THE WORLD BANK NIGERIA EROSION AND WATERSHED MANAGEMENT PROJECT (NEWMAP) (FEDERAL MINISTRY OF ENVIRONMENT) CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER, 2018 AUDITED BY OFFICE OF THE AUDITOR-GENERAL FOR THE FEDERATION Plot 273, Samuel Ademulegun Street, Central Business District, Abuja. Table of Contents CONTENTS Page Corporate Information 2-3 FPMU Management Report 4-5 Management Committee's Responsibility Statement 6 Report of the Independent Auditors 7-9 Statement of Financial Position 10 Statement of Financial Performance 11 Statement of Changes in Net Assets/Equity 12 Statement of Cash Flow 13 Notes to the Financial Statements 14-23 Corporate Information FPMU Management Committee Members of the Management Committee of the Federal Management Unit for the year ended 31st December, 2018 are as follows:- * Salisu Mohammed Dahiru - National Project Coordinator (NPC) * Ejembi Josuha - Procurement Specialist * Mshelia Ruth (Mrs.) - Social & Livelihood Specialist * Mukhtar Y. Tanko - Monitoring & Evaluation Specialist * Idoko, A. A. - Project Engineer * Alhassan Nyazi (Mrs.) - Climate Change * Mrs. Theresa Ajiboye Olayinka - Environmental Safeguard Specialist * Thomas Adebayo L. - Communication Specialist * John Akubo - Natural Resources Specialist * Anda Ayuba Y. - Water Resources Specialist * Abubakar Abdulaziz - Project Accountant * Dufegha Imomotimi J. - Head (Admin) * Olowu Sunday - Internal Auditor EPMU Office Address: No. 56 Mamman Nasir Street Off TY Danjuma Street Asokoro Abuja. Tel: +234 (0) 706 898 6980 E-mail: newmapfpmu_gmail.com Auditors: Office of the Auditor-General for the Federation (OAuGF), Plot 279 Samuel Ademulegun Street. Central Business District (CBD), p.m.b. 128, Garki, Abuja. E-mail: info@oaugf.r19 Website: www.oaugf.ng 2 Bankers: The FPMU was migrated to and has been with the Treasury Single Account (TSA) as required by the FGN in September, 2015. The State Offices however, are still engaging commercial banks, which include: Zenith Bank, Plc. Keystone Bank Plc. Fidelity Bank First Bank of Nigeria Eco Bank Plc. FPMU Management Committee's Report The FPMU submits their report together with the audited financial statements for the year ended 31st December, 2018, which discloses the state of affairs of the Project. Project Description Nigeria Erosion and Watershed Management Project (NEWMAP) is an eight (8) year multi-sectoral and multi-scale project designed to initially address acute gully erosion problems in seven south eastern states - Abia, Anambra, Cross River, Ebonyi, Edo, Enugu and Imo while creating the necessary enabling environment and laying the foundation for scaling out to northern states and additional southern states. The following states then joined the NEWMAP in mid- 2005 to bring the total number of participating states to fourteen (14) as at end 2018 - Akwa lbom, Delta, Kogi, Plateau, Gombe, Kano and Sokoto. The project also focuses on improving livelihoods in these and additional states through sustainable management of natural resources. Objectives of the Project. The Project Development Objective (PDO) is to reduce vulnerability to soil erosion in targeted sub-catchments. The project is aimed at improved erosion management and gully rehabilitation which will provide for: * Reduced loss of infrastructure including roads, houses, markets, etc. * Reduced loss of agriculture land and productivity from soil loss caused by surface erosion. * Reduced risks of floods in rural areas and reduced impacts on villages and agricultural areas. * Improved access to economic activities, social services, communication and road networks. * To achieve greater environmental and economic security. * Progressively restored vegetative cover, improved environmental conditions and more humid local climates which results in increased vegetation cover for wildlife and carbon sequestration. 