Q"OD BURTGEL AUDIT" LLC INDEPENDENT AUDITOR'S REPORT THIRD SUSTAINABLE LIVELIHOODS PROJECT CREDIT Ni5487-MN, GRANT NTFOAO794-MN Audited financial statements as at December 31, 2018 Ulaanbaatar city AUDIT, ASSURANCE, ACCOUNTING. ADVISORY INDEPENDENT AUDITOR'S REPORT TO: ZOLBOO. G, PROJECT DIRECTOR OF THIRD SUSTAINABLE LIVELIHOODS PROJECT Opinion We have audited the Financial Statements comprising the Balance Sheet, the Statements of Project Sources and Uses of Funds, the Statements of Uses of Funds by Project Activity, the Disbursement reports and the Designated Account Statements of Third Sustainable Livelihoods project funded by International Development Association (Credit No: 5487-MN) and Swiss Agency for Development and Cooperation (Grant No: TF0A0794-MN) for the year ended December 31, 2018 In our opinion, the Financial Statements of Third Sustainable Livelihoods project as at December 31, 2018, has been accurately and objectively disclosed in accordance with the requirements of International Public Sector Accounting Standard (IPSAS) issued by the Public Sector Committee of Federation of Accountants, the Financing Agreements (IDA Credit 5487-MN & SDC Grant TF0A0794-MN), the Project implementation manual and other relevant guidelines and procedures. 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 Responsibilities Jor the Audit of the 'inancial Statements section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountant's Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Mongolia, 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. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and auditor has not detennined the key matters that required to be disclosing a separate, and not provide a separate opinion on these matters. Responsibilities of Management for the Financial Statements The project management is responsible for the preparation and fair presentation of the Financial Statements according to the requirements of the IPSAS, the IDA Financing Agreement, the Grant Agreement, the Project implementation manual and other relevant instructions and procedures 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. Auditor's Responsibilities for the Audit of the Financial Statements Our 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 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 misstatement 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 ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: r 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 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. r Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Evaluate the appropriateness of accounting policies used under the project 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, the project determines whether a material uncertainty exists that may cast significant doubt on the Project's ability to continue as a going concern within a specified period of time. r 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. We communicate with project 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 we identify during our audit. GENERAL DIRECTOR OYUNAA. U Date. AMK., I Iird S¶ stai1nible [iNc1iIioods 'iojectl" Cdil No: 5487NIN & Gi-it Nu: T11A0794[NIN F inanial stateQments for the' year ende DecemberI)f 31, 20181 The Government of Mongolia The International Development Association THIRI) SUSTAINABLE LIVELIHOODS PROJECT IDA Credit 5487-MN & SDC Grant TF0A0794-MN BALANCE StIEET For the year ended December 31, 2018 2018.12.31 2017.12.31 Items Note i USD in USD ASSETS CURRENT ASSETS CASH ON HAND 116.89 75.72 Petty cash - Credit 4 111.27 70.10 1ettv cash - Grant 4 5.62 5.62 CAS1 IIN BANK 717,444.54 3,632,565.85 Designated account I - IDA 197.034.58 3,323.745.52 Designated account 2 - SDC 473,785.63 261 176.08 Operating bank account - Credit 4 939.93 914.17 Operating bank account - Grani 4 803.91 779.49 TIreasurity account-Credit 4 7,435.53 23.904.52 Treasurtv account-Grant 4 23,153.50 18,227.39 Local operating bank account-SDC 4 14,291.46 3.818.68 TOTAL CURRENT ASSETS 717,561.43 3,632,641.57 NON CURRENT ASSETS - PROJECT EXI'NDITURIES 13,216,343.21 4,961,746.14 Goods 184,074.82 182.590.40 Consultancy services 1,633,161.22 1,186,688.67 Training 644,42 .46 299.61 3.76 Incremental opeaiting costs 566.576.87 271,307.05 Good governance Performance-Based financing 10,188.108.84 3,021.546.26 OTH ER EXPFNDITURES 288.91 92,301.79 Bank charge 288.91 248.91 Loan-IDA - 17.116.41 Loan-SDC 74.936.47 TOTAL NON CURRENT ASSETS 13,216,632.12 5,054,047.93 TOTAL ASSETS 13,934,193.55 8,686,689.50 LIABILITIES AND FUNDS I1ABILITIES Account payables for incremental operating cost TOTAL LIABILITIES "01) BURTG(EL AUDIT" LLC , b Thir SustainbIe Lifelihoods Project re(dil N;: 3 I47-N & Gnint Xn: TFA7I4N inancial staleine nis for the year ended Ie,enlwer 31, 2018H FUNDS AND EQUITY F UN DS 13,772,257.19 8,583,826.13 IDA credit flind I 1026 .778.24 6.955.774.51 SDC trust fund 2.745,478.95 1.628.051.59 01T IER INCOME 161,936.36 102,863.37 Interest carned on Bank balance 156.099.37 98,549.79 Net