kenya national audit office · act, 2003. the audit was conducted in accordance with international...

REPUBLIC OF KENYA

KENYA NATIONAL AUDIT OFFICE

REPO-RT

OF

THE AUDITOR-GENERAL

ON

TOTAL WAR ON AIDS (TOWA) PROJECT - IDA CREDIT N0.4336 AND

CR N0.4841 - KE

FOR THE YEAR ENDED 30 JUNE 2014

NATIONAL AIDS CONTROL COUNCIL

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. ,. TOTAL WAR AGAINST HIV AND AIDS (TOWA) PROJECT

IMPLEMENTED BY NATIONAL AIDS CONTROL COUNCIL

PROJECT GRANT/CREDIT NUMBER 43360 & 48410

AN NUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED

JUNE 30, 2014

Prepared in accordance with the Accrual Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS) '

Table of Content page PROJECT INFORMATION ................ ..................................... ... ..... ... .. .. .... ........... .... ......... .... ... ...... .... ....... ii

MEMBERS OF THE COUNCIL ...... ... ........ .. ... ....... .. ... ....... ............ .. ...... .. ..... .. ......... .... ...... .. .. ................ ... . iii

TOWA ANNUAL REPORT JUNE 2014 ... ............... .............................................................. ..... ......... ... .... iii

STATEMENT ON RESPONSll;31LITIES OF COUNCIL MEMBERS ......... ........ ............... ............. .. .... .. ........... 3

STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2014 .......... .... ....... ....... ........ .... ..... ...... ... ... .. . 5

STATEMENT OF CHANGES IN EQUITY AS AT JUNE 30, 2014 ... ...... ............. ... .. .. .... .. ............... .... ..... ..... 6

STATEMENT OF CASH FLOWS FOR FINANCIAL YEAR ENDED 30TH JUNE 30, 2014 .. ...... ... .............. ..... 7

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2014 ........... ..... ........ ... ... 8

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NATIONAL AIDS CONTROL COUNCIL TOWA PROJECT

PROJECT INFORMATION

Bankers

Citibank N.A Upperhill Branch PO Box 30711-00100 NAIROBI Kenya

Independent Auditor

·~ ,.

The Auditor General Kenya National Audit Office Anniversary Towers PO Box 30084-00100 NAIROBI Kenya

Principal Legal Adviser

Th'e Attorney General State Law Office Harambee Avenue P.O. Box40112 City Square 00200 Nairobi, Kenya

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MEMBERS OF THE COUNCIL

1. Prof. Mary N. Getui Chairperson

2. Dr. Khadijah Kassachoon Member

3. Mr Mutea lringo Member

4. Mr. John Konchella Member

5. Dr. Kam au Thugge Member

6. Rev. Canon Rosemary Mbogo Member

7. Ms. Dorothy Onyango Member

8. His Eminence John Member

Cardinal Njue

9. Mrs. Rukia Subow Member

10. Eng. Erastus K. Mwongera Member

" 11. Prof. Abdulghafur El-Busaidy Member

12. Ms. Catherine Murithi Member

13. Ms. Francisca Gilgitele Member

14. Mr. Peter Kubebea Member

15. Dr. Charles W. Kariuki Member

16. Dr. Nduku Kilonzo Secretary

Chairperson, National AIDS Control Council

Principal Secretary, Ministry of Health

Principal Secretary, Ministry of Interior and

Coordination of National Government

Principal Secretary, Ministry of Devolution

and Planning

The National Treasury

National Council of Churches of Kenya

Kenya

Director, Women Fighting AIDS in Kenya

Chairman, Kenya Episcopal Conference

National Chairperson, Maendeleo Ya

Wanawake Organization

Federation of Kenya Employers

Chairman, Supreme Council of Kenya

Muslims

The National Council of NGOs

Nominated

Nominated

Nominated

Director, National AIDS Control Council

iii


TOWA ANNUAL REPORT JUNE 2014

The Total War against HIV and AIDS (TOWA) project was financed through a credit from

the International Development Association (IDA). The project, which was coordinated by

the National AIDS Control Council (NACC) , contributes to the partnership in the national

response to HIV and AIDS as articulated in the Kenya National HIV and AIDS Strategic

Plans (KNASP-2005/2006 -2008/2009 and 2009/2010-2012/2013). The objectives of the

TOWA project were to:

• Expand the coverage of targeted HIV and AIDS prevention and mitigation interventions.