4 * Utilize Global Environment Facility (GEF) and Special Climate Change Fund (SCCF) support with fully blended IDA resources to fund locally driven planning and replicable, innovative actions for protective tree cover and biodiversity, urban storm water management and water harvesting. The total targeted population at the beginning of the project is about 2.2million primary/direct beneficiaries which are expected to gradually increase to about 2.6million beneficiaries at the close of the project in year 2020. Majority of the population of the participating states - estimated at 30 million in 2013, rising to 33 million in 2020 are also to benefit from this project. Effective Date The project was approved on 8th May, 2012 by the Federal Executive Council with the financing and grant agreements signed on April 16,2013 by both the FGN and the IDA. The project became effective on 16th September, 2013. Key Project Information Project Name: Nigeria Erosion and Watershed Management Project (NEWMAP) Project ID: P124905 IDA Credit: 51050 Lead Implementing Agency: Federal Ministry of Environment Effective Date: 16th September, 2013 Expected Closing Date: 30th June, 2020 Credit Amount: USD500,000,000.00 Project Duration: 8 Years Project Components: 1-Erosion and Watershed Management Infrastructure Investments. 2-Erosion and Watershed Management Institution and Information Services 3-Climate Change Response 4- Project Management NEWMAP Consolidated Financial Statements for the Year Ended 31" December 2018 Statement of Management Committee's Responsibility on the Financial Statements The Financial Management Arrangements (Manual No. 3) of the NEWMAP requires the Management Committees of the Federal Project Management Unit (FPMU) and the Project Financial Management Units (PFMUs) at the states, to prepare financial statements which give a true and fair view of the project as at the end of the financial year. The financial statements must be prepared on a going concern basis unless it is inappropriate to presume that the project will continue in business. The Management Committee members have the responsibility for ensuring that the project keeps accounting records which disclose with reasonable accuracy, the financial position of the project and which enables them to ensure that the financial statements comply with requirements of the Financial Management Arrangements. The members also have a general responsibility of taking such steps as reasonably open to them to safeguard the assets of the project and to prevent and detect fraud and other irregularities. Members of the Management Unit consider that in preparing the financial statements on pages 8 - 11, they have used appropriate accounting policies, consistently applied and supported by reasonable and prudent iudgments and estimates, and that all applicable accounting standards have been followed. Nothing has come to the attention of the Committee to indicate that the project will not remain a going concern for at least twelve months from the date of this statement. SALISU DAHIRU ABDULA IZ ABUBAKAR National Project Coordinator NATIONAL PROJECT ACCOUNT 6 THE AUDITOR-GENERAL FOR THE FEDERATION Audit House, Plot 273, Samuel Ademulegun Street, Central Business District, PM.B. I28, Garki - Abuja, Nigeria. The Project Coordinator, Nigeria Erosion and Watershed Management Project (NEWMAP), Federal Ministry of Environment, Apo, Abuja AUDIT OF THE NIGERIA EROSION AND WATERSHED MANAGEMENT PROJECT (NEWMAP) PERFORMED BY THE AUDITOR GENERAL FOR THE EDERATION AUDITOR'S REPORT Opinion I have audited the financial statements of Nigeria Erosion and Watershed Management Project (NEWMAP) for the year ended 31st December, 2018. These financial statements comprise the Statement of Financial Position, Statement of Financial performance, Cashflow Statement and Statement of Net Assets/Equity for the year then ended, and a summary of significant accounting policies and other explanatory information. In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Entity as at 31st December, 2018, and of its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAS). Basis for Opinion I conducted the audit in accordance with International Standards for Supreme Audit Institutions (ISSAls). My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements Section of my report. I am independent of the entity in accordance with the Code of Ethics for Supreme Audit Institutions together with the ethical requirements that are relevant to my audit of the financial statements and I have fulfilled my other ethical responsibilities in accordance with these requirements and the Code of Ethics. I believe that the audit evidences obtained are sufficient and appropriate to provide a basis for my opinion. Responsibilities of Manaqement and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with IPSAS, 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. 