T 71 ___ Audit for Lan Impact for1 thle PUHlIC ______ Independent Auditor's Report To the readers of Kiribati Road Rehabilitation Project Financial statements for the period ended 31 December 2015 We have audited the financial statements of Kiribati Road Rehabilitation Project (KRRP) financed under the World Bank - IDA. Asian Development Bank. Pacific Region Infrastructure Facility Project (PRIF) and Government of Kiribati (GoK) which comprise the Statement of Cash Receipts and Payments as of December 31. 2015. and for the year then ended. and a summary of significant accounting policies and other explanatory information. Management's Responsibility Management (Executing Agency ) is responsible for the preparation and fair presentation of these financial statements in accordanc with the modified cash basis of accounting described in Note 7 to the Financial Statements. and for such internal control as mana-ement determines is necessary to enable the preparation of the financial statements that are free from material misstatement. whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on the accompanying statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Our audit includes examining. on a test basis. evidence supporting the amounts and disclosures in the financial statements. Our audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management. as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. The KRRP Management's policy is to prepare the accompanying statements in the format agreed between the Donor's and the Government of Kiribati as noted in the Project Operation Manual for the Grant and Project Administration Manual for the Loan- on a cash receipts and disbursement basis in which cash is recognized when received and expenses are recognized when paid. rather than when incurred. Unqualified Opinion In our opinion, the aforementioned financial statements and appended notes that were also the subject of the audit. prescnts tiirl\ in all me:erfl rspeeL . dhe ca reeipt> and dibhurs-ements of KRRP br the .\ar ended )ecemher 31. 20 15 , inc ncc \n tI 1he 1a1n rece1pts and Ji.4ursementS 1-1 S accountinT described in Note 7: and e\penditure ha e been applIed to the Ipises intended for in theQ irant and Loan a.reeient. In addition: Vith respct to Statefents oF E\penditure. adequate supportin docurnents have been maintained to support claims to the Donors for reimbursemCnIts Of eXpnditure incurred: and wýlhieh expenditures are eliilble for linancing Lunder ID.\ Grant 116450 KI PRIF TF99624 Kl ADB LOAN 2718 KIR(SF). The Designated Accounts page 7 give a true and [air k e\N of the receipts collected and pa\nents made during the ,-ear ended 31 Decernber 2015: and these receipts and pay-ments support Designated Account replenishments during the year. 28 June. 2016 M.s. MaterIeta Raiman Auditor General Kiribati National Audit Office Bairiki Tarawa KIRIBATI NATIONAL AUDIT OFFICE P.0 BOX 63 Te: (686211I' Bairiki, Tarawa Fax: (686121250 Kiribati Audit for an impact for the public Email: infor knao.govki File Ref: TRH: 33/17 Date: 28/06/2016 Reina Timau Manager Kiribati Fiduciary Services Unit Dear Madam, Final Management Letter for the financial year 2015 - Kiribati Road Rehabilitation Project We have audited in accordance with International Standards on Auditing the financial statements of the Kiribati Road Rehabilitation Project (KRRP), financed by the World Bank-IDA, Asian Development Bank (ADB), Pacific Region Infrastructure Facility (PRIF) and Government of Kiribati (GoK) for the year ended 31/12/2015, and have issued our report dated 28/06/2016. The Project is subject to audit by the Auditor-General of Kiribati in terms of section 8 in the Financial Management Manual. