SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) SPECIAL PURPOSE FINANCIAL STATEMENTS For the period from 01 January 2019 to 17 July 2020 In USD Contents: INDEPENDENT AUDITORS’ REPORT І-ІІІ SUMMARY OF SOURCES AND USES OF FUNDS 1 USES OF THE WORLD BANK’S FUNDS ON THE PROJECT’S COMPONENTS 2 SCHEDULE OF WITHDRAWALS FROM THE GRANT ACCOUNT 3 STATEMENT OF WITHDRAWALS THROUGH THE SUMMARY OF STATEMENTS OF EXPENDITURES 4 RECONCILIATION BETWEEN RECORDS OF PIU AND THE BANK 5 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS 6 WORLD BANK AUDIT DOCUMENTATION CHECKLIST 9 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) SUMMARY OF SOURCES AND USES OF FUNDS For the period from 01 January 2019 to 17 July 2020 In USD Actual For the Total period Opening balance Special account – USD - Current account – UAH - - Sources of funds: 110,230 638,947 Grant of the International Bank for reconstruction and Development Total financing: 110,230 638,947 Project expenditure: Category 1: Goods, non-consulting services, consultants’ services, Training and Incremental Operating Costs under the 110,230 638,947 Project Total Project expenditure: 110,230 638,947 Closing balance Special account – USD - - Current account - UAH - - - - Notes on pages 06-08 are an integral part of these financial statements. 1 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) USES OF THE WORLD BANK’S FUNDS ON THE PROJECT’S COMPONENTS For the period from 01 January 2019 to 17 July 2020 In USD Total for the period from 01 January Total under 2019 to 17 July 2020 the Project component Procurement Planned Actual Deviations Plan, USD Component А: EITI Implementation Support 385,661 385,869 208 481,400 Component С: Communications and Outreach - - - - Component D: Project Management 242,095 253,078 10,983 298,600 Total Project expenditure 627,756 638,947 11,191 780,000 Notes on pages 06-08 are an integral part of these financial statements. 2 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) SCHEDULE OF WITHDRAWALS FROM THE GRANT ACCOUNT For the period from 01 January 2019 to 17 July 2020 In USD Payment USD Date of Application number Category withdrawal Currency Equivalent Equivalent 104 1 10.01.2019 UAH 27,577 981 105 1 10.01.2019 UAH 44,123 1,569 106 1 10.01.2019 UAH 44,123 1,569 107 1 10.01.2019 UAH 44,123 1,569 108 1 06.03.2019 UAH 44,458 1,694 109 1 06.03.2019 UAH 44,458 1,694 110 1 06.03.2019 UAH 44,458 1,694 111 1 06.03.2019 UAH 43,185 1,645 112 1 06.03.2019 UAH 43,185 1,645 113 1 05.04.2019 UAH 202,400 7,612 114 1 05.04.2019 UAH 43,138 1,622 115 1 05.04.2019 UAH 43,138 1,622 116 1 17.05.2019 UAH 42,701 1,620 117 1 17.05.2019 UAH 42,701 1,620 118 1 13.06.2019 UAH 42,137 1,611 119 1 13.06.2019 UAH 42,137 1,611 120 1 25.07.2019 UAH 42,026 1,655 121 1 25.07.2019 UAH 42,026 1,655 122 1 30.07.2019 UAH 41,648 1,676 123 1 30.07.2019 UAH 41,648 1,676 124 1 30.07.2019 UAH 19,523 786 125 1 27.09.2019 UAH 119,927 5,011 126 1 27.09.2019 UAH 40,281 1,683 127 1 27.09.2019 UAH 30,211 1,262 128 1 27.09.2019 UAH 12,588 526 129 1 27.09.2019 UAH 39,092 1,634 130 1 27.09.2019 UAH 19,546 817 131 1 27.09.2019 UAH 12,216 510 132 1 08.01.2020 UAH 1,021,205 43,216 133 1 08.01.2020 UAH 77,420 3,276 134 1 08.01.2020 UAH 37,902 1,604 135 1 08.01.2020 UAH 38,710 1,638 136 1 08.01.2020 UAH 18,951 802 137 1 08.01.2020 UAH 24,194 1,024 138 1 08.01.2020 UAH 11,844 501 139 А 1 17.07.2020 UAH 215,600 7,900 Total: 110,230 Summary schedule by categories: Category 1 total 110,230 Total: 110,230 Notes on pages 06-08 are an integral part of these financial statements. 3 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) STATEMENT OF WITHDRAWALS THROUGH THE SUMMARY OF STATEMENTS OF EXPENDITURES For the period from 01 January 2019 to 17 July 2020 In USD Application number Category 1 Total 1. Applications submitted to the World Bank and reimbursed during the period 01.01.2019 - 17.07.2020 104 981 981 105 1,569 1,569 106 1,569 1,569 107 1,569 1,569 108 1,694 1,694 109 1,694 1,694 110 1,694 1,694 111 1,645 1,645 112 1,645 1,645 113 7,612 7,612 114 1,622 1,622 115 1,622 1,622 116 1,620 1,620 117 1,620 1,620 118 1,611 1,611 119 1,611 1,611 120 1,655 1,655 121 1,655 1,655 122 1,676 1,676 123 1,676 1,676 124 786 786 125 5,011 5,011 126 1,683 1,683 127 1,262 1,262 128 526 526 129 1,634 1,634 130 817 817 131 510 510 132 43,216 43,216 133 3,276 3,276 134 1,604 1,604 135 1,638 1,638 136 802 802 137 1,024 1,024 138 501 501 139 А 7,900 7,900 Total 110,230 110,230 2. Expenditures factually incurred for the period from 01 January 2019 to 17 July 2020 From the Grant account 110,230 110,230 From special accounts - - From current accounts in national currencies - - Total 110,230 110,230 3. Table of differences in Project costs between the World Bank records and PIU for the period from 01 January 2019 to 17 July 2020 Reimbursed according to IBRD information 110,230 110,230 Amount of costs not provided for reimbursement as at 17.07.2020 - - According to PIU data 110,230 110,230 Notes on pages 06-08 are an integral part of these financial statements. 