Please address all correspondence File ref: To Chief Executive Officer In reply, please quote the file reference FAAElI LE ATUA SAMDA GOVERNMENT OF SAMOA MINISTRY OF FINANCE 24th December 2019 Janet Gamarra Governance Specialist Financial Management World Bank Office, Sydney Level 19, 14 Martin Place, Sydney NSW 2000, AUSTRALIA Fax No: 61-2-9235-6594 Ph No: 0292356529 (57406529) Dear Ms. Gamarra, Re: AUDIT OPINION, AUDITED ACCOUNTS AND MANAGEMENT LETTER - SAMOA PACIFIC RESILIENCE PROGRAM (PREP) IDA GRANT D077-WS; ADDITIONAL FINANCING GRANT D3800-WS: YEAR ENDED 30' June 2019 Attached herewith please find attached the Audit Opinion, Audit Report and one set of Audited Statements of the above project for the period ending 30" June 2019. Submitted as per requirement of the Bank under the Financing Agreement. We would appreciate your confirmation upon receipt of the PREP Annual Financial Statement FY1819 to the following emails rhonda.aumagagmof.gov.ws and peresitene.kirifigmof.gov.ws. YoursSi c0el, (Leasiosiofaasisin Oscar Malielegaoi) CHIEF EXECU IVE OFFICER Cc: Saoleititi Maeva Betham Vaai; WBG Samoa Liaison Office Litara Taulealo; ACEO - CRICU, MOF Private Bag APIA, SAMOA Telephone: (685) 34333/34334 E-Mail: mof@mnof.gov.ws Fax: (685) 21312, 24779 Telephone: 27751 P.0 Box 13 Fax: 24167 APIA, SAMOA Email: info@audit.gov.ws "S Website: www.audit.gov.ws Please address ali conespondences to the Conhd;er and Auditor General AUDIT OFFICE REPORT OF THE AUDIT OFFICE TO THE MINISTRY OF FINANCE OF THE GOVERNMENT OF SAMOA Report on the Audit of the Financial Statement We have audited the accompanying financial report for the Samoa Pacific Resilience Program Project categorized as IDA Grant No. D077-WS and IDA Grant No. D380-WS for the year ended 30th June 2019, which comprises the Statement of Receipts and Payments, Statement of Comparison of Actual and Budget amounts, and a summary of significant accounting policies and other explanatory notes. The Consultancy Firm of XSAO Consult Ltd assisted in the audit. The Consultant in charge of the audit resulting in this Independent Auditor's Report is Chartered Accountant (CA), Violet Roebeck-Fasavalu. In our opinion, the financial statements present fairly, in all material respects, the Receipts and Payments of the Samoa Pacific Resilience Program Project for year ended 30 June 2019, in accordance with International Public Sector Accounting Standards (Cash Basis). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of Financial Statements section of our report. We are independent of the Ministry of Finance in accordance with the ethical requirements that are relevant to our audit of financial statements in Samoa, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Responsibility for the Financial Report The accompanying set of financial report is the responsibility of the management of the Implementing Agency - The Ministry of Natural Resources and Environment (MNRE) supported by the Executing Agency - Ministry of Finance. The policy of the National Executing Agency - Ministry of Finance, is to prepare the financial report in accordance with the requirements of the Donor - International Development Association (IDA) and on the cash disbursements basis. On this basis, donor funds are recognized when received and expenditure is recognized when paid rather than when incurred. The Implementing and Executing Agencies are also responsible for monitoring and ensuring all relevant project arrangements are in accordance with the terms and requirements agreed upon with the Donor, and ensure that all relevant program arrangements and activities are aligned with these terms and requirements. They are also responsible for any such internal control it determines as necessary to enable the preparation of financial reports that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial reports based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial reports are free from material misstatements and that funds provided for the program were expended in accordance with the Financing Agreement by International Development Association (IDA). An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial reports. