Project Financial Statements GPSA Grant - Empowered Citizens Enhancing Accountability of the Education Reform and Quality of Education in Moldova Project (Grant No. TF015859) December 20, 2013- December 20, 2018 GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Education in Moldova Project (Grant No. TF01 5859) For the period December 20, 2013 - December 20, 2018 CONTENTS PAGE Independent Auditors' Report Summary of Sources and Uses of Funds 2 Statement of Designated Account 3 Notes to the Special Purpose Project Financial Statements 4 1 GrantThornton Grant Thornton Audit S.R.L. 69, Grigore Ureche str. Chisinau, Moldova MD-2005 T +373 22 86 05 71 F +373 22 24 74 64 Independent Auditor's Report To: Management of the World Bank; and Management of the "GSPA- Empowered citizens enhancing accountability of the education reform and quality education in Moldova" Project, represented by the Management of Expert-Grup ("Organization") Opinion We have audited the accompanying project special purpose financial information of "GSPA- Empowered citizens enhancing accountability of the education reform and quality education in Moldova" Project ("the Project"), financed by the World Bank through the Grant Agreement no TF15859 dated 16 December 2013. The project special purpose financial information comprises the Statement of Special Account, the Statement of funds received and uses of funds for the period December 20, 2013 - December 20, 2018 and a summary of significant accounting policies and other explanatory information, in our opinion, the accompanying project special purpose financial information for the period December 20, 2013 to December 20, 2018 has been prepared, in all material respects, in accordance with accounting policies described in Note 2 to the project special purpose financial information and the relevant points of the Grant Agreement. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibility for the audit of the Project Special Purpose Financial Information section of our report. We are independent from the Organisation and from the Expert Grup in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the project special purpose financial information in the Republic of Moldova, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter - Basis of accounting and restriction on distribution and use We draw attention to the Note 2 to the project special purpose financial information which describes the basis of accounting. This project special purpose financial information is prepared to assist the management of the Organization to meet the requirements of the Grant Agreement no TF15859 dated GmitThornton AuditS.R.L. is a memben fm of Grant Thornton Irternatoina Ltd (Grant Thomton Inteonatione) References to granitthornton.nd 'Grant Thomton ae to the brand under which the Grant Thornton memberiirms operat and refer to one or more membefrOmS, az tie context enq ber G irit T whio totn tepo n s d the membor tome note ttide po rone mth . S rvc m d tertond -dopendeonlyby memobertrms, wth are not responsible tor the services or ativties of one anothoer. CGrant Thomoton Ionoteah do notproido services to cliento. December 16, 2013 concluded with the World Bank. As a result, the project special purpose financial information may not be suitable for any other purpose. Our report is intended solely for the information and use of management of the World Bank and management of the ,GSPA- Empowered citizens enhancing accountability of the education reform and quality education in Moldova" Project and should not be distributed to or used by any other parties. Our opinion is not modified in respect of this matter. Responsibilities of Management and Those Charged with Governance for the Project Special Purpose Financial Information Management is responsible for the preparation and fair presentation of this project special purpose financial information in accordance with the accounting policies described in Note 2 to the project special purpose financial information and the relevant points of the Grant Agreement no TF15859 dated December 16, 2013 and for such internal control as management determines is necessary to enable the preparation of the project special purpose financial information that are free from material misstatement, whether due to fraud or error. In preparing the project special purpose financial information, management is responsible for assessing the Project'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 Project's financial reporting process. Auditor's responsibility for the audit of the Project Special Purpose Financial Information The objectives of our audit are to obtain reasonable assurance about whether the project special purpose financial information as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs 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 project special purpose financial information. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the planning and performance of the audit. We also: - Identify and assess the risks of material misstatement of the project special purpose financial information, 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 our 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. - 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 used 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 Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the project special purpose financial information or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the project to cease to continue as a going concern. 