• Expand access to bed nets among targeted people living with HIV and AIDS and

other households in malaria risk areas.

The two main project components were:

• Strengthening the Governance and Coordination Capacity of the National AIDS Control

·,.Council (NACC).

• ·supporting program implementation by making financial resources available to Civil

Society Organizations (CSOs), private sector and the public sector, for target activities ,. identified through the Joint Annual Programme Review (JAPR)

CSOs and private sector Sub-Project Implementing entities (PSls) participated through

submission of proposals in response to Call for Proposals (CfP) made by NACC. The

proposals were submitted and approved at three levels: National Ad-hoc Committee,

District Technical Committee (OTC) and Constituency AIDS Control Committee (CACC).

Once approved the proposals are forwarded to the Project Co-ordination Office at NACC

headquarters for administrative review.

PricewaterhouseCoopers Kenya was the Financial Management Agency (FMA) charged

with the responsibility of disbursement of funds and review of accountability reports from

approved sub-project implementing entities (PSls) operating at all administrative levels of

the country.

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The TOWA project was expected to close officially on the 31st of December 2013.

However, due delays in accessing funds, the project closure date was extended to June

30th 2014.

During the financial period under review, NACC did not disburse funds to Project Sub '

Implementers (PSls). Instead, NACC focused efforts on following up accountability from

implementers. As at the closure date the accountability from PSls stood at 99% of all the

disbursements made.

Dr Nduku Kilonzo , DIRECTOR/ PROJECT CO-ORDINATOR

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STATEMENT ON RESPONSIBILITIES OF COUNCIL MEMBERS

The National AIDS Control Council (NACC) is the coordinating agency for the HIV and

AIDS and TOWA Project. The responsibilities include, planning and overall management of

the programme, reporting, accounting and Monitoring and Evaluation of programme

activities. It is also in charge of supervision of the implementing agencies and for

management and audit of TOWA resources.

The NACC is accountable to the Government and World Bank for production of outputs,

achievement of the programme objectives, and efficient use of TOWA resources.

Dr'Nduku Kilonzo Director/Secretary to Council

Mr. Kamuren Dennis K. Deputy Director/Finance & Adm·

;;.1/~l~lf ............. .......... ...... Date ... ........ ... . /. ~ .

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STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED JUNE 30, 2014

Note 2013-2014

Ksh.

Revenue from Non exchange transactions

IDA Funds 2 1,353,958,437

GOK Funds 2 12,376,808

1,366,335,245

Revenue from exchange transactions

Interest earned 3 16,867,513

Total Revenue 1,383,202, 758

Expenses

Administrative Expenses 4 100,289,273

·· Operating expenses 5 1, 108,848, 765

Finance Costs 6 3,541 ,304

Total ,Expenses 1,212,679,342

Other Gains/Losses

Surplus /(Deficit) before tax 170,523,416

Taxation

Surplus (Deficit) for the period 170,523,416

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2012-2013

Ksh.

1,585,526,347

1,585,526,347

7,725,004

1,593,251,351

114,441 ,321

2,257,260, 124

1,214,855

2,372,916,300

(779,664,949)

(779,664,949)

• Telephone: + 254-20-342330 Fax : +254-20·3 I 1482 E-Mail: [email protected] Website: www.kenao.go.ke

REPUBLIC OF KENYA

P.O. Box 30084-00 I 00

NAIROBI

OFFICE OF THE AUDITOR-GENERAL

, REPORT OF THE AUDITOR-GENERAL ON TOTAL WAR ON AIDS (TOWA) PROJECT-IDA GREDIT N0.4336-KE and CREDIT N0.4841-KE FOR THE YEAR ENDED