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement in the financial reports, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the preparation of the project financial reports 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 controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of judgments made by management, as well as evaluating the presentation of the financial reports. Telephone 27751 P.O Box 13 Fax: 24167 APIA, SAMOA Email: info@audit.gov.ws Website: www.audit.gov.ws J V\ Please address ai comespondences Mr to the Conbzer and Auditor Genera) AUDIT OFFICE We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. We have obtained all the information and explanations that we required, to conclude that management has kept proper accounting records that support and validate the financial information disclosed in the financial report and the funds for the project have been used for purposes of the project in accordance with the requirements of the Financing Agreement. Our audit was completed on the 16th December 2019 and our opinion is expressed as at that date. Apia, Samoa Jaslyn T. Mariner - Leota 18 December 2019 ASSISTANT CONTROLLER AND AUDITOR GENERAL SAMOA PACIFIC RESILIENCE PROGRAM ORIGINAL GRANT No. D0770-WS & ADDITIONAL FINANCING GRANT No. D 3800-WS Project Financial Statement for the Financial Year ended 30 June 2019 1. Management Verification 2. FYI 8/19 Project Financial Statement for the financial year ended 30th June 2019 SAMOA PACIFIC RESILIENCE PROGRAM ORIGINAL GRANT No. D0770-WS & ADDITIONAL FINANCING GRANT No. D 3800-WS Project Financial Statement For the Financial Year Ended 30 June 2019 I, Leasiosiofaasisina Oscar Malielegaoi, Chief Executive Officer, of the Ministry of Finance, Apia, Samoa verify that: - the accompanying Project Financial Statement for the year ended 30 June 2019, are to the best of my knowledge, a correct and accurate record of transactions for the said period. (Le iosio aa i na Oscar Malielegaoi) CHIEF EXE TIVE OFFICER Dated: 16 December 2019 Financial Statements for the Samoa Pacific Resilience Program in the Ministry of Natural Resources and Environment (MNRE) and the Ministry of Finance (MOF) Statement of Cash Receipts and Payments For the financial period ended 30 June 2019 CURRENCY SAT$ SAT$ SAT$ Restated Restated 12 months ended 30 June 2019 12 months ended 30 June 2018 24 months ended 30 June 2017 Receipts / Receipts/ Receipts / Payments Payments by Payments Payments by Third Payments Payments by Third Notes Controlled by the Third Parties Controlled by the Parties Controlled by the Parties RECEIPTS External Assistance IDA Funds Receipts D077 3 3,108,314.17 809,325.94 1,280,606.50 2,027,792.97 2,507,522.56 Counterpart Funds ColWterprt funding 4 (i) 159,181.19 155,138.92 231,279.54 Pre-financing Go5 Funds 4 (ii) 211,012.37 307,817.40 244,965.22 Transfer to Treasury Fund 4 (iii) - - 358,751.46 - 161,349.78 Other Interest Earned 20,187.35 18,767.93 13,791.87 Total Receipts 3,498,695.08 - 932,298.73 1,280,606.50 2,356,479.82 2,507,522.56 PAYMENTS: Component 1: Strengthening Early Warning Preparedness Sub-Component 1.1 Investments In Early Warning and Preparedness Category 1/Sub-Component 1.1.1 Institutional and regulatory strengthening 1.1.1 (a) Training and capacity building 37,111.48 1.1.1 (b) Incremental Operating Costs - - 828.00 1.1.1 (c) Services 5 693,964.89 59,800.00 Sub-total 693,964.89 59,800.00 37,939.48 Category 1/Sub-Component 1.1.2 Component Modernisation of the observation infrastructure 1.1.2(a) Incremental Operating Costs - - 4,968.00 1.1.2 (b) Services 104,062.51 21,315.85 1.1.2 (c) Goods 5 10,008.52 522,666.67 1.1.2 (d) Works 5 852,700.23 - Sub-total 862,708.75 626,729.18 26,283.85 Category 1/Sub-Component 1.1.3 Enhancement of the MHEWS Service Delivery System 1.1.3 (a) Training and capacity building - - 41,151.07 1.1.3 (b) Goods 5 3,975.00 19,483.00 25,250.00 1.1.3 (c) Services 5 48,975.69 - 1.1.3 (d) Incremental Operating Costs - - Sub-total 52,950.69 19,483.00 66,401.07 Component 2: Risk Reduction and Resilient Investments Sub-Component 2.1 Risk Reduction and Resilient Investment Planning Category 1/Sub-Component 2.1.1 Investment planning and preparation 2.1.1 (a) Services 2.1.1(b) Incremental Operating Costs Category 1/Sub-Component 2.1.2 Entry level investments 2.1.2 (a) Consulting Services 2.1.2 (b) Incremental Operating Costs 2.1.2(c) Works - Sub-total Component 3: Disaster Risk Financing Sub-Component 3.1 Disaster Risk Financing Instruments Category 3/Sub-Component 3.1.1 Contingency Emergency Response Sub-Component Category 2/Sub-Component 3.1.2 Premium Financing 5 1,460,816.01 155,138.92 1,280,606.50 231,279.54 2,507,522.56 Category 1/Sub-Component 3.1.3 Capacity Building in Disaster Risk Financing and Insurance 5 168,709.99 86,894.32 Sub-total 1,629,526.00 - 2 4 2 ,0 3 3 .2 4 1,280,606.50 231,279.54 2,507,522.56 Component 4: Project a Management 1. Category 1/Sub-Component 4.1 Project Management 4.1.1 (a) Training 4.1.1 (b) Goods 30,133.19 4.1.1 (c) Incremental Operating Costs: 5 76,457.50 24,429.97 22,068.53 4.1.1 (d) Services 5 477,077.20 208,584.98 267,102.04 Sub-total 553,534.70 - 233,014.95 - 319,303.76 Total Payments 3,792,685.03 - 1,181,060,37 1,280,606.50 681,207.70 2,507,522.56 Increase / (Decrease) in Cash - 293,989.95 - - 248,761.64 - 1,675,272.12 Foreign Currency Gains and Losses 1,273.26 68,456.26 - 77,973.11 Cash at Beginning of Year 1,416,993.63 1,597,299.01 increase / (Decrease) in Cash - 293,989.95 - 248,761.64 1,597,299.01 Cash at End of Year 1,124,276.93 1,416,993.63 1,597,299.01 Financial Statements for Samoa Pacific Resilience Program in Ministry of Natural Resources and Environment and Ministry of Finance Notes to the Financial Statements For the financial period ended 30 June 2019 1 Accounting Policies Basis of Preparation The Financial Statements have been prepared in accordance with Cash Basis International Public Sector Accounting Standard (IPSAS) Financial Reporting under the Cash Basis of Accounting. Reporting Period and Restated Comparative Figures The Accounting Policies as stated hereunder have been applied consistently throughout the financial statement and during the reporting period covering 12 months ended 30 June 2019. The comparative figures cover the reporting period of 12 months ended 30 June 2018. Reporting Entity The Ministry of Natural Resources and Environment (MNRE) through the Disaster Management Office and the Ministry of Finance (MOF) through the Climate Resilience Investment Coordination Division (CRICD) Payments by Third Parties There were no payments by Third Parties during the reporting period. Reporting Currency The Samoa PREP financial statement is presented in Samoan Tala (SAT$) as the functional and operating currency of the Government of Samoa. Exchange rate Transactions in US Dollars and other foreign currencies are translated to Samoan Tala using the Central Bank of Samoa mid exchange rates on the date of the transaction. Cash balances held in foreign currency (such as USD) is converted to Tala and reported using the end of period or closing rate, that is 28 June 2019 (last working day): USD$1 = SAT$0.38013 2 Cash Cash and cash equivalents consist of cash receipts and bank deposits from sources of funding. Exchange Rate USD$ SAT$ Equivalent End of reporting balance at CBS account as at 28th June 2019 0.38013 427,371.39 1,124,276.93 End of reporting balance at CBS account as at 30th June 2018 0.38498 545,514.22 1,416,993.66 3 External Grant Receipts External Grant Receipts from the World Bank IDA (D077-WS) received in the DA for the Samoa Pacific Resilience Program for period ended 30 June 2019 12 months ended 30 12 months ended 30 June 2019 June 2018 SAT 9/12/2015 Withdrawal Application #1 (USD650,000) DA 17/10/2016 Withdrawal Application #2 (USD14,373.73) DA 31/03/2017 Withdrawal Application #3 (USD 25,921.58) DA 22/5/2017 Withdrawal Application 84 (USD85,166.10) DA 5/9/2017 Withdrawal Application #5 (USD57,673.33) DA 144,392.69 2/2/2018 Withdrawal Application #6 (USD194,141.85) DA 480,145,05 19/6/2018 Withdrawal Application #7 (USD45,664.81) DA 117,378.19 20/6/2018 Withdrawal Application #8 (USD26,147.67) DA 67,410.01 5/7/2018 Withdrawal Application #9 (USD117,312.19) DA 304,138.21 14/9/2018 Withdrawal Application #10 (USD20,777.74) DA 54,672.51 1/2/2019 Withdrawal Application #11 (USD61,727.80) DA 159,519.85 27/2/2019 Withdrawal Application #12 (USD71,550.05) DA 185,689.95 1/3/2019 Withdrawal Application #001 (USD500,000.00) DA 1,305,006.00 30/5/2019 Withdrawal Application #13 (USD382,099.71) DA 1,017,359.04 17/6/2019 Withdrawal Application #14 (USD30,711.76) DA 81,928.61 3,108,314.17 809,325.94 4 Other Receipts Other Cash Receipts for the project include counterpart funding and pre-financing of expenditure by the Government of Samoa (GoS). GoS pre-financed expenditure are replenished regularly from the DA 12 months ended 30 12 months ended 30 June 2019 June 2018 SAT SAT i) Counterpart Fund Pacific Catastrophe Risk Insurance (PCRIC) (previously under Pacific Disaster Risk Insurance Premium (PCRAFI)) 159,181.19 155,138.92 ii) Pre-finance Expenditure by GoS* a) Program expenditure pre- financed from GoS funds 211,012.37 307,817.40 iii) Transfer to Treasury Fund Program expenditure pre-financed by GoS were reimbursed from DA - 358,751.46 iv) Interested earned 20,187.35 18,767.93 $ 390,380.91 $ 122,972.79 * Prefinanced expenditure fully replenished from DA in FY2020 5 Payment/Expenditures Payment were made in accordance to the Government of Samoa (GoS) Treasury Instructions and PFMA and the PREP Financing Agreement 6 Restatement Correction of some comparative figures was required to ensure consistency due to exchange rates used and a few expenses now correctly recorded in actual date of payment. To ensure balances are consistent with the project interim unaudited financial statements the Ministry has determined a restatement is required as noted in the restated financial statements figures. (i) To adjust Receipts - IDA Funds Receipts FY 2016-2017 by $77,042.18 (ii) To adjust Receipts - Pre-Financing GoS Funds FY 2016 -2017 by $1,300 and FY2017-2018 by $700.03 (iii) To adjust Receipts - Transfer to Treasury Fund FY 2016 -2017 by $223.46 (iv) To adjust Payments - Sub-component 1.1.1 (b) incremental Operating Costs FY2016 - 2017 by $960 (v) To adjust Payments - Sub-component 4.1.1 (b) Goods FY2016-2017 by $827.84 (vi) To adjust Payments - Sub-component 4.1.1 (c ) incremental Operating Costs FY2016-2017 by $960 and FY2017-2018 by $700 (vii) To adjust Payments - Sub-component 4.1.1 (d) Services FY2016-2017 by $31,799.22 (viii) To adjust Foreign Gains and Losses FY2016-2017 by $77,973.11 and FY2017-2018 by $68,456.26 7 Fixed Assets The fixed assets procured during the period are presented below. Description Quantity Date of Purchase Value Location Condition Server (Monitor, CPU & Keyboard) 1 1/25/2019 10,008.52 MNRE/WRD Level 3 TATTE Bi Good Financial Statements for Samoa Pacific Resilience Program in the Ministry of Natural Resources and Environment (MNRE) and the Ministry of Finance (MOF) Statement of Comparison of Budget and Actual Amounts For the Period Ended 30 June 2019 2018-2019 2017-2018 2015-2022 Restated Actual Actual Expenditure end Expenditure end CURRENCY (SAT) Notes June 2019 June 2018 Budget SAT SAT USD CASH INFLOWS External Assistance IDA Funds Receipts (DA) DO77-WS 3,108,314.17 809,325.94 32,042,377.93 12,349,629.89 IDA Funds Direct Disbursement (WB) - 1,280,606.50 10,490,427.48 4,000,000.00 Counterpart Counterpart funding 4 (i) 159,181.19 155,138.92 630,247.21 240,313.26 Pre-financing GoS Funds 4 (ii) 211,012.37 307,817.40 Transfer to Treasury Fund 4 (iii) - - 358,751.46 Other Interest Earned 4 (iv) 20,187.35 18,767.93 Totbl Receipts $ 3,498,695.08 2,212,905.23 