EARLY CHILDHOOD DEVELOPMENT PROJECT PHASE II - IBRD LOAN No. 83340 FINANCIAL STATEMENTS MARCH 31, 2018 AUDITOR GENERAL'S DEPARTMENT 40 KNUTSFORD BOULEVARD P.O. BOX 456 ANY REPLY OR SUBSEQUENT REFERENCE KINGSTON 1 To THIS COMMUNICATION SHOULD BE JAMAICA ADDRESSED TO THE AUDITOR GENERAL AND NOT TO ANY OFFICER BY NAM Tel. No.: 926-8309/926-5963/926-584 AND THE FOLLOWING REFERENCE Fax Number: 968-4690 QUOTED: - Email: audgen@auditorgenera.gov.jm September 20, 2018 GOJ/IBRD LOAN NO. 8334-JM EARLY CHILDHOOD DEVELOPMENT PROJECT PERIOD ENDING MARCH 31, 2018 AUDIT REPORT ON THE FINANCIAL STATEMENTS OPINION I have audited the accompanying financial statements for the Early Childhood Development Project, which comprises the Statement of Sources and Uses of Funds, as at 31 March 2018, Statement of Cumulative Investments, Designated Account Reconciliation Statements for the year ended, and a summary of the significant accounting policies and other explanatory notes shown on pages 5 to 9. In my opinion, the appended financial statements 1-2 and Supplemental Financial Information is a fair representation of the transactions of the Project for the period and the transactions conformed to the terms of the Loan agreement and complied with International Public Sector Accounting Standards (IPSAS) - Cash Basis. BASIS FOR OPINION The audit of the Project was conducted in accordance with: * Article V section 5.09 (b) of the Loan Agreement between the Government of Jamaica (GOJ) and the International Bank for Reconstruction and Development (IBRD) dated March 12, 2014. * International Standards of Supreme Audit Institutions (ISSAls). My responsibilities under ISSAIs are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of this report. My staff and I are independent of the Project in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my opinion. 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 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken base4 on these financial statements. As part of an audit in accordance with ISSAIs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financia 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 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 internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for expressing an opinion on the effectiveness of the Project's internal control. * Evaluate the appropriateness of accounting policies used 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 Project's ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in the auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. The 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 Project 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 presents a true and fair view. I have communicated with the World Bank regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that was identified during the audit. OPINION - SPECIAL BANK AccouNT In my opinion, the Designated Account Reconciliation Statement reflect the total amount advanced to the Designated Account at March 31, 2018 as reconciled to the outstanding amount advanced to the account as at March 31, 2018 in conformity with IPSAS Cash basis and IBRD guidelines. Auditor General Date AUDITOR GENERAL'S DEPARTMENT 40 KNUTSFORD BOULEVAR P.O. BOX 45 KINGSTON JAMAICA Tel. No.: 926-8309/926-5963/926-5840 Fax Number: 968-4690 Email: audgen@auditorgeneral.gov.jrn September 20, 2018 GOJ/IBRD LOAN NO. 8334-JM EARLY CHILDHOOD DEVELOPMENT PROJECT PERIOD ENDING MARCH 31, 2018 AUDIT REPORT ON THE FINANCIAL STATEMENTS AUDIT OF STATEMENTS OF EXPENDITURE ISOE) PROCEDURES In the course of the Audit of the Early Childhood Development Project (ECDP) for the year ended March 31, 2018, I examined the following statements of expenditure submitted to the IBRD during the financial year under review in support of applications for reimbursement of funds from the Loan Account in accordance with the Loan Agreement: Disbursement Number Date Advanced Amount (US$) JECDP2-10 May 16, 2017 200,000.00 JECDP2-11 June 30, 2017 88,742.80 JECDP2-12 January 20, 2018 119,873.41 408,616.21 The examination was done in accordance with the generally accepted auditing standards and procedures prescribed by INTOSAI and accordingly, included such tests as the verification of the internal control systems and of the accounting records, tests