30 JUNE 2014 - NATIONAL AIDS CONTROL COUNCIL

REPORT ON THE FINANCIAL STATEMENTS

Basis of the Audit

I have audited the accompanying financial statements of Total War on Aids (TOWA) Project - IDA Credit Nos.4336-KE and 4841-KE - National Aids Control Council (NACC) set~ C?.ut on pages 4 to 13 which comprise the statement of financial position as at 30 June 2014, and the statement of comprehensive income, statement of changes in equity and state,(l1ent of cash flows and special account statement for the year then ended, and a summary of significant C)Ccounting policies and other explanatory information in accordance .with the provisions of Artide 229 of the Constitution of Kenya, Section 14 of the Public Audit Act, 2003 together with the Financing Agreements No.4336-KE and . 4841-KE dated 18 July 2007 and 27 February 2011 respectively between the International Development Association (IDA) and the Republic of Kenya.

Engagement of Certified Public Accountants

The audit was Gonducted by contracted 21 Certified Public Accountants (CPAs) under my direct ·supervision and co~trol pursuant to· Section 39(3) to (6) of the Public Audit Act, 2003 Laws of 'Kenya.

ThE:! appointed GP.As ~onducted the ~udit in accordanc~ with the International Standards of Auditing with a view to obtaining reasonable assurance that TOWA project fund~ were flpplied ·for · the purposes o.f the .proje9t, e~penditures were eligible as per the financing agreem~nts, thqt funds were disbursed and applied solely for TOWA activities . and that all relevant laws and -regulations were complied with .

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Promoting Arcounlability in the Public Sector \ _. ,. I I ~ · ·

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The auditors duly reported to me the results of their audit. On the basis of my reviews and their reports, I am satisfied that all information and explanations which , to the best of my knowledge and belief, were necessary for the purpose of the audit were obtained.

The Objectives and Scope

The terms of Reference for the CPAs were as follows:-

• To visit and confirm existence of each and every Project Service Implementer (PSI). Due to the spread of the implementers in the country, it was important for the CPAs to ascertain that the implementers actually existed and applied to NACC for the funding and the method used to identify the PSls.

• To review and confirm that Financial Management Agent (FMA) performed due diligence on the approved proposals to determine if the identified organizations

,. had capacity to implement the projects.

• To confirm that funds given to the FMA by NACC were fully supported and accounted for and disbursed in line with approved list of proposals for fund ing. In particular to confirm that disbursements in the FMA records are traced in the Bank statements and records of the organization for 2013/2014 financial year;

• To establish that proper books/records of account have been maintained and are in agreement with the supporting documents, information and explanations obtained from NACC, FMA and PSls.

• To establish that the expenditure was incurred in accordance with the Grant Agreement signed by the implementing agency and in accordance with the approved proposals and work plans by the PSls.

• To ascertain that the funds received were used in accordance with the conditions of the grant agreement with attention to the economy and efficiency and only for the purpose which the financing was provided . That goods and services obtaineCil from third parties were procured in accordance with the relevant procurement procedures. That all the necessary supporting documents, records and accounts have been kept in respect of all reported expenditures;

2

• To ensure that proper records/ books have consistently been prepared in accordance with the accountability guidelines issued by the FMA and in accordance with the International Public Sector Accounting (IPSAS) and give a true and fair view of the expenditure of the project;

• To identify any systemic issues including internal control weakness, accountability concerns and noncompliance with the project legal documents and GOK financial regulations and procedures.

• To determine and quantify any ineligible expenditure or funds used for the purposes not intended in the project as per the Legal Agreement and GOK regulations.

• To cover a sample of at least 20% of PSls or at least 30% of the monetary value of funds disbursed to the PSls in the allocated region for the period ended 30 June 2014.

