software to analyze data collected; (3) carrying out capacity building activities for staff to analyze and disseminate a greater volume of information; (4) carrying out two Victimization Surveys; and (5) updating existing community profiles through the inclusion of new data on crime and violence and outreach to communities to obtain information; (ii) strenghtening the borrower's governmental agencies' capacity to: (1) carry out impact evaluation and evidence-based crime and violence reduction interventions; and (2) collect public safety data. (iii) providing training to community mobilizers and para-professionals for the incorporation of evidence-based principles and approaches for the implementation of Part 2(a) of the Project. Component 4 - Project Management: Supporting project management through, inter alia: (a) carrying out Project audits; (b) carrying out financial management and procurement requirements under the Project; (c) monitoring and evaluation of Project activities; (d) providing equipment and training for the PIU; (e) carrying out workshops and outreach activities to promote positive environmental and social behaviour related to the Project. 15 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 3. PROJECT COMPONENTS (CONT'D) Integrated Community Development Project (8356-3M) Component 4 - Project Management (Cont'd): Supporting project management through, inter alia (cont'd): (f) hiring an Independent Verification Agent for purposes of Part 1(h) (4) of the Project; (g) providing technical assistance to support: (i) crime and violence prevention activities under the Project; (ii) environmental and social management under the Project; and (iii) financial and procurement management under the Project; and (h) financing operating costs. Jamaica Disaster Vulnerability Reduction Project (8581-JM) The objective of the Project is to enhance the Borrower's resilience to disaster and climate risk. The Project consists of the following components: Component 1 - Technical Assistance for Improved Disaster and Climate Resilience Provision of goods, Consultants' Services and Training for: (a) strengthening the seismic monitoring network; (b) establishing a National Risk Information Platform to include the Coastal Risk Atlas; (c) preparing multi-hazard risk assessments for coastal areas, including ecosystems-based analyses and microzonation studies; (d) supporting implementation of the National Building Code; and (e) promoting public awareness related to climate change and disaster risk management. Component 2 - Risk Reduction: Retrofitting, constructing or rehabilitating priority infrastructure (bridges and urban drainage); retrofitting or constructing and equipping critical public facilities (schools and fire stations); and establishing or improving coastal protection measures, all identified in agreement with the Bank, through the provision of goods, works, and consultants' services. 16 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 3. PROJECT COMPONENTS (CONT'D) Jamaica Disaster Vulnerability Reduction Project (8581-JM) Component 3 - Contingent Emergency Response: To improve the borrower's response and recovery capacity in the event of an eligible crisis or emergency, as needed. Component 4 - Project Administration: Programme management costs, which include: Project audits, monitoring and evaluation, equipment, training and operating costs. Second Rural Economic Development Initiative (REDI II) Project (9017-JM) The objective of the Project is to enhance access to markets and to climate-resilient approaches for targeted Beneficiaries. The Project consists of the following components: Component 1- Climate-resilient Agricultural and Community Tourism Investments for Rural Enterprises: Promote the development of agricultural and community tourism rural enterprises to operate competitively in selected value chains, through the: 1.1. provision of support for the promotion, identification, carrying out of feasibility studies, design and implementation of climate resilient business investments in the agricultural, fisheries and community tourism sectors ("Rural Enterprise Sub-projects"); and 1.2. provision of grants for the implementation of Rural Enterprise Sub-projects Component 2 - Institutional Strengthening and Capacity-building for Public Entities: Strengthening the capacity of Public Entities to provide access to public infrastructure and the services needed to