PAN AFRICAN CLIMATE JUSTICE ALLIANCE (PACJA) PROJECT NAME: ‘Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD+’ AUDIT REPORT FOR THE PERIOD 1st January 2018 to 31st December 2018 Prepared by: Matengo & Associates Certified Public Accountants (K) Financial & Management Consultants P. O Box 67603-00200 Nairobi Kenya Tel +254 20 2373661/020-2420016 Email: info@matengo-associates.com Website: www.matengo-associates.co.ke Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 TABLE OF CONTENTS Particulars Page Project Information 1-5 Statement of Management Responsibilities 6 Report of the Independent Auditors 7-9 Fund Accountability Statement 10 Statement of Financial Position 11 Notes to the Financial Statements 12-14 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 PROJECT INFORMATION Board Members Mithika Mwenda : Continental Secretariat Augustine Njamnishi : Central Africa John Bideri : East Africa Fathiya Abdulmajid : Head of Finance Registered Office Kabarnet Road, Off Ngong Road, House No. J 13, P.O.Box 51005-00200, Nairobi. Kenya. Principle Bankers Standard Chartered Bank of Kenya Moi Avenue Branch P.O Box 30003 – 00100 Nairobi, Kenya. Donor World Bank FCPF Grant No. TF0A2298 Pan African Civil Society Forest Carbon Partnership Facility Capacity Building Program on REDD+ Project Project Auditors Matengo & Associates, CPA (K) Financial & Management Consultants Wood Avenue, Lenana Road Kilimani P.O Box 67603 Nairobi, Kenya E-mail: info@matengo-associates.com 1 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 1. Project Objective Reducing Emissions from deforestation and forest degradation, conservation of forest carbon stocks, sustainable management of forest and enhancement of forest carbon stocks 2 Project Achievement The national capacity building activities have contributed towards creating awareness to the target communities and CSOs on climate change, REDD+ and sustainable forest management majorly through conducting mass awareness forums and national sensitization campaigns, training workshops, mass caravans, media engagement and stakeholder engagement. This has contributed to equipping them with skills to participate meaningfully in REDD+ processes and to manage their forests in a sustainable manner. Through participation in the national capacity building activities, there has been an increase in the number of beneficiaries who have taken part in REDD+ activities/processes especially at the national level. The project has fostered synergies and good working relationships among various stakeholders working on REDD+ issues. For instance, in the 5 countries, the sub- grantees have received support from the national REDD+ secretariats who have also taken part in providing technical assistance during the national capacity building activities. The regional workshops have facilitated knowledge sharing and dissemination within the project, enhanced sustainable partnerships and strengthened capacities for effective engagement of civil society organizations in the REDD+ process. A platform for information exchange between Africa CSO networks has been strengthened and CSOs are more informed and equipped with the capacity to participate meaningfully in national and regional REDD+ readiness processes and dialogues. 3. Audit Objectives The objective of the audit is to express an opinion on whether the project financial reports are fairly stated and that the expenditure incurred is accurate and eligible. The audit intended to confirm whether the objectives of the projects were realized, by determining the following processes: (i) Compliance to the contract requirements and that expenditure incurred is applied solely for the achievement of the project objectives, (ii) Ascertain that the funds have been accounted for in accordance with the auditing standard 800- Auditors Report on Special Purpose Audit Engagements, (iii) Confirm that the funds have been accounted for in accordance with the generally accepted accounting principles, (iv) Ensure that the funds have been used in accordance with the application and letter of allocation. 2 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 4. Project Fund Status The Projects’ income in the period consists of grants from World Bank to the best of our knowledge and based on the confirmation from management, no income related to the projects has been left out of the Fund Accountability Statements has the total income received was utilized for the Project Activities. 