LI lOCT2 3 Ministry of Housing. Utilities and Urban Development Egyptian Holding Company for Water and Wastewater Financial and System Audit Second Integrated Sanitation and Sewerage Infrastructure Project Entity subject to Audit : Ministry of Housing, Utilities and Urban Development Country : Egypt Auditor : AHC- DFK International Period Subject of Audit : July 1,2015 to June 30, 2016 Dates of Audit Fieldwork : 1 September to 10 October 2016 Project Status : Ongoing Table of Contents Introduction .2 Independent Auditor’s report — Financial Audit 4 Independent Auditor’s report — System Audit 6 Independent Auditor’s report — Compliance with applicable Laws & regulation...... 8 1- The Engagement Context 10 1-1 ReasonfortheAudit 10 1-2 Contractual Conditions 10 1-3 Project subject of Audit 10 2- The Audit 11 2-1 Audit Objectives 11 2-2 Audit Scope 11 2-3 Audit Procedures 14 Annexes 19 Annex 1: Statement Of sources & uses for the period July 1,2015 to June 30,2016 . . . .20 Annex 2 : Statement Of sources & uses for the period July 1,2015 to June 30,201 6(by component) 22 Annex 3: Bank reconciliation 23 Annex 4: Withdrawal Application Statement 24 Annex 5: Persons contacted or involved in the Audit 25 1 AHC DFK INTERNATIONAL Chartered Accountants & Consultants Independent Auditor’s Report Financial Audit for Statement of Sources & Uses Eng. Tarek Bekhit Project Director Second Integrated Sanitation and Sewerage Infrastructure Project Cairo, Egypt We have audited the accompanying statement of Sources & Uses of funds received and expenditures paid by the Second Integrated Sanitation and Sewerage Infrastructure Project implemented by Ministry of Housing, Utilities and Urban Development funded by the International Bank for Reconstruction & Development for the period from July 1, 2015 through June 30, 2016. Management Responsibility for the Schedule of Fund Accountability Statement Management is responsible for the preparation and fair presentation of the statement of receipts & expenditures in accordance with the financial terms and standard provisions specified in the financing agreement. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the schedule that is free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on the Schedule based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the Schedule is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the schedule. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the schedule, whether due to fraud or error. In making those risk assessment, the auditor consider internal control relevant to the project’s preparation and fair presentation of the schedule 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 project’s internal control. 4 El Mohandseein Towers Floor 19 Corniche El Nil Maadi Cairo. - - - - Tel.: (+202) 25250808 (+202) 25257989 I Fax: (+202) 25257906 - E-mail: info@ahc.bz I Website :www.ahc.bz 2 AHC DFI( INTERIAtONAL Chartered Accountants & Consultants An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the schedule. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying statement of Sources & Uses presents fairly, in all material respects, the following: • Cash receipts collected and expenditures incurred by the Second Integrated Sanitation and Sewerage Infrastructure Project funded by the International Bank for Reconstruction & Development Loan No. 8069 for the fiscal year from July 1, 2015 through June 30, 2016 according to IBRD Loan No. 8069 principles and instructions. • Sources and applications of the Second Integrated Sanitation and Sewerage Infrastructure Project funded by IBRD Loan No. 8069 for the fiscal year from July 1, 2015 through June 30, 2016 are in agreement with the instructions of IBRD Loan No. 8069, Also, the expenditures were incurred in accordance with the funding rules of the Loan agreement of IBRD Loan No. 8069. Distribution & Use The Ministry of Housing, Utilities and Urban Development has requested this report and it is intended solely for the information and use of the Ministry Date: October 17, 2016 W I Heida i Audit & Accounting Partner . MeniborFlrm FESAA— FEFA— lEA—AMA RAA 9960- / 4 El Mohandseein Towers Floor 19 Corniche El Nil Maadi Cairo. - - - - Tel.: (+202) 25250808 (+202) 25257989 / Fax: (+202) 25257906 - E-mail : info@ahc.bz / Website :www.ahc.bz AHC DFI( INTERNATIONAL Chartered Accountants & Consultants Independent Auditor’s Report Financial Audit for Special Account Eng. Tarek Bekhit Project Director Second Integrated Sanitation and Sewerage Infrastructure Project Cairo, Egypt We have audited the accompanying statement of Sources & Uses for funds received and expenditures paid by the Second Integrated Sanitation and Sewerage Infrastructure Project implemented by Ministry of Housing, Utilities and Urban Development by IBRD Loan No. 8069 for the period from July 1, 2015 through June 30, 2016. Management Responsibility for the Schedule of Fund Accountability Statement Management is responsible for the preparation and fair presentation of the Special Account in accordance with the financial terms and standard provisions specified in the financing agreement. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the schedule that is free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on the Schedule based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the Schedule is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the schedule. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the schedule, whether due to fraud or error. In making those risk assessment, the auditor consider internal control relevant to the project’s preparation and fair presentation of the schedule 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 project’s internal control. 4 El Mohandseein Towers Floor 19 Corniche El Nil Maadi Cairo. - - - - Tel.: (+202) 25250808 (+202) 25257989 I Fax: (+202) 25257906 - E-mail : info@ahc.bz / Website :www.ahc.bz • AHC DFK INTERNAtIONAL Chartered Accountants & Consultants An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the schedule. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying statement of receipts and expenditures presents fairly, in all material respects, the Financial Position of the special account of the Second Integrated Sanitation and Sewerage Infrastructure Project funded by IBRD Loan No. 8069 and which resulted from the transactions of the fiscal year from July 1, 2015 through June 30, 2016 were in accordance with IBRD Loan No. 8069 principles and instructions. Distribution & Use The Ministry of Housing, Utilities and Urban Development has requested this report and it is intended solely for the information and use of the Ministry Date: October 17, 2016 Audit & Accounting Partner FESAA- FEFA- lEA-AMA RAA-9960 4 El Mohandseein Towers Floor 19 Corniche El Nil Maadi Cairo. - - - - Tel.: (+202) 25250808 (+202) 25257989 I Fax: (+202) 25257906 - E-mail : info@ahc.bz I Website :www.ahc.bz 5 AHC DFK INTERNATIONAL Chartered Accountants & Consultants Independent Auditor’s Report System Audit Eng. Tarek Bekhit Project Director Second Integrated Sanitation and Sewerage Infrastructure Project Cairo, Egypt We have audited the accompanying statement of Sources & Uses for funds received and expenditures paid by the Second Integrated Sanitation and Sewerage Infrastructure Project related to expenditures for the period July 1, 2015 through June 30, 2016. Management Responsibility for the Internal Controls The management of participatory farm-level irrigation modernization grant is responsible for establishing and maintaining internal controls. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control policies and procedures. The objectives of an internal control are to provide management with reasonable but not absolute, assurance that assets are safeguarded against from Unauthorized Use or disposition, and that transactions are executed in accordance with the management’s authorization and recorded properly permit the preparation of the fund accountability statements in a accordance with the cash basis of accounting because of the inherent limitation in internal controls errors or irregularities may, nevertheless, Occur and not be detected also, projection of any equation of internal controls to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. Auditor’s Responsibility We conducted our audits in accordance with The International Standards of Audit those standards require that we plan and perform the audit for the internal controls to obtain reasonable assurance about whether the fund accountability statements are free of material misstatement. 