COMMUNITY RESILIENCE TO CLIMATE CHANGE AND DISASTER RISK IN SOLOMON ISLANDS PROJECT [PHRD] TF012391 FINANCIAL STATEMENTS For the Year Ended 31 December 2016 Table of Contents Page (s) Report of the Executing Agency 2 Auditors Report 3 Balance Sheet 4 Statement of income and Expenditure 5 Notes to and forming parts of the Financial Statements 6-10 MINISTRY OF ENVIRONMENT, CLIMATE CHANGE, DISASTER MANAGEMENT & METEOROLOGY PO BOX 21, HONIARA, SOLOMON ISLANDS TELEPHONE: +677 23031, FAX: +677 28054 POLICY AND HUMAN RESOURCES DEVELOPMENT (PHRD) TRUST FUND TF012391 FINANCIAL STATEMENTS For the Year Ended 31 December 2016 REPORT OF THE EXECUTING AGENCY Under the terms of my contract, I have the mandate from the World Bank and Ministry of Environment, Climate Change, Disaster Management and Meteorology (MECDM), as the Executing Agency, to supervise and manage the funds provided by Japan Policy and Human Resources Development (PHRD) Trust Fund. The Grant (TF012391) is used to pilot resilience activities in Temotu and Guadalcanal Provinces under the Community Resilience to Climate Change and Disaster Risk in Salomon Islands Project (CRISP). I certify that the attached Balance Sheet and Statement of Income and Expenditure which has been prepared under my supervision presents a true and fair view of Affairs of MECDM - PHRD for the year ended 31" December 2016. Dated at Honi is day of 0 dc 2017. Dr. Melchior Mat Permanent Secr tary Executing Agency Repre Rftv Ministry of Environment, rlt s anagement & Meteorology Morris & Sojnocki CHARTERED ACCOUNTANTS Morris & Sajnocki City Centre Building Mendana Avenue Honiara Solomon Islands postal address Independent Auditor's Report PO Box 70 Report on the Financial Statements of the Ministry of Environment, Climate Telephone (677) 21851 Change, Disaster Management and Meteorology (MECDM) - Japan Policy and Human AeJhk%*NQ*Wnt (PHRD) We have audited the accompanying financial statements of the Ministry of Environment, Climate Change, Disaster Management and Meteorology (MECDM) Japan Policy and Human Resources Development (PHRD) which comprise the balance sheet as at 3 " December 2016 and the statement of income and expenditures for the year then ended and a summary of significant accounting policies and other explanatory notes as set out on pages 6 to 10. Responsibility for the Financial Statements The Ministry of Environment, Climate Change, Disaster Management and Meteorology as the Executing Agency, and management of MECDM - PHRD Project Management are responsible for the preparation and fair presentation of these financial statements in accordance with applicable Accounting Standards in Solomon Islands and the Grant Agreement TF012391 dated 24 September 2012 between Solomon Islands and International Bank for Reconstruction and Development & International Development Association, and for such internal control as management determines is necessary to enable the preparation of a statement that is free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with applicable Auditing Standards in Solomon Islands. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circum stances, 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 management, as well as evaluating the overall presentation of the financial statements. The audit also involved evaluating the project's compliance with the requirements of the Grant Agreement dated 24th September 2012 between Solomon Islands and International Bank for Reconstruction and Development & International Development Association. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or in to whose hands it may come save where expressly agreed by our prior consent in writing. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion: (a) the financial statements present fairly, in all material respects, the financial position of the MECDM - PHRD Project as at 3l1s December 2016 and the results of its operations for the year then ended, in accordance with the accounting policies set out in note I of the financial statements. (b) project funds provided by the World Bank, have, in all material respects, been used in accordance with the conditions of the financing agreement, and only for the purposes for which they were provided and adequate documentation exists to support the expenditure incurred as detailed in the Statement of Income and Expenditures, which can be