Report No: FIN-2019-48 (E) 27 June 2019 SUSTAINABLE FISHERIES RESOURCES DEVELOPMENT PROJECT MINISTRY OF FISHERIES, MARINE RESOURCES AND AGRICULTURE FINANCIAL YEAR 2018 TABLE OF CONTENTS Auditor General's Report........ 1 Financial Statement Statement of Receipts and Payments .5 Notes to the financial statement........ .6 {tP,? 0 Pt' AU0tToR t2"d 'e " 0[rlL{t;s 0ril[r ^il & AWD} T AR GENWRAJ',' S RWP O,RT TO THE MINISTRY OF FISHERIES AND AGRICULTURE ON THE T'INANCIAL STATWWNTAVWgTNNABLV,VISWWHIWSWESOUn:CV,WwVWLAYMWNTPRAJECT Opinion We have audited the Project's financial statement of Sustainable Fisheries Resources Development Project financed by the World Bank/lntemational Development Association (IDA). This financial statement comprises of the Statement of Receipts and Payments for the financial year ended 31 December 2018 and notes to the financial statement, which includes a summary of significant accounting policies and other explanatory information set out in pages 5 to 10. In our opinion, the accompanying financial statement presents fairly, in all material respects, the cash receipts and cash payments for the financial period ended 3 1 December 2018 and cash balances as at the then ended period in accordance with International Public Sector Accounting Standard: Financial Reporting under the Cash Basis of Accounting. In addition, we can provide assurance that: (a) The funds provided under the Grant have been utilised for the purposes for which they were provided; (b) The Special Account transactions and its balance as at 3l't December 2018 have been presented truly and fairly on the financial statement, in accordance with International Public Sector Accounting Standard: Financiol Reporting under the Cash-Basis of Accounting, and the cash balance as at 3l't December 2018 shown on the Statement of Receipts and Payments reflects the cash balance which is reconciled to that of the Special Account; (c) The Financial Monitoring Reports furnished to the World Bank could be fairly relied upon to support the applications for withdrawals in accordance with the requirements specified in the Grant Agreernent; and adequate supporting documentation have been maintained to support claims made to the IDA, for reimbursement of expenditures incurred and which expenditures are eligible for financing under the Grant Agreement, and (d) The Procurement guidelines of the World Bank have been complied with in the procurement of goods and services under the project. 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 financial statements section of our report. We are independent of the Project in accordance with the lnternational Ethics Standards Board for Accountants' Code of Auditor General's Office I Ghaazee Building I Ameer Ahmed Magu I Male', Republic of Maldives -960 332 3939 I irr ltt {t irtrcl it. gor'.rnr' ] rr rr vi .ntrtlit. gor . rttr -1- Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with 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 the management and those charged with governance for the financial statements The Management is responsible for the preparation and fair presentation of this financial statement in accordance with the International Public Sector Accounting Standard (IPSAS): Financial Reporting under the Cash Basis of Accounting. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statement that are 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. Those charged with governance of the project is responsible for overseeing the Project's financial reporting process. 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 lSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or eror 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 ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: o Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or eror, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. . Obtain an understanding of intemal 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 Project's internal control. o Evaluate the appropriateness ofaccounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management. o 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. )tta, Auditor General's Office I Ghaazee Building I Ameer Ahmed Magu I Male', Republic of +960 3323939 | infb lftudit.eor.rn! | trrvu.attdit.sor.mv -2- We communicate with those charged with governance of the project regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in intemal control that we identify during our audit. Review of the Project's Progress Without qualifying our opinion, we draw attention to the following management issues observed from our review ofthe project's