exchange rate gain (loss) 1.711.29 1.711.29 Other rex enue 4.125.70 2,602.29 TOTAL FUNDS 13,934,193.55 8,686,689.50 TOTAL LIABILITIES AND FUNDS 13,934,193.55 8,686,689.50 Prepared 1y: Approved by: NIrs. Tuvsh in jargal.T Mrs. Zolboo.G Fi nancia l manlagenent officer ProJect dirctor "01) BURTGEL AUDIT" LLC AUDIT, ASSURANCE, ACCOUNTING, ADVISORY INDEPENDENT AUDITOR'S REPORT TO: ZOLBOO. G, PROJECT DIRECTOR OF THIRD SUSTAINABLE LIVELIHOODS PROJECT Opinion We have audited the accompanying Statements of Project Sources and Uses of Funds of Third Sustainable Livelihoods project funded by International Development Association (Credit No: 5487-MN) and Swiss Agency for Development and Cooperation (Grant No: TF0A0794-MN) for the year ended December 31, 2018. In our opinion, the Statements of Project Sources and Uses of Funds of Third Sustainable Livelihoods project for the year ended December 31, 2018, has been accurately and objectively disclosed in accordance with the requirements of the Financing Agreements (IDA Credit 5487-MN & SDC Grant TF0A0794-MN), the Project implementation manual and other relevant guidelines and procedures. 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 Responsibilities for the Audit of the Project Statements section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountant's Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Mongolia, 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. Responsibilities of Management for the Financial Statements The project management is responsible for the preparation and fair presentation of the Statements of Project Sources and Uses of Funds in accordance with the IDA Financing Agreement, the Grant Agreement, the Project implementation manual and other relevant instructions and procedures 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. Auditor's Responsibilities for the Audit of the Project Statements Our objectives are to obtain reasonable assurance about whether the Statements of Project Sources and Uses of Funds as a whole are 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 misstatement 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. We communicate with project 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 we identify during our audit. GENERAL DIRECTOR OYJNAA U Date: . .0 .. . . .. . ~"Thir(] S-si i nad i b t, el ih ood(s Pr oJe ct (redii 4: 3487'-MN & Gran( JN: TFOAW7t94- IN Fin 1 s I,mn tils fior tlie yvar endl December 31, 2018 The Governinent of Mongolia The International Development Association TIHIRD SUSTAINABLE LIVELIIOODS PROJECT IDA Credit 5487-MN & SDC Grant TF0A0794-MN STATEMENT OF PROJECT SOURCES AND USES OF FUNDS (TOTAL) For the year ended December 31, 2018 (in USD) Cimiulative 2018.01.01 - Cumulative Items to 2018.12.31 2018.12.31 to 2017.12.31 Beginning balance Casli in State bank (DA) 3,584.921.60 Cash in State bank (OBA) 1.693.66 Cash in Ieasury account (OBA) 42,131.91 Casli iii 1 OA (OBA) 3,818.68 Petty cash 75.72 TOTAL OF BEGINNING BALANCE 3,632,641.57 - Cash receipt Financing 13,772,257.19 5,188.431.06 8,583,826.13 Interest revenuc 156,099.37 57,549.58 98,549.79 Other iicome 4,125.70 1.523.41 2,602.29 Receivable [DA/SDC 92.052.88 92.052.88 Total of cash receipt 14,024,535.14 5,339,556.93 8,684,978.21 Disbursement Goods 184,074.82 1.484.42 182,590.40 Consultant services 1,633,161.22 446,472.55 1.186,688.67 Training 644,421 .46 344.807.70 299,613.76 1ineremental operating cost 566.576.87 295.269.82 271.307.05 Good governance Performance-Based 10.188.108.84 7,166,562.58 3,02 1.546.26 financing Total of eligibility expenditures 13,216,343.21 8,254,597.07 4,961,746.14 Bank eharge 288.91 40.00 248.91 Credit-SDC/IDA 92,052.88 - 92,052.88 Unrealised gain/loss on exchange rate (1,71 .29) - (1711.29) dif[ference Total of disbursement 13,306,973.71 8,254,637.07 5,052,336.64 Ending balance Casli in State bank (DA) 670,820.21 670.820.21 3.584.921.60 Casli in State bank (OBA) 1.743.84 1.,743.84 1,693.66 Cash in Treasury fund (OBA) 30.589.03 30,589.03 42.131.91 Casli in Local Operating bank (OBA) 14.291.46 14.291.46 3.818.68 Petty cash 116.89 1 16.89 75.72 TOTAL OF ENDING BALANCE 717,561.43 717,561.43 3,632,641.57 Prepared by: Approved by: Mrs. ushinjargal.i Mrs: Zolboo.G Financial management officer PÖjýét ëdirédto1 "01> BURTGEL AUDIT" LLC (redi JNi?: 7-MN & Grant M: TItAI79-MN ion11 ii l en s tor tle D ear etld Ieeeiber 31, .018 The Government of Mongolia The International Developnent Association THIRD SUSTAINABLE LIVEILIIOODS PROJECT IDA Credit 5487-MN PROJECT SOURCES AND USES OF FUNDS (IDA) For lite year ended Deceniber 31, 2018 (in USD) Cumnulatlie to 2018.01.01 - Cumulative to Items 2018.12.31 2018.12.31 2017.12.31 leginning balance Casli in State bank (DA) - 3,323,745.52 - Cash in State bank (OBA) - 914.17 - Cash in Treasury accont (01A) - 23,904.52 Petty cash - 70.10 - TOTAL OF BEGINNING BALANCE - 3,348,634.31 - Cash receipt inancing i 1,026.778.24 4.071 003.70 6.955.774.54 Interest revenne 129,063.58 50,115.79 78,947.79 Ohier income 2,602.29 - 2.602.29 Receivable from SDC 74.936.47 74,936.47 - Total of casli receipt 11,233,380.58 4,196,055.96 7,037,324.62 Disbursement Goods 184,074.82 I,484.42 182.590.40 Consultant services 220.342.99 37,023.25 183,319.74 Tvraining 7.890.47 7,576.09 314.38 incremental operating cost 354,200.31 126,502.62 227.697.69 Good goveriance Performance- 10,188.108.84 7.1 66,562.58 3.021,546.26 Based financing Total of eligibility expenditures 10,954,617.43 7,339,148.96 3,615,468.47 Bank charge 92.91 20.00 72.91 Credit-SDC 74.936.47 - 74,936.47 Unrealisel gali/loss on exchange (1,787.54) - (1,787.54) rate diflerence Total of disbursemeniit 11,027,859.27 7,339,168.96 3,688,690.31 iinding balatce Cash in State bank (DA) 197.034.58 197.034.58 3,323.745.52 Casi in State bank (OBA) 939.93 939.93 914. 