environmental services project p130492 and p128412 …documents.worldbank.org/curated/en/... ·...

ENVIRONMENTAL SERVICES

PROJECT

P130492 and P128412

Special Purpose Financial Information

for the period from January 1 to December 31, 2015

(with independent auditor’s report thereon)

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Contents

Page

Independent Auditor’s Report

1-2

Statement of Sources and Uses of Funds

3

Statement of Withdrawal Applications

4

Notes to the Special Purpose Financial Information

5-11

Appendixes

i-iv

Grant Thornton Sh.p.k.

Rr: Sami Frasheri, Kompleksi T.I.D, Shk. B, Floor 1, 10 000 Tirana, Albania T +355 4 22 74 832 F +355 4 22 56 560 www.grantthornton.al

Independent Auditor’s Report

To the Management of the Project “Environmental Services Project” and Ministry of Finance of the

Republic of Albania

We have audited the accompanying special purpose financial information comprising the statement of

sources and uses of funds, statement of withdrawal applications, related notes and appendixes, of the

“Environmental Services Project” (further referred to as the “Project”), implemented by the Ministry of

Environment financed under International Bank for Reconstruction and Development (‘IBRD’) Loan

Agreement Number 8401-AL, Global Environmental Facility (‘GEF’) Grant No.TF017364, Swedish

International Development Cooperation Agency ‘(SIDA’) Grant No.TF18238 and Government of

Albania Contributions for the period from 1 January to 31 December 2015. The special purpose financial

information has been prepared by management of the Project in accordance with policies described in

note 2 of the special purpose financial information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the special purpose financial

information in accordance with the accounting policies described in note 2 and the relevant provisions set

out in the Loan Agreement Number 8401-AL, and for such internal control as management determines is

necessary to enable the preparation of the special purpose financial information that are free from

material misstatement, whether due to fraud or error.

Tirana, Albania

31 October 2016 TiranaitL AN!A

\!

1

Auditor's Responsibility

Our responsibility is to express an opinion on the special purpose financial information based onour audit. We conducted our audit in accordance with International Standards on Auditing.Those standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the special purpose financial information isfree from material misstatement. An audit involves performing procedures to obtain auditevidence about the amounts and disclosures in the special purpose financial information. Theprocedures selected depend on the auditor's judgement, including the assessment of the risks ofmaterial misstatement of the special purpose financial information, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the specialpurpose financial information preparation and fair presentation in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity's internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates madeby management, as well as evaluating the overall presentation of the special purpose fmancialinformation. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion.

Opinion

In our opinion, the special purpose financial information of the Project "Environmental ServicesProject" is prepared, in all material respects, in accordance with the cash receipts anddisbursement basis of accounting as set out in note 2 to the special purpose financialinformation.

Restriction on Use and Distribution

Without modifying our opinion, we draw attention to note 2 to the special purpose financialinformation, which describes the basis of accounting. The special purpose financial informationare prepared to assist the Project to comply with the financial reporting provisions of thefmancing agreements set out in the note 1 to the special purpose information. As a result, thespecial purpose financial information may not be suitable for another purpose. Our report isintended solely for the Project, the donors and the Government of Albania and should not beused by or distributed to parties other than the Project, the donors or the Government ofAlbania.

Grant Thornton sh.p.k.

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Environmental Services Project P130492 and P128412

Statement of Sources and Uses of Fundsfor the period from 1 January 2015 to 31 December 2015(in Euro unless otherwise stated)

NoteFor the period from

1 January 2015 to31-Dec-15

Sources of fundsIBRDGEFSIDAGoA contributionInterest received

3334

400,000100,000415,52935,889

227Total 951,645

Uses of fundsTraining and workshopConsultancy servicesIncremental operating costsGoodsStaff salariesVAT expenses

56789

34,17591,57121,16493,22545,36635,889

Total 321,390

630,2558,284

Excess of receipts over disbursementsExchange rate differencesCash begin period 11Cash end of period 11 638,539

The Statement of Sources and Uses of Funds is to be read in conjunction with the notes set out on pages 5to 11 and forming an integral part of the special purpose financial information.