Management's Responsibility for the Financial Statements

The · 6irectors of the National AIDS Control Council (NACC) are responsible for the preparation and fair presentation of these financial statements in accordance with lnternation9I Public Sector Accounting Standards (Accrual Basis) and for such internal control as directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Directors are also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions of Section 13 of the Public Audit Act, 2003.

Auditor-General's Responsibility

My responsibility is to express an opinion on these financial statements based on the audit and report in accordance with the provisions of Section 15(2) of the Public Audit Act, 2003. The audit was conducted in accordance with International Standards on Auditing . . Those standards require compliance with ethical requirements and that .the . audit be planned and performed t~ obtain reasonable assurance about whether the: financial statements are free from material misstatement.

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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of tile financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my qualified audit opinion .

Basis for Qualified Opinion

1. 0 ,. Results of the Audit of the Financial Statements

1.1 Trade and Other Receivables

Trade and other receivables figure as at 30 June 2014 of Kshs.127,458,655 includes advances to the Financial Management Agency amounting to Kshs.109,752,890.00 (Per note 7 to the Financial Statements) which form the bulk of the receivables. According to the 3 Addendum to the contract for consultants' services (lump-sum) between NACC and FMA dated 18 January 2013, the contract was extended to 30 June 2013. The final FMA report was received in January 2014. However, the contractual obligation for the Financial Management Agency to account for the advances was affected by the lapse of time stipulated in the contract document which put into jeopardy the legal redress available to NACC to recover the advances from the Agency. Further, the receivable figure includes Kshs.13,015,733.00 due from field officers and Kshs.2,773,583.00 in respect of Constituency AIDS goordir:iating Committee (CACC) advance~ whose recoverability is also . doubtful a.s the project h~s coi:ne to an . e[:ld . . ··In adqiti_on the ·receivables figure .includes staff imprests of Kshs.58,000.00 d.ue from. an officer .who no longer works for . NAC.C. The remaining .imprest ·of _ K~hs.60.3,600..00 \,"{as: due_ from the current NACC officers but no recoveries had been made fro'!l ~he,ir :splarie~ . by 30 June 2014, as required by the Government Financial Regulations and ·Procedures. ·

lri the circumstances, it has not been possible to confirm the recoverability of.trade and other receivables balance of Kshs.127,458,655:

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1.2 Trade and Other Payables

Included in the trade and other payables balance as at 30 June 2014 of Kshs.103,651,872.00 is an amount of Kshs.14,536,712.00 attributed to GOK-D control account which was incurred for TOWA project activities from the account without authority from the Treasury. This amount was not budgeted for and had not been reimbursed by the donor to GOK account as at 30 June 2014. In the circumstances, the reimbursement of Kshs.14,~36,712.00 to GOK is doubtful as the project has already closed.

2. Results of the Audit of Funds Distributed to SPls by Appointed Auditors

2.1 Audit of NACC and FMA

Delay in Project Fund Disbursements

Review of the Project disbursements indicated that the FMA during the financial year ended 30th June 2014, applied for Kshs.13,720,019 based on approved proposals and work plan. However, the total amount applied for was not disbursed by the close of the projett. The implication of this observation is that proposals reviewed and approved for funding in the FY 2013/2014 were not funded as planned. These delays in disbursement heavily distorted the project implementation plans, resulting in poor project impact.

~

2.2 Audit of Ministries and other SAGAs involved in TOWA Project Implementation

Audit of sampled Ministries and SAGAs reviewed that the said entities incurred unsupported expenditure amounting to Kshs.300,000 and had un-applied balance of Kshs.4,958,234. Results of a sample selection of 22 out of a population of 56 entitities were as follows:

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Expenditure Category Eligible Ineligible Unsupported . Unplanned Unaccounted for Balance not yet applied Total Disbursement

Amount

(Kshs.) 18, 160,582

300,000 18,447 56,779

4,958,234 23,494,042

During the year under review Kshs.120,269,301 was disbursed to Ministries and SAGAs. Thus if the above sample findings are extrapolated to the entire population the results will be as tabulated:

., ,. NACC and SAGAs

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Expenditure findings 2013/2014

Sample Expenditure Expenditure Extrapolation % Category Kshs. Kshs. age

Eligible 18, 160,582 92,966,570 77%

lneligle - - 0%

Unsupported 300,000 1,535,742 1%

Unplanned 18,447 94,433 0%

Unaccounted 56,779 290,660 0%

Balance not yet applied 4,958,234 25,381 ,896 21%

Totals 23,494,042 120,269,301 100%

The observation from the above findings is that Kshs. 27,302,731 may not have been properly utilized for the project implementation.