7 In preparing the financial statements, management is responsible for assessing the Entity'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 entity's financial reporting process. Auditor's Responsibility for the Audit of the Financial Statements My objectives is 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. 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 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. As part of an audit in accordance with Financial Audit Methodology (FAM), which is consistent with the Fundamental Auditing Principles (ISSAls 100-999) of the International Standards for Supreme Audit Institutions, I exercise professional scepticism throughout the audit. I also: * 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 controls. * 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 uses 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 Entity's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor's report to the related disclosures in the financial statements or, if such 8 disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the Entity to cease to continue as a going concern. 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. I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide those charged with governance 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 brought to bear on my independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor's report unless law or regulation precludes public disclosure about the matter or, when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. A. M. AYINE, FCA Auditor-General for the Federation June 17, 2019 9 NIGERIA EROSION AND WATERSHED MANAGEMENT PROJECT (NEWMAP) (INTERNATIONAL DEVELOPMENT ASSOCIATION - IDA - ASSISTED PROJECT) CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER, 2018 2 0 1 8 2 0 1 7 Notes N N ASSFTS Current assCts Cash and bank halances 3 61,795,827,544 45,708,892,833 Rcceivables 4 46,417,315 32,513,378 Total current assets 61,842,244,859 45,741,406,21 Non current assets Goods and Service 5 4,369,831,451 3,821,130,132 Civil Works 6 39,387,201,950 25,850,891,187 Consultancy 7 11,435,124,914 8,806,156,662 Total non current assets 55,192,158,315 38,478,177,981 Total Assets 117,034,403,174 84,219,584,193 L I A I I'I' u' T s Current liabilities 'a.vables 8 (25,258,104) 69,877,085 Total current liabilities (25,258,104) 69,877,085 Total liabilities (25,258,104) 69,877,085 Net Assets 117.059.661.278 84.149,707.107 NET ASSETS/EQUITY International Development Association 114,311,545,138 81,727,553,415 Federal Government Contribution 903,430,402 569,680,402 State Government Contribution 9,361,143,747 5,703,236,058 Global Environment Facility 232,222,083 82,151,543 AccumulatCd Find (7,748,680,092) (3,932,914,311) Total Net Ass t. uity 117,059.661.278 84,149.707.10 ......... .. ............4 .. .......... SALISU DAHt ABDULAZ ZAB BAKAR NATIONAL RIOJE ORDINATOR NATIONAL PROJECT ACCOUNTANT DATE:... ... DATE: .... 