Cables and Telegrames: MINLANDS MINISTRY OF LANDS AND Telephone: 233-302-687314 ,Tel/Fax: 233-302-666801 NATURAL RESOURCES P. 0. Box M 212 Accra. In case of reply, the number and date of this letter should be quoted. Our Ref. No ... b./J=t- £.J.f ./..~.~JP.. 28th Jun e, 20 I 7 Your Ref. No.................................... REPUBLIC OF GHANA ............................ 20 .......... . World Bani< Office Ghana Y:M ::~::nancial Management Specialistt!;t~ Dear Sir, Subr:riission of Audited£inancial Re ort On yhana Forest Investment Pro·ect E~FAL Fgr_ ec;_ember 3 I 20 16. .The Year Ended D_ \,Ve. forw ard herewith aud ited Financial Report on Gh ana Forest Investm ent Project (ENFAL) :,> the' yea r e nded Decem be r 3 Ist, 20 16 fo r your necessary action You rs fai thfully, ·.-~ :~ : . '. MINISTRY OF LANDS & NATURAL RESOURCES P. 0. BOX M212 ACCRA REPUBLIC OF GHANA GHANA FDREST INVESTMENT PRDGRAMME (GFIP) MINISTRY DF LANDS 6 NATURAL RESDURCES (MLNR) [IDA SCF GRANT No. TFl8842] PRDGRAMME FINANCIAL STATEMENTS 31 DECEMBER 2DIG TABLE OF CONTENTS PAGE REFERENCE GENERAL INFORMATION INDEPENDENT AUDITOR'S REPORT ON PROJECT FINANCIAL 2-3 STATEMENTS STATEMENT OF FINANCIAL POSITION 4 STATEMENT OF SOURCES AND USES OF FUNDS (COMPONENT 5 CLASSIFICATION) STATEMENT OF SOURCES AND USES OF FUNDS (CATEGORY CLASSIFICATION) 6-7 ACTIVITY AND VARIANCE REPORT 8 NOTES TO THE FINANCIAL STATEMENTS 9 - 11 GENERAL INFORMATION PROJECT BACKGROUND Objective: The Ghana Forest Investment Programme (GFIP) is a targeted program under the Strategic Climate Fund (SCF) to finance efforts to address the underlying causes of deforestation and forest degradation and to overcome barriers that have hindered past efforts. As well as to strengthen institutional capacity in forest resources management, improve governance, strengthen the regulatory mechanisms, streamline tenure and tree rights, improve local livelihoods and enhance resilience to climate change. Key components: Component 1: Policy Reforms and Institutional Strengthening Component 2: Pilot Investments for Improved Forest and Landscape Management Component 3: Innovation, Capacity Building and Communications Component 4: Project Management, Monitoring and Coordination Source of funding: The GFIP is financed primarily through a grant agreement between Government of Ghana and the International Development Association (IDA), acting as an implementing entity of Forest Investment Programme under the SCF. Grant Amount: US$ 29,500,000.00 Start date: April 2015 End date: June 2020 Implementation Agencies: • Ministry of Lands and Natural Resources (MLNR) • Forestry Commission (FC) • COCOBOD • Forestry Research Institute of Ghana (FoRIG) PROJECT MANAGEMENT TEAM Prof. Bruce Banoeng- Yakubo - Chief Director, MLNR Mrs. Gifty Mahama Biyira - Director, Finance & Admin . Mr. Musah Abu-Juam (Project Coordinator) Mr. Tabi Agyarko (Project Manager) Mr. Charles M. Seniagyah (Financial Controller) Mr. Joseph Abbey (Procurement Manager) Mr. Mathew T. Ababio (Director PPMED) Mr. Jospeh Osiakwan (Policy & Communication) Mr. Stephen Frimpong (Project Accountant) Mr. Daniel Nsowah (Safeguard Focal Person) ADDRESS Ghana Forest Investment Program Management Unit Ministry of Lands & Natural Resources (MLNR) P. 0 . Box MB 212, Accra AUDITORS Ghana Audit Service Post Office Box MB 96 Accra, Ghana BANKERS Bank of Ghana 1 AUDIT SERVICE In case of reply the number and date of the letter should be quoted V~~~- My Ref. No:...'?.~~/.~.~~~: N.22/6 Good Governance Your Ref. No~ ................................ . and Accountability P. 0. Box.............. M ...96................................. .. Tel: 233 (0) 302 664920/28/29 ACCRA ............................................................................... Fax: 233 (0) 302 6751495 Website: www.ghaudit.org 28 June, 17 ........................................................... 