promote inclusive development in rural areas; and contributing to the sustainability of Rural Enterprise Sub-projects, through the: 17 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 3. PROJECT COMPONENTS (CONT'D) Second Rural Economic Development Initiative (REDI II) Project (9017-JM) Component 2 - Institutional Strengthening and Capacity-building for Public Entities (Cont'd): 2.1. provision of grants ("Public Entity Grants") for the construction, rehabilitation improvement, furnishing and equipping of priority small public infrastructure to improve efficiency and climate resilience of selected value chains and to enhance the viability and success of the Rural Enterprise Sub-projects ("Public Entity Sub- projects"); and 2.2. provision of technical assistance and capacity building to relevant selected Borrower's public institutions responsible for assisting Rural Enterprises in their implementation of Rural Enterprise Sub-projects. Component 3- Project management: Provision of support for the implementation, coordination, monitoring, evaluation, and management of the Project, including financial management and procurement activities, Project audits, and monitoring and evaluation of environmental and social safeguards. Component 4 - Contingent Emergency Response: Provision of immediate response to an Eligible Emergency, as needed. 4. MANAGEMENT REPORT The Annual Report is submitted by management for the Integrated Community Development Project (ICDP), the Jamaica Disaster Vulnerability Project (JDVRP) and the Second Rural Economic Development Initiative Project (REDI II) year ended March 31, 2021. 5. AUDITING OF THE PROJECT The Project is currently audited by the Auditor General's Department of Jamaica. The Auditors Auditor General's Department 40 Knutsford Boulevard Kingston 5 Jamaica 18 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 6. SIGNIFICANT ACCOUNTING POLICIES I) Basis of Preparation These financial statements are prepared under the historical cost convention, using the cash basis of accounting, in accordance with the IPSAS Cash Basis: Financial Reporting under the Cash Basis Accounting. Cash Basis accounting recognises transactions and acts only when the cash and/or cash equivalent is received or disbursed by the entity, and not when they give rise to, accrue or originate rights or obligations. This accounting policy is a comprehensive basis of accounting other than that required under International Financial Reporting Standards (IFRS), where transactions should be recorded when they are paid and not when they are occur. II) Recording of Transactions Transactions are entered in local currency. However, transactions are converted into the United States of America currency for preparation of the financial statements, unless otherwise stated. Receipt and expenditure in local currency are translated into US dollars, by applying the applicable exchange rate. This will result in the recognition of foreign exchange gains or losses. Ill) Fluctuation rate 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 the Government of Jamaica. 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. V) Exchange Rate for the period Expenses paid from the Jamaican dollar project accounts held with Sagicor Bank Jamaica Limited and National Commercial Bank Jamaica Limited, were converted by applying the applicable exchange rate. This gives rise to the recognition of foreign exchange gains or losses. 19 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 7. DISBURSEMENT REQUEST This represents the total advance issued to the respective Loans by the IBRD for the current and cumulatively to March 31, 2021. (a) Integrated Community Development Project (ICDP): Advance Request Date Advance Number Amount US$ Balance as at April 1, 2020 37,092,357 June 3, 2020 14A 1,700,000 October 2, 2020 16A 2,070,325 January 14, 2021 17 48,142 Total receipt for the year ended March 31, 2021 3,818,467 Cumulative Advance as at March 31, 2021 40,910,824 (b) Jamaica Disaster Vulnerability Reduction Project (JDVRP) Advance Request Date Advance Number Amount US$ Balance as at April 1, 2020 7,888,065 May 28, 2020 16 4,176,113 January 14, 2021 18 754,355 Total receipt for the year ended March 31, 2021 4,930,468 Cumulative Advance as at March 31, 2021 12,818,533 20 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 7. DISBURSEMENT REQUEST (CONT'D) (c) Rural Economic Development Initiative 2 Project (REDI 