2 - Evaluate the overall presentation, structure and content of the project special purpose financial information, including the disclosures, and whether the project special purpose financial information represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significah!audit findings, including any significant deficiee i internal control that we identify during our audit. a-kJIrT INOVI -&x4 Grant Thornton Audit S.R.L. Ohisinau, Republic of Moldova 15 March 2019 GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Education in Moldova Project (Grant No. TF015859) For the period December 20, 2013 - December 20, 2018 SUMMARY OF SOURCES AND USES OF FUNDS December, 20 Notes 2013 - December 20, 2018 Opening balance on designated account Disbursements received during the period 626,000 TOTAL SOURCES AVAILABLE 3 626,000 Less: uses of funds 1. Building an environment enabling sustainable social accountability in Moldova 124,862 2. Applying Social Accountability Tools to empower local and regional stakeholders to increase policy accountability 97,459 3. Integrating Social Accountability activities with policy and budget dialogue 138,084 4. Knowledge and Learning 57,651 5. Project Implementation, Supervision and Administration/ Audit cost 264,597 TOTAL USES 4 682,653 Closing Balance (56,653) * The expenses for which funds were not yet received from the WB, were covered from own sources of Expert- Grup and will be reimbursed by the WB. The financial statements and accompanying notes on pages 4 to 9 were signed and approved on behalf of the Project's management on March 15, 2019 by: Ec ih4btor Financial Diredfor Adrian Lupusor lulia Sirghi-Zolotco 2 GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Education in Moldova Project (Grant No. TF015859) For the period December 20, 2013 -December 20, 2018 STATEMENT OF DESIGNATED ACCOUNT 20 December 2013 - 20 December 2018 USD Opening balance - Add: Sources received from the World Bank 626,000 Deduct: Project Expenditures (682,653) Closing balance (56,653)* * The expenses for which funds were not yet received from the WB, were covered from own sources of Expert- Grup and will be reimbursed by the WB. The financial statements and accompanying notes on pages 4 to 9 were signed and approved on behalf of the Project's management on March 15, 2019 by: Egcutiveli-efor Financial Directbr Adrian Lupusor lulia Sirghi-Zolotco 3 GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Education in Moldova Project (Grant No. TF015859) For the period December 20, 2013 -December 20, 2018 1. GENERAL INFORMATION About Expert-Grup Expert-Grup is the organization responsible for project GPSA implementation. Independent think tank Expert-Grup is a non-governmental and not-for-profit agency specialized in economic and policy research. Its core activity is economic analysis, forecast and policy research. The NGO offers a wide range of analytical products and services helping the beneficiaries to take decisions supporting the development path of Moldova. NGO Expert-Grup was registered on July 15, 1998 and is operating since 2006. Expert Grup has extensive experience of working with Moldova Soros Foundation, the East European Foundation, Konrad Adenauer Stiftung, Balkan Trust for Democracy, Black Sea Trust, Friedrich Ebert Stiftung, the UNDP Moldova, the UNICEF, the European Commission, the Council of Europe, the Open Society Foundation, the Swiss Agency for International Cooperation and the United Kingdom Department for International Development. GPSA PROJECT The objective of the Project is to empower the Member Country's civil society to: (i) engage local, regional and national authorities in evidence-based policy and budget dialogue in the Member Country's education sector; and (ii) to promote an enabling environment for social accountability. The Project includes the following specific objectives: * Facilitate engagement of local stakeholders in approximately 100 schools using social accountability tools and promoting a dialogue on school budgets. * Facilitate the flow of information from users of education services to local and national authorities. * Promote the use of three new social accountability tools as inputs into formal education budgetary processes. * Inform the public about the impact of wider economic and financial conditions on the educational sector and reforms (e.g., current situation, availability of budgetary resources, forecast). * Support the Ministry of Education and other policy stakeholders in improving the quality of data to better support an evidence-based policymaking process. The Project's direct beneficiaries are: * An estimated sixty-five thousand students, parents, and staff in approximately 100 schools. * Five regional CSOs in the towns of Balti, Cahul, Ungheni, Hancesti, and Soroca. These organizations will serve as links between the EXPERT-GRUP and local communities. * Local public authorities in the communities targeted by the Project (including about 80 mayors and some 650 local councilors). * About 23 regional authorities (20 district-level, two municipal, and one autonomous region) that will have access to the information produced by the Project. * The Ministry of Education due to more reliable and timely feedback on the status and impact of its educational reforms. The Project's indirect beneficiaries are: * Students, parents, and staff at schools not directly targeted by the Project, but who can study its results and make better informed decisions in their schools (e.g. Knowledge and Learning component). * Populations in communities targeted by the Project that will gain from efficiencies of improved local education and better educated young people. * The Ministry of Finance which will have additional information on how effectively education public funds are spent at the local level. * International donor programs supporting the education sector in Moldova. 