progress. From our review of the project's progress, we have observed that some of the activities were not completed at the end of the due date stipulated by World Bank. (The table under management response) .Failure to act upon the recommendations by World Bank will result in delay in achieving the objectives of the project in due time and have a negative impact on the performance of the project. Recommendation We recommend PMU to follow the recommendations given by World Bank's missions in a timely manner to ensure that various components of the project are implemented within the set time and budget. Action Due Date Status Reasons for Not completed, owing to Complete recruitment of new directives from the project staff for PMU and MoFT in respect of salary MOFA Divisions and allowances which are too low to attract candidates The SFRDP Portal on the MOFA website was updated in January 2018, giving access for public to submit comments, complaints and grievances. The GRM Overall mechanism is also outlined Establish Grievance June 30, Not completed. PMU in the ESMF, where local Redress Mechanism 2018 ESSO to take lead. grievances are first taken to the local council, and then provided to the SFRDP Project via the Ministry. Howevero the website is currently under construction. The Stakeholder Consultation Plan has been Development of a July 31, Not completed. PMU drafted, and will be shared Stakeholder Consultation 2018 ESSO to take lead: with World Bank Social Plan Safeguards Specialist for comments to be frnalised. Complete pre-bid work, announce bid for the May 15, In negotiations with the Not completed. Electronic Observation 201 8 consultant. Component Systems A Bids evaluated in May 2019 Complete pre-bid work, May 15, announce bid for the Not completed. 201 8 Vessel Locating Devices Auditor General'sr Office I Ghaazee Building I Ameer Ahmed Magu I Male', Republic +960 332 3939 I inlb,t( audit.gov.mv I wrvw.audit.gor.mv -3- 3omplete pre-bid work, r tr rnnounce bid for the April 30, Contractor selected on Not completed. {nci1lary Facilities for the 2018 March 2019 Multi-Species Hatchery Complete pre-bid work, Component announce bid for the Mav 30. Not completed. Bid document drafted. B DBOT for the Multi_ ;;j'8-"' 3omplete pre-bid work, rnnounce bid for the April30, Contractor selected on MRDF facilities (as agreed Not completed. 2018 March 2019 with the lrchitects/engineers) _L Not completed because World Bank in Colombo stated they lack funds for Safeguards Training for Not completed. this training, but mentioned C ESSO in March 2019 that they will try to revisit the discussion again. 27 lune20l9 \\*-0+l Hassan Ziyath Auditor General Auditor General's Office I Ghaazee Building I Ameer Ahmed Magu I Male', Republic of +96A ]323939 | inlbl?{laudit.sov.rnv I rtrvrt.attdit.sor.tnv -4- MINISTRY OF FISHERIES AND AGRICULTURE SUSTAINABLE FISHERIES RESOURCES DEVELOPMENT PROJECT STATEMENT OF RECEIPTS AND PAYMENTS F'OR THE PERIOD l JANUARY 2OT8 TO 31 DECEMBER 2018 Note For the period For the period 1 January 2018 14 June 2017 to to 31 Dec 2018 31 Dec 2017 USD USD Receipts Di sbursements,/Receipts J 3,921,776 Receipts - Retroactive financing J 50,712 Total Receipts 3,972,499 Payments Improvement of Institutional Capacity in Marine 4 (191,736) (43,493) Fisheries Management Support to Mariculture and Diversification of (270,400) (4,025) 5 Fisheries sector Project Management, Monitoring and Evaluation 6 (213,9s1) (12s,063) Total Payments (676,087) 172,580 Increase/(Decrease) in Cash (676,087) 3,799,908 Cash at beginning ofthe period 3,799,908 Increase/(Decrease) in Cash (676,087) 3,799,908 Cash at bank 3,123,821 Cash in hand 693 Cash at end ofthe period 3,124,514 3,799,908 Management of the Project is responsible for the preparation and presentation of the financial statement. The Statement of Receipts and Payments was approved by PMU on27fr June 2019. Signed for and on behalfofthe Project: Azma Assistant Director Finance Manager policies and notes on pages 6 through 10 form an integral part ofthe Statement ofReceipts and I \., 5 MINISTRY OF FISHERIES AND AGRICULTURE SUSTAINABLE FISHERIES RESOURCES DEVELOPMENT PROJECT NOTES TO THE FINANCIAL STATEMENTS I. PROJECT INFORMATION 1.1 PROJECT TITLE: Sustainable Fisheries Resources Development Project 1.2 STARTED DATE: 17-04-2017 1.3 CLOSING DATE: 3l-12-2022 1.4 PROJECT DURATION:60 Months 1.5 APPROVED BUDGET: US$ 18,000,000 (Eighteen Million U.S. Dollars) 1.6 FUNDED BY: Regional lnternational Development Association Grant & Intemational Development Association Grant 1.7 TRUST FUND MANAGER: World Bank 1.8 Objective The objective of the project is