REPUBLIC OF KENYA OFFICE OF THE AUDITOR-GENERAL REPORT 20 19 OF ";, ;T1,HE UDITOR-GENERAL ON THE FINANCIAL STATEMENTS OF KENYA HEALTH SECTOR SUPPORT (EMMS) PROJECT (IDA NO.4771 AND 5034 - KE) FOR THE YEAR ENDED 30 JUNE 2018 MINISTRY OF HEALTH Project Name: KENYA: Health Sector Support Project (EMMS/KEMSA COMPONENT) Implementing Entity: MOH &KEMSA PROJECT GRANT/CREDIT NUMBER: CR NO: 4771-KE & 50340 - KI ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED J LINE 30, 2018 Prepared in accordance with the Cash Basis of Accounting Method under the Internationai Public Sector Accounting Standards (IPSAS) KENYA HEALTH SECTOR SUPPORT PROJECT-EMMS/KEMSACOMPONENT Reports and Financial Statements For the financial year ended June 30, 2018 CONTENTS PAGE 1. PROJECT INFORMATION AND OVERALL PERFORMANCOMN.......................... ......................... 2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIESS...B....ITES............. ........................ v 3. REPORT OF THE INDEPENDENT AUDITORS ON THE KENYA HEALTH SECTOR SUPPORT PROJECT - EM M S /KEM SA COM PON ENT.................................................,...........I.........................vi 4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30TH JUNE 2018.........1 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2018 ...................2 6. STATEMENT OF CASHFLOW FOR THE YEAR ENDED 30mT JUNE 2018.......................................3 7. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS ......................................-4 8. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30m JUNE, 218 ...........5 9. PROGRESS ON FOLLOW UP OF AUDITOR RE COMMENDATIONS.......,.................................. 12 ANNEX I - VARIANCE EXPLANATIONS - COMPARATIVE BUDGLT AND ACTUAL AMOUNTS 13 ANN EX 2A - ANALYSIS O F PEN DING BILLS............................ .................................................... .14 ANNEX 2B - ANALYSIS OF PENDING STAFF BILLS ...................._................. .......................15 ANNEX 2C - ANALYSIS OF OTHER PENDING PAYABLES.............................................................16 ANNEX 3 - SUMMARY OF FIXED ASSET REGISTER..................................... .................I-,ER.117 KENYA HEALTH SECTOR SUPPORT PROJECT-EMu1S/KEMSA COMPONENT Reports and Financial Statements For the financial year ended June 30, 2018 1. PROJECT INFORMATION AND OVERALL PERFORMANCE 1.1 Name and registered office Name: The Kenya health sector support project and health sector support programme- The Essential Medi- cines and Medical supplies Component. Objective: The key objective of the project is to improve the quality of Health services at the lower levels of service, by providing adequate and quality drugs so as to reduce the level of stock-out and increase funding budgets for KEMSA. Address The project headquarters offices are Nairobi (city), Nairobi County, Kenya. The address of its registered office is: Ministry of Health Afya House - cathedral Road P.O. Box 30016-00100 Nairobi. The project is based at the National Level but it supports all the facilities at the Lower levels of service i.e. Level 1, 2, 3and Sub District Hospitals. Contacts: The following are the project contacts Telephone: (254) -20-2717077 P-mail: PS @health.go.ke Website: www.go.ke 1.2 Project Information Project Start Date: The project start date is 30/09/2010 Project End Date: The project end date is 06/30/2018 Project Manager: Thejr4ect mianager is Dr. David Kariuki Project Sponsor: The project sponsor is -Dr. Candhain N.V. Ramnana 1.3 Project Overview Line Ministry/State De- The project is under the supervision of the Health Ministry. partment of the project Project number CR 47710 & 50340 Strategic goals of the pro- The strategic goals of the project are as follows: ject (i) To ensure an improved availability of commodities in the lower level of health Facilities. (ii) Help to address the problem of insufficient budget for the commodities and build up a buffer stock foe EMMS for level 2 and 3 and limit extend for level 4. Achievement of strategic The project management aims to achieve the goals through the following goals means: (i) The product lists will be rationalized and standardized through evi- dence-based reviews of the Essential Medicines List and Essential Medical Supplies List (EMSL). (ii) The creation of buffer stock will be used to