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2.3 Audit of Project Sub-Implementers (SPls)

Audit of Expenditure of the Project Sub-Implementers revealed the results tabulated below:

Financial results

Eligible Ineligible Unsupported Unplanned Unaccounted for Balance not yet applied

Total Disbursement

Extrapolated Expenditure

Total (Kshs.)

29,088,519 1,253,292 2,774,629

353,698 5,829,936 4,226,036

43.526.110

During the year under review, the total disbursements to SPls stood at Kshp .. 408,534,657. If from the above sample the amounts are extrapolated the results , will be as shown below:-

Expenditure findings 2013/2014 ~

Expenditure Sample (Kshs) Extrapolation(Kshs) %age

Eligible 29,088,519 273,023,896 67% Ineligible 1,253,292 11,763,358 3% Unsupported 2,774,629 26,042,578 6% Unplanned 353,698 3,319,798 1% Unaccounted 5,829,936 54,719,590 13% Balance not yet applied 4,226,036 39,665,437 10% Total 43,526,110 408,534,657 100°/Q

From the above Kshs. 35,510,761 or 33% of the total expenditure may not have been properly used for the project implementation.

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2.4 Management issues

2.4.1 Poor Book Keeping

Of the sampled 421 PS1.s, it was noted that poor record keeping was the most prevalent control weakness among the PSls. 256 of the 421 PSls did not keep proper books of Account. This translates into 61 % of the population. Failure to keep proper books of Account may result in some Project Funds not being accounted for.

2.4.2 Lack of Accounting Records

Of the 421 PS1 s sampled 183 or 43% of them did not keep accounting records at all. This is a major control weakness as funds may not have been accounted for. ·• . ,

2.4.3 Bank Reconciliations

106 of the 421 PS ls, did not perform bank reconciliations. This translated to failure by 25% of the sampled population to adhere to a key control procedure.

2.4.4 Non - Existence of SPls

· Fifty four (54) SPls were found not to exist. This may have resulted in project funds being disbursed to ghost SPls. , ....

2.4.5 Other control weaknesses • Seven (7) of the sampled and existing PSI did have written procedures. • Two (2) PSI did not have asset registers.

• Twenty one (21) PS ls did not have established Headquarters • Twenty eight (28) SPls did not have qualified staff

• Fifty seven (57) SP1 s did not have terms of reference • Eighty six (86) SPls did not have registration certificates

• Sixty six (66) SPls incurred unauthorised expenditure • Ninety three (93) SPls did not support their expenditure

• Fifty one (51) PSls did not have contract documents

• Fourteen (14) SPls didnot refund their balances

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Qualified Opinion

In my opinion, except for the effect of the matters described in the Basis for Qualified Opinion paragraph, the financial statements present fairly in all material respects, the financial position of the Project as at 30 June 2014, and of its financial performance and its cash flows for the year then ended, in accordance with International Public Sector Accounting Standards (Accrual Basis) and comply with the Financing Agreement No.4336 - KE and CR. No 4841-KE.

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In addition, the special account statement presents fairly, transactions for the year and the ending balance has been reconciled with the books of account.

Emphasis of the Matter

Ineligible. Expenditure

From the audit review ineligible expenditure incurred by SAGAs and the Ministries is recoverable by World Bank. However, World Bank may consider mitigating factors in deciding recoverability of ineligible expenditure by PS ls due to:

.,. ,. 1) Inherent weakness in the design and architecture of Community Driven Development Projects (COD) where audit trail is difficult to execute. ·

2) There are no elaborate structures to achieve adequate internal and accounting controls at the tail end of Project Implementation.