to improve management of fisheries at regional and national levels including support to establish mariculture in targeted atolls in Maldives The project comprises of three main components; Component A: Augmentation of Institutional Capacity for Marine Fisheries Management (US$ 5.09 million) The objective of this component is to enhance the Govemment's capacity to implement a more effective monitoring of the fisheries sector and internal control system of key marine fisheries value chains and will focus on delivery of the Indian Ocean Regional Agenda. This includes four sub-components. (A1) Development of key fisheries management and planning instrumentsl To update the fisheries policy and legislative framework, zoning the entire Maldivian EEZ, and supporting grouper fish management, coral reef and reef fishery management plans which are essential for regional conservation and improved compliance with IOTC recommended conservation and management measures. (A2) Development and Implementation of fisheries management activities; To ensure compliance with IOTC and EU requirements, including expanded MCS, vessel registration and monitoring systems, electronic observer systems and augmentation of related reporting systems for commercial marine fisheries; collaboration with the SWIO Sub-Regional Fisheries Monitoring Centers; and, support and facilitation to regional agencies and intemational actors on the common agenda of conservation and management measures. \tt\r!Ut{('t -+ 5 MINISTRY OF FISHERIES AND AGRICULTURE SUSTAINABLE FISHERIES RESOURCES DEVELOPMENT PROJECT (A3) Support to long-term program for fisheries managementl It includes sampling programs for tuna and recreational fish species, stock assessments and conservation zone surveys which will contribute to regional assessments and subsequent actions; the preparation of protocols for disease surveillance and quality control ofbrood stocks and fish feed. (A4) Fisheries sector capacity building Including short and medium-term training, development of curriculum and teaching aids, collaboration with National Geographic Information System (GIS), and development and operation of a fisheries management information system- all focusing on strengthening local and national skills that will contribute to the national and SWIO Region agenda related to fishery management and consequent diversifi cation into mariculture. Component B: Support to Mariculture and Diversification of Fisheries (US$10.76 million) Potential economic gowth from diversification of capture fishery and from mariculture are pre-requisites for sustenance of the capture fishery resources in the MaldivianEEZ. However, mariculture is nascent in Maldives; to be able to develop this sector, research, demonstration and provision of extension services will play key roles in addition to the three primary inputs: seeds, feed and access to finance. The four sub-components include: (Bl) Development and demonstration of mariculture production and technology package; Including completion and operationalization of the infrastructure, and preparation of medium-term operations plans and service standards for the Maniyafushi research and development facility (MRDF) as a centre for the excellence for the entire SWIO region; development and demonstration of technology packages for mariculture species; and market studies in support of mariculture choices. (B2) Promotion of mariculture out-grower schemes and seafood growth clustersl Including assessments of carrying capacity and of supporting community custodianship of the coral reef resources, start-up investments including training, advisory support and compliance monitoring in outgrower farms, technical support to small enterprises for establishing out-grower contractual arrangements between small producers and larger private sector aggregators, and studies to help develop gender actions in mariculture. (B3) Supporting design, construction and operation of a multi-species hatchery; Including breeder stock development programs and professional training plans (B4) Scoping of long-term marine fisheries diversification studies; lncluding planning and scoping of studies related to technology packages and conservation plans for new marine species to be explored in future. Component C: Project Management, Monitoring and Evaluation (US$2.15 million) of this component is to provide equipment, technical assistance, training, and incremental strengthen the overall administrative capacity and capability of the Ministry of Fisheries and Project Management Unit(PMU) to manage, implement, and monitor and 7 MINISTRY OB T'ISHERIES AND AGRICULTURE