43,163,052.62 16,589,943.15 CASH OUTFLOWS Category / Component Component 1: Strengthening Early Warning Preparedness 5, 6 Sub-Component 1.1 Investments in Early Warning and Preparedness f 706,012.18 23,470,036.25 8,620,603.00 Sub-Component 1.1.1 Institutional and regulatory strengthening/CATEGORY 1 693,964.89 59,800.00 2,525,349.37 962,600.00 1.1.1 (a) Training and Capacity Building 59,800.00 1,318,122.21 502,600.00 Legal Consultant 59,800.00 111,723.05 42,600.00 Twinning Operational Support from WMO - 301,599.79 115,000.00 )eveloping and Implementing Capacity Building and Training - 603,199.58 230,000.00 Implementing training activities for major users - 301,599.79 115,000.00 1.1.1 (b) Incremental Operating Costs - 828.00 1.1.1 (c) Services 693,964.89 - 1,206,399.16 460,000.00 Detailed design of the MHEWS systems, procurement and implementation support (System Integrator) 693,964.89 - 1,206,399.16 460,000.00 Sub-Component 1.1.2 Component Modernisation of the observation infrastructure/CATEGORY 1 862,708.75 626,729.18 18,346,184.11 6,670,400.00 1.1.2 (a) Incremental Operating Costs - - - 1.1.2 (b) Services 104,062.51 748,492.00 285,400.00 Design and Technical Specification for the upgrading of the microwave link ot Aleiso, Fogalii and Mt Fiamoe 36,543.86 67,138.74 25,600.00 Design and Supervision and EIA study for the extension of the Seismic Operations Centre (Mulinuu) - 419,617.10 160,000.00 Design and Technical Specification for the Seismic Station (volcanic monitoring in Savaii) 67,518.65 69,236.82 26,400.00 Supervision of NEOC Construction 192,499.34 73,400.00 1.1.2 (c) Goods 10,008.52 522,666.67 7,474,429.58 2,525,000.00 GSM of the existing hydrological network/additional stations ondspareparts 10,008.52 522,666.67 546,910.57 208,537.00 GSM odditional stations and training services 633,262.52 241,463.00 Strengthening meteorological observing and communication systems (SIC) - 786,782.06 300,000.00 Strengthening seismic network including establishment of volcanic monitoring station in Savai - 996,590.61 380,000.00 Communication infrastructure Equipment and Software (FOSS) - 340,938.89 130,000.00 Establishment of a data management system and backup for NEOC - 603,199.58 230,000.00 Forecasting platform backup at NEOC - 301,599.79 115,000.00 Computers, software for drought and flood monitoring for -. MHEWS at Met Office - 1,507,998.95 575,000.00 Computers, software, furniture, generators for Seismic Operations Center with back up at NEOC - 904,799.37 345,000.00 A V Equipment for NEOC 852,347.23 325,000.00 1.1.2 (d) Works 852,700.23 - 10,123,262.52 3,860,000.00 Construction of the National Emergency Operations Center 852,700.23 - 7,972,724.89 3,040,000.00 New Seismic Operation Center (Mulinuu) - 2,150,537.63 820,000.00 Sub-Component 1.1.3 Enhancement of the MHEWS Service Delivery System/CATEGORY 1 52,950.69 19,483.00 2,598,502.77 987,603.00 1.1.3 (a) Training 41,151.07 - 1.1.3 (b) Goods 3,975.00 19,483.00 92,101.24 - Stockpiling of emergency goods 3,975.00 92,101.24 47,603.00 1.1.3 (c) Services 48,975.69 - 2,465,250.46 940,000.00 Development, improvement and operationalisation of production of basic and specialised information products - 845,790.72 322,500.00 Improve of service delivery to communities including development and introduction of mobile applications - 904,799.37 345,000.00 Survey of Warning Utility with public and sectors 48,975.69 - 262,260.69 100,000.00 Development of SOPs, warning protocols and signals agreed with all stakeholders and communities - 301,599.79 115,000.00 )perational training and drills with government stakeholders - 150,799.90 57,500.00 Vulnerabilityiassessments for each identified natural hazard - - troduction and pilot testing of impact forecasting techniques - SUB TOTAL $ 1,609,624.33 706,012.18 23,470,036.25 8,620,603.00 Component 2: Risk Reduction and Resilient Investments 5, 6 Sub-Component 2.1 Risk Reduction and Resilient Investment Planning - 3,009,441.38 1,147,500.00 Sub-Component 2.1.1 