of the origin and eligibility of expenditures, certification and procurement procedures for services, filing of support documents and such other auditing procedures as I considered necessary in the circumstances. Opinion In my opinion, the statements of expenditure and the annexes submitted in support of them, together with the internal controls procedures used in their preparation can be relied upon to support the applications for reimbursement in conforming to the requirements of the Loan Agreement. Auditor General Date ECD Project Phase II - IBRD Loan No, 83340 Financial Statements For the period ending March 31, 2018 Contents Page Statement of Sources and Uses of Funds I Statement of Cumulative Investments 2 Reconciliation of the Project Special Account 3 Statement of Disbursment linked Indicators 4 Notes to the fhe financial statements 5 to 9 ECD Project Phase II- IBRD Loan No. 83340 Statement of Sources and Uses of Funds Year Ended March 31, 2018 Current Period Cumulative from June Cumulative to March 2018 2014 to March 2017 C RECEIPTS Note US$ US$ US$ World Bank Reimbursement Part 1 7,880,000.00 - 7,880 00000 Retroactive Reimbursement - Part 1 - - Designated Account (Advance) 229,506.57 N 408,616.21 638 122.78 Front End Fee 30,000.00f\ - 30 000.00 YIN Total Receipts (A) 8,139,506.57 408,616.21 ,54,122.78 . LESS EXPENDITURES Partl Supporting the implementation of the NSP 7,880,000.00t\ - 7,880,000.00 Part 2 Intuitional Strengthening 218,249.37r\ 288,212.44 N 506,461.81 Front end fee 30,000.0k - 30,000.00 N Total Expenditures (B) 8,128,249.37k 288,212.44 8,416,461.81 RECEIPTS LESS EXPENDITURES Net Change in Cash (A-B) 11,257.20 120,403.77 131, 60.97 BANK BALANCES Opening Cash Balances Opening Cash Balance on Designated Account 11,257.20 Net change in Cash 120,403.77 Closing Cash Balance on Designated Account 11,257.20 131,680.97 131,097 Total Closing Balances 3 c 11,257.20 131,660.97 131,060.97 The financial statements on pages 1 to 9 were approved by the Commission on \ and signed on its behalf by: c III Itm Chairman - Early Childhood Commission Mrs. Tnsha-Williams-Singh Executive Director Mrs. Karlene Degrasse-Deslandes Page 1 ECD Project Phase II - IBRD Loan No. 83340 Statement of Cumulative Investments Year Ended March 31, 2018 Current Year 2018 Cumulative to Cumulative from June 2014 to March 31 ,2018 March 31, 2017 Categories US$ US$ US$ Category 1. Grants to Community Schools and Grants for ECC under Part 1 of Project 7,880,000.00 7,880,000.00 Category 2. Goods Training and consultants services under Part 2 of the Project. 218.249.37 288,212,44 506,461.81( Front-end Fee 30,000.00 30,000.00 Total 8,128,249.37 288,212.441 8,416,61.81 The financial statements on pages 1 to 9 were approved by the Commission on M and signed on its behalf by: R(1J - " " Mrs. Trisha-Williams-Singh Chairman - Early Childhood Commission Mrs. Karlene Degrasse-Deslandes Executive Director Page 2 ECD Project Phase II - IBRD Loan No. 83340 Designated Account Reconciliation Statement Year Ended March 31, 2018 Account Number 810088 with Bank of Jamaica Us$ 1 Total advance by world bank (or cofinancier) $ 638,122. 8 2 Less: Total amount documented by World Bank $ 338,122.78 3 Present Outstanding Amount advanced to the designated account (1-2) $ 00,00000 4 Balance of Designated Account per attached bank reconciliation as of date March 31,2018 $ 131,660.97 5 Plus: Total amount claimed in this application no .JECD2-13 & JECDP2-14 $ 168339.0 6 Plus: Total amount withdrawn and not yet claimed Reason 7 Plus : Amounts claimed in previous apllications not yet credited at date of Bank Statements Application NO WA# WA# Subtotal of Previous Appplications Not yet Credited 8 Less:Interest Earned 9 Total Advance accounted for (NO.4 Through NO.9) $ 300,000.0p 10 Difference (3-9) $ 11 Explanantion of Any Difference Shown in Line 10 The financial statements on pages 1 to 9 were approved by the Commission on ii. 24 m and signed on its behalf by: LAJ @fl = 1 mi- Chairman - Early Childhood Commission Mrs. Trisha-Williams-Singh Executive Director Mrs. Karlene Degrasse-Deslandes Page 3 ECD Project Phase it . IBRD Loan No. 83340 Statement of Disbursement Linked Indicators (DLT )Achieved . Year Ended March 31, 2018 Transaction Value NO. Description of DLI DLI Amount Date Achieved Date US$ 1 At least 25% of parenting education and support Programs Certified 1,200,000.00 MET 2013-2014 21-Oct-14 At least 90% of the Development Officers using the Classroom 1,200,000.00 MET2013-2014 21-Oct-14 2 Observation Tool (COT). 