THE WORLD BANK GROWTH AND EMPLOYMENT PROJECT (GEM) (FED ERAL MINISTRY OF INDUSTRY, TRADE AND INVESTMENT) FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31ST MARCH, 2019 AUDITED BY OFFICE OF THE AUDITOR-GENERAL FOR THE FEDERATION Plot 273, Samuel Ademulegun Street, Central Business District, Abuja. TABLE OF CONTENTS Contents Paqe Project Information/Profile 2-3 Auditor's Report 4-6 Statement of Financial Position 7 Statement of Financial Performance 8 Statement of Cash Flow 9 Statement of Net Changes in Assets/Funds 10 Notes to the Account 11-15 GROWTH AND EMPLOYMENT (GEM) PROJECT FEDERAL MINISTRY OF INDUSTRY, TRADE AND INVESTMENT FINANCIAL STATEMENTS FOR THE FIFTEEN MONTHS PERIOD ENDED 315T MARCH 2019 PROJECT INFORMATION/PROFILE Growth and Employment (GEM) Project is a Federal Government of Nigeria Project supported by the World Bank through IDA credit of $160m. The Project is domiciled in the Federal Ministry of Industry, Trade and Investment, and will run for a period of five (5) years; 2013 - 2018. However, the project was extended till March 29th 2019. The project objective is "To increase growth and employment in participating firm in Nigeria" The focus of the project is on two main sector of the economy, SERVICE: ICT, Entertainment, Tourism & Hospitality, and Construction. MANUFACTURING: Light manufacturing (Agro-processing and other manufacturing) Members of national steering committee National Competitive Council of Nigeria Federal Ministry of Finance Federal Ministry of Agriculture Federal Ministry of Communication Technology Federal Ministry of Information and Culture Nigeria Economic Summit Group PRINCIPAL OFFICERS OF THE PROJECT Vacant Project Co-ordinator Mr Ndah Abu Ali Assistant Project Co-ordinator Mrs Ilesanmi Aigba Project Accountant Mrs Uche Aneke Project Internal Auditor Mr Agonsi Ikechukwu Procurement Officer The position of Project Co-ordinator was vacant from February 15th 2018 till the end of the reporting period. The Assistant Project Co-ordinator acted as the Project Co- ordinator for the entire period. All other principal officers held office throughout the reporting period. 2 GROWTH AND EMPLOYMENT (GEM) PROJECT FEDERAL MINISTRY OF INDUSTRY, TRADE AND INVESTMENT FINANCIAL STATEMENTS FOR THE FIFTEEN MONTHS PERIOD ENDED 31ST MARCH 2019 Project Head Office and Implementing Agency: Growth and Employment (GEM) Project, Federal Ministry of Industry, Trade and Investment Old Federal Secretariat, Area 1, Abuja Project Banker: Central Bank of Nigeria Central Business District, P. M. B 0187, Abuja. Project Financier: The World Bank Project External Auditor: Office of the auditor-General for the Federation Plot 273, Samuel Ademulegun Street, Central Business District, P. M. B 28, Garki Abuja Web site:www.oaugf.ng e-mail: info(a)oauqf.ng 3 THE AUDITOR-GENERAL FOR THE FEDERATION Audit House, Plot 273, Samuel Ademulegun Street, Central Business District, PM.B. I 28, Garki - Abuja, Nigeria. The Acting Project Coordinator, Growth and Employment Project (GEM), Federal Ministry of Industry, Trade and Investment, Old Secretariat, Abuja AUDIT OF THE GROWTH AND EMPLOYMENT PROJECT (GEM) PERFORMED BY THE AUDITOR GENERAL FOR THE EDERATION AUDITOR'S REPORT Opinion I have audited the financial statements of Growth and Employment Project (GEM) for the period ended 31st March, 2019. These financial statements comprise the Statement of Financial Position, Statement of Financial performance, Cashflow Statement and Statement of Net Assets/Equity for the year then ended, and a summary of significant accounting policies and other explanatory information. In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at 31st March, 2019, and of its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS). Basis for Opinion I conducted the audit in accordance with International Standards for Supreme Audit Institutions (ISSAls). My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements