CAR GROUP TSIAR-FINANS, LLC E Uzbekistan, Tashkent, 100077, 2a, Chust street 2 Tel/Fax: (998-71) 262-50-70; 262-08-47; 262-08-41 E E-mail: reception(iciar.uz; reception(ciargroup.net www.ciar.uz ((MEDIUM-SIZE CITES INTEGRATED URBAN DEVELOPMENT)) PROJECT GRANT NO.TFOA7556 INDEPENDENT AUDITOR'S REPORT ON THE SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE PERIOD FROM 14 SEPTEMBER 2018 TO 20 NOVEMBER 2019 ndependent M o GENEVA GROUP INTERNATIONAL IAR (R ULP TSIAR-FINANS, LLC 2 CONTENT CONTENT.. IN D EPEN D ENT A U D ITO R 'S R EPO RT ............................................................................................................ 3 STATEM ENT O F SO URC ES O F FUN D ......................................................................................................... 6 STATEMENT OF USES OF FUNDS ON EXPENDITURETYPES .................................................................. 7 STATEM ENT O F FINA NC IA L PO SITIO N ........................................................................................................ 8 USD DESIGNATED GRANT ACCOUNT STATEMENT OF PU ..................................................................... 9 UZS DESIGNATED GRANT ACCOUNT STATEMENT OF PIU....................................................................10 NOTES TO PROJECT SPECIAL PURPOSE FINANCIAL STATEMENTS...................................................11 1. DESCRIPTION OF THE PROJECT ... ....... ....... .... 11 2. G OING CONCERN .... ................... ........ 11 3. A CCOUNTING POLICY... .. ................ .... ..... 11 4. PRESENTED FINANCIAL STATEMENTS........... ........ .......... 12 5. CASH AND CASH EQUIVALENTS................... ....... .......... 13 6. STATEMENT OF EXPENDITURE (SOE) PROCEDURE .......... 14 7. DIRECT PAYMENTS PROCEDURE .............1..... .. .. ...... . 14 8. STATEMENT OF UZS SECONDARY CURRENT ACCOUNT . . .. ........... ... 14 9 . T A X E S ...... ............ ........... 1............ . ....5.... ........... .. 1 5 10. EVENTS AFTER THE DATE OF THE FINANCIAL STATEMENTS ........... .. . 15 L IAR k ULi TSIAR-FINANS, LLC 3 INDEPENDENT AUDITOR'S REPORT Addressee: Management of the Project Implementation Unit (PIU) of the Medium-size Cites Integrated Urban Development Project We have audited the accompanying Special Purpose Financial Statements (hereinafter - Financial Statements) of ( PROJECT, Grant Agreement No. TF0A7556 11 NOTES TO PROJECT SPECIAL PURPOSE FINANCIAL STATEMENTS for the period from 14 September 2018 to 20 November 2019 1. Description of the Project With objective to facilitate comprehensive development and improve efficiency of the urban infrastructure management, ensure access to the services for the population of mid-size towns, as well as to strengthen the capacity of local government through introduction of the advanced technical, financial and management tools, International Bank for Reconstruction and Development / International Development Association (hereinafter together - the World Bank) from grant funds provided by various donors under the Multi-Donor Programmatic Trust Fund for Europe and Central Asia Region Capacity Development (hereinafter - ECAPDEV), approved the grant in $410.0 thousand for the preparation of the Project > Project; and (iii) Provision of consultant's services and Training to PIU for the Project implementation and financing of Project audits. The total cost of the Grant for the preparation of the Project "Medium-size Cites Integrated Urban Development" is estimated at 410,000 US dollars. The World Bank funds available for the Project implementation are intended for financing the following categories: USD Amount of the Grant Percentage of Expenditures CategoryAllocated to be Financed 1 Consultants' services (including audit) 371 000 100% of all expenditures 2 Training 39 000 100% of all expenditures Total 410000 2. Going concern According to the Grant Agreement, the closing date of the Project is the date that has expired 12 months after the entry into force of the Grant Agreement, namely May 2, 2019. Further, according the World Bank Letter dated 11 June 2019, the Grant's closing date was extended until July 11, 2019. Further disbursements of Grant funds after the Closing Date are processed on the basis of the Application/Request for disbursement received from the World bank within 4 months after the Closing Date. 3. Accounting policy These Special Purpose Financial Statements have been prepared, in accordance with requirements of International Public Sector Accounting Standards (hereinafter - IPSAS) issued by the International Public Sector Accounting Standards Board of the International Federation of Accountants, following the cash flow basis and compliant with the World Bank recommendations. () PROJECT, Grant Agreement No. TF0A7556 12 3.1. Basis of presentation Statement of Sources of Funds, Statement of Uses of Funds on Expenditure Types, Statement of Financial Position, Designated Grant Accounts Statements and the accompanying Notes are developed on cash flow basis to reflect operations conducted within the Project's frames in accordance with below-stated principles. 