4 El Mohandseein Towers Floor 19 Corniche El Nil Maadi Cairo. - - - - Tel.: (+202) 25250808 (+202) 25257989 / Fax: (+202) 25257906 - E-mail : info@ahc.bz / Website :www.ahc.bz 6 AHC “Pr” INTERNA1ONAL Chartered Accountants & Consultants Our consideration of the internal control structure disclosed all matters in the internal control structure that might be material weaknesses under the established international standard. Opinion The result of our audit disclosed no internal control findings that are required to be reported. Distribution & Use The Ministry of Housing, Utilities and Urban Development has requested this report and it is intended solely for the information and use of the Ministry. Date: October 17, 2016 Audit & Accounting Partner FESAA— FEFA— IFA—AMA RAA—9960 4 El Mohandseejn Towers Floor 19 Corniche El Nil Maadi Cairo. - - - - Tel.: (+202) 25250808 (+202) 25257989 I Fax: (+202) 25257906 - E-mail : info@ahc.bz I Website :www.ahc.bz 7 j AHC DFK INTERNATIONAL Chartered Accountants & Consultants Independent Auditor’s Report Compliance with applicable laws and regulations & Ex-post Procurement Review Eng. Tarek Bekhit Project Director Second Integrated Sanitation and Sewerage Infrastructure Project Cairo, Egypt We have audited the accompanying statement of Sources & Uses for funds received and expenditures paid by the Second Integrated Sanitation and Sewerage Infrastructure Project “related to expenditures for the period July 1, 2015 through June 30, 2016. Management Responsibility for Compliance with applicable Laws and Regulation Compliance with applicable laws, regulations contracts and grants is the responsibility of the participatory farm-level irrigation modernization grant management. As part of obtaining reasonable assurance about whether the fund accountability statements are free of material misstatements, we performed tests of the participatory farm-level irrigation modernization grant compliance with certain provisions of laws, regulations contracts and grants. Auditor’s Responsibility We conducted our audits in accordance with the International Standards of Audit those standards require that we plan and perform the compliance testing to obtain reasonable assurance about whether the fund accountability statements are prepared with out any noncompliance issue. Opi n in In our opinion the procurement process set up, operated and the performance of the Entity in the execution of its fiduciary function and controls during the period from July 1, 2015 through June 30, , 2016 was compliant with the terms and conditions of the Loan Agreement, and IBRD rules and , procedures. The results of our tests disclosed no material instance of noncompliance that is required to be reported. 4 El Mohandseein Towers Floor 19 Corniche El Nil Maadi Cairo. - - - - Tel.: (+202) 25250808 (+202) 25257989 I Fax: (+202) 25257906 - E-mail : info@ahc.bz I Website :www.ahc.bz 8 AHC LPFh INTERNATIONAL Chartered Accountants & Consultants Distribution & Use The Ministry of Housing, Utilities and Urban Development has requested this report and it is intended solely for the information and use of the Ministry. Date: October 17, 2016 Audit & Accounting Partner FESAA- FEFA- IFA-AMA RAA—9960 4 El Mohandseein Towers Floor 19 Corniche El Nil Maadi Cairo. - - - - Tel.: (+202) 25250808 (+202) 25257989 I Fax: (+202) 25257906 - E-mail : info@ahc.bz I Website :www.ahc.bz 9 1- The Engagement context 1.1 Reason for the audit The audit was carried out in accordance with the Loan agreement for the project as agreed by IBRD Loan No. 8069 and the ministry of Housing, Utilities and Urban Development. 1.2 Contractual Conditions The contractual conditions applicable to this project are as follows: Loan Agreement was signed by IBRD Loan No. 8069 and the Ministry of Housing, Utilities and Urban Development on 7 February 2016, including all annexes. The Project is entitled Second Integrated Sanitation and Sewerage Infrastructure Project. 1.3 Project subject to audit 1.3.1 Obiective and Activities The Project Development Objective is to provide targeted population in the governorate of Menoufia, Sharkeya, Assiut, and Sohag with increased access to improved sanitation and sewerage services. The project consists of the following parts: (1) Wastewater Infrastructure System in Rural Areas in Menoufia and Sharkeya, (2) Wastewater Infrastructure System in Rural Areas in Assuit and Sohag. (3) Project Management. 10 2- The audit We have been engaged by the Projects Management Unit to perform this audit in accordance with the terms of reference attached to our service contract of February 7,2016. 2.1 Audit Obiectives 2.1.1 Financial Audit The objective of the audit of the Project Financial Statement (PFSs) is to enable the auditors to express an independent professional opinion on the financial position of the project to ensure that the funds granted to the Project have been used for their intended purposes as Follows: . The First auditable year covering from July 1, 2015 through June 30, 2016. 