financial statement for the global partnership on …€¦ · statement of cash receipts and...

THE WORLD BANK

FINANCIAL STATEMENT

FOR THE

GLOBAL PARTNERSHIPON OUTPUT- BASED AID

PROJECT

TF 16279 IN VANUATU

For the Year Ended 31 December 2016

Prepared Under IPSAS: Financial Reporting Under the Cash Basis Accounting

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TABLE OF CONTENTS

PRO JECT BAC KG RO UND............................................................................................. 3AUDITOR'S REPORT............. ........... ....................... 5STATEMENT OF CASH RECEIPTS AND PAYMENTS..........................6

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL ........................ 7STATEMENT OF ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS ...... .... 8

. Accounting Policies......................................................8

2. Government counterpart funding ............................................. 03. Donor grant assistance ................................................... 114. Operating Expenditure ............. 11................................ .

5. Capital Expenditure......... ........... 2................................126. Closing cash balance................................................ .... 127. Revenue variance between budget and actual .............................. ..... 128. Expenditure variance between budget and actual ................................ 129. Imprest Account ....................................................... 1210. Payments to Third Parties................................................12

11. Related Parties.......................................................12

2 IGlobal Partnership on Output-Based Aid Project - Financial Statements, 2016

PROJECT BACKGROUND

Global Partnership on Output - Based Aid Project (GPOBA) provides Grant Funding of US$4.85million to the Department of Energy (DoE) to support households to the grid network within theconcession areas (Port Vila in Efate, Luganville, Espiritu Santo, Lenakel, Tanna and Lakatoro,Malekula) by 2018 when the project is expected to be concluded.

The project under the oversight of the Department of Energy (TF 16279) - is planned to connect4,375 households to the grid network within the concession area by 2018. The objective of the projectis to increase sustainable access to formal grid-based electricity services within the Recipient'selectricity concession service areas for low-income customers through targeted subsidies. The projectconsists of the following parts:

Part 1: New Service connections for Low-Income Households

Provision of OBA Subsidies to assist in covering the costs of connecting Eligible Households to grid-based electricity services.

Part 2: Household wiring for Low-Income Households

Provision of OBA Subsidies to assist in covering the costs of household wiring and energy savinglight bulbs for Eligible Households gaining electricity connections under Part 1.

Part 3: Project Management, Monitoring and Evaluation, Communications and Outreach, andTraining

Carry out activities to support implementation of the project, including among other things:

a) Raising Beneficiaries' awareness of the OBA Subsidies under Part I and Part 2 and trainingon safe electrical practices;

b) Development and adoption of technical standards and a licensing scheme for householdwiring, including delivering training programs for electricians and monitoring compliancewith standards;

c) Monitoring and evaluation, financial management, supervision, and audit of the Project; andd) Technical training, support, and incremental operating costs for the Department of Energy.

3 1 Global Partnersip on Outp ut-Based Aid Project - Financial Statements, 2016

Part 4; Independent Verification

Carrying out independent monitoring and verification connections through an independent agent.

This report provides the financial statement for the Global Partnership on Output-Based Aid Project

(GPOBA) TF 16279 for the 12 months ended 31 December 2016. The GPOBA project commenced inJune 2014 and will end on 30 June 2018.

Mr Jesse Benjamin

Director General

Ministry of Climate Change Adaptation, Meteorology, Geo-Hazards, Environment & EnergyPort Vila, 23 June 2017

4 [ Global Partnership n Outpu-Based Aid Project - Financial Statements, 2016

parLnersCHARTERED ACCOUNTANTS AND BUSINESS ADVISERS

Independent Auditors' Report

Global Partnership on Output-Based Aid

The Auditor-General is the auditor of Global Partnership on Output-Based Aid (GPOBA). The Auditor-General hasappointed Law Partners to undertake the audit of GPOBA pursuant to Section 24(1) of the Expenditure Review and AuditAct [CAP 241].

Scope

We have audited the financial statements of Global Partnership on Output-Based Aid Project for the financial year ended31 December 2016 consisting of the statement of cash receipts and payments, statement of comparison of budget andactual amount and accompanying notes set out on pages 6 to 12.