20 .............. INDEPENDENT AUDITOR'S REPORT TO THE CHIEF DIRECTOR, MINISTRY OF LANDS & NATURAL RESOURCES REPORT ON THE PROJECT FINANCIAL STATEMENTS We have audited the accompanying project financial statements of the Ghana Forest Investment Programme (GFIP) which comprise the statement of financial position for the period ending 31 December, 2016, and the statement of sources and uses of funds for the period ended, as well as a summary of significant accounting policies as set out in Note 1. Management's responsibility for the project financial statements The financial statements are the responsibility of the Project Coordinating Unit (PCU) under the Ministry of Lands and Natural Resources (MLNR). The GFIP-PMU is responsible for the preparation and fair presentation of these Project Financial Statements in accordance with generally accepted accounting standards and provisions of the Grant Arrangement (SCF Grant No. TF018842) as well as the selection and application of accounting policies set out in Note 1. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation of the GFIP financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances . Auditor's responsibility Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards of Supreme Auditing Institutions (ISSAls) and the Grant Agreement and World Bank Project Implementation guidelines. Those standards require that we comply with the ethical requirements, and plan and perform the audit to obtain reasonable assurance whether the project financial statements are free from material misstatement whether caused by fraud, other irregularity or error. An audit includes performing procedures to obtain audit evidence about the amounts and disclosures in the project financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the 2 project financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the project financial statements 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management team, as well as evaluating the overall presentation of the financial statements. We believe that we have obtained sufficient appropriate audit evidence to provide a basis for our audit opinion . Opinion In our opinion , the project financial statements present fairly, in all material respects, the financial position of GFIP as at 31 December, 2016, and the results of its operations for the period and the accounting policies set out in Note 1 of the Project financial statements as well as GFIP Grant Arrangement (Grant No. TF018842). Report on compliance In addition, the PCU has complied, in all material respects , with the covenants of the GFIP Grant Arrangement (Grant No. TF018842) and Government rules and regulations for the period ended 31 December, 2016. Restriction of use This report is intended solely for the use of the Management of the project, IDA, and the Government of Ghana, and should not be used for any other purpose . Signed by: ;.;:;") , r.t:i:fl..,. Oc---6' ~ _A.; ROBERTA ASSIAMAH-APPIAH (MRS) DEPUTY AUDITOR-GENERAL, EIDA FOR: AUDITOR-GENERAL 3 GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES STRATEGIC CLIMATE FUNDED GRANT No. TF18842 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER, 2016 2016 2015 NOTES US$ US$ Non-current assets Property, Plant & Equipment 3 1,640,044.48 0.00 Accumulated Non capital expenditure 4 2,347,660 .32 318,603.86 3,987,704.80 318,603.86 Current assets Bank balances 4 5,110 ,871.92 1,459,345.99 Advances to Implementing Agencies 5 749,967 .71 222,050.15 5,860,839.63 1,681,396.14 Net Total Assets 9.848.544.43 2.000.000.00 Financed by Proceeds from SCF Grant 6 9,848,544.43 2,000,000 .00 9.848.544.43 2.000.000.00 Signed : Financial Controller Mr. John Wallace Koomson Date: ~Tu- J ~F, ;)....£)\ ( The attached notes 1 to 10 form an integral part of these financial statements. 