4 GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Education in Moldova Project (Grant No. TF0 15859) For the period December 20, 2013 - December 20, 2018 II. PROJECT DESCRIPTION A. Project Components The Project consists of the following components: Component 1: Building an Environment Enabling Sustainable Social Accountability in Moldova Strengthening the capacity of the Recipient to create partnerships and tools for social accountability in the Member Country's education sector, including, inter alia: (a) Assessment of the training needs of CSOs working in the Member's Country's education sector and selected in a manner acceptable to the World Bank. (b) Carrying out of periodic open data readiness assessment of the Member Country's education sector. (c) Establishment of a network comprised of regional and local focal points, including, inter alia: defining the criteria for school selection, preparing the terms of reference and the development of training materials. (d) Development of mechanisms and tools for citizen and CSOs' oversight of the Member Country's education sector, in particular in relation to school policy and budget reforms. (e) Carrying out of training activities for relevant stakeholders in the use of the mechanism and tools developed under Component 1 (e) of the Project. Component 2: Applying Social Accountability Tools to Empower Local and Regional Stakeholders to Increase Policy Accountability Empowering local and regional stakeholders of the Member country's educational sector to increase policy accountability, including, inter alia: (a) Organization and implementation of meetings to discuss the planned budgets of schools selected in a manner acceptable to the World Bank. (b) Preparation of education stakeholder report cards, adjusted to the Member Country's context. (c) Collection of data and digitalization of results for the education stakeholders report cards, prepared under Component 2(a). (d) Development of a website to facilitate evidence-based policy and budget dialogue and exchange of information at the local, regional and national level. Component 3: Integrating Social Accountability with Policy and Budget Dialogue Promoting the use of social accountability tools within the Member Country's Ministry of Education and relevant local and regional authorities inform education policy planning and execution, including, inter alia: (a) Carrying out of annual independent education budget analyses for the education sector in a manner acceptable to the World Bank. (b) Carrying out of independent monitoring activities to engage and inform relevant stakeholders about policy changes in the Member Country's education sector. (c) Carrying out of workshops for relevant stakeholders to discuss the education mid-term expenditures framework, prepared by the Member's Country Ministry of Finance. (d) Preparation of policy papers, including the carrying out of quantitative analyses of the educational policy issues. Component 4: Knowledge and Learning Preparation and dissemination of learning products on social accountability mechanisms, taking into account lessons learned from Project implementation, including inter alia: (i) guidance notes; and (ii) case studies. B. Project Financing The financing instrument elected for this Project is a Recipient Executed Trust Fund (RETF) Grant. The source of financing for this Grant is the Global Partnership for Social Accountability (GPSA), housed within the World Bank. As per World Bank Trust Fund guidelines, given that this Trust Fund is smaller than US$5 million and larger than U$500,000 this Project is subject to World Bank procedures related to Project preparation and supervision of Small RETF Grants. The total Project costs is estimated to be US$696,955 to be financed completely by the GPSA 5 GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Education in Moldova Project (Grant No. TF015859) For the period December 20, 2013 -December 20, 2018 grant. Additionally, the World Bank will commit an annual Project supervision budget in the amount of US$20,000. Project costs Total GPSA Grant WB %GPSA project Financing Financing Financing cost (US$) - last (US$) (US$) approved Component 1. Building an environment enabling 232,313 129,417 0 100 sustainable social accountability in Moldova Component 2. Applying Social Accountability Tools 184,880 97,982 0 100 to empower local and regional stakeholders to increase policy accountability Component 3. Integrating Social Accountability with 226,545 139,685 0 100 policy and budget dialogue Component 4. Knowledge and Learning 53,217 57,823 0 100 Component 5. Project implementation,Supervision, 0 272,058 0 0 Administration/Audit costs World Bank Supervision* 100,000 0 100,000 0 Total Project Cost 796,955 696,955 100,000 87.5 * Annual World Bank project supervision budget of US$20,000 from December 20, 2013 until December 20, 2018. 