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the statement, whether due to fraud or error in making those risk assessments, we considered internal controls relevant to the Project's preparation and fair presentation of the statement 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. We would be pleased to discuss these comments and recommendations with you at any time. The Project's written response to our comments and recommendations has not been subjected to the auditing procedures applied in the audit of the statement and, accordingly, we express no opinion on it. This report consists of two sections: Section I Contains recommendations relating to improvements in existing systems and procedures noted in the current year. ,Audit iden,fe tw'X auldit iSSUes with relevant recommendations. Section II Contains recommendations from prior years that have not yet been fully implemented. This communication is intended solely for the information and use of the Project's Management and is not intended to be and should not be used by anyone other than these specified parties. Should you have any enquiries in relation to this audit, please contact the undersigned on email: auditorgeneral@knao.gov.ki or phone number shown above. Yours sincerely, Matereta B. Raiman Auditor General Cc : Project Manager, KRRP, Bairiki Secretary, MPWU, Betio. Section I Improvements to existing systems and procedures Observation: Our general audit approach involved testing of controls, carried out analytical review tests and completed substantive testing, verifying specific transactions or balances. At the planning stage, we designed audit tests to provide us with sufficient audit evidence to support an opinion as to whether the financial statements show a true and fair view. In summary we: * updated our understanding of the organisation and its environment; * reviewed the design and implementation of key internal financial control systems; and * planned and performed an audit with professional scepticism recognising that circumstances may exist that cause the financial statements to be materially misstated As a result based on the above we found no issues. Therefore we would like to commend the project management team at the executing and implementing agency for their great effort and input to the financial year 2015. ;- KIRIBATI ROAD REHABILITATION PROJECT Funded by: World Bank (International Development Association - IDA) Pacific Region Infrastructure Facility (PRIF) Asian Development Bank (ADB) Government of the Republic of Kiribati (GoK) FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2015 KIRIBATI ROAD REHABILITATION PROJECT Contents Introduction 2 Statement of Receipts & Payments Summary 3 Statement of Funds Received - WB IDA & PRIF Direct Payment Schedules 4 Statement of Funds Received - ADB Direct Payment Schedules 6 Statement of Funds Received - IDA & PRIF DA Replenishment Schedules 7 Statement of Funds Received - GoK 8 Summary of Grant Balances with World Bank 9 Statement of Funds Paid - By Component 11 Statemeent of Funds Paid - By Category 12 Statement of Balances 13 Notes to the Financial Statements 14 Fixed Assets Register 16-17 KIRIBATI ROAD REHABILITATION PROJECT The Financial R jr Tre prciec: fcr : Fk- ye3r o mplemen1d December 20LY ae bein pr!ne -o au ig n compance wi n he projec: reements tre audt repor is ruired to be surmt:ed to the donor partners by the 3 june 2016 and we wouId reauest your kind offices the auditng could be completed by the due date AUI financial records for the praoect are el wi:hun the Kirbati Fduciary Steav Li :t at the Ministry of Finance & Econoric Pannng Benamin Tokataake ReFna a mau Secretary for Public WÅorks & Utilites Manager. KSFU Date 25th February 2016 KIRIBATI ROA REÆI LITATION RO-ECT KRR IDA RANT S H6450 KI & DO350 K-RAF GRNAT T 99624K ACB CAN 2-18 KIR(SF)iGOK STATEME~ F ECEiP-S & AYMENT S SUMMARy For the Period Ended December 31. 