Section of my report. I am independent of the entity in accordance with the Code of Ethics for Supreme Audit Institutions together with the ethical requirements that are relevant to my audit of the financial statements and I have fulfilled my other ethical responsibilities in accordance with these requirements and the Code of Ethics. I believe that the audit evidences obtained are sufficient and appropriate to provide a basis for my opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with IPSAS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 4 In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the entity's financial reporting process. Auditor's Responsibility for the Audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with (ISSAls), 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 financial statements. As part of an audit in accordance with Financial Audit Methodology (FAM), which is consistent with the Fundamental Auditing Principles (ISSAls 100-999) of the International Standards for Supreme Audit Institutions, I exercise professional scepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financial statements, 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 my 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 controls. * 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 Entity's internal control. * Evaluate the appropriateness of accounting policies uses and the reasonableness of accounting estimates and related disclosures made by management. * Conclude on the appropriateness of management's 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 Entity's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. I 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 I identify during my audit. I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be brought to bear on my independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor's report unless law or regulation precludes public disclosure about the matter or, when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. A. M. AYINE, FCA Auditor-General for the Federation June 17, 2019 6 GROWTH AND EMPLOYMENT PROJECT FEDERAL MINISTRY OF INDUSTRY TRADE AND INVESTMENT STATEMENT OF FINANCIAL POSITION AS AT 315T MARCH, 2019 2019 2017 EMPLOYMENT OF FUNDS CURRENT ASSET Cash & Cash Equivalent 12,420,027,486.91 11,680,569,217.02 Cash Advance 42,965,991.00 Receivables & Prepayments 4,500,000.00 12,424,527,486.91 11,723,535,208.02 Non-Current Asset Development Capital Expenditure 5 3,912,977,225.05 2,890,797,338.95 Development Operating Expenditure 6 303,270,189.86 161,162,642.38 Fixed Asset 7 5,721,855.00 5,534,870.00 4,221,969,269.91 3,057,494,851.33 Total Net Asset 16,646,496,756.82 14,780,476,532.35 LIABILITIES Current liabilities 1 Payables 4 47,387,311.27 56,367,086.89 Short Term borrowings Short Term provisions Employee benefits Total Current Liabilities 47,387,311.27 56,367,086.89 Non-Current Liabilities Long term borrowings Long term provisions Employee benefits Total Non-Current liabilities Total Liabilities 47,387,311.27 56,367,086.89 Net Assets 16,599,109,445.55 14,724,109,454.46 FINANCED BY IDA Credit 4 16,599,109,445.55 14,724,109,454.46 16,599,109,445.55 14,724,109,454.46 NDAH ABU ALI AIGBA ILESANMI (ACTING PROJ CT COORDINATOR) (PROJECT ACCOUNTANT) Date. Date.. 0 . ......... 7 GROWTH AND EMPLOYMENT PROJECT FEDERAL MINISTRY OF INDUSTRY TRADE AND INVESTMENT STATEMENT OF FINANCIAL PERFORMANCE FOR THE PERIOD ENDED 31s MARCH, 2019 2019 2017 INCOME IDA Credit 16,599,109,445.55 14,724,109,445.55 Interest 42,887,311.27 13,954,622.81 16,641,996,756.82 14,738,064,068.36 EXPENDITURE Consultancy 10 1,697,689,299.65 1,147,908,293.24 Workshop 11 72,537,759.92 74,695,321.61 Training 12 73,738,852.58 77,294,650.85 Operating Cost 6 303,270,189.86 161,162,642.38 Depreciation 15 572,185.50 553,487.00 2,147,808,287.51 1,461,614,395.08 Excess Income Over Expenditure 14,494,188,469.31 13,276,449,173.28 8 GROWTH AND EMPLOYMENT PROJECT FEDERAL MINISTRY OF INDUSTRY TRADE AND INVESTMENT STATEMENT OF CASH FLOW FOR THE PERIOD ENDED 31ST MARCH. 