3.2. Financing The Project financing is recognized when suppliers of material resources or services are paid the World Bank's Grant Account under Direct payment procedures (see Note 7). The Project financing is also recognized when transferring funds from World Bank accounts to the Designated Grant Account in US dollars opened in Tashkent Branch of "Asaka" Bank (see Note 5). 3.3. Expenditure Project expenditures are recognized as such and stated in the Project Special Purpose Financial Statements prepared on a cash basis, when the payment is made to suppliers of goods, works and/or services. The payments are made either directly from the World Banks's Grant Account, either from Designated Grant Accounts of Project. 3.4. Reporting currency and currency exchange methodology As financing of Project is carried out in United States Dollars (hereinafter referred to as "USD"), the Special Purpose Financial Statements also presented in USD, which is the functional and presentation currency of Project. Items included in the Financial Statements are measured using that functional currency. While developing the Project Financial Statements the following exchange rate principles were used: for Grant funds, expenses in currency different from USD are converted into USD at the corresponding commercial rate at the time of conversion. 4. Presented Financial Statements The Project Special Purpose Financial Statements have been prepared by the Project Implementation Unit - the Projective executive pursuant to the Grant Agreement. The Project Special Purpose Financial Statements have been signed by PIU Director Dj. Fayazov and Chief Accountant A. Tatibaeva on 14 February 2020. Project Reporting Period is not the same as conventional calendar year and covers the entire implementation period of the Grant, namely the period from September 14, 2018 to November 20, 2019 therefore, there are no comparable indicators in the Special Purpose Financial Statements. The Project Special Purpose Financial Statements prepared in accordance with IPSAS based on the cash method and comprise the following statements: 4.1. Statement of Sources of Financing Statement of Sources and Uses of Funds includes data on funds received and paid includes information on financing the World Bank from grant funds provided by various donors under the Multi-Donor Programmatic Trust Fund for Europe and Central Asia Region Capacity Development (ECAPDEV). The total amount of funding for the Project for the reporting period was USD 216,481, including USD 94,950 are Direct Payments (see Note 7) and USD 127, 501 is replenishment of the Designated Grant Account (see Note 5). In November 2019, from the Designated Grant Account in USD, unused funds of the World Bank were refunded in the amount of USD 5,970. 4.2. Statement of Uses of Funds on Expenditure Types Statement of Uses of Funds on Expenditure Types includes breakdown by Project expenditures for categories of the Project according Grant Agreement, and also Grant budget for the preparation of the Project "Medium- size Cites Integrated Urban Development" for the reporting period. The total Project expenditures for the implementation period amount USD 216,481 (see Note 9). <> PROJECT, Grant Agreement No. TF0A7556 13 4.3. Statement of Financial Position Statement of Financial Position provides information on the accumulated funds of the Project, financing, as well as the total costs of the Project as of November 20, 2019. 5. Cash and cash equivalents For the purposes of Project implementation, the Project have opened accounts: 5.1. Designated Grant accounts of PIU PIU maintains two Designated Grant accounts: in USD and UZS. Accounts are opened on September 14, 2018 in the "ASAKA" Bank of Tashkent city branch. - USD Designated Grant Account During reporting period the World Bank disbursed financing on the USD Grant account was total of USD 127,501 of which USD121,531 was transferred to the Designated Grant Account of the Project in UZS (by currency conversion) to cover eligible costs of the Project. The balance of unused funds in the amount of USD 5,970 was returned to the World Bank. - UZS Designated Grant Account The Designated Grant Account of the Project in UZS is intended to finance eligible costs of the Project. The total amount of expenses incurred in the reporting period from the Designated Grant Account of the Project in UZS amounted to USD 121,531 (equivalent to 000'UZS 1,037,946) including UZS, to transfer total of USD 18 994 (equivalent to 000'UZS 173, 190) to the secondary Project account that is used to settle payments with individual Project consultants. 