2.1.2 Systems Audit The objective of the systems audit is to express an opinion on the whether the internal control system set up and by the entity for the purpose of managing risks to the achievement of the objectives of the project, was suitably designed and operated effectively in the period from July 1, 2015 through June 30, 2016. 2.1.3 Ex-post review of procurement The objective of the ex-post review of the procurement processing is to evaluate and assess the compliance of the procedures used by the project for procurement with the terms and conditions in loan agreement, the operational and IBRD rules and procedures. 2.2 Audit Scope The audit will be carried out in accordance with the International Accounting & Auditing standards and will include such tests and verification procedures as the auditors consider necessary under the circumstances . In conducting the audit, special attention should be paid to the following: (a) All IBRD funds have been used in accordance with the conditions of the loan with due attention to economy and efficiency and only of the loan agreement which the funds were provided. 11 (c) Goods, works and services financed have been procured in accordance with the loan Agreement and in accordance with the IBRD rules and procedures; and have been properly accounted for. (d) Appropriate supporting documents, records and books of accounts relating to all Project activities have been kept. Clear linkages should exist between the books of accounts and the financial statements presented to the IBRD. (e) The financial statements have been prepared by project management in accordance with applicable accounting standards mentioned and give A true and fair view of the financial position of the project as at the year end and of its receipts and expenditures for the period ended on that date. (f) Comprehensive assessment of the adequacy and effectiveness of the accounting and overall internal control system to monitor expenditures and other financial transactions and ensure safe custody of project —financed assets and that they are being used for the intended purposes. (g) Comprehensive assessment of the adequacy and effectiveness of the accounting and overall internal control system to monitor expenditures and other financial transactions and ensure safe custody of project —financed assets and that they are being used for the intended purposes; (h) Project’ s fixed assets are real and properly evaluated and project property rights or related beneficiaries ‘ rights are established in accordance with loan conditions. (i) Ineligible expenditures identified during the audit will be reflected in a separate paragraph of the audit report and if material, the point should be reflected in the auditors’ opinion, in accordance with international standards on auditing the auditors shall pay Attention to the following: i. Fraud and Corruption: In accordance with ISA 240 (the Auditors Responsibilities Relating to fraud in Audit of Financial Statement) the auditors shall identify and evaluate risks related to fraud obtain or provide sufficient evidence of 12 analysis of these risks and assess properly the risks identified or suspected. Laws and Regulation: In preparing the audit approach and in executing the audit procedures the auditors shall evaluate the PIUs compliance with the provisions of laws and regulation that might impact significantly the PFSs as required by ISA 250 (Considerations of Laws and Regulation in an Audit of Financial Statement). iii. Governance: Communicate with the PlUs Management responsibilities for governance regarding significant audit issues related to governance in accordance with ISA260Communication With those charged With Governance). iv. Risks: With a view to reducing audit risks to a relatively low level the auditors will apply appropriate audit procedure and handle anomalies/risks identified during their evaluation. This is in accordance with 1SA330 (The Auditors Responses to assessed Risks). 13 2.3 Audit Procedures 2.3.1 Financial Audit The scope of work is the issuance of Financial Audit Report for ( Second Integrated Sanitation and Sewerage Infrastructure Project). as follows: Financial Audit Report for Second Phase. The audit will be carried out in accordance with the International Standards on Auditing, having regard to relevant financing agreements and Loan specific requirements, and should pay special attention to the following: 1. All IBRD funds provided to the Project have been used, accounted for and classified in accordance with the relevant financing agreement, with due attention to economy and efficiency and only for the purposes for which the funds were provided. 