4 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) RECONCILIATION BETWEEN RECORDS OF PIU AND THE BANK For the period from 01 January 2019 to 17 July 2020 In USD Grant amount 780,000 Subtract: Project costs: Category 1: Goods, non-consulting services, consultants’ services, Training and Incremental 638,947 Operating Costs under the Project Total: (638,947) Special account – USD - Current account – UAH - Total available funds: - Total withdrawals: (638,947) Balance as at 17 July 2020 141,053 Notes on pages 06-08 are an integral part of these financial statements. 5 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS For the period from 01 January 2019 to 17 July 2020 In USD 1. Project Description In accordance with the Letter of Agreement dated 14 January 2016 and Additional Agreement No. 1 to the Letter of Agreement dated 17 May 2017, the International Bank for Reconstruction and Development and the International Development Association (“World Bank”) , acting as administrator of grant funds provided by Australia, Canada, Finland, Germany, Norway, Switzerland and the United Kingdom under the Extractives Global Programmatic Support Multi-Donor Trust Fund, proposes to extend to the Recipient, a grant in an amount not to exceed seven hundred eighty thousand USD (780 000 USD). The estimated number of contracts in force during the same period is 6. The objective of the Project is to assist the Recipient in implementing its EITI agenda. The Grant consists of the following parts: Component А: EITI Implementation Support Provision of consultants’ services for the preparation of report(s) covering all extractive industries for the calendar years 2014, 2015 and 2016. Component В: Capacity Building Provision of training to recipient’s public institutions, state agencies and companies operating in the extractive industries to deepen their knowledge on issues associated with resource management, EITI Standard, overall transparency in the sector and training to investigate journalists on the reporting of the extractive industries and EITI. Component С: Communications and Outreach Provision of support for the implementation of the EITI Communication strategy, including print and visual media, outreach campaigns, organization of awareness raising events, and internet and social media activities. Component D: Project Management Provision of support to the EITI National Secretariat, including Incremental Operating Costs. 2. Significant Accounting Policies Basis of Preparation The special purpose financial statements were prepared under the cash basis. Accounting policies were applied consistently during the entire period of the Grant funds use. Reporting Period This report covers the period of the Grant funds usage from 01 January 2019 to 17 July 2020. The closing date of the Grant is 31 December 2019 or such later date as established by the Bank. Reporting Currency According to the requirements of the World Bank, the reporting currency is US dollar. Receipts and Expenditures Recognition The EITI National Secretariat in Ukraine keeps records and prepares financial statements under the cash basis. Receipts are recorded as they enter the bank accounts supported by advances from the IBRD. Expenditures are recorded on the date of cash withdrawal from accounts. 6 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS For the period from 01 January 2019 to 17 July 2020 In USD The following methods of funding can be applied within the Grant: • Reimbursement of expenses; • Advance payments; • Direct payments. During the reporting period, the Ministry of Energy of Ukraine used only direct payments from the Grant account within the Project implementation due to the fact that accounts in the State Treasury of Ukraine have the risk of being blocked at any time. This does not allow for the use of other methods of the Grant disbursement. The table below defines the categories of Eligible Expenditures that can be financed from the Grant (“Category”), the distribution of the Grant funds between the Categories, and the percentage of expenditures that can be financed by Eligible Expenditures in each Category: Percentage of Allocated funds of the Category expenditures being Grant (in USD) financed (including tax) (1) Goods, non-consulting services, consultants’ services, Training and Incremental Operating 780 000 100% Costs under the Project TOTAL 780 000 All products, consulting and non-consulting services required for the project, and those that are eligible for funding at the expense of the Grant, must be procured in accordance with the requirements described in such documents and the links contained therein: • Section І of the «Guidelines: Procurement of Goods, Works and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers» dated January 2011 (revised July 2014) («Procurement Guidelines»), in the case of goods and non-consulting services; • Sections І and IV of the «Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers » dated January 2011 (revised July 2014) («Consultant Guidelines») in the case of consultants’ services. 