10 NIGERIA EROSION AND WATERSHED MANAGEMENT PROJECT (NEWMAP) (INTERNATIONAL DEVELOPMENT ASSOCIATION - IDA - ASSISTED PROJECT) CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 DECEMBER, 2018 2 0 1 8 2 0 1 7 Notes N N REVENUE Sales of tender documents 3,590,000 8,202,000 Interest received (Dollar Acct) 71,019,174 19,178,633 Interest received (Naira Acct) 3,018,279 72,959 Miscellaneous receipts 492,850 6,275,453 TOTAL REVENUE 78,120,303 33,729,045 EXPENDITURES Federal Project Management - Operating Costs 1,222,018,406 786,038,822 State Project Management 2,668,908,552 1,370,441,606 Provision for difference on trial balance 9 2,959,125 TOTAL EXPENDITURES 3,893,886,083 2,156,480,428 Surplus / (Deficit) for the year (3,815,765,780) (2,122,751,383) 11 NIGERIA EROSION AND WATERSHED MANAGEMENT PROJECT (NEWMAP) (INTERNATIONAL DEVELOPMENT ASSOCIATION - IDA - ASSISTED PROJECT) STATEMENT OF CHANGES IN NET ASSETS/EQUITY FOR THE YEAR ENDED 31 DECEMBER, 2018 IDA COUNTERPART ACCUMULATED GEF TOTAL FUNDING DEFICIT N N N N N Balance at 81,727,553,415 6,272,916,460 (3,932,914,311) 82,151,543 84,149,707,106 1s" January 2018 Addition During the 32,583,991,723 3,991,657,689 (3,815,765,780) 150,070,540 32,909,954,172 year 114,311,545,138 10,264,574,149 (7,748,680,091) 232,222,083 117,059,661,278 12 NIGERIA EROSION AND WATERSHED MANAGEMENT PROJECT (NEWMAP) (INTERNATIONAL DEVELOPMENT ASSOCIATION - IDA - ASSISTED PROJECT) CONSOLIDATED STATEMENT OF CASHFLOW FOR THE YEAR ENDED 31 DECEMBER, 2018 2018 2017 Notes N N OPERATING ACTIVITIES Surplus/deficit for the year 10 (3,815,765,780) (2,122,751,383) Changes in operating assets 11 (109,039,125) (103,245,857) Net cash outflows from operating activities (3,924,804,906) (2,225,997,240) INVESTING ACTIVITIES Good and services (548,701,318) (1,214,707,565) Civil work (13,536,310,763) (7,184,401,687) Consultancy (2,628,968,252) (3,510,739,105) Net cash outflows from investing activities (16,713,980,334) (11,909,848,357) FINANCING ACTIVITIES IDA 32,583,991,723 49,884,526,136 Global Environment Facility 150,070,540 82,151,543 Federal Government Contribution 333,750,000 22,500,000 State Government Contribution 3,657,907,689 2,384,486,946 Net cash outflows from financing activities 36,725,719,952 52,373,664,625 Net increase/(decrease) in cash and cash equivalents 16,086,934,711 (14,135,845,597) Cash and cash equivalents at 1 January 45,708,892,833 7,471,073,805 Cash and cash equivalent at 31 December 61,795,827,544 45,708,892,833 13 NOTES TO THE FINANCIAL STATEMENTS Note 1: Statement of Compliance with IPSAS The financial statements set out above were in compliance with the requirements of the international Public Sector Accounting (IPSAS) Accrual where applicable subject to the statement of accounting policies disclosed below Note 2: Statement of Accounting Policies The following are the significant accounting policies adopted in the preparation and fair presentation of the financial statements * Basis of accounting The accounts have been prepared under the historical cost convention. * Foreign Exchange Rate Foreign currencies are converted at the rate ruling at the time of the transaction * Fixed Asset Cost These are stated at historical cost * Fixed assets and civil works were not depreciated in line with the project's policy 14 NIGERIA EROSION AND WATERSHED MANAGEMENT PROJECT (NEWMAP) (INTERNATIONAL DEVELOPMENT ASSOCIATION - IDA - ASSISTED PROJECT) NOTE TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2018 2018 2018 2017 2017 N N N N 3. CASH AND BANK BALANCE Naira Draw Down ( 32303 - Federal, 32202 & 32301 - State FPMU 297,924,962 223,281,322 Abia (1,784,635) (4,192,908) Anambra 3,773,950 3,389,962 Borno - 4,154 Cross River 12,848,016 157,499,111 Ebonyi - 4,785,826 2,805,556 Edo 8,070,622 (4,807,991) Enugu - (1,704,824) 1,087,365 I-mo 947,994 1,156,445 Delta 5,369,464 3,389,685 Kogi 3,922,047 581,819.04 Gombe 4,285,905 4,165,709 Kano 13,898,634 13,448,260 Katsina - (1,493,387) 15 Niger 11,383,629 Sokoto 777,594 251,730.32 Plateau 4,038,342 2,918,898 Akwa lbon 407,074,330 (9,187) 357,144,710 (9,187) Special Account (32101) FPMU 126,610,980 126,610,980 Abia 16,126,761,678 16,127,030,277 Anambra 7,324,340,120 3,620,685,513 Borno 706,306,679 - Cross River 7,935,520,120 678,340,632 Ebonyi 3,276,741,225 4,736,998,973 Edo 8,760,083,962 3,946,773,139 Enugu 8,619,873,267 5,258,124,341 Imo 142,975,548 282,515,635 Delta 752,489,086 892,646,719 Kogi 580,861,759 280,788,466 Gombe 1,314,339,118 1,485,989,981 Kano (27,305,936) 220,699,562 Katsina 19,321,898 - Nassarawa 706,861,247 Niger 562,129,900 - Sokoto 96,747,417 97,745,327 Plateau 699,178,269 545,675,968 Akwa lbon 524,340,167 58,248,176,503 550,705,641 38,851,331,154 16 NOTE TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2018 2018 2018 2017 2017 Special Account - TSA (32102) FPMU 628,145,518.5 2,844,505,252 Abia (3,695,853,98) (3,067,708,47) - 2,844,505,252 Counter-Part Fund Account (32202 - Federal, 32201- State) FPMU 109,100,745 143,035,312 Abia 133,886,426 225,431,041 Anambra 48,599,835 334,245,777 Borno 994,854,451 - Cross River 83,313,608 138,053,086 Ebonyi 175,830,527 266,935,749 Edo 371,795,861 591,109,851 Enugu 129,419,425 406,885 Imo 11,098,486 39,793,135 Delta 266,995,151 372,525,096 Kogi 806,284,269 30,113,781 Gombe 98,572,590 98,802,944 Kano 249,728,253 274,864,803 Katsina 469,129,636 - Nassarawa 529,093,191 Niger 294,461,800 Sokoto 1,021,244,530 1,021,244,530 17 Plateau 344,570 21,276,165 Akwa Ibon 362,536,461 6,156,289,815 7,780,402 3,655,618,557 Interest (Naira) Bank Account - 32401 & 32402, Interest (Dom) Bank Account - 32501 & 32502 Abia 17,753,275 - Anambra (305,576) Cross River 1,494,716 - Ebonyi Edo 29,325,396 - Enugu 2,642,547 Imo 481,402 - Akwa lbon 310,447 51,702,206 -- Petty Cash 293,160 293,160.00 293,160 293,160 Total Cash and bank 61,795,827,544 45.708.892. balance 2018 2017 4. RECEIVABLE - STAFF ADVANCES N N FPMU 933,083 810,138 Abia (3,137,797) (3,137,797) Anambra 1,000 1,000 Borno 2,273,013 Cross River 3,137,797 3,137,797 18 Ebonyi 9,299,038 2,204,005 Edo 498,670 498,670 Enugu 19,136,087 19,136,087 li-no 611,315 611,315 Kano 3,759,380 Nassarawa 5,277,089 - Plateau 11,750,173 2,183,630 Sokoto (14,000) (14,000) Delta (12,500) (12,500) 46,417,315 32,513,378 5. Goods and Services FPMU 1,931,440,399 1,718,389,752 Abia 349,190,251 237,129,200 Anambra 204,554,139 173,395,672 Cross River 108,224,514 87,363,329 Ebonyi 94,109,126 94,109,126 Edo 302,802,773 302,802,773 Enugu 188,866,286 144,273,199 Imno 88,241,327 87,112,727 Delta 311,915,118 301,734,227 Kogi 177,654,789 164,310,660 Kano 63,130,440 19 63,130,440 Katsina 102,323,262 Sokoto 154,023,750 154,023,750 Gombe 121,640,815 121,640,815 Plateau 171,714,463 171,714,463 4,369,831,451 3,821,130,132 These represent accumulated expenditures on both Federal and State Project Management - Goods and Services 2018 2017 6. Civil Works Opening balance 25,850,891,187 FPMU 618,862,167 20,989,838.00 Abia 3,352,825,139 1,352,963,047 Anambra 1,842,386,990 1,700,586,888 Borno Cross River 910,069,342 4,299,393,273 Ebonyi 3,183,587,310 326,705,530 Edo 2,330,788,268 15,529,927,863 Enugu 103,584,141 747,771,093 Kogi 128,204,485 5,273,948 Gombe 138,710,562 64,149,231 Kano 229,765,341 100,189,526 Katsina 492,475,490 Nassarawa 567,658 Niger Sokoto 55,377,646 8,431,515 20 Plateau Akwa Ibon 72,596,914 45,972,512 39,387,201,950 25,850,891,187 These represent expenditures on prevention and management of erosion, construction works, sensitization, training, capacity buildings and others on erosion by Federal and State Governments. 7. CONSULTANCY Opening balance 8,806,156,662 FPMU 1,131,081,565 3,620,996,764 Abia 225,566,241 451,309,437 Anambra 79,502,634 500,299,813 Plateau - 63,236,541 Cross River 219,553,175 675,287,140 Ebonyi 41,776,327 336,074,293 Edo 380,023,803 1380808373 Enugu 66,245,833 461009794 Imo 26,656,861 175494958 Delta 207,078,895 212477348 Kogi 130,026,346 277145069 Gombe - 192421788 Kano 121,456,572 53454725 11,435,124,914 8,806,156,662 21 NOTE TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2018 2018 2017 N N 8. PAYABLES VAT 36,355,171 (5,400,369) Local payables (24,418,005) 98,486,828 Foreign payables (73,185,552) -1,840,478 Unclaimed allowance 74,245 578,530 (25,258,104) 69,877,085 9. PROVISION FOR DIFFERENCES ON TRIAL BALANCE Anambra - GEF trial balance not agreed 1,783 - Kano - Difference on trial balance resulted from stamp duty not added up to the total expenses on state project management (3,759,380) - and coordination Delta - IDA trial balance not agreed (10,000) - Imo - IDA trial balance not agreed 6,726,718 - Enugu - Difference on trial balance 5 2,959,125 - 10. CASHFLOWS FROM OPERATING ACTIVITIES Deficit for the year (3,815,765,780) (2,122,751,383) 22 11. CHANGES IN OPERATING ASSETS Receivables (13,903,936) Payables (95,135,189) Inventories (109,039,125) 23