Members' responsibility for the financial statementsThe Director of Ministry of Climate Change Adaption, Meteorology, Geo-Hazards, Environment and Energy isresponsible for the preparation and fair presentation of these financial statements in accordance with International PublicSector Accounting Standards: 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 financialstatements that are free from material misstatements, whether due to fraud or error selecting and applying appropriateaccounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditors' responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with International Standards on Auditing. These standards require that we comply with relevant ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free ofmaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on our judgement, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we considerinternal control relevant to the entity's preparation and fair presentation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the entity's internal controls. An audit also includes evaluating the appropriateness of accounting principles used andthe reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements.

Opinion

In our opinion, the financial statements present fairly in all material respects the cash receipt and payments and cash flowsof the Project for thel2 months ended 31 December 2016, in accordance with International Public Sector AccountingStandards: Financial Reporting under the Cash Basis of Accounting and the project administration complies with relevantVanuatu legislation and regulations.

LAW PARTNERSChartered Accountants(Qualified auditors under Section 130 ofthe Companies Port VilaAct No. 25 of 2012 of the Republic of Vanuatu) 23 June 2016

TEL+678 22 091FAX.678 23665

maitLawpartnersvanuatu.com

PRINCOPALS LAW PARTNERS HOUSEJONATHAN LAW PO sOX 212

www.Iaw partnersvanuatu.com VICKI JOE PORTVILA I VANUATU

FINANCIAL STATEMENTS

GLOBAL PARTNERSHIP ON OUTPUT- BASED AIDSTATEMENT OF CASH RECEIPTS AND PAYMENTSFOR THE YEAR ENDED 31 DECEMBER 2016

2016 2015Receiptl(Paym Receiptl(Paym Consolidated

Notes ent) ent) ProjectTotal

(VUV) (VUV) (VUV)12 Months 19 Months 31 Months

CASH RECEIPTSWorld Bank 3 6,030,183 15,560,631 21,590,814Receipts Paid Directly to ThirdParty 10 27,577,860 10,550,040 38,127,900World Bank - Funds Transferdirectly to Development Fund 3 -860,001 860,001 -

TOTAL CASH RECEIPTS 32,748,042 26,970,672 59,718,714

CASH PAYMENTSConsultants Services Under Part 4of the Project 3,735,950 4,026,370 7,762,320

Consultants - SmartStream 275,000 - 275,000OBA Subsidies Under Part 1 andPart 2 of the Project 27,577,860 10,550,040 38,127,900Goods - 2,620,691 2,620,691Workshops 335,125 - 335,125Trainings

Incrementing operating Costs 428,311 404,411 832,722Unallocated funds

TOTAL CASH PAYMENTS 4 32,352,246 17,601,512 49,953,758CASH RECEIPTS LESS CASHPAYMENTS 395,796 9,369,160 9,764,956

INCREASE/{DECREASE) IN CASH 395,796 9,369,160 9,764,956Cash at 1 January 9,369,160Cash at 31 December 6 9,764,966 9,369,160 9,764,956

Mr Jesse Benjamin

Director General

Ministry of Climate Change Adaptation, Meteorology Geo-Hazards, Environment & EnergyPort Vila, 23 June 2017

6 Global Partnership oi Output-Based Aid Project - Financial Statemenls. 2016

GLOBAL PARTNERSHIP ON OUTPUT- BASED AIDSTATEMENT OF COMPARISON OF BUDGET AND ACTUALFOR THE YEAR ENDED 31 DECEMBER 2016

(Expressed in Vanuatu Vatu)

2016 2015 CONSOUDATED PROJECTTOTAL

ACTUAL BUDGET Difference ACTUAL BUDGET Difference TOTAL ACTUAL FINAL BUDGEr VARIAICEActual Vers us ActuaiVersus

12month 19monthVW VUv Eudget vW VIN Budget OW vuv VUV

12 Months 12 Months 19 Months 19 Monts 31 Months 49 MontsCASH INFLOWS

Worl Bank - Funds Transfer directly toDoE 32,748,042 110.367,640 (77,619,498) 26,970672 106,719.570 (79,748,898) 59,718,714 436,500,000 376,781,286)

Total Receipts 32,748042 110,367640 (77,819,496) 26,970,672 106,719,570 (79,748,098) 9,718,714 436,00,000 (376,751,26)

CASH OUrFLOWS

Category 1: Consultants 275,000 4,788,000 (4.513,000) - 275,000 13,838,760 .13,563760C 0 2,620,691 2,362,00 257,B31 2,6206,1 2,362,860 257,831

