89467 REPUBLIC OF TURKEY PRIME MINISTRY Undersecretariat of Treasury INDEPENDENT AUDITOR'S REPORT On 1STANBUL SEISMIC RISK MITIGATION AND EMERGENCY PREPAREDNESS PROJECT'S ,..."'''n FINANCE ilyas BALOGLU Riistem OZ Ahmet Tugrul OZTURK Senior Treasury Controller Junior Treasury Controller Junior Treasury Controller 03, 14 TABLE OF CONTENTS l. EXECUTIVE Sl!MMARY 2. FINANCIAL STATEMENTS OF THE PROJECT 2. L Independent Auditor's Report Statement of Sources and Uses of Funds Statement of Cumulative Investments 2.4. Statement of Requests for Reimbursement (SOE Statement) 2.5 Statement of Special Account 2.6 Notes to the Project Financial Statements I EXECUTIVE SUMMARY EXECUTIVE SUMMARY A. Project Summary: To transform Istanbul in the next 10-20 years into a city more resilient to a major earthquake, Istanbul Seismic Risk Mitigation and Emergency Preparedness (ISMEP) Project had been prepared by the Turkish Government. The Istanbul Seismic Risk Mitigation and Emergency Preparedness (ISMEP) Loan Agreement (Loan No. 4784-TU) was signed by the Republic of Turkey and the International Bank for Reconstruction and Development on October 18, 2005. and became effective as of February 3, 2006. The project closing date, which originally was March 31,2010, was first extended to December 31,2011. Following a second extension, the closing date was determined as December 31. 2012. Due to ever-expanding scope of the project as well as unanticipated increases, a second agreement was signed between the Republic of Turkey and the World Bank on August 4, 2011 for an additional loan (Loan No. 8033-TU). Istanbul Special Provincial Administration - Istanbul Project Coordination Unit (IPCU) was responsible for the implementation and monitoring of the Project, which is expected to be completed by December 31, 2014. In accordance with the removal of Istanbul Special Provincial the law no 6360. published in official gazette dated Dec 06. 2012, IPCU is responsible for the Governorship of Istanbul as of March :J.O, 2014. The overall goal of the ISMEP Project is to save lives and reduce the social, economic and financial impacts in the events of future earthquakes. The specific objective of the Project is to improve fhe city of Istanbul's preparedness for a potential earthquake through enhancing the institutional and technical capacity tor disaster management and emergency response, strengthening critical public facilities tor earthquake resistance. and supporting measures for better enforcement of building codes and land use plans. The Project is composed of four parts: Part A: Enhancing Emergency Preparedness Part B: Seismic Risk Mitigation tor Priority Public Facilities Part C: Enf(Jrcement of Building Code Part D: Project Management According to the project financial statements, EURO 21.416.889,89 was disbursed in this auditing period. So, total amount disbursed from the project resources (including front and fee) has reached to EURO 27.209.432,04 by December 31, 2013. B. Objectives of Audit: The objectives of our audit are: a) To an opinion on whether the financial statements, prepared as of December 31, 3 and the year then ended, a true and lair view of the f1nanciai position of the Project in accordance with the cash receipts and disbursements basis accounting, To d"''"rmine~ as of December 3!, 20 13, wh,etlter !PCU complied, in material with procedures of Loan Ai';re>?' 