2. Goods, Works & Services financed have been procured in accordance with the relevant financing agreement and in accordance with the IBRD rules and procedures, and have been properly accounted for; 3. All necessary supporting documents, records, and books of accounts have been kept in respect of all project activities. Clear linkages should exist between the books of account and financial statements presented to the IBRD. 4. Where Designated Accounts have been used, they have been maintained in accordance with the provisions of the relevant financing agreement. 5. Compliance with specific covenants of the Loan Agreement and Project Appraisal Document (e.g., compliance with the short-term and long-term borrowing conditions, cash flow covenant). 6. Determine eligibility of expenditures claimed under Statement of Expenditures submitted to the IBRD for replenishment. This is in addition to substantiation of these expenditures. 14 7. Review all correspondences with the IBRD in relation to the Project including copies of the Aide Memoires, Mission Reports, and assess progress on all financial issues. 8. Project fixed assets are real and properly evaluated and project property rights or related beneficiaries rights are established in accordance with the loan conditions. 9. We made field visits to the following Governorates: El Menoufia, El Sharkeya Assiut and Sohag. , The substantive procedures applied during our audit consisted of: The following are the audit procedures to be undertaken. This list is not comprehensive and may be updated commensurate with the requirements of the audit: 1) Inspection of all SOE-based withdrawal applications; a. Review the SQE control procedures regarding disbursement taking into consideration the effectiveness of the said controls and document any instances where controls are lacking or are considered in need of strengthening. b. Inspecting documents that support payments to support claims for IBRD disbursements. c. Verify eligibility of expenditures to determine whether the expenditures are eligible for IBRD disbursement in accordance with legal agreements, where ineligible expenditures are identified as having been included in the withdrawal applications and replenished, these would be noted separately by the auditor. 2) Verifying the eligibility of the costs with the terms and conditions of the Project contract and that this costs were necessary for carrying out the action. In other words, the auditor will verify that expenditures for a transaction have been incurred for the intended purpose of the action and it has been necessary for the implementation of the contracts. 3) Verifying the level of compliance with the IBRD contract and all general and specific conditions. 4) Verifying whether the funds have been used in accordance with the principle of sound financial management. 15 5) Obtaining confirmation from the IBRD for the IBRD balances and authority to sign. 6) Obtaining confirmation from lawyers in the event of ongoing disputes. 7) Checking the accounting system to verify that the use of funds and safeguarding of assets, the following aspects in particular will be examined: a) Existence of separate accounting separate accounting system for the project or of an appropriate analytical system which provides information on the financial situation of the IBRD part of the programme and the overall situation, account being taken of each partner’s contribution. b) System of accepting and authorizing transactions including amendment and deletion of data. 8) Verify that amounts invoiced to the IBRD relates to eligible costs. 9) Checking that the expenditures incurred are not listed in ineligible expenditures in the contractual basis of the Project. 10) Ensuring that expenditures relates to the project, and that activities financed with the project funds were foreseen in the contractual basis of the project and that expenses fit into the agreed budget items of the project and respect the corresponding budget ceilings. 11) Verifying that the expenses incurred fall under one of the budget heading of the program. 12) Ensuring that expenses have been incurred and borne by the auditees. 13) Checking that activities carried out or financed with the programme funds are provided for in contractual basis and that the expenditures have not been affected for private purposes. 14) Verifying that the expenditures is substantiated by the appropriate documents and correctly entered in the accounts. 