Worishops 335125 1,029,060 (693,935) - . - 335,125 2,158,200 -1,823,075Training

Increnental Operating Costs 428,311 905.400 1477,089) 404,411 707,400 (302,989) 832,722 3.185,100 -2,352,378OBA Subsilies Uhder Part 1 and Part 2 of

Category 2: the Proect 27577,860 96.750,00 (69,172,1401 10,550,040 93750.29 (E,199,90) 38,127,900 387,000,000 -348,87Z100Consutants Services Under Part 4 of the

Category 3: Paject 3,735,950 4,497,120 (1761170) 4.020,370 4,51,284 (474,914) 7,752,320 18,363,240 -10,60,920UnalocEte Funds - 2,397,960 (2.397 0) - 2,398,G25 (2,398,026) - 9,01,40 -9,591,40

Total Payments 32,352,246 110,367,540 (78,01,2941 17,01,512 106,719,570 (89,11,058) 49,93,758 436,00,000 (386,646,242)

NET CASH FLOWS 395,796 395,796 9,369,160 9,39,160 9,764,956 - 9,764,955

This statement is to be read in conjunction with the accompanying notes and accounting policies,

-- Global Partnership on Output-Based Aid Project - Financial Statements, 2016

GLOBAL PARTNERSHIP ON OUTPUT- BASED AIDSTATEMENT OF ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTSFOR THE YEAR ENDED 31 DECEMBER 2016

1. Accounting Policies

a. Reporting Entity

The Global Partnership on Output-Based Aid Project (GPOBA) is administered by the

Department of Energy (DoE). The Grant is for Global Partnership on Output-Based Aid Project

(GPOBA) which the objective of the project is to increase sustainable access to formal grid-

based electricity services within the Recipient's electricity concession service areas for low-

income customers through targeted subsidies. The project consists of the following parts:

(i) New Service Connections for Low-Income Households

(ii) Household Wiring for Low-Income Households

(iii) Project Management, Monitoring and Evaluation, Communication and Outreach, and

Training

(iv) Independent Verification

b. Authorization Date

The financial statements of the Grant TF 16279 was for the year ended 31 December 2016 and

was authorized for issue on 23 June 2017 by Mr. Jesse Benjamin for the Department of Energy.

No other body has the power to amend these financial statements once they have been issued.

c. Basis of Preparation

The financial statements of the Grant have been prepared in accordance with requirements of the

Public Finance and Economic Management Act [CAP.244] which includes the requirement to

comply with generally accepted accounting practice.

The financial statements comply with IPSAS "Financial Reporting under the Cash Basis of

Accounting" for the year ended 31 December 2016.

Global Partners/p on Output-Based Aid Project - Financial Statements, 2016


d. Presentation currency

The financial statements are presented in Vanuatu Vatu (VUV).

e. Foreign currency

The grant funding payments received from the World Bank are in USD and have been converted

by the Reserve Bank of Vanuatu at the rate on the day of the transaction.

f. Cash and Cash equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known

amounts of cash and which are subject to an insignificant risk of changes in value.

Department of Energy receives the grant from the World Bank which is managed through the

centralized SmartStream system. Under this arrangement the Department of Energy does not

control the grant as their own bank account but rather the central entity will make payments on

behalf of the department after appropriate authorization and documentation. These transactions

have been disclosed in a separate column in the "Statement of cash receipts and payments".

g. Property, Plant & Equipment

Purchases of fixed assets have been included in the statement of Cash Receipts and Payments

under Goods. Separate disclosure has been disclosed in Note 5 of these accounts.

Fixed assets are stated at cost at the date of purchase.

There are no fixed assets purchased on hire purchase schemes and no depreciation is being

charged.

h. Budget

The budget is prepared on a cash basis when cash is expected to be received and paid. Theclassification of the budget is prepared on the common revenue sources and expenditure isclassified on the nature of expenditure normally incurred by the project. Goods are treated as part

of normal operational expenditure.

9 Global Partnership on Output-Based Aid Project - Financial Statements, 2016


h. Budget (continued)

The final budget is the budget that was approved by the World Bank dated 02 June 2014.

