The Federal Democratic Republic of Ethiopia Audit …documents.worldbank.org/curated/en/456981483078605204/...The Federal Democratic Republic of Ethiopia Audit Services Corporation

M814n r0cov& h7A7ti- hC7&71I)The Federal Democratic Republic of Ethiopia

Audit Services Corporation

INDEPENDENT AUDITOR'S REPORT TO THEMINISTRY OF WATER, IRRIGATION AND ELECTRICITY

We have audited the financial statements of Ministry of Water, Irrigation and Electricity,Urban Water Supply and Sanitation Project, financed under IDA Credit Nos. 4292- ET and5115-ET and IDA Grant No. H287-ET, which comprise the balance sheet as at 7 July 2016,and the statement of sources and uses of funds and a Designated Account statement for theyear then ended, and a summary of significant accounting policies and other explanatoryinformation.

Project Coordinator's Responsibility for the Financial Statements

The Project Coordinator is responsible for the preparation of financial statements that give atrue and fair view in accordance with the modified cash basis of accounting described innote 2 to the financial statements and for such internal control as management determinesis necessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with International Standards on Auditing. Thosestandards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The Procedures selected depend on the auditor'sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity's internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by management, aswell as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion.

St 251-011-5515222 Fax 251-011-5513083 E-mail: [email protected] E 5720251-011-5535012251-011-5535015251-011-5535016

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INDEPENDENT AUDITOR'S REPORT TO THEMINISTRY OF WATER, IRRIGATION AND ELECTRICTY (continued)

Opinion

In our opinion, the financial statements give a true and fair view of the financial position ofMinistry of Water, Irrigation and Electricity, Urban Water Supply and Sanitation Project,financed under IDA Credit Nos. 4292-ET and 5115-ET and IDA Grant No. H287-ET, as at 7July 2016 and of its sources and uses of funds for the year then ended in accordance withthe modified cash basis of accounting described in note 2 to the financial statements.

Report on Other Requirements

As required by the World Bank guidelines we report that, to the extent we can assess

- during the year all external funds have been used in accordance with the conditionsof the relevant financing agreements and only for the purposes for which thefinancing was provided;

- goods, works and services financed have been provided in accordance with therelevant financing agreements and disbursement letters:

- all necessary supporting documents, records and accounts have been maintained inrespect of all Project activities;

- the Designated Account has been maintained in accordance with the provisions ofthe relevant financing agreements and funds disbursed out of the DesignatedAccount were used only for the purposes intended in the financing agreements;

- the funds disbursed covered expenditures that are eligible for financing under IDACredit Nos. 4292- ET and 5115- ET and IDA Grant No. H287- ET;

- with respect to statements of expenditure submitted during the year ended 7 July2016 and listed on page 8, in our opinion;

a) the statements, together with the procedures and internal controls involved intheir preparation, can be relied upon to support the relevant withdrawals;

b) adequate supporting documentation has been maintained to support claimsto the IDA for reimbursements of expenditures incurred; and

c) which expenditures are eligible for financing under IDA Credit Nos. 4292- ETand 5115-ET and IDA Grant No. H287-ET.

bywcJ 0S ~t*tA

21 December 2016

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MINISTRY OF WATER, IRRIGATION AND ELECTRICITYURBAN WATER SUPPLY AND SANITATION PROJECTIDA CREDIT NOS. 4292-ET AND 5115-ET AND IDA GRANT NO. H287-ETSTATEMENT OF SOURCES AND USES OF FUNDSFOR THE YEAR ENDED 7 JULY 2016

Cumulative from27 November2008 to 7 July

2016 2016 2015Ethiopian Birr Ethiopian Birr Ethiopian Birr

FINANCINGCredits and grant from IDA

Initial deposit to DesignatedAccount - 100,038,600 -

Direct payments 196,330,629 377,295,583 24,958,513SOE procedures - 548,810.269 121.590,801

196,330,629 1,026,144,452 146,549,314

Contribution from towns andmunicipalities 168,336,587 488,122,636 215,114,236

Gain on foreign exchange 2,399,896 39,332,651 1,786,557Other income 3.447,745 4,308,483 751,827

TOTAL FINANCING 370,514,857 1,557.908,222 364,201,934

PROJECT EXPENDITURE,Works and goods 371,945,893 1,221,169,694 351,361,780Consultants' services 14,662,538 68,591,625 14,315,317Training 341,998 5,001,038 298,739Operating costs 6,331,744 24,498.049 4,273,109

TOTAL PROJECTEXPENDITURE 393.2821173 1,319,260,406 370,248,945

(DEFICIT) I EXCESS OFFINANCING OVEREXPENDITURE ( 3i6 234170

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MINISTRY OF WATER, IRRIGATION AND ELECTRICITYURBAN WATER SUPPLY AND SANITATION PROJECTIDA CREDIT NOS. 4292-ET AND 5115-ET AND IDA GRANT NO. H287-ETBALANCE SHEETAS AT 7 JULY 2016

2016 2015Notes Ethiopian Birr Ethiopian Birr

ASSETS

CURRENT ASSETSCash and bank balances 3 111,244,455 184,696,319Debtors 4 178.816.473 107,917,921