17 Cash in Tveasury fund (OBA) 7,435.53 7.435.53 23,904.52 Pettv cash 1 11.27 1. 1127 70.10 TOTAL OF ENDING BALANCE 205,55,231 3 205,521.31 3,348,634.31 Prepared by: Approved by: mrS, NMrs. Tuvshinjargal.T Mrs Zolhoo;G Financial ianagemenit officer P dIector "OD Bli RTGEL AUDIT" LLC d1 : l487-iN & (Grant 1l TVOAÄ794-MÅTN i i al si ts for the ycar eded D)eemberl 3 f 012 The Governinent of Mongolia The International Development Association THIRD SUSTAINABLE LIVELIHOODS PROJECI SDC Grant TF0A0794-MN PROJECT SOURCES AND USES OF FUNDS (SDC) For the year ended December 31, 2018 (in USD) Cumulative to 2018.01.01 - Cumulative to ktems 2018.12.31 2018.12.31 2017.12.31 Beginning balance Cash iii State bank (DA) 261,176.08 Cash iii State bank (OßA) 779,49 Cash in Treasurv account (OBA) 18,227.39 Cash in LOA (OBA) 3.818.68 Peti cashi 5.62 TOTAL OF BEGINNING BALANCE - 284,007.26 Cash receipt Finan cing 2.745,478.95 1,117,427.36 1,628,05 .59 Iterest revenue 27,035.79 7.433.79 19.602.00 Other ineome 1,523.11 1.523.41 Receivaible fr-om DA 17,116.41 17.116.41 Total of cash receipt 2,791,154.56 1,143,500.97 1,647,653.59 Disbursement Consultant services 1.412,818.23 409,449.30 1.003.368.93 Training 636,530.99 337,23 1.61 299,299.38 increimental operating cost 2 12.376.56 168,767.20 43.609.36 Total of eligibility expenditures 2,261,725.78 915,448.11 1,346,277.67 Bank charge 196.00 20.00 176.00 Credit-IDA 17,1 16.41 - 17,116.41 Unrealised gain/loss an exchange rate 76.25 - 76.25 clifference Total of disbursement 2,279,114.44 915,468.11 1,363,646.33 Enling balance Cash in State bank (DA) 473,785.63 473.785.63 261.176.08 Cash in State bank (C)BA) 803.91 803.91 779.49 Cash ii Treasnrv fund (O1A) 23,153.50 23,153.50 18.227.39 Cash in Local Operating bank (OBA) 14.291.46 14,291.46 3,818.68 Petty Cash 5.62 5.62 5.62 TOTAL OF ENDING BALANCE 512,040.12 512,040.12 284,007.26 Prepared by: Approved by: M,irs. Tuvshinjargar.l Mrs.lbo.' 1'inaneia ianagement officer Prject d irear 1OURBiITGEL AUDIT" LLC 1!0 AUDIT, ASSURANCE, ACCOUNTING, ADVISORY INDEPENDENT AUDITOR'S REPORT TO: ZOLBOO. G, PROJE CT DIRECTOR OF THIRD SUSTAINABLE LIVELIHOODS PROJECT Opinion We have audited the accompanying Statements of Uses of Funds by Project Activity of Third Sustainable Livelihoods project funded by International Development Association (Credit No: 5487-MN) and Swiss Agency for Development and Cooperation (Grant No: TF0A0794- MN) for the year ended December 31, 201 8. In our opinion, the Statements of Uses of Funds by Project Activity of Third Sustainable Livelihoods project as at December 31, 2018, has been accurately and objectively disclosed in accordance with the requirements of the Financing Agreements (IDA Credit 5487-MN & SDC Grant TF0A0794-MN), the Project implementation manual and other relevant guidelines and procedures. 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 Responsibilities fbr the Audit of the 'roject Statements section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountant's Code of Ethics for Professional Accountants (ESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Mongolia, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the TESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management for the Financial Statements The project management is responsible for the preparation and fair presentation of the Statements of Uses of Funds by Project Activity in accordance with the requirements of the IDA Financing Agreement, the Grant Agreement, the Project implementation manual and other relevant instructions and procedures 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. I II -4 Auditor's Responsibilities for the Audit of the Project Statements Our objectives are to obtain reasonable assurance about whether the Statements of Uses of Funds by Project Activity as a whole are free from material misstatement, whether dIe 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 misstatement 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. We communicate with project 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 we identify during our audit. GENERAL DIRECTOR OYUNAA. U Date:t&¾] 1lird Visus i l e l eihod Projectr redi( M: tK7-MN & (änft X,: TFI A0I7941N 1 ilnlncin lalenltts fto te I et eni ded Dec el Ib er 3l, 2018 Governiiient of Mongolia Tie International Developnent Association TIIIRI) SUSTAINABLE LIVELIHOODS PROJECT IDA Credit 5487-MN and SDC Grant TF0A0794-MN STATEMENT OF USES OF FUNDS BY PROJECT ACTIVITY (TOTAL) For the year ended December 31, 2018 (in USD) Cum1ulative to 2018.01.01 - Ciumulaive to Project Activities 2018.12.31 2018.12,31 2017.12.31 Component 1. Capacity building for local 1,654,672.63 656,701.11 997,971.52 governance and liselitoods Cosul tancy on Med-term [p lann ing, Community parlicipation. Budget preparation, Budget execution, 826,081.24 150.644.19 675.437.05 Monitoring evaluatian. Pasturing planning and managemenlt Training an Med-term 1a1nn1ig, Community participation, Budget preparation, Budget execution. 