address the problem of late starts in procurement procedures, pegged to the availability of funds in the annual budget of the ministry. Other important back- The project aims at strengthening pharmaceutical and medical supplies pro- ground information of the curement; regulation and management system need major investment. project KENYA HEALTH SECTOR SUPPORT PROJECT-EAIMS/KEMSA COMPONENT Reports and Financial Statements F.ur the financial year ended June 30, 2018 Current situation that the The project was formed to intervene in the following areas: project was formed to in- (i) The availability of essential medicines and medical supplies has im- tervcne proved in the public facilities. (ii) The project has provided financing to commodities and has strength- ened the logistics system. Project duration The project started on 30"' Scp 2010 and is expected to run until 301'June 2018 1.4 Bankers The following are the bankers for the current year: L CENTRAL BANK OF KENYA - (PROJECT ACCOUNT) ACCOUNT NAME: HEALTH SEC SUP PRJ AND HSSP 11 1-EMMS (KES) ACCOUNT: 1000187468 P.O BOX 60000 - 0200 1., COOPERATIVE BANK - DEPOSIT ACCOUNT ACCOUNT NAME: HEALTH SEC SUP PROJ1-CT -KEMSA ACCOUNT: 02120134337900 P.O. BOX 74956-00100 L. Auditors The project is audited by the: Auditor - General P.0 Box 30084 - 00100 Nairobi. 1.6 Roles and Responsibilities List the different people who will be working on the project. This list would include the project manager and all the key stakeholders who will be involved with the project. Also, record their role, their positions, and their contact information. Names Title designation Key qualification Responsibilities Dr. David Kariuki Vlead, Directorate of MB chB, Msc Project oversight and overall policy, planning and coordination of activities of Health care Financ- the Directorate and Project ing. Coordinator Dr. Valeria Makory Project Coordinator MBChB, MSc Medi- Project Coordinator - Kenya cal Statistics (Nbi), Health Sector Support Project MSc Public Health (Kernri) Alice Olango Project Accountant B.com, CPA(K) Preparation of Financial re- ports as required from time to time e.g. Bank reconciliation, preparation of project F/S, Kevin Ogollah Accountant CPA II Preparation of Quarterly re- ports e.g. (IFR),Bank recon- ciliations, Aulgah Achieng Accountant CPA II Voucher preparation and processing and fihng Note: The Project operates within the MOH structures and systems and therefore involves multiple par- ties beyond the names provided above. 11 � с� е? � с � с� � с ,� гц �, �, � � � н � � � � � �� � � � [ � cci � .� � с �; � г•� �г; м � � � � � � � � са `а� я n �С � � � � � �� �ч а � �' л £� �G �7 �G Д � � 4! NE ц� 00 � � , �, � � ,. п1 И flG � 'Q ' w � � 1ц М � � � � � Т�1 � О �;, �.CJ � И г+1 ,. 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С`� F � KENYA HEALTH SECTOR SUPPORT PROJECT-EMMS/KEMSA COMPONENT Reports and Financial Statements For the financial year ended June 30, 2018 1.8 Summary of Overall Project Performance: - The Project was able to achieve the targeted objectives as they were set in the work plan of 2017/2018. 1.9 Sinniary of Project Compliance: - The project complied with applicable laws and regulations, and essential external financing agreements/covenants and this helped us to achieve the objectives set. iv 乍 KE NYA HEA L TH SECTOR SUPPOR T PR OJECT-EMYSMEMSA COMPONENT Reports and FinancialStatemenn ,or ffiefinancialyear ended Jime 30,2018 z. siATEmENT OF PROJECT MANAGEMENT RF,SPONSIBILITIES The, Principal Secretary for the Ministry of Health and the Project Coordinator for KHS8P & 1ISSP III are responsible for the preparation and presentation of the Project's financial staternerits, which give a true and fair view of the state of affairs of the Projcot for and as at the end of the financial year ended on June 30,2018. This responsibility includes: (i) Maintaining adequate financial management arrangement and ensuring that these continue to be effective thr0Ugl10Ut the reporting period; (ii) Maintaining proper accounting records, which disclose with reasonable accuracy at any tirric the financial position of the Project-, (iii) Designing, implementing and maintaining internal oontrok relevant to the preparation and fair presentation of the financial statement, and ensuring that they are free frorri material misstatements, whether due to error or