5.2. Other accounts - UZS Secondary Current Account Additionally the Project has UZS Secondary Current Account opened on October 18, 2018 in the Tashkent city branch of "ASAKA" Bank. During the reporting period USD 18,994 (equivalent to 000'UZS 173,190) was transferred from the UZS Designated Grant Account to this account. Funds are used to pay for the individual consultancy services for total of USD18 988 (equivalent to 000'UZS 173,138). Balances of the Project's bank accounts are reflected in the following table: 000'UZS USD Opening Cash Balance World Bank funds Project's USD Special Grant Account 0 0 Project's UZS Special Grant Account 0 0 Project's UZS Secondary Current Account 0 0 Total Project Funds as at date of opening balance 0 0 Balance as at 20 November 2019 World Bank funds Project's USD Special Grant Account 0 0 Project's UZS Special Grant Account 0 0 Project's UZS Secondary Current Account 53 6 Total Project Funds as at 20 November 2019 53 6 ((MEDIUM-SIZE CITES INTEGRATED URBAN DEVELOPMENT> PROJECT, Grant Agreement No. TF0A7556 14 6. Statement of Expenditure (SOE) procedure Statement of Expenditure (SOE) procedure is used by the Project to replenish funds on the Designated Grant Accounts, in line with the Grant Agreement and Guidelines procurements of World Bank. Below is the table with cumulative data on netted-off and reimbursed expenditures according to the SOE for the period from September 14, 2018 to November 20, 2019: Total Amount reported under SOEs 121 531 Of which: replenished to Designated Grant Account 127501 Refund of World Bank financing (5 970) Subtotal 121 531 Difference 0 7. Direct payments procedure The List of Direct payments made by the Project for the reporting period is summarized below: Withdrawal application No Date of financing Payment currency Total in payment currency (USD) 2 07.12.2018 USD 12475 3 07.12.2018 USD 12475 7 11.06.2019 USD 15000 8 11.06.2019 USD 20000 9 11.06.2019 USD 24000 24 31.10.2019 USD 11 000 Total 94950 All the above payments were made by the category "Consultants' services (including audit)", including the following contracts: Payment amount Contract No. and date Supplier name under the contract No. MSIUDP-CS/CQS-03-1 dated 20.08.2018 LLC "Nazar Business and Technology" 24 950 No./UDP-CS/CQS-01 dated 09.04.2019 LLC "Ultra Group" 70 000 Total 94 950 8. Statement of UZS Secondary Current Account for the period from 14 September, 2018 to 20 November, 2019 USD 000'UZS Opening Cash Balance (18 October, 2018) 0 0 Inflow: Transfer of funds from the Special Grant Account in Uzbek Soums 18994 173 190 Total inflow: 18994 173190 Outflow: Expenses on related components 18988 173 138 Total outflow: 18988 173138 Balance as at 20 November, 2019 6 53 ((MEDIUM-SIZE CITES INTEGRATED URBAN DEVELOPMENT> PROJECT, Grant Agreement No. TF0A7556 15 9. Taxes Services and goods acquired from Grant funds are exempted from all taxes and levies based on Tax Code of the Republic of Uzbekistan. 10. Events after the date of the financial statements Events after the date of Financial Statements (FSs) requiring disclosures are covering period starting after 20th November 2019 to the FSs date. On the 13th February 2020 the US Grant Account was used to return WB funds for total of USD 1,210 (equivalent to 000'UZS 11 503), including: (i) Reimbursement by the Project staff member for total of USD 1,204 (equivalent to UZS 11 450 thousand) disbursed earlier by mistake as salary; (ii) Total of USD6 (equivalent to UZS 53 000) is the closing balance on the Project Secondary Current Account on the reporting date (was not returned to the World Bank in due time). Disclosure on the WB Grant revenues and expenditures on the reporting date of 20th November 2019 and on the signed reporting date of 14th February 2020 (including events after the reporting period) is as follows: USD On the reporting Events after the Signed reporting Item date of 20Nov19 reporting period date 14Feb20 Revenues (World bank grant facility) 216 481 (1 210) 215 271 Total expenditures (World bank grant facility) 216 475 (1 204) 215 271