4 I GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES STRATEGIC CLIMATE FUNDED GRANT No. TF18842 STATEMENT OF SOURCES AND USES OF FUNDS BY COMPONENT FOR THE YEAR ENDED 31 DECEMBER, 2016 2016 2015 NOTES US$ US$ Sources of funds Balance as at 1st January 1,681,396.08 0.00 SCF Grant Funds 7,848,544.43 2,000,000.00 9,529,940.51 2,000,000.00 Uses of funds Component 1: Policy & Institutional 7 254 ,231.69 0.00 Reforms Component 2: Pilot Investment for Improved Forest and Landscape Management 8 2,668,920.29 127,260.07 Component 3: Innovation, Capacity 9 Building & Communication 315 ,863.81 140,277.63 Component 4: Project Monitoring & 10 Evaluation 430,085.09 51,066.16 (3,669.100.88) (318,603.86) Net Cash Flow 5,86!:M139.63 1,681,396.14 Bank and cash balance as at 31 December, 2016 Project Special Account 5,110,871 .92 1,459,345.99 Unretired Advances to Implementation Agencies 749,967.71 222,050.15 Net Cash Available 5,860,839.63 1,681,396.14 The attached notes 1 to 10 form an integral part of these financial statements. 5 I GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES STRATEGIC CLIMATE FUNDED GRANT No. TF18842 STATEMENT OF SOURCES AND USES OF FUNDS BY CATEGORY FOR THE YEAR ENDED 31 DECEMBER, 2016 2016 2015 US$ US$ Sources of funds Balance as at 1st January 1,681 ,396.08 0.00 SCF Grant Funds 7,848,544.43 2,000,000.00 9,529,940.51 2,000,000.00 Uses of funds Component 1 1.1 Stakeholders forum to validate preferred tree tenure 5,002.74 0.00 1.3 Build policy consensus on benefit sharing 19,276.32 0.00 1.6 Guidelines for operationalizing the National Plantation Strategy 0.00 0.00 1.7 Support implementation of Forest & Wildlife policy 0.00 0.00 1.8 Conduct extensive education and awareness creation 0.00 0.00 1.9 Developing guidelines for implementation and dissemination 121 ,848.42 0.00 1.10 Organize consultative workshops 80,723.86 0.00 1.11 Conduct stakeholders analysis and review roles 37,722.46 0.00 264,573.80 0.00 Component 2 2.1 Securing trees in key landscapes in community 95,275.44 0.00 2.2 Enhancing trees and smart cocoa practices 0.00 0.00 2.3 Support integrated landscape level planning 81 ,750.18 17,105.24 2.4 Reducing further degradation of permanent forest estates 1,776,354.27 39,578.98 2.5 Enhancing carbon stocks 121 ,332.51 10,368.44 2.6 Enrichment planting, nurseries and native species 570,646.65 78,929.51 2,645,359.05 145,982.17 Component 3 3.1 Training 104,206.88 12,543.92 3.2 Implementation and mainstreaming of safeguards in project 42,469.13 9,759.19 3.3 Communication 0.00 96,034.74 3.4 Innovation 112,119.19 3,217.68 258,795.20 121,555.53 Component 4 4.1 Procurement of goods 167,735.94 0.00 4.2 Procurement process 28,656.99 0.00 4.3 Financial Management 32,898.06 3,956.43 4.4 Project monitoring and evaluation system 61 ,547.93 5,966.05 4.5 Project coordination 197,252.76 41,143.68 4.6 PMU consultants and assistant consultants 12,281.15 0.00 500,372.95 51,066.16 3,669,100.88 (318,603.86) 6 I Net Cash Flow 5.860.839.63 1.681.396, 14 Bank and cash balance as at 31 December Project Special Account 5,110,871 .92 1,459,345.99 Unretired Advances to Implementation Agents 749,967.71 222,050.15 Net Cash Available 5.860.839,63 1.682.337,37 The attached notes 1 to 10 form an integral part of these financial statements. 7 I GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES STRATEGIC CLIMATE FUNDED GRANT No. TF18842 STATEMENT OF ACTIVITY AND VARIANCE REPORT BY EXPENDITURE FOR THE YEAR ENED 31 DECEMBER, 2016 Budget Actual Variance Project Budget Expenditure Component US$ US$ US$ 1.1 Civil Works 547 ,000 .00 0.00 547 ,000.00 1.2 Goods and Supplies 4,155,000 .00 1,640 ,044.42 2,514 ,955.58 1.3 Consulting Services 1,543 ,750 .00 24 ,448 .63 1,519 ,301 .37 1.4 Training , Tours and Workshop 2,126,500 .00 692 ,955 .36 1,433,544 .64 1.5 Non-Consulting Services 832 ,000 .00 396,478 .18 435 ,521 .82 1.6 Operational Cost 1,219,000.00 915 ,174.29 303,825.71 Grand Total 10,423,250.00 3,669,100.88 6,254,149.12 8 I GHANA FOREST INVESTMENT PROGRAMME (GFIP) MINISTRY OF LANDS AND NATURAL RESOURCES STRATEGIC CLIMATE FUNDED GRANT No. TF18842 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2016 1. Significant Accounting Policies The following is a summary of the significant accounting policies adopted in the preparation of the financial statements: Basis of accounting The financial statements