5. Audit Scope The audit covers all financial aspects of the project for the period 1st January 2018 to 31st December 2018. We carried out our examinations on test basis of evidence relevant to the amounts and disclosures in the project financial statement and records as well as other project information. The audit confirmed the following during the audit: • All funds disbursed under the Project are eligible, have been used, accounted for and classified in accordance with the relevant Loan/Grant agreements and all the disbursements made on behalf of the project are in accordance with the World bank disbursement guidelines; • The PFS are prepared in accordance with the International Financial Reporting Standards, under the cash basis of accounting and give a true and fair view of the financial operations of the project within the year. Any material deviations from those standards and the impact of such departures on the project financial statements as presented would be stated; • An assessment of the effectiveness of the internal controls over financial reporting involved in the preparation of replenishments, direct payments, payments through special commitments, and reimbursements i.e. expenditures reimbursed on the basis of Statements of Expenditures can be relied upon to support the related withdrawals; • Goods and services financed have been procured in accordance with World Bank Procurement Guidelines updated in May 2004 and October 2006; • All necessary copy of supporting documents, records, and accounts have been kept in respect of all projects. Clear linkages should exist between the books of account and the Project Financial Statements (PFS) presented to the Bank; • Where Special/Designated Accounts have been used, they have been maintained in accordance with the provisions of the relevant Loan/ Grant agreements; 3 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 5. Audit Scope (Cont.) • Project expenditures as reported by the Governing Body are reconciled with the amounts withdrawn from the Special/ Designated Account and the amounts deposited to the Special/ Designated account are reconciled with the amounts disbursed from the Loan/ Grant agreements. • Eligibility of expenditures claimed under Statement of Expenditures submitted to the World Bank for replenishment. This is in addition to substantiation of these expenditures; • An assessment of project implementation and whether financial and physical progress is consistent during the project period. The monitoring of the expenditures in relation to physical progress is validating that physical progress and disbursements are under proper financial control • Ensure that the fixed assets financed by the project are purchased in accordance with contracts and payment documents, are used for the purpose for which they were acquired and are physically existent; • Verify that checks are signed by those authorized by management and negotiated by the intended payee under a specific contract and as required under the terms of the Loan/Grant agreements; 6. Audit Coverage Based on our control and risk assessment, we selected and audited 100% of total expenditure in the Fund Accountability Statements for the financial period under audit. 7. Cash and Cash Equivalent We did not perform any surprise cash count during the audit assignment as our appointment was after the project period. The funds received for the projects were banked in separate accounts as detailed in the grant agreement. Our checks did not reveal any unauthorized movements in the bank balances. No interest was charged on the funds. We checked that no interest was accrued in the period as regards bank balances. Consequently, no such interest income has been booked as income in the Fund Accountability Statements. 4 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 8. Laws, Regulations and Fraud considerations. During our audit, we did not become aware of any matters indicating or giving rise to suspicion of fraudulent actions materially affecting the Project Funds and any acts or omissions affecting the projects, its participants or employees, which would give reason to believe that members of the project management may be liable in damages or incur criminal liability. 9. Other Information We confirm that, except for the matters noted above: (i) We complied with generally accepted qualification and independence requirements for purposes of the audit; (ii) That we have received all information requested and considered necessary to perform the audit; (iii) That we consider the Financial Statements to be based on correct book-keeping and accounting practices. 