0 "RNC; 2 ISTANBUl PROJECT CORRDINATION UNIT 8033-TR ISMEP PROJECT TABLE OF CUMULATIVE INVESTMENTS-WB As of December 31 ,20'13 and for the year then ended (EURO) Actual l,lanned Variance 2013 Cumullltive YTll Cumulative YTD Cumulative l~l;o...'Vf:STME:\TS BY PR()JECr COMPONF:XrS l -Investments A- l:nhannng Emcrgencv Prepar~·-dncss l~Wurko:A'innds 2 !72AS2)l 2 l72A823l 2_!!6.000.,00 2 ! !6 000,00 56 4S2J l 56.4SL :1! 2·Constll!ancy S('!YIJ;es 192.467,71 192 467,7! 191 600,00 !Yl 600,00 S67)l H67.7l SubTotal 2.364.950,02 23M.950,02 2.307.600,00 2.307 .MHI,OO 57.350,02 57.350,02 B~ Stsmtc Rnk Mitlp:utton t!x Pnbh'c htcd!tws ! , Wmk'i--GOO 7.S9,45 3·Pm)CCt Man;Jg<:nwnt L6Y7 904 70 1Nr!_004 70 1.610.500 00 1.6rtL lO,Qtk 157.404 70 ?l7A04 70 Total 21.4!.0.889 89 27.209.432,04 20.914.JOO,Oll 26.706.1)42,15 502.789,89 502.789 89 /~,o~,/'~~""""'-·~" /"_"'~,.., ,?' u / L::. .;:;/ Kaz1 Ok a ~LGIN Gonq/;zo1MIR / Project ctor Depyty Gofernor ISTANBI 'L GOn;RNORSIUP !STANllCL PROJECT COORIHNATION I' NIT 8033-TR ISMEP PROJECT SOE WITUilRAWALTA.BLE FOR EXI'ENSE STATEMENTS For the Period Ending on 31.12.2013 In Et:RO 1-Rratit,r~d Applicati{ms Fund Lses On Cat(>l'{}P.' Basis HJlt<' of Applkationj;\.pplieation 1 ~~ ork~und ~Goods ~~··onsultancy ~~?c.n~. Op. IITnallocah~{l rrolal !Paid Amount Jnatc of Payment Number lechnkal S >4.0Kl,95 25JN 2013 J::.!! 20 t3 " 7 I ! 74. l69J.l] 390_826,44 !.564'/95A7 l 564 995A1 2tU l 20U ltU2 2013 ! 85N.353512 1 858 353.92 !9122013 " I JS6 762,43 501 591,49 8.3!7.210.64 o.oo 0,00 0.00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 Total application demanded during thv- )'car ,., 0 (H} 1.702.071 41 000 000 t0JH9.tk2,oi5 10.019.282 05 I GUnayod~;' Deputy (3'6vfnor ( I l ISTANBUL GOVERNORSHIP ISTANBUL PROJECT COORDINATION UNIT ISMEP 8033 TR SPECIAL ACCOUNT STATEMENT (SA) SPECIAL ACCOUNT NO: 94 64 32 014 As of 31 December 201 3 (in EURO) 1- Opening Balance 7.407.000,76 2~ Transfers to Special Account (01.01.2013-31.12.2013) 19.896.722,52 a) Direct Payment 0,00 b) Advance Payment 0,00 c) Advance Deduction H 0,00 d) SOE Method 9.877.440,47 e) Summary Sheets 10.019.282,05 f) Other 0,00 3~ Returns to Special Account 0 I· SOURCES 27.303.723,28 4- Withdrawal for Expenses 21.549.706,39 (01.01.2013- 31. 12.2013) 5~ Paid Commissions II -Total Usages l'lf549.706,39 1111 -Ending )$.754,016,89 Kazun G6khan ELGiN GOnav.dDEMIR REPUBLIC OF TURKEY 1ST ANBUL GOVERNORSHIP ISTANBUL PROJECT COORDINATION UNIT (IPCU) 8033-TR ISTANBUL SEISMIC RISK MITIGATION AND EMERGENCY PREPAREDNESS PROJECT ADDITIONAL FINANCE NOTES TO THE PROJECT FINANCIAL STATEMENTS (31.12.2013) 1. OBJECTIVES AND NATURE OF THE PROJECT To transform Istanbul in the next I0-20 years into a city more resilient to a major earthquake Istanbul Seismic Risk Mitigation and Emergency Preparedness (!SMEP) Project had been prepared by the Turkish Government. The World Bank and the Turkish Government signed a Loan Agreement (4784-TU) in the amount of Euro 310.00 million (US$400.00 million equivalent) on October 18, 2005 for the funding of ISMEP. The agreement became effective on February 3, 2006. Istanbul Special Provincial Administration, Istanbul Project Coordination Unit (IPCU) is responsible for the implementation of this project. Loan Agreement (4784-TU) closing date 31 December 2012. Republic of Turkey Council of Minister's Decree Number 201111410 dated February 8, 201I,The World Bank and the Turkish Government signed a Loan Agreement (8033-TR) in the amount of Euro 109.8 million on August 04,2011 for the funding ofiSMEP. i The overall goal of the proposed project is to save lives and reduce the social. economic and financial impacts in the event of future earthquakes. The specific objective of the project is to improve the city of Istanbul's preparedness for a potential earthquake through enhancing the institutional and technical capacity for disaster management and emergency response, strengthening critical public facilities for earthquake resistance, and supporting measures for better enforcement of building codes and land use plans. 