2019 2019 2017 Cash Flow from Operating Activities Excess of income over Expenditure 14,494,188,469.31 13,276,499,673.28 Depreciation 572,185.50 553,487.00 Net Cash Flow From Operating Activities 14,494,760,654.81 13,277,007,160.28 Cash Flow From Investment Activities Purchase of Asset (5,721,855.00) (5,534,870.00) other Expenditure Net Cash Flow From Investment Activities 14,489,038,799.81 13,271,468,290.28 Cash Flow From Financing Activities 2,069,011,312.90 1,590,899,073.25 Grants 13 Net Cash Flow From Financing Activities 12,420,027,486.91 11,680,569,217.03 Cash & Cash Equivalent for the Year 739,458,269.89 8,531,711,842.75 Cash & Cash Equivalent B/F 11,680,569,217.02 3,148,857,374.28 Cash & Cash Equivalent C/F 12,420,027,486.91 11,680,569,217.02 9 GROWTH AND EMPLOYMENT (GEM) PROJECT STATEMENT OF CHANGES IN NET ASSETS/FUNDS FOR THE PERIOD ENDED 31f MARCH, 2019 Exchange Accumulated Capital Grant Reserve Difference Surplus/(Deficits) Total N'000 N'000 N'000 N'000 N'000 Balance at 1st January, 2018 14,724,109,445.55 0 Additional Grant/Fund 1,875,000,000.00 1,875,000,000.00 Surplus on Revaluation of PPE Exchange Rate Gain Surplus for the period from 14,724,109,445.55 Operating activities Balance at 31 March 2019 16,599,109,445.55 - 16,599,109,445.55 10 GROWTH AND EMPLOYMENT (GEM) PROJECT FEDERAL MINISTRY OF INDUSTRY, TRADE AND INVESTMENT NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31T MARCH 2019 STATEMENT OF COMPLIANCE WITH IPSAS The preparation and contents of these Financial Statements are in accordance with the requirements of the International Public Sector Accounting Standards (IPSAS) accrual basis, except that Statement of Budget and Actual of the Coordinating Unit was excluded because it has not been made publicly available as required by IPSAS 24. * ACCOUNTING POLICIES The following is the summary of the significant Accounting policies adopted in the preparation of the Project's financial statements. * BASIS OF PREPARATION The financial statements have been prepared under the historical cost convention and in accordance with the accrual basis of international public sector accounting standards (IPSAS) FUNDS All contributions by the Financier were only recognized when received and capitalized as IDA credit/fund. This fund is subsequently increased or reduced by surplus or deficit from the statement of financial performance. * RECOGNITION OF REVENUE & EXPENDITURE Revenue and expenditure were recognized when they become receivable or incurred. * NON-CURRENT ASSETS * Non-current assets acquired during the year (if any) were stated at cost * Depreciation: No depreciation was provided on the Non-current Assets * REPORTING/FOREIGN CURRENCY The financial statements were prepared in Nigerian Naira version. Transactions in foreign currency were translated at the ruling rate for the period, while all foreign accounts balances were translated at the rate of exchange at the reporting date. * INVENTORY Inventory is valued at accrual of cost and net realizable value * Stationeries 2,500,000.00 * Giant Stapler 1,200,000.00 * Office Pins 800,000.00 Total 4,500,000.00 11 4. Revenue These are IDA Credit denominated in USD ($) and are translated into Naira at the ruling exchange rate for the period January 2018 to March 2019. No interest was recorded in respect of the Project Fund Account (Naira) maintained with the Central Bank of Nigeria. The Revenue is made up of: 2019 2017 Balance B/F 14,724,109,445.55 7,023,177,749.48 IDA Credit for the period 6,100,000,000.00 7,700,931,696.07 20,824,109,445.55 14,724,109,445.55 Less: Return of unutilized fund 4225,000,000.00) Total 16,599,109,445.55 14,724,109445.55 5 Development Capital Expenditure 2019 2017 Consultancy 1,697,689,299.65 