5 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 STATEMENT OF MANAGEMENT’S RESPONSIBILITIES The management has the responsibility to prepare Fund Accountability Statements which give a true and fair view of the state of affairs of the projects as at the end of the financial period. They are also required to ensure that the programme keeps proper accounting records which disclose, with reasonable accuracy, the financial position of the project. The management is also responsible for safeguarding the assets of the programme. The management certifies that to the best of their knowledge and belief, the information furnished to the auditors for the purpose of the audit was correct and complete in all respects, and in their opinion the statement gives a true and fair view of the state of the financial affairs of the programme. The management further accepts the general responsibility for the maintenance of accounting records, which may be relied upon in preparation of Fund Accountability Statements, as well as adequate systems of internal control. Approved by the management and signed on its behalf by: __25th June 2019______ 25th June 2019______ Date Date 6 M&A MATENGO & ASSOCIATES Financial & Management Consultants Apartment B6 Wood Avenue, Lenana Road P O BOX 67603- 00200 City Square Kilimani Nairobi, Kenya 2nd Floor Tel: 254-20-2420016 E-mail : info@matengo-associates.com REPORT OF THE INDEPENDENT AUDITORS Opinion We have audited the accompanying Fund Accountability Statement for the period ended 31st December 2018 set out on page 8, implemented by Pan African Climate Justice Alliance – PACJA- in accordance with the accounting policies described on page 10. The statement has been prepared by management of Pan African Climate Justice Alliance based on the provisions of the grant letters between Pan African Climate Justice Alliance and World Bank. In our opinion, the accompanying Fund Accountability Statement present fairly, in all material respects, the grant revenues and allowable expenses of the project activities for the period ended 31st December 2018. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Fund Accountability Statement section of our report. We are independent of the Organization in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the Fund Accountability Statement in Kenya and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Information Pan African Climate Justice Alliance Management is responsible for the preparation and fair presentation of these fund accountability statements. Our opinion on the Fund Accountability Statement does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the Fund Accountability Statement, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Fund Accountability Statement or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard. 7 Responsibilities of Management and those Charged with Governance for the Fund Accountability Statement The Management is responsible for the preparation and fair presentation of the Fund Accountability Statement in accordance with IFRSs, and for such internal control as the Managements determine is necessary to enable the preparation of Fund Accountability Statement that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibilities for the Audit of the Fund Accountability Statement Our objectives are to obtain reasonable assurance about whether the consolidated Fund Accountability Statement as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs 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 Fund Accountability Statement. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the Fund Accountability Statement, 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 our 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 Organizations internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Management. • Conclude on the appropriateness of the Managements 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 Organizations ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the Fund Accountability Statement or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Organization to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the Fund Accountability Statement, including the disclosures, and whether the Fund Accountability Statement represent the underlying transactions and events in a manner that achieves fair presentation. 