2) Advance Request Date Advance Number Amount US$ Balance as at April 1, 2020 July 20, 2020 1 325.635 January 11, 2021 2 224,047 Total receipt for the year ended March 31, 2021 549,682 Cumulative Advance as at March 31, 2021 549,682 8. SOURCE OF FUNDS (ICDP, JDVRP and REDI II) The amount of US$ 9,298,617 (2020: US$19,217,205) was received from the World Bank for the period reviewed; with a cumulative funds received of US$54,279,039 (2020: US$44,980,422). Year ended Cumulative to March 31, 2021 March 31, 2021 US$ US$ ICDP 3,818,467 40,910,824 DVRP 4,930,468 12,818,533 REDI II 549,682 549,682 9,298,617 54,279,039 21 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 8 Advance from Government of Jamaica During the year the Government of Jamaica paid project administrative cost on behalf of the projects. Year ended March 31, 2021 US$ IBRD (ICDP) 243,316 IBRD (JDVRP) 41,838 REDI II 31,733 9. USE OF GRANT FUNDING (ICDP, JDVRP and REDI II) Total funds invested during the period amounts to approximately US$11,749,748 (2020: US$17,847,398); with a cumulative investment of US$53,468,849 (2020: US$41,719,102). Year ended Cumulative to March 31, 2021 March 31, 2021 US$ US$ IBRD (ICDP) 5,042,531 40,519,431 IBRD (JDVRP) 6,112,348 12,354,549 REDI II 594,869 594,869 11,749,748 53,468,849 10. CASH AVAILABILITY (ICDP, JDVRP and REDI II) The cash available as at March 31, 2021, as expressed in US dollars is: March March 31, March 31, Total Total 31,2021 2021 2021 March 31, March 31, DVRP ICDP REDI II 2021 2020 US$ US$ US$ US$ US$ Bank of Jamaica 2,286 449,361 3,311 454,958 354,446 National Commercial Bank - 420,424 - 420,424 1,363,478 Sagicor Bank 522,149 - 80,437 602,586 1,775,376 Available cash balance 524,435 869,785 83,748 1,477,968 3,493,300 The Designated account held at BOJ is used to hold monies advanced on Loan for the purpose of making payments for eligible expenses relating to the Project. Monies are periodically transferred from the Designated account to the Projects' local currency account, held at NCB and Sagicor Bank from which such expenses are paid directly. 22 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 11. CASH MOVEMENT Available cash Funds received Project Available cash resources as at during the (outflows) less resources as at year ended recoveries March 31, March 31, March 31, 2020 2021 2021 March 31, 2021 US$ US$ Us$ US$ IBRD (ICDP) 1,775,862 3,818,467 (4,724,544) 869,785 IBRD (JDVRP) 1,717,438 4,930,468 (6,123,471) 524,435 REDI II - 549,682 (465,934) 83,748 3,493,300 9,298,617 (11,313,949) 1,477,968 Variance in the Project (outflows) less recoveries as at March 31, 2021 above, in comparison to the cumulative investment showed on the Statement of Sources and Uses of Funds (Page 5) and the Statement of Cumulative Investment by Categories (page 6) for the ICDP, JDVRP and REDI II Project, respectively, is due to the foreign exchange gain/(loss) and documented expenditure adjustments. * ICDP - Foreign exchange gain of US$130,077 * DVRP - Foreign exchange loss of US$56,387 * REDI II - Foreign exchange loss of US$2,798 23 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 12. FIXED ASSETS (a) Integrated Community Development Project (ICDP): Furniture, Fixtures & Motor Computer Equipment Vehicle Total Cost US$ US$ US$ US$ Balance at Ist April 2020 108,667 34,193 158,418 301,278 Additions 93,570 - - 93,570 Balance at 31st March 2021 202,237 34,193 158,418 394,848 (b) Jamaica Disaster Vulnerability Reduction Project (JDVRP): Furniture, Fixtures & Motor Computer Equipment Vehicle Total Cost US$ US$ US$ US$ Balance at I'" April 2020 29,593 1,383 50,012 80,988 Additions 2,522 - - 2,522 Balance at 31s" March 2021 32,115 1,383 50,012 83,510 24 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD 13. LOAN FUNDING AVAILABLE: (a) Integrated Community Development Project (ICDP): Category Loan Disbursement Balance US$ US$ US$ Goods, works, non-consulting services, consultants' services and operating costs for parts 1(a) through to (h), 2,3 and 4 of the Project. 41,430,726 40,149,118 1,281,608 Goods to serve as RB Incentives for NSWMA under Part I (h)(4)(A) of the Project. 285,714 243,660 42,054 Salary supplement and goods and/or works under Sub-projects to serve as RB Incentives for Environmental Wardens and Community Based Organizations, respectively, all under Part 1 (h)(4)(B) of the Project. 