1,147,908,293.24 Workshop 72,537,759.92 74,695,321.61 Training 73,738,852.58 77,294,650.85 Grant 2069.011,312.90 1,590,899,073.25 TOTAL 3,912.977,225.05 2,890,797,338.95 6 Development Operating Cost Project Management Operating Expenses 2019 2017 Office rehabilitation 6,331,251.48 Books/Periodicals/Subscription 1,556,409.00 Equipment maintenance 734,000.00 2,393,700.00 PMU Cost 786,400.00 1,329,200.00 Telephone Internet Service 945,420.93 1,040,775.00 Vehicle Insurance 3,088,858.40 3,088,858,40 Media Expenses 934,225.00 Printing and photocopy 578,941.50 1,037,900.00 12 Generator Fuel and Lubricants 4,230,595.24 8,787,500.00 Technical Support 7,303,037.50 2,025,000.00 Office Stationary 6,248,770.00 2,602,072.02 Computer Consumable 20,000.00 2,312,200.00 Publicity and Advertisement 2,069,261.26 12,728,724.97 Audit Charges 210,000.00 - Bank Charges 655,350.02 605,465.05 Local Running 120,000.00 32,444,908.91 Security Expenses 14,535,500.00 9,931,250.00 PlU and Other Meeting Expenses 11,040,938.00 1,570,750.00 Vehicle Maintenance 4,807,400.00 6,917,825.00 Fuel Project Vehicle 344,000.00 2,909,364.00 Office maintenance 20,924,570.39 12,831,062.50 Evaluation in Hotel 2,831,272.00 Driver allowance 2,175,000.00 Office Cleaners 8,024,023.81 Local Travel 11,371,290.00 25,041,167.33 WHT FIRS 120,789,515.74 18,001,261.39 VAT FIRS 83,303,817.40 - Implementation Support 874,000.00 TOTAL 303,270,189.86 161,162,642.38 7 Fixed Asset Purchases 2019 2017 Office Equipment 5,721,855.00 4,924,050.00 ICT Equipment 147,600.00 Office Furniture -_ -_ - --_463,220.00 Total 5,721,855.00 5,534,870.00 8. Cash & Bank CBN TSA ACCOUNT ($34,727,794.23 @305) 10,591,977,241.07 7,478,854,410.89 13 9. OTHERS - Grant Window A total amount of USD ($) 84m was allocated to grant for the life of the Project. The total expended between 2018 January to March 2019 on grant is N2,069,011,312.90. 10. Consultancy: 2019 2017 BDS Providers 163,102,242.20 PAU Enterprise Dev Center 52,261,021.88 19,824,685.63 Project ACT 2,817,812.05 171,338,098.49 Local Consultancy 666,214,693.23 637,977,267.27 International Consultancy 549,280,123.60 210,805,805.95 PWC 159,758,674.76 4,166,000.00 KPMG 104,254,731.75 112,796,435.90 TOTAL 1,697,689,299.65 1-147,908,293.24 11. Workshops: PM workshops tour 72,537,759.92 74,695,321.61 12. Training: 2019 2017 Local Training 5,248,696.00 20,046,799.50 Foreign Training 61,986,707.01 5,518,436.15 Training/Capacity Building 6,503,449.57 51729,415.20 Total 73,738,852.58 77,294,650.85 13. Grants: 2019 2017 Equity Grant - 75,420,317.86 Innovative Market Grant 42,791,050.00 36,600,000.00 Institutional Grant 132,470,211.90 Accelerator Grant 234,000,000.00 470,313,600.00 Skill Placement Window 31,449,000.00 113,540,000.00 Aso Villa Demo Day (ADDV) Grant 268,790,566.00 409,058,011.39 Fast Track Grant 1,359,510,485.00 485,967,144.00 Total 2069,011,312.90 1,590,899,073.25 14 14. Payables 2019 2017 VAT 15,795,770.42 19,655,155.36 WHT 31,591,540.85 36,711,931.53 Total 47,387,311.27 56,367,086.89 The Payables reported in this Financial statement is strictly tax related (VAT and WHT). The figure does not represent the total liabilities of the PlU as at 31st March 2019. Details of other liabilities such as grants, operating expenses, consultancy fees, local and international training etc were not provided for audit examination by the PIU. Consequently, the audit team cannot give any assurance on the total liabilities of the PlU as at 31st March, 2019. 15. Depreciation The Project adopted a depreciation rate of: Office Equipment 10% ICT Equipment 10% Office Furniture 10% Depreciation Schedule Cost Items Office ICT Equipment Office FurnitureTotal Equipment 10% 10% 10% 10% Blneaat1/1/18 0 0_____1F- Addition for the year 5,721,855.00 572185500 Total Asset 5,721,855.00 i-5,721,855.00 5572 185.00 Depreciation j 7,8.0- 1572,185.00 Total Depreciation 572,185.50 572,185.00 for the year NBV 5,149,669.50 5 15