The special purpose financial information of Environmental Services Project were authorized for issue bythe management of the MiQistry of Environment on 17 October 2016 and signed on its behalf by:4E 0"

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Algi Bllali

,~ l0~ ! 11,:",General ,roe. .- ..TJ

- -penment

Donika QesjaFinancial Specialist

Mingironment

3


4

Statement of withdrawal applications for the period from 1 January to 31 December 2015 (in Euro unless otherwise stated)

Donor

Withdrawal

application

number

Date of

withdrawal

application

Type of

Disbursement Training and Workshop

Other

expenses Total in EUR

Amount in Original

Currency CCY

IBRD WA-1 I 7/29/2015 Advance - 400,000 400,000 400,000 EUR

SIDA WA-1 S 5/22/2015 Advance - 400,000 400,000 400,000 EUR

SIDA WA-2 S 5/22/2015 Direct Payment 7,039 - - 7,039 EUR

SIDA WA-3 S 5/26/2015 Direct Payment 8,490 - - 8,490 EUR

GEF WA-1 G 7/29/2015 Advance - 100,000 100,000 100,000 EUR

Total 15,529 900,000 900,000 915,529


5

1. General

The objective of the Project is to support sustainable land management practices and increase

communities’ monetary and non-monetary benefits, in targeted Project areas which are

mainly in erosion prone rural upland areas.

The Project consists of the following parts:

Part 1: Strengthening Institutional Capacity to Improve Environmental Services from

Integrated Landscape Management

(a) Strengthening the Borrower’s capacity for governance of forests and pastures

including:

(i) preparing a change detection National Forest Inventory to provide

information on how forest cover and volume have changed over an agreed

intervening period;

(ii) developing a ten year rolling National Forest Inventory whereby plots

sampled for forest cover and volume are examined on annual basis for a duration of

ten years;

(iii) supporting forest management planning in the state managed production

forests excluding the protected areas;

(iv) establishing the Albanian Forest Information System;

(v) strengthening the capacity of the Regional Forest Directorate to carry out its

obligations including the independent monitoring of the forests; and

(vi) registering forests and pastures transferred by the central government to the

communes.

(b) Carrying out activities to empower beneficiaries, including Local Government Units

(LGUs), CFPUAs and farmers, to practice sustainable land and pasture management

practices including:

(i) implementing the Gender Action Plan to promote gender equity in natural

resource management;

(ii) supporting LAGs to contribute to the rural development strategy;

(iii) training LGUs and CFPUAs on sustainable use of forests, pastures and

agricultural lands; and;

(iv) promoting rural income generation, through analysis of values chains and

preparation of short and medium-term forest products processing and marketing

plans.

Part 2. Planning and Provision of Grants to Improve Land Management

(a) Carrying out activities to prepare and implement CMCPs to improve land

management, including:

(i) developing guidelines for the preparation of CMCPs to promote integrated

use of natural resources;

(ii) preparing CMCPs for new communes; and

(iii) Upgrading existing CFPMPs which will expire during the life of the Project

into CMCPs.

(b) Providing Grants to eligible Beneficiaries to carry out Subprojects.

(c) Strengthening the capacity of staff for the Regional Forest Directorates, District

Forest Office, ARDA and bodies involved in the agricultural and forests extension

services as well as applicants to carry out their responsibilities under the Project.


6

Part 3: Introducing Payment for Environmental Services

Establishing financing mechanisms for reducing land degradation and supporting sustainable

livelihoods including:

(a) preparing technical studies for the development of carbon projects and establishing

monitoring, reporting and verification systems to quantify carbon sequestered by

Project activities;

(b) developing mechanisms for Payment for Watershed Services to ensure that those who

benefit from environmental services pay those who generate these services; and a

model for linking land use practices with the generation of ecosystem services; and

(c) Piloting the Payment for Watershed Services mechanism in selected areas.

Part 4: Supporting Project Implementation

(a) Carrying out activities for Project implementation, including supplying of office

equipment, building staff capacity, and the implementation of the environmental

safeguards.

(b) Supplying and installing a Project monitoring information system to promote

effective tracking of project activities; and carrying out surveys, conducting

environmental audits and monitoring and evaluation.

The Project became effective on 29 January 2015 and will be completed by 30 September

2019.

The Project is financed from the following sources:

IBRD 84010 AL

According to the Loan Agreement dated 25 July 2014 between GoA and IBRD, the Project

is entitled to a loan of 7,300,000 Euro.