616,476.78 337,547.61 278.929.17 Monitoring evaluation. Pasturing planning and management Incremental operating cost 212.114.61 168,509.3 1 43,605.30 Coniponent 2. Good governance 10,675,445.38 7,324,428.33 3,351,017.05 performanc-based support program Good governance perfarmance- 10.188.108.84 7.166,562.58 3,021.5 46.26 based financing Annual perförmance assessment 478,178.53 157,865.75 320.312.78 (Consultainey) Training to Good governance 9.158.01 - 9.158.01 perafrmance-based financing Component3. Project management and 886,225.20 273,467.63 612,757.57 mionitoring_and evaluation Operating expenses 160.244.91 31.513. 12 128,73 1 .79 Stafl salary 371,515.94 90.903.50 280.6!2.14 Staff training 19.102.67 7,576.09 11,526.58 "OD IRTGEIL ALDIT" LLC 1 " 1ýn'ird S t,]ilin 1ble L,i vel ihood - Proji elt" 'eidi (: 5187-MUN & Grant O: 794-MNI f-iiEil s temenleilts for the year ended December 31, 2018 Covernnient of Mongolia The International Development Association THIR) SUSTAINABLE LIVELIHOODS PROJECT IDA Credit 5487-MN STATEMENT OF USES OF FUNDS BY PROJECT ACTIVITY (IDA) For the year ended December 31, 2018 201 8.01.01 C .iuatel Cimulative to Cumulative to Project 2018.12.31 2017.12.31 Projet Ativiies20 18.12.31 Component 1. Capacity building for 34,911.22 15,995.50 18,915.72 local governance and liveliioods Consultancy on Med-term planning. Communnity pariciati. Budget 34.853.12 15.937.40 18.915.72 preparation, Budget execution. monl itoriing evalunation. Pasturing planniing and management Traininig on Med-term planning. Community participatiol, Budget preparaltion, Budget execution, Monitoring evaluation, Pasturing plallning and imanageiiient Incremental operating cost 58.10 58.10 Component 2. Good governance 10,188,108.84 7,166,562.58 3,021,546.26 pieforniance-based su port program Good goverlaice performance- 10.188.108.84 7.166,562.58 3.02 1.546.26 based financing Component3. Project manageient 731,597.37 156,590.88 575,006.49 and ionitoring and evaluation - - -- Operating expenses 133,706.03 31,513.12 102.192.91 Staff salary 371.515.94 90,903.50 280,612.44 Staff training 7,890.47 7,576.09 3 14.38 Information dissemination 9.649.51 4.028.21 5.621 .30 Financial management (audit) 7,644.50 3.969,44 3.675.06 Consultancy 17,116.41 17,116.41 Goods 1 84.074.51 1 ,4 8 4 .1 1 182,590.40 Total 10,954,617.43 7,339,148.96 3,615,468.47 Prepaired by: Approved by: Mrs. Nvshmijaal.F Mrs. Zolboo:G 1Fiinancial management officer Projeet.direCtor "01) BUURTGEL AUDIT" LLC l Iird Sitslininable Liveliho dis,iI Projeet" redil M 5487-NIN & Grant N: TF0A07.1'9IMN n i i,]il ';t:ileIents for tIle yar en eu Dece m er 31, 2018 Government of Mongolia The International Development Association THIRD SUSTAINABLE LIVELIHOODS PROJECT SDC Grant TF0A0794-MN STATEMENT OF USES OF FUNDS BY PROJECT ACTIVITY (SDC) For the year ended December 31, 2018 (in USD) Cumulative to 2018.01.01 Cuinulafive to Project Activities 2018.12.31 2017.12.31 2018.12.31 ____ Component 1. Capacity building for local 1,619,761.41 640,705.61 979,055.80 governance and livelihoods Coilsidtancy on Med-term planning, Comiunity participation, Budget preparation, Budget execution, 791,228.12 134,706.79 656,521.33 moinitoring evaluation. Pasturing planniing and management Training an Med-term plann ing. Conimmnity participation. Budget preparation, Budget execution. 616.476.78 337.547.61 278.929.17 Monitoring evaltiation, Pasturing planimg mid management Incremental operating Cost 212,056.51 168.451.2! 43,605.30 Component 2. Cood governance 487,336.54 157,865.75 329,470.79 iperformnec-based support program - - Annual performance assessment 478.178.53 157.865.75 320,312.78 (Consuilta ncy) Training to Good governance 9158.01 - 9J58.0 I performance-based Financing Component3. Project management and 154,627.83 116,876.75 37,751.08 m1onitoring and evaluation- Operating expenses 26.538.88 - 26,538.88 Staff salary 116.876.75 116.876.75 Staff trainng 11.212.20 - 11,212.20 Total 2,261,725.78 915,448.11 1,346,277.67 Prepared by: Approved by: Mrs. Tuvshinjargal.T1 "Irs Loaleo,G Financial management officer Pae ili "OD BURTGLAtUDIT" LLC AUDIT, ASSURANCE, ACCOUNTING, ADVISORY INDEPENDENT AUDITOR'S REPORT TO: ZOLBOO. G, PROJECT DIRECTOR OF THIRD SUSTAINABLE LIVELIHOODS PROJECT Opinion We have audited the accompanying Statements of Expenditures (SOEs) of Third Sustainable Livelihoods project funded by International Development Association (Credit No: 5487-MN) and Swiss Agency for Development and Cooperation (Grant No: TF0A0794-MN) for the year ended December 31, 2018. In our opinion, the Statements of Expenditures of Third Sustainable Livelihoods project as at December 31, 2018, has been accurately and objectively disclosed in accordance with the requirements of the Financing Agreements (IDA Credit 5487-MN & SDC Grant TFOA0794- MN), the Project implementation manual and other relevant guidelines and procedures. 