fraud; (iv) Safeguarding the assets of the Prqject; (v) Selecting and applying appropriate accounting p0liCiCS; and (vi) Making accounting estimates that are reasonable in the circumstances, The Principal Secretai-f for the Ministry of Health and the Project Coordinator for KHSSP & I-ISSP III accept responsibility for Ih(, Project's financial StRtenlentS, which have been prepared on the Cash Rasiq Method of Financi3l Reporting, using appropriate accounting policies in accordance with International Public Sector Accounting Standards, The Principal Secretary for the Ministry of Health and the Project Coordinator for KHSSP & HSSP Ill are of the opinion that the Project's financial statements give a true and fair view of the state of Project's transactions during the financial year ended June 30, 2018, and of the Project's Financial position as at that date. The Principal Secretary for Ministry of Health and the Project Coordinator for KHSSP & FISSP III fiorther confirm the completeness of the accounting records maintained for the Project, which have been relied upon in the preparation of the Project Financial staternents as well as the adequacy of the systerns of internal Financial control. The Principal Secretary for the Ministry of Health and the Prcjcct Coordinator for KHS P & I.-ISSP III conFrin that the Project has complied folly vvith applicable Government Regulations and the terms of external financing covenants, and that Project funds received during the financial year undcr aLidit were used for the eligible purposes for which they wcre intended and were properly accounted for. Approval of the Project financial statements The Project Financial qtatements were approved by fliQ Principal Secretary for the Ministry of Health and the Project Coordinator for KHSSP & HSSP Ill on 2018 and signed by thern. L 11v I i-t r K. Tum Dr. Principal Secretary Project Coordinator v REPUBLIC OF KENYA Telephone: +254-20-342330 Fax: -254-20-311482 PO. Box 30084-00100 E-rmnil; og@agkenya.go.ke NAIROBI Website: wwwkenao.go.ke OFFICE OF THE AUDITOR-GENERAL REPORT OF THE AUDITOR-GENERAL ON KENYA HEALTH SECTOR SUPPORT (EMMS) PROJECT (IDA NO.4771 AND 5034 - KE) FOR THE YEAR ENDED 30 JUNE 2018 - MINISTRY OF HEALTH REPORT ON THE FINANCIAL STATEMENTS Qualified Opinion I have audited the accompanying financial statements of Kenya Health Sector Support (EMMS Component 2) Project Credit No.4771 and 5034 - KE set out on pages 1 to 17, which comprise the statement of financial assets and liabilities as at 30 June 2018, and the statement of receipts and payments, statement of cash flows, statements of comparative budget and actual amounts and special account statement for the year then ended, and a summary of significant accounting policies and other explanatory information in accordance with the provisions of Article 229 of the Constitution of Kenya, Section 35 of the Public Audit Act, 2015 and the Financing Agreement Credit No. 4771 and 5034 - KE dated 21 January 2014 between the International Development Association (IDA) and the Republic of Kenya. I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the purpose of the audit. In my opinion, except for the effect of the matter described in the Basis for Qualified Opinion paragraph, the financial statements present fairly, in all material respects, the financial position of Kenya Health Sector Support (EMMS Component 2) Project as at 30 June 2018, and of its financial performance and its cash flows for the year then ended, in accordance with International Public Sector Accounting Standards (Cash Basis) and comply with the Financing Agreement dated 21 January 2014. In addition, the special account statement presents fairly, the transactions for the year and the closing balance has been reconciled with the books of account. Basis for Qualified Opinion Cash and Cash Equivalent The bank balance of Kshs,365,626,247 included in the statement of financial assets and liabilities as at 30 June 2018 include long outstanding payment in bank statement not in cashbook of Kshs.2,380,000 dating back to July 2016. No explanation has been provided for failing to clear these long outstanding items- Consequently, the accuracy and validity of the bank balance of Kshs.365,626,247 as at 30 June 2018 could not be confirmed. Report of the Audtor-General on the Financial StatWems of Kenva Health Sector .;pport (EMNS Project lDA No.rI4 / and 3 d34 - KEf br the year ended 30 June 2018 -/inistri of Health Promioingr Accounailt; in ie Pubile Sector The audit was conducted in accordance with International Standards of Supreme Audit Institutions (ISSSAls)- I am Independent of Kenya Health Sector Support (EMMS Component 2) Project in accordance with ISSAIs 30 on Code of Ethics. I have fulfilled other ethical responsibilities in accordance with the ISSAI and in accordance with other ethical requirements applicable to performing audits of financial statements in Kenya. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgement, are of most significance in the audit of the financial statements. Except for the matter described in the Basis for Qualified Opinion section of my report, I have determined that there are no Key Audit Matters to communicate in my report. Report on Compliance with Lawfulness and Effectiveness in Use of Public Resources As required by Article 229(6) of the Constitution, based on the procedures performed, other than as stated under basis for qualified opinion part of my report, I confirm that nothing has come to my attention to cause me to believe that public money has not been applied lawfully and in an effective way. Report on Internal Control Effectiveness Governance and Risk Management Systems As required by Section 7 (1) (a) of the Public Audit Act, 2015, based on the procedures performed, I confirm that, nothing has come to my attention to cause me to believe that internal controls, risk management and overall governance were not effective. Responsibilities of Management and Those Charged with Governance Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (Cash Basis)] and for maintaining effective 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 and for its assessment of the effectiveness of internal control. In preparing the financial statements, management is responsible for assessing the ability to continue to sustain services, disclosing, as applicable, matters related to sustainability of services and using the applicable basis of accounting unless the management either intends to liquidate the project or to cease operations, or have no realistic alternative but to do so. Reportf the A ditor-General on the Finunviu Stements of Kenva Health Secor Support (ERMS) Prqject (IDA No,4 / and 5034 - KE)]br the Year eded 30 June 20/8 - Ministry of Health 2 Management is also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions of Section 47 of the Public Audit Act, 2015. In addition to the responsibility for the preparation and presentation of the financial statements described above, management is also responsible for ensuring that the activities, financial transactions and information reflected in the financial statements are in compliance with the authorities which govern them, and that public money is applied in an effective manner. Those charged with governance are responsible for overseeing the financial reporting process, reviewing the effectiveness of how the entity monitors compliance with relevant legislative and regulatory requirements, ensuring that effective processes and systems are in place to address key roles and responsibilities in relation to governance and risk management, and ensuring the adequacy and effectiveness of the control environment. Auditor-General's Responsibilities for the Audit The audit 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 in accordance with the provisions of Section 48 of the Public Audit Act, 2015 and submit the audit report in compliance with Article 229(7) of the Constitution. 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 and weakness 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. In addition to the audit of the financial statements, a compliance review is planned and performed to express a conclusion with limited assurance as to whether, in all material respects, the activities, financial transactions and information reflected in the financial statements are in compliance with the authorities that govern them in accordance with the provisions of Article 229(6) of the Constitution and submit the audit report in compliance with Article 229(7) of the Constitution. The nature, timing and extent of the compliance work is limited compared to that designed to express an opinion with reasonable assurance on the financial