8 • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Organization to express an opinion on the Fund Accountability Statement. We are responsible for the direction, supervision and performance of the Organizations audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Basis of Accounting and Restriction on Distribution and Use Without modifying our opinion, we draw your attention to the significant accounting policies which describe the basis of accounting. It is common practice that the Fund Accountability Statement is prepared on the basis of cash receipts and payments. By using this practice, income will be included when received rather than when earned and expenditures will be included when paid rather than when incurred. As a result, the statement may not be suitable for another purpose. This report is solely intended for the information and use of Pan African Climate Justice Alliance and World Bank. The engagement partner responsible for the audit resulting in this independent auditor’s report is CPA Meshack Matengo P/No. 2061 __________________________________________ CERTIFIED PUBLIC ACCOUNTANTS NAIROBI 26th June 2019 Date 9 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 Fund Accountability Statement for the period ended 31st December 2018 Income Notes Budget Actual Variance USD USD USD % Balance B/F 84,795 68,365 16,430 19% Receipts 800,000 211,415 588,585 74% Total 884,795 279,780 605,015 68% Expenditure Project Activities National Capacity Building and Awareness Raising 3(a) 484,464 63,871 420,593 87% Component II: Regional Exchange and Sharing Lessons Learnt 3(b) 274,641 134,233 140,408 51% Sub-total Project Activities 759,105 198,104 561,001 138% Project related expenses Component III: Management, M&E and Reporting 4 125,690 47,073 78,617 63% Subtotal Project Related Expenses 125,690 47,073 78,617 63% Total Expenditures 884,795 245,177 639,618 200% Fund Balance 34,603 The Fund Accountability statement was approved by the following: __25th June 2019______ 25th June 2019______ Date Date 10 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 Statement of Financial Position for the period ended 31st December 2018 Notes USD Assets Advances 5 55,022 Cash at Bank 6 17,311 Total Assets 72,333 Equity and liabilities Equity Fund Balance 34,603 Total Equity 34,603 Liabilities Payables to PACJA 7 34,729 Accrued Audit Fees 3,000 Total 37,729 Total Equity and Liabilities 72,332 The Statement of Financial Position was approved by the following: __25th June 2019______ 25th June 2019______ Date Date 11 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 Notes to the Financial Statements 1. ACCOUNTING POLICIES The fund Accountability statements are prepared in accordance with Generally Accepted Accounting Principles adjusted to the provisions of the grant agreement and the principal accounting policies set out below. a) Basis of Accounting The fund accountability statement has been prepared on a cash basis of accounting which recognizes revenue when cash is received and expenses when cash is paid. b) Revenue Recognition Income represents grants received during the period. Grants from donors are accounted for when received. c) Funding The total grant received from the donor Pan African Climate Justice Alliance (PACJA) during the period was USD 211,415 and disbursed as follows: Particulars Date Amount Donor Grant 16.04.2018 27,000 Donor Grant 04.09.2018 29,415 Donor Grant 09.10.2018 70,000 Donor Grant 26.11.2018 85,000 211,415 d) Currency The Fund Accountability Statement has been presented in USD. e) Taxation No provision for tax or deferred tax is recognized as the project is exempt from taxation. 12 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 Notes to the Financial Statements Budget Actuals Variance USD USD USD % 2 Income Balance B/F 84,795 68,365 16,430 19% Receipts 800,000 211,415 588,585 74% Total 884,795 279,780 605,015 68% 3(a) National Capacity Building and Awareness Raising Assessment and Approval of Proposals 20,335 11,336 8,999 44% Contracting of Sub-grantees 2,400 - 2,400 100% Selected Recepients-2 Carbon Fund Countries@$50,000/8 Readiness Countries@$30,000 357,222 19,592 337,630 95% Consultations 15,000 13,844 1,156 8% Supervision & Implementation Support 58,007 9,700 48,307 83% Project Assistant 18,000 3,200 14,800 82% Documentation Costs 6,000 - 6,000 100% Meetings between CSO's for selection of Representatives (In-country) and training of selected representatives 7,500 6,199 1,301 17% Total 484,464 63,871 420,593 87% Component II: Regional Exchange and Sharing 3(b) Lessons Learnt Organize and implement a Regional knowledge & experiences sharing forums in the Sidelines on 1 