REPORT ON PROJECT FINANCIAL STATEMENTS OF THE MINISTRY OF PUBLIC FINANCE Grant no.TF018442 Grant for Strengthening Financial Accountability of the Public Sector For the period November 15, 2015 - March 31, 2017 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 NO. CONTENTS PAGE Auditor's report on the project financial statements 4 List of abbreviations 5 General information 6 1. Statement of sources and uses of funds 9 2. Statements of expenditures 10 3. Summary of statement of expenditures 11 4. Financial statement of the grant 11 5. Budget realization 12 6. Project commitments 13 7. Accounting policies and records 15 8. Statement of accounts 20 9-11 Notes to the project financial statements 20 Annex 2  BAKER TILLY IDMEPENDENT AUDITORS REPORT 4  THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 List of abbreviations: IBRD - International Bank for Reconstruction and Development WB - World Bank MOPF - Ministry of Public Finances 5 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 GENERAL INFORMATION Reporting entity The Ministry of Public Finance Grant Agreement TF018442 Destination of Borrowed Funds Component A: Introduction of the Results-informed Budgeting Component B: Improving the Quality of Governance and Financial Reporting of State Owned Enterprises Component C: Project management, monitoring and evaluation The loan amount for Project is allocated as follows: Category Amount of the Percentage of Loan Allocated Expenditures to (expressed in be financed USD) (inclusive of Taxes) (1) Goods, non-consulting services, Consultants' 488,100 100% services, including audit, Training and operating costs of the Project TOTAL AMOUNT 488,100 For the purposes of this Schedule: * "Goods" means the goods described in the Procurement Guidelines, including commodities, raw material, machinery, equipment, vehicles, and industrial plant; * "Non-Consultant Services" means the non-consultant services described in the Procurement Guidelines, including the non-consulting services for which the physical aspects of the activity predominate, are bid and contracted on the basis of performance of a measurable physical output, and for which performance standards can be clearly identified and consistently applied; * "Consultants" means the consultants described in the Consultant Guidelines, including a variety of private and public entities such as consulting firms, engineering firms, management firms, auditors, multinational organizations, investment and merchant banks, universities, research institutions, government agencies, nongovernmental organizations (NGOs), and individuals; * "Training" means the costs (other than consultants' services) incurred on the account of training activities under the Project and comprises expenditures related to organizing, 6 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 conducting or participating at training events such as workshops, seminars, conferences, including: rental costs of training adequate space and equipment, costs for training materials and supplies, costs for catering, costs for translation and interpretation services, and study tours in an amount that does not exceed the financing thresholds established for said Eligible Expenditure pursuant to the Rules of Operation. "Operating Costs" means the costs incurred on the account of Project implementation, comprising: procurement related advertising costs, translation and interpretation costs (other than those related to training events as mentioned above), office supplies, Project related travel costs and per diem allowances for training participants, including accommodation and transportation; banking charges, exchange rate differences, and communications. Other information The term "Statement of Expenditures" means: expense reports used by the Recipient to forward to IBRD the applications for advance. The IBRD grant funds were disbursed using the advance as disbursing method. Withdrawal applications were sent to the Bank periodically by the Recipient (MOPF), according to Disbursement Letter. Procurement plan prepared by the MOPF was updated regularly and it was prior reviewed by the IBRD. 7 l 0 se i 'b* <1 °± E THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 1. STATEMENT OF SOURCES AND USES OF FUNDS 1.1 Statement of the IBRD Grant Account for the Project for the period November 15, 2015 - March 31, 2017 Grant No TF018442 Date of Approval November 14, 2015 Cumulative as at March 31, 2017 USD Grant amount approved 488,100 Less: Total drawings from grant 488,100 Grant amount not disbursed 0 1.2 Summary of Funds Received and Uses of Funds for the period November 15, 2015 - March 31, 2017 Cumulative I Cumulative as Fiscal Y Cumulative as as at Nov at Nov 30, 2016 at March 31, 15, 2015 2016 2017 USD USD USD USD Opening cash balance 0.00 150,000.00 150,000.00 488,100 Project expenditure 0.00 59,510.06 221.567,81 487,718.55 Closing cash balance 0.00 90,489.94 -71,567.81* 381.45 *Explanation: Advanced payments from the state budget. 