statements. Further, in planning and performing the audit of the financial statements and review of compliance, I consider internal control in order to give an assurance on the effectiveness of internal controls, risk management and governance processes and systems in accordance with the provisions of Section 7 (1) (a) of the Public Audit Act, 2015 and submit the audit report in compliance with Article 229(7) of the Constitution. My consideration of the internal control would not necessarily disclose all matters in the internal control that might be material weaknesses under the ISSAls. A material Reporl of/the Auditor-General on the Financial Stateents of Kenya Health Sector Support (EMMS) Prqjet (fDA No.4771 and 5034 - KE) for the year ended 30 June 2018 - Minisiy o 1Health weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Because of its inherent limitations, internal control may not prevent or detect misstatements and instances of noncompliance. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the Entity's policies and procedures may deteriorate. As part of an audit conducted in accordance with l,$SAls e \eraide professional judgement and maintain professional skepticism throughluf aiuditiaso: * 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 control, * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. * Conclude on the appropriateness of the 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 ability to continue as a going concern or to sustain its services. If I conclude that a material uncertainty exists, I am required to draw attention in the 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 audit report. However, future events or conditions may cause the project to cease to continue to sustain its services. * 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- * Obtain sufficient appropriate audit evidence regarding the financial information and business activities of the project to express an opinion on the financial statements. Repout / f i Aur-GetI on the FinancialStatements of Kenya Heath Sector Support (hAlfMS) Project (IDA No 477/ and 503/ - KF f)ri- the Year ended 30 June 20/8 Ministry ofheallh 4 * Perform such other procedures as I consider necessary in the circumstances. I communicate with the management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that are identified during the audit. I also provide management 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 thought to bear on my independence, and where applicable, related safeguards. FCPA Edward R.O. Ouko, CBS AUDITOR-GENERAL Nairobi 05 December 2018 Ralyrwt ?f the .nlafr-Genertal on the FnavcialIStIUIeMeI71S Of Kenav Plat etr.upoi(AAS hrqjeet lID.I No.-47'1 and 503-4 - KE) foIr the year ended 30.Ilne 2018 - Minishn ofHealth 5 KENYA HEALTH SECTOR SUPPORT PROJECT-EMMS/KFMSA COMPONENT Reports and Financial Statements For the financial year ended June 30, 2018 4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30TH JUNE 2018 2018 2017 Receipts Receipts and and Receipts and Payments payments Payments payments made by controlled made by Note controlled by third par- by third Cumulativi s the entity ties the entity parties date Kshs Kshs Kshs Kshs Kshs RECEIPTS Transfer from Govern- ment entities 8.2 - 8,300,000 - 2,002,419 Proceeds from domestic and foreign grants 8.3 - - - 1,617,199, Loan from external de- velopment partners 8.4 165,163,425 665,514,870 830,000,000 - 8,935,444, Miscellaneous receipts 8,5 1,363,425 - 508,245,204 - 548,603, Total receipts 166,526,850 665,514,870 859,753,796 13,103,666 PAYMENTS Purchase of goods and services 8.6 41,494,169 - 10,416,772, Transfers to other gov- ernment entities 8.7 590,627,134 665,514,870 556,881,254 - 2,321,268, TOTAL PAYMENTS 290,627,134 665,51t8 598,375,423 - 12,738,040, SURPLUS/DEFICIT FOR THE YEAR (424,100,284) - 748,169,782 - 365,626 The accounting policies and explanatory notes to these financial statements are an integral part of the financial statements. Mr. Peter K. Tum Dr. Divid Kariuki Project Accountant Principal Secretary Project Coordinator Alice Olango ICPAK NUMBER: Date Date Date 1 I IENYA HEALTH SECTOR SUPPORT PROJECT-FMMS/KEMSA COMPONENT Reports and Financial Statements For the financial year ended June 30, 2018 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2018 Notes 2018 2017 Kshs Kshs FINANCIAL ASSETS Cash and Cash Equivalents Bank