2015 ALS Acon Desmcapun Nores 2015 Cumnulatve C.ASH RECE1PTS cirecT Payment CA Ge 3 2 5 6 z Government of Kinbauit 8 i Ttail Casn Rece pts $ 20 12.460 5 4F 351505 PAYMENTS iPe, Gran Cmporint) 9 Camnponent A A dEn~ N AS,DýE PT Sr Component B Op nn , 3 1 e- ComDonent C Total PaDments $ 20,79 225 $ 46 233 090 NET CASh RECEPTS 5 86 651 5 118 15 Other Payments Bank Ch.ir0 ______ NET CHANGE IN CASH 5 86 765) 5 118415 Opening Cash Balnces -A Total Opening Cash 5 205 79 $ weican Avaawe 5 us 5 u 527 1 ProrPerTod ta Camntative Totai 54694 28 $ 420,149.58 KIRIBATI ROAD REHABILITATION PROJECT GoK PAYMENTS SCHEDULE FOR THE YEAR ENDED DECEMBER 31, 2015 Note 8 Direct Payments GoK MCCONN ELL DOWELL XE Payment WA No. US$ AU$ Local Currency Exchange AU$ Value Date Rate 27 Mar 15 3. 6 364 739.97 09658289 27 Mar 15 -43 697 13 S 58.06113 0.75260557 27 Mar 15 P . 5 106 394.07 1COCOCO Total for 2015 $ 1,029,195.17 Prior Periods $ Cumulative Total $ 1,029,195.17 KIRIBATI ROADS REHABILITATION PROJECT IDA GRANTS H6450 K] & D0350 K]/PRIF GRANT TF99624 Kl/ADB LOAN 2718 KIR(SF) SUMMARY OF GRANT BALANCES AS PER WB STATEMENT FOR THE PERIOD ENDED 31 DECEMBER 2015 IDA GRANT H6450 K] Camxmt Cg TaIa CancÅDat % Di.rud Eisb,Uurwt Coxmittd A,wada4k IDA GRANT D0350 KI n arid Bank \ mni D ibrseent Sjmmar~- n - e4maee -.-a tu et4une NI miH i D~Dh, 4kb4'4 æIII 4 u.natiued KIRIBATI ROADS REHABILITATlON PROJECT IDA GRANTS H6450 Kl & D0350 Kl/PRIF GRANT TF99624 KI/ADB LOAN 2718 KIR(SF) SUMMARY OF GRANT BALANCES AS PER WB STATEMENT (cont'd) FOR THE PERIOD ENDED 31 DECEMBER 2015 PRIF GRANT TF99624 KI n Am I- B3nk NDecehmbr Di 20 i L : 州‘&“一→可一 十一一一一話 ‘一卜一一一一－一一一一必一－－一一•j&，編，一一必 !: 了一曆了－ 〞一二一訕；取 兀一汰近·舟 韋＿:_＿一＿___－一久＿__＿豐 -er C> EE jr> cn Cn cn K=t. b- cif LAJ 7 lim t5 Ck-- C-4 ;<ý 1- C2L- CiL> i Cy CYN lim uj Ck:t c> ckt !a- !52 52 <5 cf lin c) C> :2f lin LLJ C92 L.LJ C22 CY6 22 XN gir £2n C7 CS, KIRIBATI ROAD REHABILITATION PROJECT (KAJP) IDA GRANTS H6450 Kl & 00350 Kl/PRIF GRANT TF99624 Kl/ADB LOAN 2718 STATEMENT OF BALANCES For the Period Ended December 31. 2015 Note 10 2015 DESIGNATED ACCOUNT Bank Reconciliation at 31 December 2015 Baiance per bank staternent S 122,211 37 ne p r U np eied ;,Cheques 959042 $1372 37 959ý S11~368 S13 877 10 3393 45 $ 118,817.92 Accounts Receivable VA T Recoverale 29333 Current Liabilities KFP and PAYE (696.60) FIXED ASSETS REGISTER SUMMARY Fixed Assets procured under te project are treated as expenses cenerally, euipment and furniture procurement are dasifed as Ftxed Assets. but in some cases the expense account will either reflect the name of the equipment bougt, or reflec the neading of the expense account for -h-ch the assets have been b,ugt AlFed Asse s wl rerain the propert o te cent at the end of the project, and as a requirement under the project agreemen aA Fxed Assets procurement should be recorded. Th record 2mmarizes the exDense account under w,1 h :he F Asets have been bought and is suported by an actual Fixed Assets Reg ster also atached to the accounts 2015 Prior Years Cumulative 1y Notes to the Financial Statements BACKGROUND L h Kriba Road hab rt onPoject- P ofiially corm enced m Auus 2011 nemrs the da:e when the 1D grant wa m-ade availatie Th !sng aei currentiv se: as 30 JuneC 20z1 2. KRRP is funded iyt by the ,orla Bank tnroug its Internatona Development Association - IDA the Pacifc Regon InrastrucVure Facity PRIF the Asan Developm-ent Bank A1B9 ana Vhe Governm ~nt of the RepubI of KiatiGoK The orginal funding was as fonows IDA - Grant of Special Drawng Rhts SR 13 00 millon with on,ginaly estmated AU