2. ACCOUNTING POLICIES Basis of accounting The Project Financial Statements are special purpose financial statements that have been prepared in accordance with consistently applied accounting standards acceptable to the GPSA and the World Bank, in a manner adequate to reflect the operations, resources and expenditure related to the Project. NGO Expert-Grup applies the National Accounting Standards to ensure comparability of financial data and reports for local reporting purposes based on Accounting Law Number 1 13-XVI of April 27, 2007. The NGO's accounting system (books and records) provides the basis for the preparation of the special purpose financial statements of the Project and the financial statements of the Expert-Grup as an entity and is established to record all transactions in respect of the Project. The cash basis of accounting was used in the preparation of these Project Financial Statements since the recording of cash receipts and payments is the primary interest. Under the cash basis system income (or expenditure) is recognized when cash is received (or paid) irrespective of when goods or services are received. The amounts are expressed in USD and prepared for the period December 20, 2013- December 20, 2018. Taxes Expert-Grup is exempted from VAT based on the Agreement between the Government of the Republic of Moldova and the World Bank. Expert-Grup is liable for withholding Social Security and Medical Insurance Tax associated with 6 GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Education in Moldova Project (Grant No. TF015859) For the period December 20, 2013 - December 20, 2018 contracts with individuals. Financial management and procurement Financial management and procurement process include the expenditure incurred by Expert-Grup in connection with the preparation of tenders' documentation, the publication of the announcements in the national press, the reception of bids, the announcement of the final selection to bidders, the preparation and negotiation of contracts with the selected firms and all contracts related to the satisfactory delivery of the equipment in Moldova, including salaries of the Expert-Grup staff, as such costs are agreed by the WB. Designated Account The Designated account is the account through which the drawdowns are made. All payments for eligible expenses are made from this Designated Account. Foreign currency translation The accompanying financial statements are presented in USD which is the presentation currency required by the WB. Transactions denominated in Moldovan Lei (MDL) recorded by Expert-Grup are recorded at the exchange rate of National Bank of Moldova at the date of incurring expenses. 3. PROJECT FINANCING During the Project period the following funds tranches have been made from the World Bank. Date Amount, USD World Bank disbursement on 07.03.2014 208,887 World Bank disbursement on 01.07.2015 67,016 World Bank disbursement on 15.09.2015 60,630 World Bank disbursement on 28.07.2016 77,709 World Bank disbursement on 24.05.2017 72,221 World Bank disbursement on 06.12.2017 69,376 World Bank disbursement on 06.02.2018 69,370 Total received by Expert-Grup 625,209 Commission on international transfers 791 Total disbursed by the World Bank 626,000 7 GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Education in Moldova Project (Grant No. TF015859) For the period December 20, 2013 -December 20, 2018 4. ACTIVITY FOR THE REPORTING PERIOD COMPARED TO THE AGREED BUDGET FOR THE REPORTING PERIOD Below is a presentation of Project expenses for the reporting period compared to the budget Expenses Final Budget Variance Completion of Budget 1. Building an environment enabling sustainable social accountability in Moldova Consulting services 110,231 110,961 730 99.3% Dissemination Cost 5,240 5,250 10 99.8% Training / Capacity Building 6,702 10,806 4,104 62.0% Others 2,689 2,400 (289) 112.0% 124,862 129,417 4,555 2. Applying Social Accountability Tools to empower local and regional stakeholders to increase policy accountability Consulting services 89,407 89,635 228 99.7% Dissemination Cost 7,690 7,927 237 97.0% Training / Capacity Building 362 420 58 86.2% Others -_- - - 97,459 97,982 523 3. Integrating Social Accountability activities with policy and budget dialogue Consulting services 124,976 126,336 1,360 98.9% Dissemination Cost 1,114 1,000 (114) 111.4% Training / Capacity Building 11,994 12,349 355 97.1% 138,084 139,685 1,601 4. Knowledge and Learning Consulting services 49,233 49,700 467 99.1% Training / Capacity Building 8,418 8,123 (295) 103.6% 57,651 57,823 172 5. Project Implementation, Supervision and Administration/ Audit cost Consulting services 192,270 197,258 4,988 97.5% Others 72,327 74,800 2,473 96.7% 264,597 272,058 7,461 TOTAL USES 682,653 696,965 14,312 97.9% 5. Subsequent events Based on the agreement signed with the WB, the Expert Grup will receive the subsequent reimbursement for the expenses incurred for the month of December 2018 which were financed by the Expert Grup own funds, total amount to be reimbursed equal USD 56,653. Additionally, direct payment from WB is to be made to the auditor in amount of USD 3,500. 8