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 Responsib iities for the Audit of the Project Stateintws section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountant's Code of Ethics for Professional Accountants (TESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Mongolia, 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. Responsibilities of Management for the Financial Statements The project management is responsible for the preparation and fair presentation of the Statements of Expenditures in accordance with the requirements of the IDA Financing Agreement, the Grant Agreement, the Project implementation manual and other relevant instructions and procedures 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. Auditor's Responsibilities for the Audit of the Project Statements Our objectives are to obtain reasonable assurance about whether the Statements of Expenditures as a whole are 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 misstatement 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. We communicate with project 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 we identify during our audit. GENERAL DIRECTOR OYUNAA. U Date:... ~1 /6 J...r g "Third Sustainln e Li elihods Project- ( red it `: 3487-IN & G rani '½: TF' IA0fft7941-1 N 1imni stanemenlts for Ite year en ded Icejiber 31, 2018 The Government of Mongolia The International Development Association TIHIRI) SUSTAINABLE LIVELIHOODS PROJECT IDA Credit 5487-MN STATEMENT OF EXPENDITURES (IDA Withdrawals) For the year ended December 31, 2018 ________________________________ __________(iii US) WA Application Claimed Credited Amount Anount Diference numiibers type date date claimed Credited VA-6 Advance 2018.03.07 3,500,000.00 3.500,000.00 - WA-7 Replenisiment 2018.04.30 2018.05.15 192,003.70 192.003.70 - WA-8* Replenishment 2018.05.30 379,000.00 379,000.00 - For the reportflig period, 4,071,003.70 4,071,003.70 2018 (WA 6-7) Up to December 31, 2018 11,026,778.24 11,026,778.24 (WA 1-7) lie project implementing Lnit received $ 379,000.00 (WA-8) in accounit No 3332400 (belongs to [vinistry of Finance) on May 31. 2018 as a Good Governance Performance-Based financing. Prepared by: Approved by: Mrs. Tuvshiniiargal.T Mrs. Zolboo .G Financial rnaniagement officer Pro ect director "OD BURTGEL AUDIT" LLC Ilird Sirstainable livelhaoos Project" iYi: :187-iM1N & Grant Nø: T0Aø794-MN Finanjcial s11tc11ee for tlie year ended IDecm r 31, 2018 The Government of Mongolia The International Development Association THIRD SUSTAINABLE LIVELIHOODS PROJECT SDC Grant TF0A0794-MN STATEMENT OF EXPENDITURES (SDC Withdrawals) For the year ended December 31, 2018 (in US») WA Applicatioi type Claimed Credited Amount Amotut Differene numbers date date clained eredited WA-4 Replenishmcnt 2018.05.15 2018.06.04 598,760,12 598.760.12 WA-5 Replenishmenl 2018.08.31 2018.11.06 518,667.24 518,667.24 For the reporting period, 2018 (WA 4- 1,117,427.36 1,117,427.36 5 ) - - - - - -- - - Up to Deceiber 31, 2018 (WA 1-5) 2,745,478.95 2,745,478.95 The expenditurc of IJSD 418.256.25 expensed in 2017, wnas claimed tlirough WA -4 in 2018. Prepared by: Approved by: Mrs. TuvshinjargalT MIrs Zolboo ( Finanlcial imainagemenit officer Projeet directoi "D0) BUIRTGEL AUDIT" LLC 口 L一〕〞：! _... 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С v°`° � С" о ®(}'I , е Г`i .._. - . ...З�� I 1 , `� � 3I' i � � Л I � {Х- Ф � j �� � t '._- ALTDIT, ASSURANCE, ACCOUNTING, ADNISORY INDEPENDENT AUDITOR'S REPORT TO: ZOLBOO. G, PROJECT DIRE, CTOR OF THIRD SUSTAINABLE LIVELMOODS PROJECT Opinion We have audited the accompanying Designated Account Statements of Third Sustainable Livelihoods project funded by International Development Association (Credit No: 5487-MN) and Swiss Agency for Development and Cooperation (Grant No: TFOA0794-MN) for the year ended December 31, 2018, In our opinion, the Designated Account Statements of Third Sustainable Livelihoods project as at December 31, 2018, has been accurately and objectively disclosed in accordance with the requirements of the Financing Agreements (IDA Credit 5487-MN & SDC Grant TFOA0794-MN), the Project implementation manual and other relevant guidelines and procedures. 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 Audilors RI-sponsibildies ft)r the Audit qfthe Project Statements section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountant's Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirement.-, that are relevant to our audit of the financial statements in Mongolia, and we have fuifilled 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, Responsibilities of Management for the Financial Statements The project management is responsible for the preparation and fair presentation of the Designated Account Statements in accordance with the requirements of the IDA Financing Agreement, the Grant Agreement, the Project iMpleMentation manual and other relevant instructions and procedures 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. Auditor's Responsibilities for the Audit of the Project Statements Our objectives are to obtain reasonable assurance about whether the Designated Account Statements as a whole are 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 misstatement 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. We communicate with project 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 we identify during our audit. GENERAL DIRECTOR OYUNAA.U Date: . h I T hird 'is[ inile i\cIihoods Project" C redit )': 3487-MijN & Gran N,: TFOA0,794-1 IN iinrncwil S1acniu ts for the Near nilded ectimbe1r 31, 2018 The Government of Mongolia The International Development Association THIRD SUSTAINABLE LIVELIHOODS PROJECT IDA Credit 5487-MN DESIGNATED ACCOUNT STATEMENT (IDA) For the year ended December 31, 2018 At Dec 31, At Dec 31, Items 2018 2017 in US) in US) Part A- Account transactions Beginning balance 3,323,745.52 3,303,041.29 Add: Total amount deposited by the IDA for the year 3,692,003.70 3.297.930.36 Total interest earned 50,085.93 65.459.00 Receivable SDC 74.936.47 - Total cash receipt 3,817,026.10 3,363,389.36 DeduLct: Advance to operating account for LOC 118,612.86 160,388.7d I DA credit expenditures Goods - 82.23 1 .32 Consultancy 33.053.81 3,675.06 Incremental operating cost 4.487.79 - Good governance Performance-Based 6.787,562.58 3.02 1,546.26 linancimig Total for IDA expenditurcs 6,943,717.04 3,267,841.38 Bank charge 20.00 20.00 Credit-SDC - 74,823.75 Total amount withdrawn 6,943,737.04 3,342,685.13 Ending balance 197,034.58 3,323,745.52 Part B - Account reconciliation Amount advanced by the IDA 3.499.625.88 3.499.625.88 Balance of the Designated account at the end of the year 197,034.58 3,323,745.52 Add: Amount withdran and not yet claimed 6.927,202.02 159.036.69 Bank charge 58.75 58.75 Foreign exchange loss 533.99 533.99 Credit-SDC 74,936,47 7,1.936.47 Balance ofTrcasury account 7A435.53 23.904.52 Balance of OBA 939.93 914.17 Balance of Petty cash 111.27 70.10 Total 7,011,217.96 259,454.69 "OD 13URTGEL AUDIT" LLC o n A "ThIird Sulin IANelihmods Project", Credij N: 57-IN & Grafnt X,: TFOAO'791-MN Fjinancial statemnt1s for the year unded Decemiber 31, 218 Deduct: Interest carned 129.063.65 78.947.79 Other revenue 1,380.75 1.380.75 Foreign exchange gain 3,245.79 3.245.79 Receivable SDC 74,936.47 - Total 208,626.66 83,574.33 Total advance to Deignated account 6,999,625.88* 3,499,625.88 *1he projct received USD 3.500.000.00 ofadvance payment (WA-6) on the designed account on 7 March. 20 1 9. Prepared hy: Approved by: M rs. Tuvshinargal.T Mrs. Zolboo.G Financial management officer Projeet director "01) BURTGEL AUDIT" LLC "Third iu i nblliie LiNelihl(oods Pr1oje edi 1 3187- MIN & G V_n , it 1 1F) A07 9 1 IN iin-ivinil sjntenvts for ffie year enled December 31, 20f8 The Governnent of Mylongolia The International I)evelopient Association TTIIRI) SUSTAINABLE LIVELIHOODS PROJECT SI)C Grant TF0A0794-MN DESIGNATED ACCOUNT STATEMENT (SDC) For the vear ended December 31, 2018 At Dec 31, 2018 At Dec 31, 2017 Itemls in USD in USD) Part A- Account transactions Beginning balance 261,176.08 144,252.84 Add: Total amount deposited by the SDC for the 1117.427.36 783.703.83 year Total interest Carned 6,84 7.59 6.3 19.37 Receivable-IDA 17,116.41 Total cash receipt 1,141,391.36 790,023.20 Deduct: Advance to operating account for 10C 422.507.99 378.544.61 DA eredit expenditures Consultancy 409.449.26 277.4 18.92 Training 96.804.56 Total for SI)C expenditures 928,761.81 655,963.55 Bank charge 20.00 20.00 Payable-IDA - 171 .6.41 Total amount withdrawn 928,781.81 673,099.96 Ending balance 473,785.63 261,176.08 Part B - Account recoiciliation Amount advanced by the IDA 700,000.00 700,000.00 Balance of the Designated account at the end of the 473,785.63 261,176.08 year Amount withdrawn and not yet claimed 216,277.00 418.256.25 Credit-IDA 17116.4 1 17.1 16.41 Bank charge 196.00 176.00 Foreign exchange loss 618.42 618.42 Balance of OBA 803.91 779.49 Balance of Treasur account 23.153.50 18.227.39 Balance of Local operating bank account 14,291.46 3.818.68 Balance of Petty casli 5.62 5.62 Total 272,462.32 458,998.26 "D01) HURTGEL AUDIT " LLC r "Thirdi Ssiinable ivelihoiods Projeci- red il N: 54187-NIN & Grant N: TFOAO794AMN rinainical ilviets for flie ear ended December 31, 2018 Deduct: Net interest carned 27.035.96 19,602.17 Other income 1.523.4! Reccivable-IDA 17,116.41 - Foreign exchange gpain 542.17 542.17 Bank charge 30.00 30.00 Total 46,247.95 20,174.34 Total advance to Designated account 700,000.00 700,000.00 Prepared by: Approved by: Mrs. Tuvshinjarga.T Mrs. Zolboo.G Financial management officer Project director 'OD BJRT,EL ALlD 1T" L LC h i fSus L iliehoods Projed Xecii i II tli -A IN &K Grnt mT11FC.AW794,-1N M NOTES TO T1E FINANCIAL STATEMENTS 1. PROJECT BACKGROUND On Januarv 30. 