My opinion is not qualified in respect to this matter.

Edward R.O. Ouko, CBS AUDITOR-GENERAL

19 June 2015

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Appendix A

Expenditure findings 2013/2014

Sample Expenditure Extrapolation

Kshs. Kshs. % age

Eligible 29,088,519 273,023,896 67%

lneligle 1,253,292 11,763,358 3%

Unsupported 2,774,629 26,042,578 6%

Unplanned 353,698 3,319,798 1%

Unaccounted 5,829,936 54,719,590 13%

Balance not yet applied 4,226,036 39,665,437 10%

43,526,110 408,534,657 ·100%

Community initiative Expenses (Extract from

the Accounts)

Type of Expense Amount in (Kshs.)

Co~n.selling and Testing 146,587,682.00

PMTCT 5,503,258.00

BCC 99,263,057.00

Male Circumcision 4,380,614.00

Care 65,490,927 .00

Protection of Human Rights 16,435,911.00

Advocacy 53,346,687.00

Mitigation Policy 27,438,867.00

Targetted Mitigation Progrc: 20,775,506.00

Community Empowerment 12,625,262.00

Public Sector Mainstreamin 60,949,299.00

Towa Commodities 16,006,888.00

Total 528,803,958.00

Less Disbursements to

NACC and National SAGAs Disbursement to NACC

(Maina ltote) 24,994,233

Public (Maingi Wawioo) 95,275,068

Sub-total 120,269,301

Amount Disbursed to SPls 408,534,657 .00


STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2014

Assets

Current Assets '

Trade and other Receivables

Cash and Cash equivalents

Inventories

Total Assets

Liabilities

Current Liabilities

Trade and other Payables

Net Assets

Reserves

Accumulated Surplus .,, ,.

Note

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8 9

10

2014

Ksh.

127,458,655

316,471,900

5,568,202

449,498,757

(103,651,872)

345,846,885

2013

Ksh.

671,131,587

12,535,393

683,666,981

(104,694,802)

578,972,178

578,972.178

The f inancial statements set out on pages 4 to 13 were sig d on behalf of the board by:

Kamur:n Dennis K. ...... .......... ... ... .... ... .. . ....... . :': ... ... . !?t..~~·~'(' Deputy Director/Finan

~:;.~~~,~~:~:~~:~y to Councii················· ... -~·······Date ?.1.b/ »J If

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STATEMENT OF CHANGES IN NET ASSETS AS AT JUNE 30, 2014

Accumulated Surplus Total

Balance as at 01/07 /12 1,358,637,127 1,358,637,127

Deficit for the year (1,329,441,755) (1,329,441, 755)

Restatement * 549, 776,806 549, 776,806

Balance as at 30/06/2013 578,972.179 578.972,179

Surplus for the year 170,523,416 170,523,416

Transfer to GOKD (403,648, 709) (403,648, 709)

Balance as at 30/06/2014 345,846,885 345,846,885

* See note 12 on restatement.

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STATEMENT OF CASH FLOWS

Cash flow from operating activities

Deficit for the period

Transferred to GOK

Deficit before Working Capital Changes

Working Capital Changes

Increase inTrade and other Payables

Decrease in Trade and other Receivables

Increase in Inventories

Net Cash flow from Operating Activities

NET Increase /(Decrease)in cash and , cash. equivalent

Cash and Cash Equivalents at the Beginning ~

Cash and Cash Equivalents as at June 30,2014

7

2014 2013

Ksh. Ksh.