The approved budget is developed on the same accounting basis, classification basis, as thefinancial statements. The budget presented has been prepared for the whole project period of 49months which is different to the 12 months period prepared for these financial statements. Thereason for presenting a different period of budget to actual is because the grant agreement was onlyapproved according to the budget given over the project life.

The Grant Agreement identified the budget categories according to the following components tobe procured under the project. It encompasses the same entities as the financial statement.

Category 1: Goods, Consultant services, Incremental Operating Costs, Training and Workshopsunder Part 3 of the Project.

Category 2: Output -Based Aid (OBA) Under Parts 1 and 2 of the Project

Category 3: Consultants' services under Part 4 of the Project

The budget was originally designed in USD and was converted into VUV at the rate of USD 1=VUV90 as per summary of disbursements,

i. Changes in accounting policies

There have been no changes in accounting policies during the financial year.

j. Comparatives

These financial statements are for the year ended 31 December 2016. The comparative figuresare for the 19-month period ended 31 December 2015.

2. Government counterpart funding

The project does not receive any funds from the Vanuatu Government as this project is fully fundedby the World Bank



3. Donor grant assistance

In 2014, the Department of Energy signed a grant agreement (World Bank Grant No. TF16279) withthe World Bank. The purpose of the project is to increase sustainable access to formal grid-basedelectricity services within the Recipient's electricity concession services areas for low-incomecustomers through the targeted subsidies (Vanuatu Utilities Infrastructure Limited and UNELCO) andthe arrangement was for US$ 4,850,000 from 2014 to 2018.

The grant agreement specifically sets out the areas for spending of which US$ 350,000 allocated forthe Goods, Consultant Services, Incremental Operating Costs, Training and workshops under Part 3 ofthe Project. OBA Subsidies under Parts I and 2 of the Project are allocated US$ 4,300,000 and US$200,000 allocated for Consultants' services under Part 4 of the Project.

As at 31 December 2016, US$ 553,790.86 (total grant received as at 31 December 2016 equivalent toVUV 59,718,714) had been drawn down from World Bank with a remaining balance of US$4,296,209.14 to be drawn down from 2017 to 2018.

4. Operating Expenditure

2016 201512 Months 19 Months

Provident Fund 137,020 149,020Consultants Fees 3,873,930 3,877,350Subsistence Allowances 105,000 5,000Vehicle Fuel 60,001 50,000Telephone / Fax- Communications 38,000 1,000Vehicle Repairs & Maintenance 0 19,890Lighting Utilities 27,577,860 10,550,040Local Travel 142,125 32,200Advertising -Communications 260,000 273,000Printing -Communications - 19,000Stationery- Communications 73,310 4,321Office - Materials 5,000 -Incidentals 80,000Total 32,352,246 14,980,821

11 Glbal Partnership on Outp ut-Based Aid Project - Financial Statements , 2016


5. Capital Expenditure

2016 2015

Equipment -Additional General - 270,691Vehicle - Additional Vehicle - 2,350,000Total - 2,620,691

6. Closing cash balance

2016 2015Made up as follows:

Smartstream Central Account 9,764,956 8,509,159World Bank- Funds Transfer directlyto Development Fund - 860,001Total 9,74,956 9,369,160

7. Revenue variance between budget and actualThe difference of VUV 77, 619,498 represents the actual amount received being less than the period

budget. The variance relates to the funding from the World Bank that was delayed due to the project

starting later than anticipated and also the different exchange rate used in the final budget which is

US$1 = VUV 90 and the actuals that used the exchange rate on the transaction date.

8. Expenditure variance between budget and actualThe project underspent VUV 78,015,294 against the budget of VUV 110,367,540. This is due to the

late commencement of the project which required the establishment of new systems, processes and

procedures compliant with World Bank requirements. These have now been established and many of

the grant activities are progressing well.

9. Imprest AccountAs at 31st December 2016, there is no outstanding Imprest Account for the Trust Fund.

10. Payments to Third Parties

There were six direct payments made to the two subsidies (UNELCO & VUI) in 2016. Direct

Payment was made in the World Bank Financial System (Client Connection) for the Subsidy Claim

payments. For reporting purposes, the Department of Energy is required to keep a record of every

transaction that occurs in Client Connection. Therefore, a general journal has been prepared and

processed into SmartStream by debiting the Lighting Utilities account and credit the Global

Partnership Output-Based Aid: World Bank Contribution.

11. Related PartiesThere were no related party transactions during the year.


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