Investment planning and preparation/CATEGORY 1 - 1,311,303.44 500,000.00 2.1.1 (a) Services - 1,311,303.44 500,000.00 Investment and Preparation Planning - 1,049,042.75 400,000.00 Stocktake - 262,260.69 100,000.00 2.1.1 (c) Goods 2.1.1 (d) Works 2.1.1 (e) Training Sub-Component 2.1.2 Entry level investments/CATEGORY 1 - 1,698,137.95 647,500.00 2.1.2 (a) Services - 649,095.20 247,500.00 Entry level investments to strengthen climate and disaster resilience (structural) 649,095.20 247,500.00 2.1.2 (b) Works - c. . Schools retrofitting construction 1,049,042.75 400,000.00 2.1.2 (c) Goods - 2.1.2 (d) Training 2.1.2 (e)rdremental Operating-Costs CONTINGENCY SUB TOTAL - 3,009,441.38 1,147,500.00 Component 3: Disaster Risk Financing 4 (i), 5, 6 Sub-Component 3.1 Disaster Risk Financing Instruments 1,629,526.00 1,522,639.74 12,736,338.03 4,856,537.15 Sub-Component 3.1.1 Contingency Emergency Response Sub-Component/CATEGORY 3 - 1,311,303.44 500,000.00 Contingency Emergency Response (CERC) - 1,311,303.44 500,000.00 Sub-Component 3.1.2 Premium Financing/CATEGORY 2 1,460,816.01 1,435,745.42 11,036,027.13 4,208,037.15 Premium financing - counterpart 159,181.19 155,138.92 545,599.65 208,037.15 Premium financing 1,301,634.82 1,280,606.50 10,490,427.48 4,000,000.00 Sub-Component 3.1.3 Capacity Building in Disaster Risk Finance Insurance (DRFI) 168,709.99 86,894.32 389,007.46 148,500.00 3.1.3 (a) Services Disaster Risk Finance Insurance & Capacity Building Consultant 168,709.99 86,894.32 389,007.46 148,500.00 SUB TOTAL $ 1,629,526.00 1,522,639.74 12,736,338.03 4,856,537.15 'omponent 4: Project Management 5, 6 Category 1/Sub-Component 4.1 Project Management 233,014.95 2,833,648.81 1,144,803.00 4.1.1 (a) Services 477,077.20 208,584.98 2,222,435.31 911,168.00 4.1.1 (b) Goods - 30,133.19 - 4.1.1 (c) Incremental Operating Costs: $ 76,457.50 24,429.97 581,080.31 233,635.00 SUB TOTAL $ 553,534.70 233,014.95 2,833,648.81 1,144,803.00 Contingency 1,113,588.15 820,500.00 Exchange Rate Fluctuations Total Payments 3,792,685.03 2,461,666.87 43,163,052.63 16,589,943.15 NET CASH FLOWS (293,989.95) - 248,761.64 Pacific Resilience Program Management Letter Report for the financial year ended 30th June 2019 Appendix Pacific Resilience Program Page 1 of 5 Contents O v e rv ie ....................................................................................................................................................... 3 Issu e D e ta ils .................................................................................................................................................. 4 Issue 1- Delayed project implementation............................................................................................... 4 Issue 2 - Delayed replenishment of the CBS project designated account................................................ 4 Issue 3 - No reimbursements made within the year for government funds used for project expenses. 5 Pacific Resilience Program Page 2 of 5 Overview The audit for the Pacific Resilience Program project has been completed and we submit herewith our report covering the period 1st July 2018 to 30th June 2019. Based on our audit, we concluded that the financial records, transactions and balances of the project that we examined were generally well kept and include materially complete and accurate information. However, a number of issues pertaining to various areas were noted, where improvement is needed to ensure that all financial areas of the Project's operations are effectively controlled. More detailed information on the matters referred to above is outlined in the following section of this management letter. Pacific Resilience Program Page 3 of 5 Issue Details Issue 1- Delayed project implementation The project's total disbursement rates as at 30th June 2019 are as follows which is noted to be slow considering this is the fourth year since project inception and will be completed in 2022. Grant Number Grant Amount Undisbursed Disbursement