290,060,928 292,614,240CURRENT LIABILITIESCreditors 5 51,413,112 31,199108

NET CURRENT ASSETS 2847816 2

REPRESENTED BY

ACCUMULATED FUND 6 238fi478 261,415,13

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MINISTRY OF WATER, IRRIGATION AND ELECTRICITYURBAN WATER SUPPLY AND SANITATION PROJECTIDA CREDIT NOS. 4292-ET AND 5115-ET AND IDA GRANT NO. H287-ETDESIGNATED ACCOUNT STATEMENT

For year ended 7 July 2016Account number 0261501357700

Depository bank National Bank of EthiopiaAddress Addis Ababa, EthiopiaRelated credit IDA 4292-ET, 5115-ET and H287-ETCurrency USD

Equivalent

USD in Ethiopian Birr

Beginning balance - 7 July 2015 4,170,041.80 85,827,383.22Add: Replenishments - -

4.170.041.80 85.827 383.22

Less: PaymentsTransfers to Birr account 3,562,246.00 75,134,944.69Transfers to towns 204,359.61 4,292,452.26Training costs 2,425.00 111,680.22Operating costs 5,358.14 50779.50

3.774.388.75 79,589,856.67

395,653.05 6,237,526.55Add: Gain on foreign exchange - 2,399,895.95

Ending balance 7 July 2016 395,653.05 8,637,422.0

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MINISTRY OF WATER, IRRIGATION AND ELECTRICITYURBAN WATER SUPPLY AND SANITATION PROJECTIDA CREDIT NOS. 4292 ET AND 5115 ET AND GRANT NO. H287 ETNOTES TO THE FINANCIAL STATEMENTS

1. PROJECT INFORMATION

The Project was established to implement IDA Credit agreement Nos. 4292-ET and5115-ET and Grant No. H287-ET signed between the Government of the FederalDemocratic Republic of Ethiopia and the International Development Association(IDA) on 16 May 2007. The main objective of the Project is to insure sustainablewater supply and sanitation services for urban users through improved capacity inthe sector.

The Project became operational on 27 November 2008. The original closing date of31 December 2014 has been extended to 31 December 2017.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of preparation

These financial statements have been prepared on a modified cash basiswhereby non-monetary assets are expensed when acquired and monetaryassets and liabilities are carried at fair value,

b) Currency

These financial statements are presented in Birr. Transactions in foreigncurrencies are translated into Birr at the approximate rates of exchangeprevailing at the dates of the transactions. Cash balances denominated inforeign currencies are translated into Birr at the exchange rates ruling at thebalance sheet date.

3. CASH AND BANK BALANCES

2016 2015Ethiopian Birr Ethiopian Birr

National Bank of EthiopiaUSD Designated Account No. 0261501357700 8,637,423 85,827,383Birr account No. 0160101368000 31,969,900 6,403,025

Commercial Bank of Ethiopiavarious branches 70,637,132 92,465,911

6184,631

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MINISTRY OF WATER, IRRIGATION AND ELECTRICITYURBAN WATER SUPPLY AND SANITATION PROJECTIDA CREDIT NOS. 4292-ET AND 5115-ET AND GRANT NO. H287- ETNOTES TO THE FINANCIAL STATEMENTS (continued)

4. DEBTORS

2016 2015Ethiopian Birr Ethiopian Birr

Advances toSuppliers 72,105,866 6,662,830Contractors 74,659,355 76,459,616Consultants - 24,739,579

Staff 32,051,252 _ 55896

5. DEBTORS

ContractorsRural Water Supply and Sanitation Project - 194,961Suppliers - 5,000,000Withholding taxes 3,802,809 10,817,614Value added tax 113,938 582,547Consultants 514,717 2,619,723Retention - 30,667Sundry 18,941,169 11,728,238

28040479 225358

6. ACCUMULATED FUND

Balance at 7 July 2015 261,415,132

(Deficit)/excess of financing overexpenditure (22,767,316)

Balance at 7 July 2016

7. DATE OF AUTHORIZATION

The Director of Water Supply and Sanitation Directorate of the Ministry authorizedthe issue of these financial statements on 21 December 2016.

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MINISTRY OF WATER, IRRIGATION AND ELECTRICITYURBAN WATER SUPPLY AND SANITATION PROJECTIDA CREDIT NOS. 4292-ET and 5115-ET AND GRANT NO. H287 ETSOE WITHDRAWAL SCHEDULE FORSTATEMENTS OF EXPENDITURE

submitted during theYEAR ENDED 7 JULY 2016

Withdrawal Works andApplication goods

No. Ethiopian Birr USD

IDA CreditNo. 5115 ET

54 12,180,136.06 592,658.9852 16,119,624.35 776,419.4753 2,024,198.74 97,497.7652 49,162,639.13 2,357,694.2153 34,697,292.89 1,658,722.1952 11,033,541.94 525,784.3453 45,591,738.94 2,194,939.3462 5,280,017.69 254,197.7745 20.241.438.96 936,632.47

Total 198,330,828.7 9,394,546.53

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