9 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 2. STATEMENT OF EXPENDITURES 2.1 Project expenditure by component Cumulative as Expenditures for Cumulative as Component/ Description at Nov 30, the year ended as at March 31, 2015 at Dec 31, 2016 2017 USD USD USD Component A: Introduction of the Results-informed 0 195,118.93 Budgeting 0, Component B: Improving the Quality of Governance 20,484 157,885.03 235,385.03 and Financial Reporting of State Owned Enterprises Component C: Project management, monitoring and 39,026.06 63,82.78 57,214.60* evaluation Total Project Expenditure - Project Funds 59,510.06 221,567.81 487,718.56 *Reconsideration (minus) of study visits expenditures (cofinanced from the MOPF's budget). 2.2 Project expenditure by category Expenditures for the Cumulative as at year ended as at Dec 31, Cumulative as at Category Nov 30, 2015 2016 March 31, 2017 USD USD USD Goods < 10% 27,009.74 35,248.66 35,248.66 Consultants' services (including audit) 20,484 149,646.11 432,410.73 Operating costs <10% 0 811.49 8,860.36 Training < 30% 0 11,198.81 11,198.81 10 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15,2015 - March 31, 2017 3. SUMMARY OF STATEMENTS OF EXPENDITURES During 2016-2017 the below withdrawal applications were submitted. WhTotal amount claimed of which amount claimed Withdrawal Application UD)Amount paid Amount as at uneSO(UD (USD) under SOE (USD) 1 150,000 150,000 10-Jun-2016 2 0 0 19-Dec-2016 101,802.45 3 101,802.45 101,802.45 10-Jan-2017 - 4 145,089.70 145,089.70 13-Feb-2017 145,089.70 5 91,207.85 91,207.85 24-Mar-2017 134,575 6 0 0 18-May-2017 106,251.40 Total 488,100 488,100 487,718,55 4. FINANCIAL STATEMENT OF THE GRANT 4.1 Total disbursements as at March 31, 2017 Amount USD As at Nov 15, 2015 0 During 2015 0 As at Nov 30, 2016 150,000 During 2016 150,000 As at Dec 31, 2016 150,000 DuriNg 2017 338,100 As at March 31, 2017 338,100 Total disbursements 338,100 4.2 I3RD payments during the period ended March 31, 2017 Withdrawal Beneficiary Amount application name Type Ccy claimed Category Ccy Amount paid Value date 10-Jun- 1 MOPF Advance USD 150,000 DA-A USD 150,000 2016 Documentation of 19-Dec- 2 MOPF prior advance USD 0 1 USD 0 2016 10-Jan- 3 MOPF Advance USD 101,802.45 DA-A USD 101,802.45 2017 Advance and 13-Feb- 4 MOPF documentation of USD 145,089.70 1 USD 145,089.70 2017 11 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31,2017 prior advance Advance and documentation of 24-Mar- 5 MOPF prior advance USD 91,207.85 1 USD 91,207.85 2017 Documentation of 18-May- 6 MOPF prior advance USD 0 1 USD 0 2017 5. BUDGET REALIZATION 31.03.2017 31.03.2017 31.03.2017 Allocated per component as per Accumulated Deito Budget Component/Description Procurement Plan no.4 to date USD realization USD USD (%) Component A: Introduction of the Results-informed 175,561 195,118.93 11,019.55 111.14 Budgeting Component B: Improving the Quality of Govemnance the FinancialfReporriagco 208,600 235,385.03 26,785.03 112.84 and Financial Reporting of State Owned Enterprises Component C. Project management, monitoring 99,500 57,214.60 -42.285.40* 57.50 and evaluation 484,661+ Total Project Expenditure -3,439 Project Funds (economy to cover 487,718.56 381.45 99.92% echange rate differencies) - - - 488,100 *Reconsideration (minus) of study visits expenditures (cofinanced from the MOPF's budget). The total budget realization up to March 31, 2017 is 99.92%. 12 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 6. PROJECT COMMITMENTS Project commitments as at November 30, 2016 are stated below: Ctr Contract Objective of the Signing Contract Contract Contract value Cumulative Remaining Reference Supplier Sinn payments as at value of the Noagteen date cey Value USD Number March 31, 2017 contracts 53,986 Consultants' 53,986 + 10,620.57 1 CS/l s Martin Johnson 28.07.2016 USD 53,986 5398 p 1600 Cosurvins' (VAT paid by the MoPF) 44,700 2Consultants' Jan Marusinec 28.07.2016 USD 44,700 44,700 +8,79364 services (VAT paid by the MoPF) 3 CS13 Consultants' Costel Dorin 28.072016 USD 42,000 41,143.72 41,143.72 services Todor 4 CS/4 Consultants' Mihai Vilnoiu 20.09.2016 USD 18,000 18,000 18,000 0 services Consultants' 17,875 17,875 5 CS/5 sultans Mihai Paunescu 09.08.2016 USD 17,875 0 48,000 Consultants' Constantino4800+9859 6 CS/6 sultans n 22.07.2016 USD 48,000 48,000 +9,085.890 services Navarro (VAT paid by the MoPF) 48,000 7 CS/7 Consultants' Axel Kravatzky 25.07.2016 USD 48,000 48,000 +9,064.16 0 services (VAT paid by the MoPF) 48,000 8 CS/8 Consultants' Albert Hrabak 25.07.2016 USD 48,000 48,000 + 8,996.06 0 services (VAT paid by the MoPF) Consultants' 32,000 32,000 CS/9 services (VAT included) (VAT included) 0 13 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 10 CS/10 Consultants' Carmen 25.07.2016 USD 18,000 18,000 18,000 0 services Mataragiu II CS/l1 Consultants' Dan Paulopol- 22.07.2016 USD 6,000 6,000 6,000 services Necula 12 LCS/12 Audit Baker Tilly Klitou 29.11.2016 EUR 9,525.60 10,145.69 10,145.69 0 & Partners 13 G/13 Goods SC Dante 20.10.2016 RON 109,800 27,009.74 27,009.74 0 International SA 6, 887.42 14 0114 Goods Statcon Schafer 26.09.2016 EUR 6,500 6,887.42 + 1,351.50 (VAT paid by the MoPF) SC