3. Economic Environment The main economic activity is performed on the territory of Ukraine. The Ukrainian economy is in a protracted crisis, complicated by the military conflict in eastern Ukraine and the unrecognized separation of the Autonomous Republic of Crimea. Stabilization of the situation in Ukraine will largely depend on the government's actions aimed at resolving the military conflict, reforming the country's financial, administrative, fiscal and legal systems. To solve the above-mentioned tasks, the government of the country introduces rather severe and unpopular measures, such as partial mobilization of the population liable to military service, introduction of new taxes and fees, restrictions on cash and non-cash foreign currency transactions, etc. 4. Events after the reporting date Pandemic of coronavirus SARS-CoV-2 At the end of 2019, the SARS-CoV-2 coronavirus epidemic began, starting in China, and in early 2020, becoming a pandemic and spreading world-wide. In order to contain the effects of the pandemic, significant restrictive measures have been introduced in most countries of the world. All the financial, economic and physical measures aimed at protecting the lives of the population are slowing down the pace of global economic development and can cause a global economic crisis. At present, it is impossible to reliably estimate the duration of restrictive measures and the potential impact of the current situation on the economy of particular countries and business environment of legal entities and individuals. 7 SUPPORT FOR EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE COMPLIANCE PROCESS PROJECT (EITI) NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS For the period from 01 January 2019 to 17 July 2020 In USD On 11 March 2020, the Cabinet of Ministers of Ukraine adopted a Resolution “On Prevention of COVID -19 Coronavirus Spread in Ukraine”, whereby a quarantine was instituted in Ukraine from 12 March to 3 April 2020 with an option to extend. On 17 March 2020, the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine aimed at Preventing the Emergence and Spread of Coronavirus Disease (COVID- 19)” was adopted, whereby some laws of Ukraine were amended. On 25 March, the Cabinet of Ministers of Ukraine extended the quarantine until 24 April 2020 and introduced an emergency situation (ES) regime throughout Ukraine. Now the quarantine has been extended by the Government until August 31, 2020. With continued Covid-19 coronavirus epidemic and during the quarantine period, business conditions have complicated dramatically due to significant bans aimed at containment of the disease, which could have significant impact on the activities of the Ministry of Energy of Ukraine and the Project. In addition, there was a significant risk that due to the spread of the disease, the staff of the Ministry of Energy of Ukraine and the Project could be exposed to the risk of illness and inability to perform their duties for some time. The management of the Ministry of Energy of Ukraine and the Project constantly monitored the current situation related to the Project implementation and to the region as a whole. Currently, the special purpose financial statements do not require adjustments due to the constraints imposed by the current circumstances on the Project implementation due to the Covid-19 coronavirus epidemic. 8 WORLD BANK AUDIT DOCUMENTATION CHECKLIST Name of Loan/Credit: World Bank UKRAINE Loan/Credit # TF0A1759 Audit Report: Year ended July 17, 2020 Check if Check if Included N/A I. Audit report (Opinion): A. Applicable accounting standards noted X B. Applicable auditing standards noted X C. Opinion rendered on all forms of withdrawals: 1. Statement of Expenditures X 2. Special Account X D. All sources of financing for the project are noted X II. Financial Reports: A. Revenue Earning Entity (all of the following are required): 1. Balance sheet X 2. Cash Flow Statement X 3. Income Statement X B. Non-Revenue Earning Entity (all of the following are required): 1. Balance sheet X 2. Summary of Sources and Uses of Funds X C. If applicable (refer to Loan Agreement): 1. Statement of Expenditure (SOE) Statement X 2. Special Account Statement X III. Notes to the Financial Statements X IV. Reconciliation between World Bank records and project records X V. Management Letter X 9