Balances 8.8 365,626,247 789,726,531 TOTAL FINANCIAL AS- SETS 365,626,247 789,726,531 REPRESENTED BY: Fund Balance b/f%wd. 8.8 789,726,531 41,556,749 Surplus/Deficit for the year (424,100,284) 748,169,782 Prior year adjustments NET FINANCIAL POSI- TION 365,626,247 789,726,531 The accounting policies and explanatory notes to these financial statements forn an integral part of the financial statements. The financial statements were approved on .2018 and signed by: Mr. Peter K. Turn Dr. David-ariuki Project Accountant Principal Secretary Project Coordinator Alice Olango ICPAK NUMBER: Date Date Date 2 .IENYA HEALTH SECTOR SUPPORT PROJECT-EMMS/KEMSA COMPONENT Reports and Financial Statements For the financial year ended June 30,_2018 6. STATEMENT OF CASHFLOW FOR THE YEAR ENDED 30 JUNE 2018 2017-2018 2016-2017 Notes Kslis Kshs Receipts for operating in- come Transfer fron Government entities 8.2 8,300,000 Proceeds from domestic and foreign grants 8.3 - Miscellaneous receipts 8.5 1,363,425 508,245,204 Payments for operating expenses Purchase of goods and ser- vices 8.6 (41,494,169) Transfers to other govern- ment entities 8.7 (590,627,134) (556,881,254) Adjustments during the year Net cash flow from operat- ing activities (589,263,709) (81,830,219) CASHFLOW FROM BORROWING ACTIVI- TIES Loan from external devel- opment partners 8.4 165,163,425 830,000,000 Net cash flow from financ- ing activities 165,163,425 830,000,000 NET INCREASE IN CASH AND CASH EQUIVALENT (424,100,284) 748,169,782 Cash and cash equivalent at BEGINNING of the year 789,726,531 41,556,749 Cash and cash equivalent at END of the year 365,626,247 789,726,531 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The entity financial statements were approved on 2018 and signed by: Mr. Peter K. Turn Dr. Davidariuki Project Accountant Principal Secretary Project Coordinator Alice Olango ICPAK N UMBER: Date Date Date 3 k〞 方 - ZNYA HEALTH SECTOR SUPPORT PROJECT-EMMS/KEMSACOMPONENT Reports and Financial Statements For the financial year ended June 30, 2018 8. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30""' JUNE, 2018 The principal accounting policies adopted in the preparation of these financial statements are set out below: 8.1 Statement of compliance and basis of preparation The financial statements have been prepared in accordance with and comply with International Public Sector Ac- counting Standards (IPSAS) with particular emphasis on Cash Basis Financial Reporting under the Cash Basis of Accounting. The financial statements comply with and conform to the form of presentation prescribed by the Ac- counting Standards Board of Kenya. The financial statements are presented in Kenya Shillings, which is the functional and reporting currency of the Project. The accounting policies adopted have been consistently applied to all of the years presented. The financial statements have been prepared on the cash basis following the Government's standard chart of ac- counts. The cash basis of accounting recognizes transactions and events only when cash is received or paid out by the Project, I. Recognition of revenue and expenses The Project recognizes all revenues from the various sources when the event occurs and the related cash has actually been received by the Project. In addition, the Project recognizes all expenses when the event occurs and the related cash has actually been paid out by the Project. 11. In-kind donations In-kind donations are contributions made to the Project in the form of actual goods and/or services rather than in money or cash terms. These donations may include vehicles, equipment or personnel services. Where the financial value of in-kind donations can be reliably determined, the Project includes such value in the statement of receipts and payments both as revenue and as an expense in equal and opposite amounts; otherwise, the donation is not rec- orded. III. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at bank, short-term deposits on call and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Bank account balances include amounts held at the Central Bank of Kenya and at various commercial banks at the end of the financial year. For the purposes of these financial statements, cash and cash equivalents also include short term cash Imprests and advances to authorized public officers and/or institutions which had not been surrendered or accounted for at the end of the financial year. 5 ENYA HEALTH SECTOR SUPPORT PROJECT-EMMS/KEMSA COMPONENT Reports and Financial Statements For the financial year ended June 30, 2018 IV. Pending bills Pending bills consist of unpaid liabilities at the end of 30"' june, 2018 arising from contracted goods or services during 30"' June, 2018 or in past. As pending bills do not involve the payment of cash in the reporting period, they are simply disclosed as an Annex to the financial statements. When the pending bills are finally settled, such payments are included in the statement of receipts and payments in the year in which the payments are made. V. Budget The budget is developed on the same accounting basis (cash basis), the same accounts classification basis, and for the same period as the financial statements. The Project's budget was approved as required by Law and Na- tional Treasury Regulations, as well as by the participating development partners, as detailed in the Government of Kenya Budget Printed Estimates for the year. A high-level assessment of the Project's actual performance against the comparable budget for Lhe financial year under review has been included in an annex to these finan- cial statements- VI. Exchange rate differences The accounting records are maintained in the functional currency of the primary economic environment in which the Project operates, Kenya Shillings. Transactions in foreign currencies during the 30' June, 2018 are con- verted into the functional currency using the exchange rates prevailing at the dates of the transactions. Any for- eign exchange gains and losses resulting from the settlement of such transactions and fron the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statements of receipts and payments. VII. Comparative figures Where necessary comparative figures for the previous financial year have been amended or reconfigured to con- form to the required changes in financial statement presentation, VIII. Subsequent events There have been no events subsequent to the financial year end with a significant impact on the financial state- ments for the year ended June 30, 2018. 6 IENYA HEALTH SECTOR SUPPORT PROJECT-EMMS/KEMSA COMPONENT Reports and Financial Statementi For the financial year ended June 30, 2018 8.2 Receipts from Government of Kenya These represent counterpart funding and other receipts from government as follows: 2017/18 2016/17 Cumulative Kshs Kshs to-date Counterprtfunding through Ministry of HJalth Counterpart funds Quarter 1 Counterpart funds Quarter 2 Counterpart fuids Quarter 3 - Counterpart funds Quarter 4 8,300,000 2,002,419,177 S830300,000 2 2,07419,177 7 I � о � � � � � � � � � �: .� , � ,� � н � � � � � �, � р г�Л v�t q оо ос, д � ,--� ,� � � � � � й с V "� � � � ы � � � � � � � � � w С 1 � � � '�, .. , � ,� � � � � � � � � � Т- •° и � � � �� е� р ���� � �� �° � � �.�� � а� � ; � " � Ё �' +� г`�*� n�i й � °� � � � � � � .��, .� ,-.. :� � � � а bL q � � � ® �-. .� � � '^" � �"' �^' °т �° +�n � �' � �з r� w �; Е � ww C.i � с � �' �+ � � � � � � ��� j� � ы � � � � С .s° � � ^ � � � S� � �. � � � R1 ум �r. ° еС� Gб � �' �... ,� ,° С �g`, � � д� ,� � � � � ,,� � �� � �' � � � `� � I � � и ул �, � � . � r`� '`� � � `� ° � � � � � � � � � � � л � � � и� � � .� � � � � � � � р � j а`�• � � � �1 w '� � { ` Е � � � � �' .� п � г, � � � ,г, и� � �с � � �� �i� � � � � ^_ � � � �� � '� у .�Я д � гл I� � � � � � � м �„ а � �.� � � � ,� �,� � � � � � � � � � � �' � � � �` С� �.' ',-, � � Е ~ �: ", � � � � � � � �, w� � � � ' � � '��^,, �'° с� � �i � р � `�_ 4 �fy V7 ,�`,� С� д' д � � � .� � ,�,`�. й � � л 1••� 4 {.� � +r "й � '� � . гл � 04 OS7 Ру L '� а е ci k. � .� � р аи � �"- '� ои �i �о � `� й � � С�'' � е c�i . . ° � r� � м � .-�., � �" � С7 � � � `°' � � �? � g � � � � `�, � � � � � � � .�� r� �' '� � � � .� д `� � � �ь � '� ° �-` с° °� � � ° � � `�ь � � � � � r°,� � '� � � � ,� � � � ro � : � а~ аз v � � � а ,� r� �, `- � � о � � � '� � � � �г ы � � �: ,.�. ,,�..� I с� � � .� °н' •� � й р � � � '� � � � � ` � й � а} �1 `� `� � '� С,� � � а: � ` � а � � � �r � � .� .._,.: � � д°., °� 4д � � � +w �' й � `�" °�' � т � W � � � � сз � � о � �. � F � R �`" .,� '� ° � � � � � � � � � � w' и F� 't� � � '"" '° 1ы � � � � � � � � � � ' � аг ±� , � а, аэ ,о �. � �., � �" � �,3 �,� ' w � �' +�у ,�+ ° '� д Q �" � � � �ыч �°„ � G3 � � г--� � С й � � � /� �S r/] !