Fortuna 15 T/15 Training Business Travel 10.10.2016 RON 48,648.75 11,198.81 11,198.810 SRL Translation SC International 31.12.2015 8,726.19 8,726.19 16 and Operating Costs Consulting RON - interpretation Alliance SRL 17 Bank charges 1 134.17 0 Total project 487.718,5 commitments 5 0 All contracts are approved by EBRD through the procurement plan. 14 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15,2015 - March 31, 2017 7. ACCOUNTING POLICIES AND RECORDS Basis for preparation of special purpose financial statements The special purpose project's financial statements are prepared in USD. Therefore, the inter- banking exchange rate of the BRD Socidtd G6n6rale and Banca Transilvania was used for payments made in RON currency. The accounting records of the project are maintained by the MOPF in accordance with the accrual basis of accounting in compliance with the Operational Manual approved by the WB. The Project Financial Statements are prepared for complying with the Grant requirements and with the appropriate World Bank guidelines. Eligible categories and expenditures Eligible expenditures mean expenditures in respect of the reasonable cost of goods, consultant's services including audit, non-consulting services, training and operating costs required for the Project and to be financed out of proceeds of the Grant allocated to the eligible Category in accordance with the Grant Agreement. Funding The sources of funds identified for Project implementation are the external sources, granted by the WB through the Grant. Contribution from general budgetary allocations and MOPF's own sources: Within Project activities, the MOPF covered the expenditures which are usually spent in order to achieve reform objectives (such as salaries of MPF staff involved in the implementation of grant activities, their operational expenditures, costs during study visits which were organized within the grant) and they were estimated at approx. $210,000 USD. Use offunds Using of funds represents the amounts paid for the purpose of the Project through the MOPF. The invoices for services not paid as of 31 December 2016 will be reported as uses of funds at the date of payment. The invoices for services not paid as of 31 December 2016 are presented in the annex. Conversion of amounts paid to Grant currency (USD): For payments in local currency the National Bank of Romania exchange rate at the date of invoice' issuance day is used. For payments in foreign currencies - EUR (other than the Grant currency) the inter-banking exchange rate of the BRD Soci6td G6n6rale/Banca Transilvania at the date of payment of the respective foreign currency is used. Accounting system The accounting system is established according to the Accounting Law no. 82/1991 republished, with subsequent alterations and completions and to the Accounting Plan approved by Order of the Minister of Public Finance no. 1917/2005. Therefore, the payments in foreign currencies to foreign 15 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 contractors are converted in local currency using the exchange rate of the National Bank of Romania on the date of the payment. 8. STATEMENT OF ACCOUNTS Cumulative Cumulative as Fiscal Year Cumulative as as at Nov at Nov 30, 2016 at March 31, 15, 2015 2016 2017 USD USD USD USD Opening cash balance 0.00 150,000.00 150,000.00 488,100 Project expenditure 0.00 59,510.06 221.567,81 487,718.55 Closing cash balance 0.00 90,489.94 -71,567.81* 381.45 *Explanation: Advanced payments from the state budget. 9. LEGISLA TION AND FISCAL ENVIRONMENT IN ROMANIA The legislation and fiscal environment in Romania and their implementation into practice are subject to different interpretations. The project team benefitted from Tax Policy Department's support during project implementation, especially with regard to fiscal regime for international individual consultants. 10. PROJECT FINANCIAL STATEMENTS PRESENTATION The special-purpose Project Financial Statements were prepared for complying with the Grant requirements and with the appropriate World Bank guidelines. 11. SUBSEQUENT EVENTS In the subsequent period December 2016 - March 2017 no following contracts were concluded: Contract Signing Contaret Contract Contract No Reference Objective of the agreement Supplier date ccy Value Value EUR Number During period Dec 2016 - March 2017 the following withdrawal applications were submitted: Withdrawal Beneficiary Amount application name Type Ccy claimed Category Ccy Amount paid Value date 10-Jan- 3 MOPF Advance USD 101,802.45 DA-A USD 101,802.45 2017 Advance and documentation of 13-Feb- 4 MOPF prior advance USD 145,089.70 1 USD 145,089.70 2017 16 THE MINISTRY OF PUBLIC FINANCE Grant for Strengthening Financial Accountability of the Public Sector - TF018442 For the period November 15, 2015 - March 31, 2017 Advance and documentation of 24-Mar- 5 MOPF prior advance USD 91,207.85 1 USD 91,207.85 2017 Documentation of 18-May- MOPE prior advance USD 0 1 USD 0 2017 Mihaela Grigorescu luliana GeantA Constanta Coconu Project Manager Accounting Manager Financial Manager Date: 3 0 17