The table below sets forth the items to be financed out of the proceeds of the grant, the

allocation of the amounts of the grant and the percentage of expenditures to be financed:

Category

Amount of the Loan

Allocated (expressed in EUR)

Percentage of Expenditures

to be financed (inclusive of

Taxes)

(1) Goods and non-

consulting services under

Part 1(a), 2(c) and Part 4 (a)

of the Project 4,679,850 100%

(2) Subprojects under Part

2(b) of the Project 2,601,900 100%

(3) Front-end Fee 18,250

Amount payable pursuant to

Section 2.03 of this

Agreement in accordance with

Section 2.07 (b) of the General

Conditions

TOTAL AMOUNT 7,300,000


7

GEF TF 17364 (P128412)

According to the Grant Agreement dated 25 July 2014 between GoA and GEF, the Project is

entitled to a grant of 2,880,000 U$.



Category

Amount of the

Grant Allocated

(in USD)

Percentage of

Expenditures to be

Financed (inclusive

Taxes)

Non consulting services, training,

consultants services and Operating Costs

under Parts 1(a), 2(a) and Part 3(a) of the

Project 2,880,000 100%

Total Amount 2,880,000

SIDA TF 018238

According to the Grant Agreement dated 25 July 2014 between GoA and SIDA, the Project

will receive a grant of 7,960,000 U$.



Category

Amount of the

Grant Allocated

(in USD)

Percentage of

Expenditures to be

Financed (inclusive

Taxes)

1) Goods, Works, Consultants and Non-

consulting services, Training, Operating

Costs under Part 1, Part 2(a) and ( c), Part

3(a) and ( c) and Part4 of the Project 6,142,470 100%

2) Sub project under Part 2(b) of the Project 1,817,530 100%

Total Amount 7,960,000


8

1. General (continued)

The Grant will be used to finance up to 100% of expenditures consisting of goods,

consultancy services, meetings and workshops and operating costs for the Project. In

addition, the project management costs will be financed on 100%.

As at 31 December 2015, Euro 915,529 has been disbursed from the Donors funds.

GoA’s contribution

The Government of Albania is to finance project expenses relating to VAT.

2. Summary of significant accounting policies

A summary of significant accounting policies underlying the preparation of the Project’s

financial statements is presented below.

a) Basis of preparation

The financial statements have been prepared in accordance with Cash Basis of Accounting as

further explained below under point C.

Cumulative information on cash receipts and disbursements from the Project’s inception to

date is presented in the Statement of Sources and uses of Funds for information purposes

only.

The financial statements are presented in Euro.

The financial statements comprise the Statement of Sources and Uses of Funds, the

Statements of Expenditures used as the basis for the submission of withdrawal applications

and a summary of significant accounting policies and other explanatory notes.

As supplementary schedules to the financial statements are presented the Statements of

Special and Accounts and Single Treasury Account associated with the Project.

b) Foreign currency transactions

The Project has adopted the Euro as its reporting currency for consistency with the reporting

needs of its main donor, the World Bank.

Cash and bank balances in other currencies are converted into Euro at the year-end rate of

exchange. Transactions in currencies other than Euro are converted to the reporting currency

at the rate ruling at the date of the transaction. Foreign exchange differences are recognized

in the Statement of Sources and Uses of Funds.

As at 31 December 2015, 1 Euro was equivalent to 137.28 All.

c) Recognition of income and expenses

Income is recognized when received rather than when earned and expenses are

recognized when paid rather than when incurred. Accordingly, direct payments of the

Project, which are made from the proceeds of the Project, are recognized as sources and

uses of funds at the time the payment is made.

d) Taxation

The Project is exempt from income tax since its nature is of non-profit activities and the

surplus by the end of the project is returned to the financing parties. The Project is liable

for withholding tax and personnel income tax for its staff. The Project of liable for all

VAT expenses incurred, which are to be settled from the GOA’s contributions.


9

3. DONORS funding

Funds received from DONORS funding for the period from 1 January 2015 to 31 December

2015 were composed as follows:

Period from

1 January to 31 December 2015

Advance 900,000

Direct Payments 15,529

Total 915,529

Direct Payments refer to amounts paid directly from donor to the suppliers in relation to

incurred training and workshop expenses of the project.

4. GoA contribution

GoA contribution represents VAT expenditures for some contracts. Total funding from

inception date up to 31 December 2015 was ALL 5,015,150 (Eur 35,889).