15) Verifying that expenditures has been incurred and disbursed within the periods authorized under the contract for operations effected within the period covered by the audit. 16 16) Ensuring that the assets has been acquired and managed in accordance with the Project conditions. 17) Ensuring that assets exist, are owned by the Auditees and are correctly listed, valued etc. 18) Ensuring that the other administrative and financial conditions of the Project have been met. 19) Checking the possibility of overlapping of staff assigned to the project with other programmes. 20) Verifying of original supporting documents. 21) Reviewing the reconciliation of bank accounts. 22) Checking the physical existence of the assets. 23) Identifying and reporting on any areas where the value of money is in question (Cost effectiveness). 24) Making inquiries of management of their knowledge of any irregular activities, fraudulent or otherwise. Any information obtained so will be investigated to obtain full details. To the extent possible the effects of such activities will be quantified. 25) Quantifying the problems and financial adjustments noted in the course of the procedures carried out. 26) Performing physical inspection of assets, including review system and valuation of disposals/transfers of assets. 17 2.3.2 Systems Audit Our audit procedures applied to test the design and performances of controls were as follows: • Interviews held with entity staff that may have relevant information. • Inspection of contractual conditions. observing operations and inspecting documents, reports, printed and electronic records of transaction processing, accounting procedures and other key approval and internal control procedures (e.g. periodical expenditure reports, budget to actual comparisons, etc); and Performing walk through tests on internal control procedures. 2.3.3 Ex-post review of procurement Our audit procedures applied to review the procurements mainly included examining the following: • Compliance of procurement as regards to (i) mode of procurement; (ii) standard procurement documents; (iii) the tendering process; with the provision of the Grant agreement. • Clarity and transparency in: (i) the evaluation of bids for procurement of goods and works; (ii) in the evaluation of consultancy proposals; (iii) in the criteria and their application for the procurement of goods, works and selection of consultants. • Conformity of the final contract with the approval tender document, in particular with validity of any modification and other change made to the original contract during its execution (contract addenda) Our work also included the following aspects with regard to the procurement process: • Procedures of publicity and their validity. • The bidding documents. • The bid proposals opening procedures. • The evaluation of bid/proposals and the endorsement of the contracts. • Any complaints from bidders or other concerned parties. 18 Annexes 19 Annex 1: Statement of Sources & Uses For the period July 1,2015 to June 30, 2016 20 r . . . - —] Financial report about period from 11712015 to 3016I2016 DA Account No. 4/082/1845412 Actual (USD1 Planned (USD1 Variance (USD) Sources and Uses of Funds Current Cumulative to Current Year -To Cumulative Cumulative to Year -To Date Current Quarter Year -To Date Quarter Date Quarter Date to Date Date Opening Cash Balances DAfor WB Credit No: 41082118454/2 0 2,152,143 2,152,143 0 0 0 0 0 0 Sources of Funds WB-Funds Loan No: 8069 0 20,579,839 20,579,839 0 44,879,647 44,879,647 0 -24,299,808 -24,299,808 Project Managment Unit (PMU) at MOHUUC 0 120,353 120,353 0 120,353 120,353 0 0 0 Total 0 22,852,335 22,852,335 0 45,000,000 45,000,000 0 -24,299,808 -24,299,808 Uses of Funds Goods 0 0 0 0 0 0 0 0 Works 0 12,842,994 12,842,994 0 44,679,647 44,679,647 0 -31,836,653 -31,836,653 Project Managment Consultancy (PMC) 0 0 0 200,000 200,000 0 -200,000 -200,000 Project Managment Unit (PMU) at MOHUUC 0 120,353 120,353 0 120,353 120,353 0 0 0 Other Operation Cost 0 0 0 0 0 0 0 0 0 Total 0 12,963,347 12,963,347 0 45,000,000 45,000,000 0 -32,036,653 -32,036,653 Closing Cash Balances DA for WB Credit No: 4I082I1 8454/2 0 9,888,988 9,888,988 0 0 0 0 7,736,845 7,736,845 Notes to the statement of Receipts and Expenditures For the period from July 1,2015 till June 302016 1- Accounting Policies 1.1. Basis of Preparation of statement of Receipt and Expenditures The statement of receipt s and expenditures was prepared according to the modified cash basis and the policies agreed with the International Bank for Reconstruction & Development (IBRD) Loan No. 8069 accounting to the loan agreement. On this basis receipt are recognized when received and the expenditures are recognized when incurred. 