SUSTAINABLE T'ISHERIES RESOURCES DEVELOPMENT PROJECT activities. Specifically, support will include staffing and operation of the PMU, establishment of adequate financial management and procurement management systems, implementation of the communication plan and grievance redress activities, monitoring and evaluation (M&E) and third party audits; preparation and implementation of specific environment impact assessments as per the national laws; coordination with other ministries such as the Ministry of Environment and Energy and the private sector,; special evaluation studies; and sharing of monitoring protocols, evaluation studies and specific experience of implementation of various aspects of fisheries management that are of interest to SWIO Region countries. 2. SUIVIMARY OF SIGNIFICANT ACCOUNTING POLTCTES 2.1 2,1Basis of preparation The Statement of Receipts and Payments are prepared in accordance with International Public Sector Accounting Standard: Financial Reporting under the Cash-Basis of Accounting. 2.2 Recognition of Receipts and Payments Receipts and payments are accounted for on cash basis. Receipts are recognised when the Govemment of Maldives (GOM) receives the funds from World Bank. Payments are recognised at the time of outflow of cash from the bank account. 2.3 PresentationCurrency The Statement of Receipts and Payments has been presented using the United States Dollars (USD). All figures have been rounded to the nearest Dollar. 2.4 Foreign Currency Translation Receipts and payments in currencies other than the reporting currency (USD) are converted at the MMA's exchange rate existing between the transaction currency and USD at the time of the receipt/payment. Cash balances in currencies other than USD as at the end of the reporting period are shown in the financial statement at the exchange rate that was prevailing at the last day of the reporting period. 2.5 Reporting Period Financial statement is generally prepared for one year (Calendar year) with the exception of commencement and/or closure of the project. Depending on the date of commencement or closure, a period shorter or longer than one year may be covered. Period for which financial statement is prepared is disclosed on the face of financial statement. 2.6 Comparatives In addition to the figures for the year ending 3l December 2018, the Financial Statement shows the figures for the period 14 June 2017 to 31 December 2017 as well. $$0ul((t 8 MINISTRY OF FISHERIES AND AGRICULTURE SUSTAINABLE FISHERIES RESOURCES DEVELOPMENT PROJECT 3. Distrursements/Receipts For the period I't For the period 14th January 2018 to June 2017 to 31"t 3l't Dec 2018 Dec2017 USD USD Receipts from World Bank 3,921,776 Receipts - Retroactive financing Retroactive Financing (Spent from GOM's State Budget) 50,712 3,972,488 4. Component A: Improvement of Institutional Capacity in Marine Fisheries Management For the period l't For the period 14th January 2018 to June 2017 to 31't 31't Dec 2018 Dec 2017 USD USD A1 Development of Key Fisheries Management and Planning Instruments Project 12,427 4,267 Retroactive Financing 12,427 4,267 ,A.2Development and Implementation of Fisheries Management Activities (including MCS) at Regional and National Level Project 65,716 Retroactive Financing 39,127 65,716 39,127 ,A.3 Support to Long Term National Fisheries Management Project I r 3,594 Retroactive Financing 99 I13,594 99 Total Expenditure from Component A 191,736 43,493 5. Component B: Support to Mariculture and Diversification of Fisheries Sector For the period l't For the period 14th January 2018 to June 2017 to 3l"t 31't Dec 2018 Dec2017 USD USD Bl Develop and Demonstrate Mariculture Production and 270,400 4,025 Technology Packages Total Expenditure from Component B 270,400 4,025 llrr(ruat(t 9 MINISTRY OF FISHERIES AND AGRICULTURE SUSTAINABLE FISHERIES RESOURCES DEVELOPMENT PROJECT 6. Component C: Project Management, monitoring and evaluation For the period 1't For the period 14th January 2018 to June 2017 to 31't 31't Dec 2018 Dec 2017 USD USD Cl PMU HR (Staff and consultants) Project 166,147 77,420 Retroactive Financing ) \7\ 166,147 79,994 C2 Equipment Project 824 6,256 Retroactive financing r 3,141 824 19,397 C3 Fiduciary and Technical Capacity Building l,l0l 3,590 1,101 3,590 C4 Monitoring & Evaluation 4,851 4,851 C5 Training and Capacity Building on Project/Program Management 17,872 1,277 17,872 1,277 C6 lncremental Operating Cost (including Expenditure to Strengthen Technical and Managerial Capacities of MoFA) Project 23,156 12,615 Retroactive financing 8,1 89 23,156 20,804 Total Expenditure from Component C 213,951 125,063 BCrrrUrc(i 10