5. Training and Workshops

The meetings and workshops for the period from 1 January to 31 December 2015 were

composed as follows:

Period from


Accommodation 8,678

Per diem and Transport expenditures 14,587

Workshop 2,763

Project lunching event 3,365

Other 4,782

Total 34,175

6. Consultancy services

The consultancy services for the period from 1 January to 31 December 2015 were


Period from


Study of Cost of Land Degradation in Albania 40,425

M&E software 25,848

GAP implementation consultancy 12,841

Baseline Survey consultancy 12,457

Total 91,571


10

7. Incremental Operating costs

Operating costs for the period from 1 January to 31 December 2015 were composed as

follows:

Period from


Office Supplies 5,058

Bank Charges 727

Operating Cost Components (Equipment repair, car

insurance and repair etc. 9,553

Health & Social Insurance for staff 5,826

Total Incremental Operating Costs 21,164

8. Goods

Goods for the period from 1 January to 31 December 2015 were composed as follows:

Period from


GNSS goods for IPRO offices 68,450

GIS License for IPRO 14,895

FM Software 9,880

Total 93,225

9. Staff salaries

Period from


Net staff Salaries 30,794

Social Securities and health insurance contribution 9,329

PIT 5,243

Total 45,366


11

10. Project expenditures by category

Expenditures by sources of funds for the period from January 2015 to December 2015 were


Period from


Goods 93,224

Training Workshops 34,174

Consultancy services 91,571

Operating costs 21.163

Staff salaries 45,366

Total 264,358

11. Cash at banks

Cash at banks as at 31 December 2015 was composed as follows:

Period from


GEF Special Account BoA (EUR) -

IBRD Special Account BoA (EUR) -

SIDA Special Account BoA (EUR) -

Single Treasury Account (ALL) -

Project Accounts at Local Banks

GEF Credins Bank (ALL) 8,338,946

Equivalent in Euro 60,744

GEF Credins Bank( EUR) 43

SIDA Credins Bank (ALL) 15,711,622


SIDA Credins Bank (EUR) 143,523

IBRD Credins Bank (ALL) 27,894,507


IBRD Credins Bank (EUR) 116,585

Total 638,539

i

APPENDIXES

Environmental services Project P130492 and P128412

Statements of Special Accounts and Project Accounts

for the period from 1 January to 31 December 2015

(Supplementary schedules to the Special Purpose Financial Information)


ii

Appendix 1

Supplementary Schedule of Special Account Statement

Donor GEF TF01736 SIDA TF 18238 IBRD 8401-AL

Account No: 2117645E 2117632E 2117646E

Depository Bank Bank of Albania

Bank of Albania

Bank of Albania

Address

Skenderbeg Sqaure, No 1,

Tirana, Albania


Tirana, Albania


Tirana, Albania

Currency EUR

EUR

EUR

2015 2015 2015

Opening Balance at beginning of

period - - -

Funds received:

Advance 100,000 400,000 400,000

100,000

400,000

400,000

Disbursements:

Funds transferred to Credins Bank in

EUR

200,000 200,000

Funds transferred to Credins Bank

ALL account

100,000

200,000 200,000

TOTAL

100,000

400,000

400,000

Balance at end of the period - - -


iii

Appendix 2

Supplementary Schedule of Project Account Statement

IBRD SIDA GEF

Account No: 704816 679781 704809

Depository Bank CREDINS BANK CREDINS BANK CREDINS BANK

Address Str.Ismail Qemali,

Tirana

Str.Ismail Qemali, Tirana

Albania Str.Ismail Qemali,

Tirana Albania

Currency EUR EUR EUR

2015 2015 2015

Opening Balance at beginning of period - - -

Funds received:

Funds received from Special Account 400,000 400,000 100,000

Funds received from the other account 87 15,634 34

400,087 415,634 100,034

Disbursements:

Project expenditures

83,463 161,477 40,560

Loss from exchange rate 3,155 3,816 1,313

Balance at end of the period 319,779 257,973 60,787


iv

Appendix 3

Supplementary Schedule of Single Treasury Account

Depository Bank: Treasury Account M260324

Address: Ministry of Finance

Currency: ALL

2015

Opening Balance at beginning of period -

Funds received:

Funds received from GoA 5,015,150

5,015,150

Disbursement:

Transferred to Credins Bank -

Transferred to GoA -

-

Balance at end of the period 5,015,150

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