relied on as a basis for loan disbursement. (c) the designated accounts have been used and maintained in accordance with the provisions of the financing agreement and cash at bank balances at 31 '1 December 2016 are correctly stated, (d) apart from the failure to provide audited financial statements to the World Bank not later than 6 months after the end of the financial year, we have noted no significant internal control we nesses or non-compliance with the financing agreement terms. MORRIS & SOJNOCKI Chartered count ts Date: /dq "9c6~ 2o/-t Honiara BY GREGJ JNOCKI PARTNER 3 2016 2015 SBD SBD Notes Assets Current Assets Cash at Bank and on Hand 3 (1, ii) 763,672 4,015 Community-led Sub-projects 4 (i) 1,217,672 1,245,881 PHRD Receivable-CRISP 4 (ii) - 24,680 Total Current Assets 1,980,946 1,274,576 Current Liabilities Creditors and Accrued Liabilities 5 (i, ii) 864,091 1,013,121 PHRD Payable-CRISP 5 (iii) - 28,000 Total Current Liabilities 864,091 1,041,121 Net Assets 1,116,855 233,455 Accumulated Funds Opening accumulated funds 233,455 136,005 Current Year Surplus 883,400 97,450 Closing Accumulated Funds 1,116,855 233,455 The Balance Sheet is to be read in conjunction with the notes to and forming part of the accounts on page 6 to 10. 4 2016 2015 SBD SBD Notes TF012391 TF012391 INCOME World Bank - Grants Received 2 7,745,165 3,692,718 TOTAL INCOME 7,745,165 3,692,718 EXPENSES Audit Fees - 29,250 Bank Charges 27,352 2,822 Consulting Services 50,765 203,060 Contract Services - Works 369,985 - Freight 85,197 Fuel 61,544 Grant Assets 6 4,324,002 Hire 96,194 900 Materials - Community Projects 863,711 4,667 Miscellaneous - Community Projects 126,008 - Meals & Refreshments - 2,243 MV Expenses - Fuel/Oil 915 Office Equip Expenses - 2,800 Office Supplies & Stationary 1,180 - Printing and Photocopies 7 - 10,630 Staff Expense - International Consultants 8 453,049 1,704,031 Staff Expense - National Consultants 9 100,272 1,140,218 Telephone & Internet - 50 Training Materials - 16,196 Travel Expense 10 153,205 226,575 Utilities - Water, Electricity and Other 900 - Venue Hire - 7,200 Workshops and Seminars 11 - 232,003 Miscellaneous expense 12 20,700 9,708 *Unacquitted expenses 13 127,701 - TOTAL EXPENDITURE 6,861,765 3,595,268 NET SURPLUS 883,400 97,450 The Income & Expenditure Statement is to be read in conjunction with the notes to and forming part of the accounts on page 6 to 10. *Amount already spent but receipts & other relevant supporting documents not yet received 5 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31st December 2016 ACCOUNTING POLICIES a Basis of preparation The financial statements have been prepared in accordance with generally acceptable Accounting Standards using the Accrual Basis of Accounting, The accounting policies have been applied consistently throughout the period. b Reporting entity The financial statements are for the Community Resilience to Climate Change & Disaster Risk in Solomon Islands (CRISP) project, which is funded by the International Bank for Reconstruction and Development (IBRD) ('the World Bank') in partnership with the Ministry of Environment, Climate Change, Disaster Management and Meteorology. The principal objective of the CRISP project is to: L integrate climate change adaption and disaster risk reduction across the recipient's sectors ii. improve climate change adaptation and risk reduction information and communication iii. increase the resilience of rural communities to climate change and natural hazards c Reporting currency The financial statements are presented in the Solomon Islands currency, the Solomon Islands dollar (SBD). d Recognition of Revenue Revenue is recognized when cash is received or a withdrawal application is approved for payment by the Bank within the financial year, although payment is received in the subsequent year e Foreign currency transactions Transactions in foreign currencies are recorded at the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currency are recorded at the exchange rate at the date of the transaction f Fixed Assets Capital Expenditure is expensed during the year in which the expenditure is made. 6 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31st December 2016 2 FUNDING Grant Funding was provided by the International Bank for Reconstruction and Development and the International Development Association (World Bank), acting as administrator of grants provided by the Japan Policy and Human Resources Development (PHRD) Trust Fund to support Disaster Reduction and Recovery through the Increasing Resilience to Climate Change and Natural Hazards Project. During the year, Advances from World Bank and reimbursements of expenditures was recorded. 