178,560 21,654 156,906 41,895,000 40,414,432 1,480,568 Value of funds contracted as at March 31, 2021 is US$1,333,333 (2020: US$6,576,458) (b) Jamaica Disaster Vulnerability Reduction Project JDVRP): Category Loan Disbursement Balance US$ US$ US$ Goods, non-consulting services, consultants' services for component 1, and training for component 1(a) to (c) and (e). 3,465,000 1,419,856 2,045,144 Training for component 1(d) 350,000 - 350,000 Goods, works, non-consulting services, consultants' services for component 2. 23,610,000 9,874,415 13,735,585 Emergency expenditures under component 3. - - - Goods, non-consulting services, consultants' services, training and operating costs for component 4 2,500,000 985,278 1,514,722 29,925,000 12,279,549 17,645,451 n 25 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) & Rural Economic Development Initiative 2 Project (9017-JM) Notes to the Financial Statements Year Ended March 31, 2021 Expressed in USD The total documented disbursement for the current year of US$12,356,828 was overstated by US$53,231 due to a foreign exchange conversion. This would result in the cumulative disbursement being US$12,303,597; adjustment will be reflected in the subsequent expenditure documentation. Value of funds contracted as at March 31, 2021 is US$6,275,759 (2020: US$12,861,272). (c) Rural Economic Development Initiative 2 Project (REDI 2): CategorV Loan Disbursement Balance US$ US$ US$ Goods, works, non-consulting services, consultants' services, training and workshops, operating costs under Parts 1, 2 and 3 of the 39,900,000 494,869 39,405,131 Project. 39,900,000 494,869 39,405,131 Value of funds contracted as at March 31, 2021 is US$281,266 (2020: US$0). The REDI II project commenced during the reporting period. 14. COVID-19 PANDEMIC IMPACT: COVID-19 has significantly impacted our business activities for the year 2020/2021. Measures taken by the Government to contain the virus resulted in changes to our operating procedures including: * Closure of work sites for extended periods * New protocols developed and implemented at all locations including JSIF's administrative office * Weather conditions which impacted on infrastructure work * Contracts incurring variations relating to additional measures, and extension of time due to the impact of COVID- 19 * Increase use of technology to facilitate "work from home" initiative was introduced * Loss of man-hours as work from home policy was mandatory for government agencies Despite the adverse conditions brought on by COVID-19, JSIF achieved 97% of the projects' expenditure target for the fiscal year, having disbursed $1.6 billion of the allotted space of $1.7 billion. 26 AUDITOR GENERAL'S DEPARTMENT 40 KNUTSFORD BOULEVARD P.O. BOX 455 KINGSTON 10 JAMAICA Tel. No.: 926-8309/926-5963/926-5846 Fax Number: 968-4690 Email: audgen5@cwjamaica.com JAMAICA SOCIAL INVESTMENT FUND INTEGRATED COMMUNITY DEVELOPMENT PROJECT (8356-JM) and JAMAICA DISASTER VULNERABILITY PROJECT (8581-JM) RURAL ECONOMIC DEVELOPMENT INITIATIVE PROJECT (9017-JM) Period ending March 31, 2021 AUDIT OF STATEMENTS OF EXPENDITURE (SOE) PROCEDURES In the course of the Audit of the Integrated Community Development Project, Jamaica Disaster Vulnerability Project and the Rural Economic Development Initiative Project for the period ended March 31, 2021, I examined the following statements of expenditure submitted to the IBRD during the financial year under review in support of applications for advance of funds from the Loan Accounts in accordance with the Loan Agreements: (a) Integrated Community Development Project (ICDP): Date of Disbursement Disbursement Number Request US$ 14A May 22, 2020 1,700,000 16A September 30, 2020 2,070,325 17 December 3, 2020 48,182 Total 3,818,507 (b) Jamaica Disaster Vulnerability Reduction Project (JDVRP): Date of Disbursement Disbursement Number Request US$ 16 May 14, 2020 4,176,114 18 November 27, 2020 754,355 Total 4,930,469 c) Rural Economic Development Initiative Project (REDIP): Date of Disbursement Disbursement Number Request US$ May 11, 2020 100,000 1 July 13, 2020 325,635 2 November 27, 2020 224,047 Total 649,682 27 The examination was done in accordance with generally accepted auditing standards and procedures prescribed by INTOSAI and accordingly, included 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. Oinion 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 Loan Agreement. Auditor General of Jamaica 2021 September 29 Date This document is not intended for public scrutiny