2015, the International Development Association and the Government of \Mongolia (represented by the Ministry of Finance) signed the Financing Agreement IDA Credit 5487-M4N to assist in financing of Third Sustainable Livelihoods Project The total credit amount is SDR 16.100.000.00 (equivalent to $24.000.000.00). Moreover. on .1uly 31. 2015, International Development Association. International Dev elopment Bank and Government of Mongolia (representing by the Ministry of Finance) had mutualyi signed on the Financing Agreement SDC TF0A0794-MN. The total grant amount is $3.290.000.00. In reporting period. the grant funding increased to $5.665.000 and the closing date was extended until June 30. 2019. The project becanie effective on July 31. 2015 and closing date wvill be on October 3 . 2020. The objeelive of the project is to improve governance and comniuty participation for the planning and delivery of priority investrnents in rural areas of Mongolia. [He proJect consists of the following parts: Component 1. Capacity building for Local Governance and Livelihoods A. Provision. to local authorities and communities, of training and technical assistance related lo the implementation of the Local Development Fund. in the areas of medium term planning. eommtnity participation. budget preparation and adoption. budget execution including proeurement and supervision. reporting, monitoring and evaluation and pastureland planning and management. 13. Provision of teehnical assistanec to the central public administration organizations in charge of econonie and finance issues related to the development and implementation of the Local Development Fund. Component 2.Good Governance Performance-Based Support Program A. As an incenive for good governance, provision of Good Governanec lerformane-Based Financing to Soums for the fnancing of activities under the Local Development lund. 3. Carrying out of annual performance assessments of Soums for the purposes of determining the al location of Good Governance Perlrmance-Based Financing. ( Provision of training to Good Governance Performance Assessment Teams. Component 3.Project management and Monitoring and Evaluation Provision of technical assistance and training and acquisition of office and other equipllent. to support implementation of the Sustainable 1,ivelihoods Program. including support 1) BUR ITGIEL AUDI 1 LLC ii lp Ilii i Mile i1 A. eli hl fi y t I !jt 1 IlemeI i ;tr tlie, 1 vMiffe JK1 I I ile rI i 311.ý0 0 i mnpl c1emitation for roj cct implem entation. staff' training. in formatio i dissenination. monintoring and evaluation. financial management. and audit of Project accounts. 2. SUNMARY OF SIGNIFICANT ACCOUNTING POLICIES a1) Statement of compliance Ilie Financial Statements comprise the Balance Sheet. the Statements of Projeet Sources and Uses of Funds. Ilie Statements of Uses of Funds by Projeet Activity, the Disbursenent reports and the lDesignated Account Statements. The formats of Ihese reports are agreed with the World Bank. b) Basis of prI'eparatiol Ilie Financial Satenents are prepared in accordance with the International Public Sector Accounting Standards (IPSASs) issued by the International Federation of Accountants. Cash basis of acconting has been adopted. On this basis. reccipts are recognized when received or diircCI payinent to creditors are made rather than when incoine is carned and disburseients are recognized \vhen paid rather than when expenses are incurred. The ProJect has its own Financial Managemcnt Manual which has been accepted by the World Bank and its financial managernent system is being operated consistently in accordance with this financial manual. e) Basis of ineasurement The Financial Statements are presented in US Dollars ("USD"). Elxpenditure transactions denomninated in currencies other than USD are translated at spot rates of commercial banks of the date which respective fund is transferred from Designated Account to Operating Acconts. Ikalances in MNT are translated using Bank of Mongolia's rate at respective dates. Any gains and losses arising from the translation of Ilie currencies are reflected in the Stateinent of Sources and Uses of Funds. d1) Basis of presentation Ilie account balances in the Financial Statements as of December 31, 2018 have been compared with such balances as of December 31. 2017. e) Bank accounts and petty cash accounts 1. )esignated accounts In accordance with the Disburseient Letter of Financing Agreement IDA Credit 5487-NN. the project opened the Designated Account (DA) which is the segregated account for the Credit financing at the State Bank acceptable to the World Bank. Account numher of the DA is 1 04900064444 and ii is maintained in USD. The payments for Ilie eligible expenditlres of 01) BURTGEL ALDIl Li( T hin; u aiIbe LiNelilhoos PrjeC ; cd it "Wi<-1N Grani KiTF0A0794-MN I onmei inemeut, flir thie year ended 3 m r 1, 2?018 proeuring goods. consultants fee and training are paid from the DA account. The ceiling of the credit in designated account Of IDA is USD 3.500.000 until the end of the August. 