170,523,416 (779,664,949)

(403,648, 709)

(233,125,293) (779,664,949)

(1:,042,931) 89,237,923

543,672,933 333,053,344

(5,568,202)

537,061,800 422,291,267

303,936,506 (357,373,682)

12,535,393 369,909,075

316,471,900 12,535,393

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NATIONAL AIDS CONTROL COUNCIL

TOWA PROJECT

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS

Original budget

2013-2014

Revenue l<sh

Property taxes -

Public contributions and donations -

Fines, penalties and levies -Licenses and permits -

Government grants and subsidies 433,681,245

Rendering of services -

Sale of goods -

Finance Income -

Gains on disposal, r·ental income and agency fees . -Others (Sale of Tenders, Bank Interest) -

Total income 433,681,245

Expenses

Compensation of employees

Goods and services -

Finance cost -

Rent paid

Taxation paid -

Other payments (pror·arn and admin costs) 433,655,245

Grants and subsidies paid -

Total expenditure 433,681,245

Surplus for the period -

Notes

l)Other payments-Performance different(11%)

Adjustments

2013-2014

Ksh

-

-

-

-

932,654,000

--

-

-

-

932,654,000

-

-

-

932,654,000

-

932,654,000

-

Final budget Actual on Performance

comparable basis difference

2013-2014 2013-2014 2013-2014

Ksh Ksh Ksh

- - -

- - -

- - -

- - -

1,366,335,245 1,366,335,245 -

- - -- - -

- - -

- - -

- 16,867,513 (16,867,513)

1,366,335,245 1,383,202, 758 (16,867,513)

- - -

- - -

- - -

1,366,335,245 1,212,679,342 153,655,903

- - -1,366,335,245 1,212,679,342 153,655,903

- (170,523,416) 170,523,416

The variance in the budget and the the actual was due to mismatch between the time funds were releasea to NACC for disbursement to PSls and the time the

PSls accounted for the funds. Whereas revenue was recognised on receipt, the expenditure was recognised when the disbuesed funds were accounted for. -,

-............ _

Performance

difference (%)

0%

100%

11%

11%


NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2014

The principal accounting policies adopted in the preparation of these financial statements are set out below:

1.1 Statement of compliance and basis of preparation

The TOWA project financial statements have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS) with particular emphasis on Accrual Basis Financial Reporting under the Accrual Basis of Accounting . The statement of cash flows has been prepared using the indirect method.

The financial statements are presented in Kenya Shillings, which is the functional and reporting currency of the Project and all values are rounded to the nearest one Shilling. The accounting policies adopted have been consistently applied to all of the years presented .

The financial statements have been prepared on the accrual basis following the Grant agreement's expenditure categories. The accrual basis of accounting recognises transactions when they occur and not necessarily when cash is received or paid out

~ ,. by the Project.

i. In-kind donations

ln-'kind donations are contributions made to the Project in the form of actual goods and/or services rather than in money or cash terms. These donations may include vehicles, equipment or personnel services. Where the financial value of in-kind donations can be reliably determined, the Project includes such value in the statement of financial performance both as revenue and as an expense in equal and opposite amounts; otherwise, the donation is not recorded .

ii. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and cash at bank. Bank account balances include amounts held at various commercial banks at the end of the financial year/period. For the purposes of these financial statements, cash and cash equivalents do not include short term cash imprests and advances to authorised public officers and/or institutions which had not been surrendered or accounted for at the end of the financial year/period .

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SIGNIFICANT ACCOUNTING POLICIES (Continued)

iii. Pending bills (Accounts payable)

Pending bills consist of unpaid liabilities at the end of the financial year/period arising from contracted goods or services during the year/period or in past years/periods. When the pending bills are finally settled, such payments are included in the statement of statem~nt of financial position and statement of cash flows in the year in which the payments are made.

iv. Budget

The budget is developed on the cash basis, for the entire project period. The Project's budget was approved as required by Law and National Treasury Regulations, as well as by the participating development partners, as detailed in the project grant agreement.

v. Exchange rate differences

The accounting records are maintained in the functional currency of the primary , ,. economic environment in which the Project operates, Kenya Shillings. Transactions in

.. foreign currencies during the year/period are converted into the functional currency using the exchange rates prevailing at the dates of the transactions. Any foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statements of receipts and payments.

vi. Comparative figures

vii.