1.2. Foreign currency transactions The project maintains its accounts in Egyptian The transactions in foreign . currencies are translated to the fiscal year bank balances are translated exchanges rates and at the end of the bank on June 30, every year. 1.3. Interest income Interest income on deposits is recognized according to the cash basis 1.4. Expenditures Expenditures are recognized according to the Cash basis. 1.5. Cars and Equipment Cars and equipment are stated at the acquisition cost at the year of acquisition and were charged to its specific item in the budget and recorded in control registry for control purpose. 21 Annex 2: Statement of Sources & Uses For the period July 1,2015 to June 30, 2016 (By component) 22 Financial report about period from 1/712015 to 30I6I2016DA Account No. 4I082I1845412 Actual (USD) Planned (USD) Variance (USD) Project Activities (By Component) I Cumulative to Current Cumulative Current Year -To Cumulative to Current Quarte Year -To Date Year -To Date I Date Quarter to Date Quarter Date Date Component 1: Wastewater infrastructure systems in rural areas within the two Delta Governorates of Menoufia and Sharkeya 1. WWTP 0 2,154,179 2,154,179 0 9,847,857 9,847,857 0 -7,693,678 -7,693,678 2. Networks 0 3,775675 3,775,675 0 13,749,187 13,749187 0 -9,973,512 -9,973,512 Total of comp. 1 0 5,929,854 5,929,854 0 23,597,044 23,597,044 0 -17,667,190 -17,667,190 Component 2: Wastewater infrastructure systems in rural areas within the two Upper Egypt Governorates of Assiut and Sohag 1.WWTP 0 898,810 898,810 0 6,000,000 6,000,000 0 -5,101,190 -5,101,190 2. Networks 0 6,014,330 6,014,330 0 14,082,603 14082,603 0 -8,068,273 -8,068,273 Total of comp. 2 0 6,913,140 6,913,140 0 20,082,603 20,082,603 0 -13,169,463 -13,169,463 Component 3: Project Management 1. Project Managment Consultancy (PMC) 0 0 0 200,000 200,000 0 -200,000 -200,000 Total of comp. 3 0 0 0 0 200,000 200,000 0 -200,000 -200,000 Component4: . 120,353 120,353 0 1,120,353 1,120,353 0 0 0 Project Management Unit (PMU) Total of comp. 4 0 120,353 120,353 0 1,120,353 1,120,353 0 0 0 Total Project Expenditure 0 12,963,347 12,963,347 0 45,000,000 45,000,000 0 -31,036,653 -31,036,653 Annex 3: Bank Reconciliation 23 Bank Reconciliation DA Account No. 41082/18454/2 about period from 1/7I2015 to 30/6/2016 . . Amount Amount Description U.S.D U.S.D Opening Balance 2,152,143 The transfer amount from W.B to DA No. 4/082/18389/9 20,579,839 Project Managment Unit (PMU) at MOHUUC 120,353 Total Receipts 22,852,335 Less Disbursement The total amount disbursed in this period 12,842,994 Project Managment Unit (PMU) at MOHUUC 120,353 Total Disbursements 12,963,347 Special account balance on 30/6/2016 at the central bank of Egypt account as 9 888 988 per bank statement ‘ Z L LJ Cash Forecast IN_USD (a) Cash (b) Cash Requirement (c) Cash Requirement (d) Cash Total Cash Disbursement Category Requirement for Requirement for Number Description for Quarter ending for Quarter ending Requirement for FY. Quarter ending Quarter ending 30/09/2015 31/12/2015 31/3/2016 30/6/2016 Ending 30/6/2016 1) Goods Foreign 0 0 0 0 0 Local 0 0 0 0 0 2) Works Foreign 7,000,000 8,000,000 12,000,000 17,200,000 44,200,000 Local 0 0 0 0 0 3) Consultants Firm (PMC) Foreign 0 0 0 800,000 800,000 Local 0 0 0 0 0 Total 7,000,000 8,000,000 12,000,000 18,000,000 45,000,000 Annex 4: Withdrawal Application Statement 24 # 0 Coo m C ’ 4 .4 p. -4 -4 (‘J 4%) M Uk 4—4 -4 — t. •o t’ o f% -4 o 00 .4%) t4 --4->> CL i4 4 41:4 *% 4 a4 , 44 < 4 z4 4 C) r’- ‘ -4 -4 (.4 4.4 -4 )4) .4- 4) 4) ‘p 0 -Q .0 ID I. 4:4 D’. ‘C 41) CL 4.4 C CL , C 1.’ in 0 D z 441 4$ 3.$ ii — -4:, C Uk 4- 4.’ 4) 4.4 E > c • in 41) 4-. 0 4.4 34 m 4.4 CL C 4) 11 34 C 0. . c1 0 4 Uk lu Ui E 11 4- 41) .4 CL C) 4.. 4) 4.’ 4) 4.’ 34 34 0 4- C 140 4- ‘I’ a 4) 0 4-4 - * U 0 • —. C.) C) iSo i-’ C) 0 C 44:4 ‘a ‘a C d 0 do C U 0 (.4 - --‘-‘,,.,, ::-‘S,;-” C) ‘-4 -‘4 .34 4-. 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U) UI UI Oi 0 UI C’ ‘74 In 4..’ ,..* iI vi — 4.- “J ‘3 “4 4.. ‘.4 CT ‘74 C vi . .c It’ C 0 i;:4-’, C, 0 “‘4 I-. - *0 13) I Annex 5: Persons contacted or involved In the Audit 25 The Auditor — AHC — DFK International Wael Heida Partner Mustafa Eltaweel Audit Manager The Entity subject audit — Ministry of Housing, Utilities and Urban Development Eng. Tarek Bekhit General Director Ahmed Halawa Project Accountant 26