3 At least 54% of ECIs have received a permit to Operate 1,200,000.00 MET 2013-2014 21-Oct-14 At Least 30% of all early childhood parenting education and support 4 programs certified,(DLT 2). 500,000.00 MET 2014-2015 05-Oct-15 At Least 30% of ECIs are implemeting their improvememnt Plans,(DLT 5 11). 500,000.00 MET 2014-2015 05-Oct-15 At least 30% of ECIs practitioners are qualified at level III and above, 6 (OLT 15). 500,000.00 MET 2014-2016 05-Oct-15 ECC Annual Publication reports on the performance of ECD sector and 7 NSP2012-2018 500,000.00 MET2014-2016 05-Oct-15 8 At least 40% of ECIs are implemeting their improvement plans ,(DLT 13) 500,000.00 MET 2015-2016 19-Aug-16 At least 35% of ECIs practitioners are qualified at Level Ill and above 9 (DLT 16). 500,000.00 MET 2016-2017 19-Aug-16 10 At Least 65%of all ECIs have received a permit to operate (OLT12). 500,000.00 MET 2016-2017 19-Aug-16 A communication strategy to educate parents and raise awareness about ECD,early simulation nutrition and other parenting practices is being 11 implemented,(DLT3). 390,000.00 MET 2015-2016 20-Mar-17 The Readiness evaluation for children at age 4 has been implemented as part of the country's national assessment program and results presented 12 to the MoE, (DLT 20). 390,000.00 MET 2016-2017 28-Mar-17 TOTAL 7,880,000.00 The financial statements on pages 1 to 9 were approved by the Commission on-\ j TL and signed on its behalf by: _ 6I __ -1 Chairman - Early Childhood Commission Mrs. Trisha-Williams-Singh Executive Director Mrs. Karlene Degrasse-Deslandes Page 4 The Early Childhood Development Project Loan Number 8334-JM Notes to the Financial Statements For the period ended March 31, 2018 1. The Project The Early Childhood Development Project ("the Project") is a project being undertaken by the Government of Jamaica to improve the overall early childhood care and educational services. The Project is financed by the International Bank for Reconstruction and Development (IBRD) through a US$12,000,000,00 loan. The duration of the loan is for four years commencing June 10, 2014 ad ending on September 28, 2018. The Early Childhood Development (ECD) Project's objectives are to improve the quality of and increase access to ECD services, while providing technical assistance to strengthen t`1e organizational and institutional arrangements that govern the ECD sector. The Project is executed by the Early Childhood Commission (ECC), a statutory agency of the Minist of Education. A Steering Committee, headed by the Permanent Secretary of the Ministry of Educatio has been organized to provide inter-agency co-ordination, policy guidance and oversight durin implementation, although the Early Childhood Commission is responsible for the day-to-day activities of the project. The Project supports the Jamaica's National Strategic Plan for Early Childhood Development through its seven target areas including: i. parenting education and support; ii. preventive health care for children 0-6 years old; iii. screening, diagnosis and eady intervention; iv. safe, learner centred early childhood facilities; v. effective curriculum delivery by trained early childhood practitioners; vi. early childhood sector governance; and vii. timely, clear and current appropriate information to support evidence-based decision making. 2. COMPONENTS OF THE ECD PROJECT The project consists of two components, and each will be carried out under different financing and implementation arrangements as follows: a) Component I - Sector-Wide Approach (SWAP) will co-finance the implementation of the National Strategic Plan (NSP). This component will be implemented by the ECC and the MOE and will use the SWAP modalities valued at US$1 1.OM. Page 5 The Early Childhood Development Project Loan Number 8334-JM Notes to the Financial Statements For the period ended March 31, 2018 2. COMPONENTS OF THE ECD PROJECT CONT'D b) Component 2 valued at US$0.97M will consist of technical assistance and will finance consultant services procured and managed by the ECC that are critical to achieving the objectives of the NSP. This component will be implemented by the ECC and will use standa d financing and implementation arrangements, such as planning of activities, the development of terms of reference, selection of qualified consultants, and the review of work programmes and deliverables. 