of GFIP are prepared on cash basis and under historical cost convention. Under the historical cost convention, assets and liabilities are reflected or disclosed in the financial reports at the cost incurred or price paid at the time of transaction . Property, plant and equipment Property plant & equipment acquired by PCU are stated at cost and shall not be depreciated. Cost of repairs and maintenance incurred on any fixed asset shall be expensed in the period during which it was paid . Receipts and payments Revenues are recognised when funds are received from the International Bank for Reconstruction and Development (World Bank) acting as Implementing Agency of the SCF and expenditures are accounted for in the year when goods and services are incurred and paid. Non capital expenditure This reflects actual cash expenditure accounting for expenses such as consultancy, trainings or seminar and operating costs incurred during the period . Consultancy Services This represents the cost of local and external consultants' service to provide expert skills to PCU in achieving FIP deliverables. Training, Seminars and Conferences This represents the cost of organizing and attending training and workshops in consultative meetings with key stakeholders' activities including but not limited to civil society, private sector, local, regional and national government representatives in support of the development and stakeholder validation consultations on project activities . 9 I Operating Expenses This relates to the administrative and office running cost of the PCU and other Implementation Agencies. 2. Property, Plant & Equipment Opening balance Additions Closing balance 01/01/2016 During the period 31/12/2016 US$ US$ US$ Office Equipment 0 00 150,609.57 150,609. 57 Heavy Duty Trucks 0.00 68,645.17 68,645.17 Motor Vehicles 0.00 1,420,789.74 1,420,789.74 0.00 1 640 044.48 1 640 044.48 3. Non capital expenditure Opening balance Additions Closing balance 01/01/2016 During the period 31/12/2016 US$ US$ US$ Consultancy 0.00 24,448 .63 0.00 Training , Seminars and Conferences 108,551 .59 692,955.36 801 ,506.95 Non-Consulting Services 0.00 396,478 .18 396,4 78.18 Operating expenses 210,052 .27 915 ,174.29 1,125,226.56 318 603.86 2,029,056.46 2,347_,§§0.31 4. Bank and cash balances Bank balances represents the available cash for project related disbursement activities . 2016 2015 US$ US$ Designated Special Account (US$) 5,109,770.58 1,458,685.57 Sub Designated account (Cedi Account) 1 101.34 660.42 5,110 ,971 .92 4~] ,_345:~9 1L 5. Advances to Implementing Agencies This represents unretired advances to Implementation Agents during the period. 2016 2015 Implementation Agency US$ US$ Forest Commission 518,691 .77 43,902 .60 Ghana Cocoa Board 174,248.40 108,147.55 Forestry Research Institute of Ghana 57,027 .54 70,000.00 749,967.71 222,050.15 10 I 6. Finance by This represents IBRD-SCF disbursement withdrawal application receipts to PCU towards GFIP work planned activities. 2016 2015 US$ US$ Opening Balance 2,000,000.00 0.00 Additions 7,848,544.43 2,000,000.00 Closing Balance 9,848,544.43 2,000,000.00 7. Component 1: Policy & Institutional Reforms 2016 2015 US$ US$ Training, Tours & Workshop 168,576.41 0.00 Operational Cost 85,655.28 0.00 254,231.69 0.00 8. Component 2: Pilot Investment for Improved Forest and Landscape Management 2016 2015 US$ US$ Property, Plant & Equipment 1,496,217.47 0.00 Consulting Services 24,448.63 0.00 Training, Tours & Workshop 185,935.72 2,631.58 Non-Consulting Services 396,478.18 0.00 Operational Cost 565,840.29 124,628.49 2,668,920.29 127,260.07 9. Component 3: Innovation, Capacity Building & Communication 2016 2015 US$ US$ Training, Tours & Workshop 125,498.37 104,037.43 Operational Cost 190,365.44 36,240.20 315,863.81 140,277.63 10. Component 4: Project Monitoring & Evaluation 2016 2015 US$ US$ Property, Plant & Equipment 143,827.01 0.00 Training , Tours & Workshop 212,944.86 1,882.58 Operational Cost 73,313.28 49,183.58 430,085.15 51,066.16 11 I