Where necessary comparative figures for the previous financial year/period have been amended or reconfigured to conform to the required changes in financial statement presentation.

Subsequent events

There have been no events subsequent to the financial year/period end with a significant impact on the financial statements for the year ended June 30, 2014.

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NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

2 PROJECT FUNDS

3

4

This comprises of the funds received during the year from IDA

2014 2013 Ksh. Ksh.

IDA Funds 1,353,958,437 1,585,526,347 GOK Funds 12,376,808

1,366,335,245 1,585,526,347

OTHER INCOME

Interest Earned 16,867,513 7,725,004 Income from other sources

16,867,513 7,725,004

ADMINISTRATIVE EXPENSES

This refers to administrative costs incurred in running the Project activities and programmes Th~'following administrative expenses were reported during the period:

Kshs Kshs 1) T~lephone Expenses 1,254,709 7,053,751 2) Consumables 1,438,586 3,962,049 3) Design and Printing 36,032,950 25,924,921 4) Other administrative 9,616,282 6,622,799 5) Advertisement 26,145,104 34,801,639 6) Other Allowances 10,523,049 15,967,776 7) Stationery 8,634,504 13,887,703 8) Maintenance of Equipment 6,504,890 6,062,283 9) Audit fees 139,200 158,400

100,289,273 114,441,321

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NOTES TO THE FINANCIAL STATEMENTS (CONT'D) 5 OPERATING EXPENSES

These are expenditures incurred by NACC in program implementation and community

based organizationswho are implementing projects. The expenditures are captured when expenditure reports are received from the sub-project implementers.

The following expenses were reported during the year:

Travel & Accomodation

Seminars & Conferences

Community Mobilisation General Consultancy Services

Administrative Expenses - FMA Community Initiative Expenses

Counselling and Testing PMTCT

BCC

Male Circumcision ·I< , .

Care

Protection of Human Rights

Advocacy "Mitigation Policy

Targetted Mitigation Programmes-OVC

Community Empowerment Public Sector Mainstreaming

Towa Commodities

6 FINANCE COSTS

Bank Charges

7 TRADE AND OTHER RECEIVABLES

FO Advances

FMA Advances Other Advances and Deposits

Revenue Receivable

Staff Imprest A/C

CACC Advances Total Receivable

2014 Kshs

175,331,914 104,968,674

12,599,996 263,007,386

24,136,838

146,587,682 5,503,258

99,263,057 4,380,614

65,490,927 16,435,911 53,346,687 27,438,867 20,775,506 12,625,262 60,949,299 16,006,888

1, 108,848, 765

3,541,304

13,015,733 109, 752,890

1,254,848

661,600 2,773,583

127,458,655

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2013 Kshs

262,292,940 216,912,158

40,908,834 134, 708, 720 111,169,625

448,378,977 2,395,206

244,048,012 10,092,101

113,847,697 14,690,263

196,412,248 130,831,646

1,059,449 86,784,847 61,844,620

180,882, 782 2,257,260,124

1,214,855

13,778,904 598,050,001

14,139,186 39,787,615

299,601 5,076,280

671,131,587


NOTES TO THE FINANCIAL STATEMENTS (CONT'D)

8 CASH AND CASH EQUIVALENTS

9

10

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This refers to the cash at hand and the bank balance held as at the end of the financial year

Cash at Bank

Cash at Hand

lnvetories

TRADE AND OTHER PAYABLES

Other Payables .,. 1'

Payable to suppliers of good and services · Audit fees payable

RESTATi:MENT

2014 2013 Ksh.

316,407,430

64,470 316,471,900

5,568,202

5,568,202

14,536,712 88,975,960

139,200 103,651,872

Ksh. 12,535,393

12,535,393

15,335,176

89,220,426

139,200 104,694,802

The operating expenses for the FY 2012/13 have been restated by Ksh 549, 776,806. This was ocassioned by overstatement of community initiative expenses and understatement

of FMA advance balance by same amount.

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kenya national audit office · act, 2003. the audit was conducted in accordance with international...

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