AMCEN,1 CCDA and Participation in 1 African Carbon Forum,2 Congo Basin Partnership 214,857 124,999 89,858 42% Completion Workshop 4,000 - 4,000 100% Case studies 9,000 - 9,000 100% IEC Materials 21,182 9,234 11,948 56% Communication Officer 16,602 - 16,602 100% Translation 9,000 - 9,000 100% Total 274,641 134,233 140,408 51% 13 Pan African Climate Justice Alliance-PACJA Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 Notes to the Financial Statements Budget Actuals Variance USD USD USD % 4 Component III: Management, M&E and Reporting External Auditors Fee 25,150 3,000 22,150 88% Project Coordinator 12,957 4,840 8,117 63% Project Officer 38,049 12,160 25,889 68% Finance Officer 18,609 9,113 9,496 51% M&E Officer 9,540 2,883 6,657 70% Internal Auditor 4,500 997 3,503 78% Procurement/Logistics/Admin 9,411 4,103 5,308 56% Office Support Costs-Office Rent, utilities, Communications costs, local transport, printing & Stationery, Repair & Maintenance, Bank charges) 7,474 9,976 (2,502) -33% Total 125,690 47,073 78,617 63% 5 Advances Gassy youth UP 17,500 CTC-COOP 10,000 AMISTAD 10,000 EWNRA 10,000 Groupment ED/ADCF 7,522 Total 55,022 6 Cash and Cash Equivalent Standard Chartered Bank (USD) 5,262 Standard Chartered Bank (Kshs) 12,049 Total 17,311 14 Pan-African Civil Society Forest Carbon Partnership Facility Capacity Building Programme on REDD plus Project Audit report for the period 1st January 2018 to 31st December 2018 7 Payable to PACJA USD Sarova White-Annual planning mtg Down payment-10%-wb 401 Joshua Kioko-Internal Audit for Oct 2018-20% 161 joshua kioko-nov internal audit 20% 161 Nancy Y. Mbito-Rent payment for the quarter (October-December 2018) 1,997 Airtime for communication REDD+ via MPESA (Obed) 10 Airtime for communication @3000 ED/ FAM @2000 50 Jamii Telecomm. Ltd- Internet for November 2018-20% 20 Felltech System Kenya-Payment for website update & reconfiguration 146 Taxi from PACJA to US Embassy for US Visa Application - REDD+ Project (Obed) 8 Taxi from US Embassy for US Visa Application to PACJA - REDD+ Project (Obed) 9 Fuel for KCL 004H CCDA runs (Ayoo) 30 Boda Boda fromPACJA to CBD then PACJA (Obiero / AMK) 5 Fuel for KBU 207R (Obed) 16 Fare and Boda Baoda from PACJA to Lukenya Getaway - RED+ for ED (GN/Ayoo) 10 Parking fee and Fuel for KBU 207R (FAM) 21 Fuel for KBU 207R (FAM) 24 Fuel for KBU 207R (FAM) refund 43 Parking fee and Fuel (Ayoo) 31 Fuel for KBU 207R (Zoeb) 5 KBU 207R Tire Getta, Tube and repairs (Ayoo) 10 Fuel for KBU 207R (Ayoo) 10 Mackphilisa Comp. Systems-Printing & Stationery-20% 245 Mackphilisa Comp. Systems-Printing & Stationery-20% 39 Passport photo processing for US Embassy - REDD + (Obed) 7 Drinking water and parking fee (Chebonya) 16 Kitchen supplies 10 Water supplies week of 8th and 16th Oct. 2018 60 Office newspapers 22nd to 26th Oct. 2018 6 Office news papers 6 Office newspapers 5th - 9th Nov. 2018 (Emmanuel) 6 Snacks for kitchen supplies 47 Kitchen supply @5511 and Taxi for Kitchen supply @300 58 Office newspapers - 12th to 16th Nov 2018 Nation @300 / STD @300 6 Office newspapers standard and nation 6 Office newspapers standard @280 and Nation @300 6 15 USD Nairobi water bill 12 Drinking Water - Chebonya 9 Kitchen supplies - Chebonya 21 Antiochtech Enterprises-Installation of windows 10 & 7 to office computers 10 Antiochtech Enterprises-Computer repairs and maintenance 13 Intersys Connection ltd-Outlook configuration & Installation & Activation of MS Office 42 Antiochtech Entderprises-Repair & Maintenance of office laptop & Computers 55 Oct 2018 Payroll-S.General-WB 627 Nov 2018 Payroll-S.General-WB 627 Dec 2018 Payroll-S.General-WB 627 Oct 2018 Payroll-Program Officer (Obed)-WBank 1,698 Nov 2018 Payroll-Program Officer (Obed)-WBank 1,698 Dec 2018 Payroll-Program Officer (Obed)-WBank 1,698 Oct 2018 Payroll-Fin Officer-WorldBank 999 Nov 2018 Payroll-Fin Officer-WorldBank 999 Dec 2018 Payroll-Fin Officer-WorldBank 999 Oct 2018 Payroll-Admin /HR/Log Officer 499 Nov 2018 Payroll-Admin /HR/Log Officer 499 Dec 2018 Payroll-Admin /HR/Log Officer 499 Oct 2018 Payroll-M&E Officer 499 Nov 2018 Payroll-M&E Officer 499 Dec 2018 Payroll-M&E Officer 499 Employers Pension Contribution for Oct 2018 216 Employers Pension Contribution for Nov 2018 216 Employers Pension Contribution for Dec 2018 216 W/tax Augustine Njamnshi-Project Associate for the FCPF Project 640 Ngong Hills Hotel-Accom during the CCDA 4,689 Safari Park-Deposit for CCDA- Conference 5,000 Safari Park Ltd-Conference 5,648 Global Trade Skills-Translation During CCDA 1,288 Total 34,729 16