� k � . � � ri��i+, ��ц +� � W � � � � С� � � � � ^� '�4 8С � ' �м 5..+ 1-f � 4� д F^ � � �ч FC"� � � .±ENYA HEALTH SECTOR SUPPORT PROJECT-EMAMS/KEMSA COMPONENT Reports and Financial Statemeiits For the financial year ended June 30, 2018 8.5 Miscellaneous Receipts Receipts Receipts controlled controlled by the entity by third Cuuinn1t in Cash parties FY 2017/18 FY 2016/17 to- dat Ksks Kshs Kshs Kshs Interest earned - - - 36,706,258 Reversal 1,923,538 Error posting - -- - 350 Refund received 1,363,425 1,363,425 508,245,204 509,608,629 1363,425 1,363,425 508,245,204 548,603,390 The refund of Kshs. 1,363,425 was an amount that was paid in error from this account to Artemis Health Institute in INDIA. This amount is now refunded back. 8.6 Purchase of Goods and Services Payments made by Payments the Entity made by in Cash third parties 2017/18 2016/17 Cumulative Kshs Kshs Kshs Kshs to-date Utilities, supplies and ser- vices 41,494,169 10,159,665,920 Other operating expenses --- 257,106,292 Exchange rate losses/gains (n et) TO TAL - 41,494,169 10,416,772,212 9 KENYA HEALTH SECTOR SUPPORT PROJECT-EMMS/KEMSACOMPONENT Reports and Financial Statements For the financial year ended June 30, 2018 8.7 Transfers to other government entities During the 12 months to 30 June 2018, we transferred funds to reporting government entities as shown below: Cumulative Payments Payments Financial Year Financial Year made by made by 2017/18 2016/17 the Entity third par- in Cash ties To date Kshs Kshs Kshs Ksks Kshs Transfers to National Gov- ernment entities Ministry of Health - HSSF 590,627,134 590,627,134 - 1,098,872,338 Ministry of Health - KEMSA - - 556,881,254 556,881,254 UNITED NA- TIONS CHIL- DRED FUND 665514,870 - 665,51,4,2870 TOTAL 590,627,134 665,514,870 590462751342S16,881,254 2,321,268,462 8.8 Cash and Cash Equivalents C/Fwd. 2017/18 2016/17 Ksbs Kshs Bank accounts 789,726,531 (Note 8.8) 365,626,247 Total 365,626,247 7787726,531 2017/18 2016/17 Kshs Kshs 8.8 Bank Accounts Local Currency Accounts Central Bank of Kenya [A/c No. 1000187468] 365,626,247 789,726,531 Total local currency balances 365,626,247 789,726,531 Total bank account balances 365,6265247 789,726,531 10 i KENYA HEALTH SECTOR SUPPORT PROJECT-EMMS/KEMSA COMPONENT Reports and Financial Statements For the financial year ended June 30, 2018 Special Deposit Accounts The balances in the Project's Special Deposit Account(s) as at 30th June 2018 are not included in the State- ment of Financial Assets since they are below the line items and are yet to be drawn into the Exchequer Ac- count as a voted provision. Below is the Special Deposit Account (SDA) movement schedule, which shows the flow of funds that were voted in the year. These funds have been reported as loans/grants received in the year under the Statement of Receipts and Payments. Special Deposit Accounts Movement Schedule 2017/18 2016/17 KShs KShs (i) A/C Name [A/c No 02120134337900...] Opening balance 502,746.31 502,746.31 Total amount deposited in the account - - Total amount withdrawn (as per Statement of Receipts & Payments) 502,746.31 502,746.31 Closing balance (as per SDA bank account reconciliation attached) 6,31, (ii) A/e Name [A/c No ..... Opening balance (as per the SDA reconciliation) 502,746.31 502,746.31 Total amount deposited in the account - Total amount withdrawn (as per Statement of Receipts & Payments) 502,746.31 502,746.31 Closing balance (as per SDA bank account reconciliation attached) 502,74-6.1 The Special Deposit Account(s) reconciliation statement(s) has (have) been atached as Appendix iv support the closing balances. 11 你。 一 一〕m l 〕 〕件· i i i � � � � � � � еС �+ �l�+ �" � � � � � С � � � я � � � �s � +�. � � �' � ���� � � �-, � 'v � � �а� � гг1 -� � � г ��уΡ � � "� � 4i Сз � �" а � й � «�. � � � � � � � !� .� '� � � с� -� � �r �.. ® - �.._ � -.._ � � - - - __ _ W '� а � и t�м .� С� � � � � � � � ' г: � � � � � � ��� с� х� W � � � � � � �' � •м � � � W � °�' � � м х � �; � [� � д � � � � � �.' �, b � � � � � i� ct �г г#� �. С7 с� �� С� � � г�л � �ч W��. � � � � �з ��. а � � �, � � t� Н � � � � � � � ' � "� � �" л-, � С� 4) б� •w � � � � � � � � � � . � � � � � � � � � � � � � � � � ar � �s � � ,� �, � � � с � � � � � � � � � � � �" � �; � F` в� �" � !� � � � � . а � � � � � � ,--� r� а � ���., @ � ��c�r� r����гiv�э vt�r=aoв� ггС,��,�.. t/�С� l -,，너 ,