3. Statement of compliance, basis of preparation and significant accounting policies a) Statement of compliance and basis of preparation: The statements are prepared in accordance with International Public Sector Accounti jg Standards (IPSAS) Cash Basis. Under this basis income is recognized when funds are received rather than when requested and expense are recognized when payment is made rather than when obligations are incurred. The Project financial statements have been prepared using the historical cost basis. b) Significant accounting policies 1. Foreign currency translation Expenditure in Jamaica dollars paid from the United States dollars project accourt (special account) held with Bank of Jamaica ("the bank"), were converted at the rate of exchange applied by the bank at the date withdrawal request were received. During the period, the rates of exchange applied by the bank ranged from J$125.80895 to J$129.6247 to US$1. The balance of the Project's special account at the closing average rate of exchange which was applicable as at March 31, 2018 was J$125.80895 and J$128.34365 to US$1. II. Property, plant and equipment Equipment and other fixed assets acquired with the Project resources are recorded (t their acquisition cost at the date of purchase. Depreciation is not charged on these assets and as such no depreciation charge is reflected on these financial statements. Page 6 The Early Childhood Development Project Loan Number 8334-JM Notes to the Financial Statements For the period ended March 31, 2018 ill. Revenue recognition Reimbursements and advances are recorded on the cash basis. No interest income is recognised when received, interest earned is transferred out of the Project special account at the ending of each month by Bank of Jamaica. c) Available Cash balance The available cash balance as at March 31, 2018, in the Project bank account was: March 31 2018 March 31,2017 US$ US$ Available Cash Balance 131,660.97 11,257.20 131,660.97 11,257.20 5. Disbursement requests from World Bank The following disbursement requests were made during the period: Component I Request Amount Amount Amount recorded n the Disbursement # date requested approved by Project's financial stitements IBRD April 1, 2014 to March 31, 2018 US$ US$ us$ 2014-2015 JECDP2-01 8/10/2014 3,600,000.00 3,600,000.00 3,600,000.00 2015-2016 JECDP2-04 22/07/2015 2,000,000.00 2,000,000.00 2,090,000.00 2016-2017 JECDP2-06 1818/2016 1,500,000.00 1,500,000.00 1,590,000.00 JECDP2-07 2013/2017 780,000.00 390,000.00 3 0,000.00 JECDP2-08 28/3/2017 390,000.00 390,000.00 390,000.00 Cumulative balance 8,270,000.00 7,880,000.00 7,8§0,000.00 Page 7 The Early Childhood Development Project Loan Number 8334-JM Notes to the Financial Statements For the period ended March 31, 2018 Component 1 Swap The disbursement drawdown twelve (12) DLT's achieved to date, was transferred to the Government of Jamaica Consolidated fund to assist with the financing of GoJ's recurrent sector-wide budget. Component 2 Amount recorded in AmountI Disbursement # Request date Amount approved the Project's financial requested IBRD statements April 1, 2014 to March 31, 2010 u s$ u s $ u S$ 2014-2015 JECDP2-02 (Advance) 2/12/2014 100,000.00 100,000.00 100,000.00 2015-2016 JECDP2-03 9/712015 65,081.35 65,081.35 65,081.35 2016-2017 JECDP2-05 06/6/2016 64,425.22 64,425.22 64,425.22 2017-2018 JECDP2-10 (Advance) 16/5/2017 200,000.00 200,000.00 200,000.00, JECDP2-11 30/6/2017 88,742.80 88,742.80 88,742.80, JECDP2-12 20/1/2018 119,873.41 119,873.41 119,873.41 Cumulative balance 638,122.78 638,122.78 638,122.781 Page 8 The Early Childhood Development Project Loan Number 8334-JM Notes to the Financial Statements For the period ended March 31, 2018 6. Revolving Fund/ Special Account Advance The Project's special account maintained a revolving fund up to US$100,000 and equivalent to 10.31% of component 2 loan amount. An amount of US$288,212.44 was expended in 2017-2018 from the Projec 's special account. 7. Property, Plant and Equipment There were no fixed assets purchased during the year for the Project. Page 9