rate IDA D0770 (GRTD) SDR 10,000,000 SDR 7,651,138.35 23% IDA D3800 (GRTD) SDR 1,800,000 SDR 1,441,443.41 20% Recommendation Effective project management and monitoring is crucial at this stage given there is still a lot to be achieved with the closing date also drawing near. Management Response The delay in implementation is a result of a combination of challenges exacerbated by staff turnover (not only within the key implementing agencies of the project but also the changes made to the project implementation unit team), new project staff meant it took a lot longer to catch up and the technical complexities of the project being partly regional and technically-heavy resulted in the project team relying on additional external technical support including from the World Bank. It is expected that significant progress implementation and disbursement rate will pick up within the next year for Component 1 as the construction of the National Emergency Operations Centre (NEOC) is completed and majority of the remaining investments to be financed by the project are currently under procurement stage. For information, as of end November 2019, disbursement rate for the project has reached 30%. Issue 2 - Delayed replenishment of the CBS project designated account There was a delay in the replenishment of the CBS project designated account resulting in the project designated account being overdrawn within the month of February 2019. Recommendation The Central Bank of Samoa (CBS) project designated account (DA) should be regularly reconciled and MOF should ensure that replenishment of funds through Withdrawal Applications are timely to avoid overdrawn balances. Management Response Recommendation is noted. Pacific Resilience Program Page 4 of 5 However, note that this is a one-off situation. Due to unforeseen circumstance where MOF had to pay from the DA the premium of USD 500,000 to the Pacific Catastrophe Risk Insurance Company (PCRIC) by end of October 2019 to allow Samoa to be covered under the insurance for season 7 from 1 November 2018 to 31 October 2019 (awaiting clearance of the additional financing). This depleted our DA balance and were not able to drawn down until system cleared the additional financing conditions. The project had funds in the DA to meet payments except the specific period the CBS project DA was overdrawn. The specific overdrawn balance was due to exchange rate variance - the payment was in three different foreign currencies (Euro, AUD and NZD), we had projected balance in DA would be sufficient but at time of payment the actual USD value of the three currency payment exceeded what we estimated would be the actual USD value. This is a CBS payment, overdrawn balance was a one-off case, funds were deposited in the DA immediately thereafter and cleared the only overdrawn amount of USD2,493.55. The overdrawn amount was noted when Bank Statement was received at end of the month. Issue 3 - No reimbursements made within the year for government funds used for project expenses Project expenses of $211,012.37 (SAT) funded by the government (also referred to as pre-financed expenses) during the financial year were not reimbursed in a timely manner. Recommendation Timely reimbursements for pre-financed expenses should be made to assist with the government's cash flow. A formal policy should be established and approved by the Ministry of Finance to govern this type of disbursement method. This will also guide as to whether there is a limit amount for this practice and when reimbursements should be done, together with the relevant disclosures of these payments to comply with applicable accounting practices. Management Response This is noted. All pre-financed expenditure has been reimbursed in FY19/20. Expenditures are recorded in the period it occurred and reported in the Interim unaudited Financial Reports (IFRs) sent to the World Bank every six months as required in the project financing agreement. Pacific Resilience Program Page 5 of 5