2. MAIN ACCOUNTING POLICIES a} IPCU accounts the project-related operations on the basis of cash. Accordingly, revenues are received when the loan is transferred to the special accounts, and expenditures arise when a payment is made. Payments made to suppliers are expensed at the date of payment. However, tax withdrawals from suppliers are accrued in bank accounts and expensed on the date of the payment of these taxes one month later. b) lPCU is responsible for payments, accountings, records and all financial reports on the project- related activities, resources and expenditures within the framework of the Project. Those records and accounts are prepared for the special accounts to be held the auditors to Bank. in accordance with the conditions to the Bank, in year. c) IPCU procured an accounting sotlware program, Financial Management System ("FMS"), to follow up the payments and accounting records of the project, Data entry to FMS is conducted based on the payment dates. The transactions recorded in local currency (Turkish Lira- TL) are converted to the EURO using the exchange rate prevailing at the date of withdrawal in accordance with Central Bank's official bid rates for Euro. Since these rates are entered daily to FMS, conversions from TL to. EURO are automatically held. FMS sotlware was developed in compliance with Accounting Standards, For each accounting record, an automatically numbered wage receipt is taken. Receipts, invoices, contracts and payment orders are filed and archived regularly, Below there is a list of the reports received from FMS: i. Project Resources and Fund Use 11. Use of Funds on the base of Project Activities 111. Cash Withdrawals IV. Special Account Table {based on Euro) d) There is one special account under the investment framework of the project, opened in the Central Bank. As of December 31, 2013. a total amount of EURO 33.189.894,07 has been used from the World Bank account. 3. RESTRICTIONS CONCERNING THE USE OF THE FUNDS AND OTHER ASSETS In accordance with the Loan Agreement signed between Turkish Government and the Bank, use of those resources in the Special Account is limited to the project objectives. Those resources still unused at the end of the Project will be returned back to the Bank, in compliance with the related financing I agreement. Records shall be kept on the project resources and those assets procured through the project resources during the project and the subprojects. 4. VARIANCES FROM THE PLANNED AMOUNT IPCU is carrying out a revision on the distribution of the expenses over the years under the scope of the project and variations from the planned amount and the current and cumulative planned amounts are changing as well. In 2013, project investments realized 502.789.89 Euro above the planned amount. 5. CASH AVAILABLE AT 31 DECEMBER 2013 Cash available at 31.12.2013 is as tollows.(Euro) ···········-- .......... _ ..........-~···· fllll!ls._ . --~ .Q!~e.r-J?IIIln record WB as SOE but it was •·crnrrlPrl 2012. In 2013 this amount credited to advance and debited to SOE account. However. this amount was not shown in tables in order to be in accordance with SOE tables. /} ;c·· ~ //./ c:::e· ~/-- / ~ . I If/~ . // .. ~ /~. /)5:ll'z1m Gtkban ~GiN 'i Director Giinav OZDEMIR Dep~tfqovernor . I / jl • { I