equivalent of AUS 2000 milIon estab7ished through a Financg Agreeren signed 5 May 2011 PRIF - Grant or USS S79 milon with originaILy estimated AUS equivalent of AU$ 5 79 milhoni, estabished through a Financing Agreernent signed 30 May 2011 ADB - Loan of SDR 7 62 mion iwth onginaly estimated AU equivalent of AUS 12 00 milIon, estabbshed rhrough a Financing Agreenent sgned 17 March 2011 SGo - mn:rbuton f S mllion .n ismaed AS equivalent o 19 5 mNen) Durig 2015. additional funding was made availaLe, as follows IDA - Grant of SDR 4 2 rmllon, througn a separate grant agreement , PRIF - Grant of USS 7 0 meirs-, --rougi an a,-ndment to the existing grant agreement Further addtional fundmg s expected from ADB PRIF and GoK dunng 2016 PRiF funding is contrutons fror the Austraian Government, channeled through PRIF GoK funding is provded to co- rnance Component A of KRRP, and to cover any shorttalls in funding durng the project OBJECTIVES 3 The objectives of KRRP are o morove the condiion of South Tarawa's main road network and help strengthen road financing and maintenance capacty There are three Parts to KRRP as foIhows Part A - Rec s ut år n, nuIa2iof s s- ain ma, or road segments and associated works including design and super ision servcesn along with the requisite safety mprovements Part B -Implementaton of a reform prograr to strengthen the road sector and contrbute to more sustamable man road frastrucure Soh Tarasa Pat- Prjc 1upr PROJECT IMPLEMENTATION & ADMINISTRATION 0r '- ~ n - 1 - ~ 0 nrWvad nxser both the 1A and M nCmg A peoedbas ccunt Dergne Account a been estabushed: n Koda to sn~cd bot IA and PRl fu:nn i aditio~n larger oamet under WB-admniste red kunding rnav oe made direct byn WABi an charged diretly :o the repectve grant rather than channeied rough th~e Desinated Accunt, ml accrdance wth agreed WBv procedures. Ai ADB runded paymes were mnad and cIarged tr the lon, directly by ADB 6 Certa, costs are faued separatey b ADB IDA or PRIF or jont by more than one financier in ac 2rejah itne Sianuing agr,uerts. ACCOUNTING POICY 7 The Finanial Statements are prepared by RRP uer the istorical cost conventon and in accordance , e cash basis f accounting, except SAdvances (whmch are given for approved officiai purposes only) are charged against a Receivables Account .nirialy, and are charged to expenditure based on advance acquittals wih suportng documerts; and * Payables are taken ii for income tax and provident fund abites at the time of payment of salares and are deared throuh tre setterent of the labhtes to the respectve authorites, on a monthny basis. 8 The reporting currency is Australian Dohars AUIJ 9 Transactions in currencies cther than AUS are trarslaced mco AUS using the actual exchange rate apphed by the bank (whren the transactions are pad from the Desgnated Account) Where the transactions are paid directly by WB, the XE exchange rate at va;ue date is used to coner the currency in whch payment was made to Australian Dollars. For the ADB funding: a Paym-ents aainst nvoices in AUS are converted to AUS at 1 : 1 b Payrents against invoices in USS and GBP are converted to AUS based on the echange rate as pe www xe com on the value date 1 Tr ep a e ifh year ä maementation -o, < and the founh set ot be r~ ard KIRIBATl ROAD REHABUTATION PROJECT IDA GRANT Hö4JS KI/PRIF GRANT T99624 Kl/ADB LOAN 2718 KIR(SF) FIXED ASSETS REGISTER FOR THE PERIOD ENDED 31 DECEMBER 2015 Fled åst su ister nCmoe a Swament MAed n P!an - 'nd £dP: eCP'ToDr 20 gemtanor seM am rm rt seDo ram . . w .l ... ... AL 1 .. .. . .. .i p g 52, 2 ý1 ' o E ded e C J1 n n ++un mm m..c - dec p W'a. r" "ute .. .. . ....-.. . xx x xxx xx xx - - ---- -÷ - - - ···- · · - - · - i- x :x × .... - s. .. . ...... - --~v- --- mmmm i An