2017. while the ceiling amount is defined as LJSI) 7.000,000 from September 2017. In accordance with te Disbursement 1Letter of Finaneing Agreement SDC TF0A0794-MN. the project opened the Designated Account (DA) which is Ilie segregated account for Ilie grant financing at Ilie State Bank acceptable to the World Bank. Account number of Ilie DA is 102200463537 and it is maintained iii USD. The payments for Ilie eligible expenditures of' procuring goods. consultants fee and training are paid from Ilie DA account. The ceiling of grant amount for Ilie DA from SDC is defimed as $700.000. I1. Operating accounts As specified in the Disbursement Letter of Financing Agreenent IDA Credit 5487-MN,I the project opened Ilie Operating Bank Account (OBA) wliielh is Ilie segregated account at the State Bank accepitable to the World Bank. Account number of tlie OBA is 104900065283 and it is maintained in MNT. The paynents for Ilie eligible incremental operating costs are paid 'ron Ilie OBA. The ceiling credit amount of tie OBA from IDA is USD 25.000. As specified in the Disbursenient Letter of Financing Agreement SDC TF0A0794-MN. the Piect opened the Operating Bank Account (OBA) which is Ilie one segregated account at Ilie State Bank acceptable to Ilie World Rank. Account number of tlie OBA is 102200463545 and it is maintained in NNT. The payments for the eligible inerenental operating costs are paid from Ilie OBA. The ceiling grant amount from Ilie SDC for the 013A is USD 25.000. ilie Minister of Finance has enacied the decision #357 on December I1. 2017. which states all the designated and operating accounts maintained in MNT of te Government irojcts and activities linanced by foreign credits and grants shall be transferred to State freasury Accounits operated by Ministry of Finance. In accordance wvitli the decision #357 of Ilie Minister of Finance. te Project had transferred its OBAs into State Treasury Accounts. The eligible inreniental operating costs shall be paid from the State Treasury Accounits hereinafter. Tlie State Treasnry Accounits infornation is: Account no 100900011108 is for incremiental operating costs of credit financing and account no 100900011140 is for grant financing of incrernental operating costs of Ilie project respectively. Botli accounts are maintained in MNT. III. Local operating bank accounts The Project had financed its local units in each provinces througli Local OBA that are lield at State Bank in accordance with Disbursement Letter of Financing Agreement SDC, As specifled by the letter. small anount of incremental operating costs and training costs are allowed to be disbursed through Ilie Local OBA. For the year. eligible costs were disbursed througli Ilie Local OBA and reported in the financial statenents and WAs accordingly. 01) BURTGEL AUDIT LLC hird S.I t ia1b1)Ile l. iN elihiolo s (Projtt (i M174N & Grant XoTFOA0791-MMN m1 1(mnS for Ilhe yA end- < ffled De, cember 31), 2018 Accoimt number at # Account descriptioni Currency State Bank S Arkhangaf SST-SLP3 MNT 102200463602 2 BaNankliongor SST-SLP3 MNT 102200463628 3 Bavan-Ulgi- SSTV-SL3 MNT 102200463615 4 [3ulgan SST-SLP3 MNT 102200463631 5 DarkIn-LJLI SST-SLP3 MNT 102200463666 6 Dornod SST-SLP3 MINT 102200463689 7 F)ornogovi SSF-SLP3 MNT 102200463677 8 Dundgovi SST-SLP3 MNT 102200463690 9 Govi-Altai SST-SLP3 MNT 102200463644 10 Govi-Sumber SST-SLP3 MNT 102200463653 11 Khentii SST-SLP3 MNT 102200463809 12 Khovd SST-SLIP3 MNT 102200463788 13 Kliuvsgul SS 1 -SL)3 MNT 102200463791 14 Orkhon SST-SLIP3 MNT 102200463716 15 Selenge SS T-S13 MNT 102200463750 16 Sukhbaatar .SS-SLP3 MNT 102200463742 17 Tuv SST-SLP3 MNT 102200463769 18 Umnugovi SST-SLP3 M-NT 102200463734 19 LUvs SS1 -St p3 MNT 102200463775 20 Uvurkhlangai SST-SL P3 M NT 102200463727 21 Zavkhan SST-SLP3 MNT 102200463703 IV. Petty casli accounts As specilied in the Financial Management Manual, the Project maintains two separale petty cash accounts by each financing agreement (IDA Credit 5487-MN and SDC Grant TF0A0794- NiN). The petty cash accounts are usedl in covering siall and sundry payments for expenditures with the amount not exceding the maximum of USI) 300 or its equivalent. This ceiling amtount is applicable for each petty cash account. 3. DISBURSEMENT PROGRESS a) 1)isbursement of IDA Credit 5487-MN As ol December 31. 2018, the project had received USD 11.026.778.24 (45.94% of the total credit) through the DA as financing from IDA Credit 5487-MN and had disbursed USD 10.954.617.43 (45,64% of the total credit). b) Disbursement of SDC Grant TF0A0794-MN As of December 31. 2018. the proJect had received USD 2.745.478.95 (48.46%/0 of the total grant) through the DA as financing from SDC Grant TF0A0794-MN and disbursed UISD 2.261,725.78 (39.92% of the total gran). 1) BURTGEL AUDIT' LLC i Iid Sius;iniable I tlihIfods Pre-ject