2016 2015 (SBD) (SBD) ADVANCES - GRANT INCOME (TF012391) Advance to Designated Account i,S00,000 Reimbursement of expenditure during reporting period 1,926,680 3,691,723 Advances as Direct Payment during reporting period 4,319,082 - Foreign exchange gains/(loss) from unpaid International fees (597) 995 based on year end rate TOTAL 7,745,165 3,692,718 3 CASH AT BANK AND ON HAND i. Project Management Unit Designated Account Cash Balance with ANZ - Acct# 4934447 763,672 4,015 TOTAL CASH AT BANK AND ON HAND 763,672 4,015 4 ADVANCES i. Community-led Sub-Projects Horabau SIC Account with BSP - Acct# 4001004508 5,646 180,358 Duidui SIC Account with BSP - Acct# 4001004482 10,819 161,179 Koli SIC Account with BSP - Acct# 4001052739 5,249 96,978 Kobito SIC Account with BSP - Acct# 4001120411 223 - Malo SIC Account with BSP - Acct# 4001054362 56,750 174,440 Baenga SIC Account with BSP - Acct# 4001052689 897 20.120 Nela SIC Account with BSP - Acct# 4001053042 - 99,317 Luova SIC Account with BSP - Acct# 4001052903 91,266 174,440 Venga SIC Account with BSP - Acct# 4001052713 24,349 98,515 Nea SIC Account with BSP - Acct# 4001052911 35,905 174,440 Lata Area 4 SIC Account with BSP - Acct# 4001067455 17,087 66,095 Manoputi SIC Account with BSP - Acct# 4001120429 94,545 - Lulunga SIC Account with BSP - Acct# 4000598427 91,032 - Mahu SIC Acct with BSP - Acct# 4000599268 32,530 - Tanavasa SIC Account with BSP - Acct# 4001120437 125,361 - Singe SIC Account with BSP - Acct# 4001134990 82,385 - Papagu SIC Account with BSP - Acct# 4001135419 141,319 - Pitukoli SIC Account with BSP - Acct# 4001135070 184,729 - Koliasi SIC Account with BSP - Acct# 4001135013 135,299 - Verahue SIC Account with BSP - Acct# 4001135435 81,882 - ii. Receivable - CRISP Receivable - CRISP TF016425 TOTAL 1,217,274 1,245,881 7 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31st December 2016 2016 2015 (S8D) (SBD) CREDITORS AND ACCRUALS i). Amounts owing to Suppliers & Consultants - 117,672 ii). Accrued Liabilities Cash Balance overspent by Nela SIC due to dishonoured 7996 - Cheque pending 3rd tranche funding from PHRD Basic Rate Payable - 1,657 PAYE Tax Payable 856,095 808,404 Professional With-Holding Tax Payable - 65,366 National Provident Fund Superannuation [7.5%] - 12,014 National Provident Fund Superannuation [5%] 8,009 Total 864,091 1,013,121 ill). Payable-CRISP Payable-CRISP TF016614 - 28,000 Total - 28,000 TOTAL 864,091 1,041,121 6 GRANT ASSETS Equipment 775,127 - Radio Communication Equipment 3,544,455 - Tools 4,420 - TOTAL 4,324,002 - 7 PRINTING AND PHOTOCOPY Printing and Photocopy - 9,330 Printing - Training Materials - 1,300 TOTAL - 10,630 8 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31st December 2016 2016 2015 (SBD) (SBD) STAFF EXPENSES - INTERNATIONAL CONSULTANTS Consultant Fees (Long Term) 330,527 956,913 Consultant Fees (Short Term) - 317,984 Accommodation (Short Term) 26,741 Living Allowance (Long Term) 73,769 201,066 Perdiem Expenses - 16,878 Accommodation (Long Term) 42,000 154,000 Travel and Transport 6,753 30,449 TOTAL 453,049 1,704,031 g STAFF EXPENSE - NATIONAL CONSULTANTS Salaries 75,991 1,044,666 Staff Expense - Casual 900 Holiday Leave Passage 15,832 16,302 Staff Expense - Perdiem 2,750 - NPF Contribution (7.5%) 5,699 78,350 TOTAL 100,272 1,140,218 10 TRAVEL EXPENSE Travel Expense -Accommodation 9,850 61,950 Travel Expense - Airfare 4,778 13,920 Travel Expense - Allowance 3,550 69,200 Travel Expense - Motor Vehicle/Taxi/Boat Hire 135,027 68,246 Travel Expense - Sundry - 13,259 Total 153,205 226,575 11 WORKSHOPS AND SEMINARS Workshops and Seminars - 232,003 TOTAL 232,003 12 MISCELLANEOUS EXPENSE Staff Expenses - Sundry - 6,360 Sundry Expenses 20,700 3,348 TOTAL 20,700 9,708 9 NOTES TO THE FINANCIAL STATEMENTS for the year ended 31st December 2016 2016 2015 (SBD) (SBD) 13 UNACQUITTED EXPENSES i. Community Sub-project Funds Koli SIC 3,407 - Kobito SIC 4,350 - Lale SIC 9,310 - Malo SIC 4,000 - Baenga SIC 930 - Nela SIC - Luova SIC 78,097 - Venga SIC 22,787 - Nea SIC 1,220 - Lata Area 4 SIC 3,600 Total 127,701 - 10