the mongolia improved governance of extractives project tf...

The Mongolia Improved Governance of Extractives ProjectGrant No: TF 0A2830

Financial Statements as of December 31, 2017

Ulaanbaatar 2018

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"NIlSLEL AUDIT" LLCCertified audit appraisal and accounting consultancy company

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INDEPENDENT AUDITOR'S REPORT

To: PIU Coordinator Sh.TsolmonThe Mongolia Improved Governance of Extractives ProjectGrant No: TF OA 2830

We have audited the Project Financial Statements comprising the Balance Sheet, Project Source andUses of Funds by project activities, Disbursement Report and the Designated Account statement of theMongolia Improved Governance of Extractives Project for the period from August 24, 2016 toDecember 31, 2017. The management of the Mongolia Improved Governance of Extractives Projectis to prepare the Project Financial Statements on the cash receipts and payments basis in conformitywith the International Public Sector Accounting Standards (IPSAS). On this basis, cash receipts arerecognized when received and cash expenditures are recognized when paid rather than when incurred.Our responsibility is to express an opinion thereon based on our audit.

We conducted our audit in accordance with the International Standards on Auditing issued by theInternational Auditing and Assurance Standards Board of the International Federation of Accountants.These standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the annual financial reports are free of material misstatement. An audit includes examiningon test basis, evidence supporting the amounts and disclosures in the annual financial reports. An auditalso includes assessing the accounting principles used and significant estimates made by managementas well as evaluating the overall statement presentation. We believe our audit provides a reasonablebasis for our opinion.

In our opinion, the Project Financial Statements have been prepared in accordance with theInternational Public Sector Accounting Standards issued by the Public Sector Committee of theFederation of Accountants, presented fairly the cash receipts and payments of the project for the periodfrom August 24, 2016 to December 31, 2017 and, furthermore, in all material respects, expenditureshave applied to the purpose intended in the Grant Agreement, Grant No: TF OA 2830.

"Niislel-Audit" LLC

Ulaanbaatar city, Sukhbaatar district, Baga toiruu-44 Phone/Fax: 31-89-18, 70120095E-mail: [email protected]

The Government of MongoliaThe World Bank

Grant No: TF OA 2830The Mongolia Improved Governance of Extractives Project

BALANCE SHEETFor the period from August 24, 2016 to December 31, 2017

(in USD)

Notes Dec 31, 2017 Aug 24, 2016

ASSETS:

Cash and cash equivalents 3 12,081.55Designated account 10,450.16Sub-Account 1,631.39Cumulative Project Expenditures 4 219,357.38Goods 2,102.20Consultant services 160,292.46Non consultancy services 2,335.71Training and Workshop 26,546.43Incremental Operating Costs 28,080.58

TOTAL ASSETS 231,438.93

FUNDS:

IDA's fund 5 230,067.73Earned Interest 6 1,371.20

TOTAL FUNDS 231,438.93

Prepared by: Approved by:

A.OTGONT GALAG SH.TSOLMONFinancial Officer Project Coordinator

"NIISLEL AUDIT" LLCCertified aUd t, appra sa! ad accounting consultancy company


To: PIU Coordinator Sh.TsolmonThe Mongolia Improved Governance of Extractives ProjectGrant No: TF OA 2830

We have audited the accompanying Statement Sources and Uses of Funds of the Mongolia Improved

Governance of Extractives Project submitted to the World Bank for the period from August 24, 2016to December 31, 2017 in support of credit withdrawals under the Grant Agreement, Grant No: TF OA2830.

We conducted our audit in accordance with generally accepted auditing standards that included

examination, on a test basis, of evidence supporting the amounts and disclosures in the Statement ofSources and Uses of Funds. An audit also includes assessing the accounting principles used and

significant estimates made by management as well as evaluating the overall statement presentation.We believe our audit provides a reasonable basis for our opinion.

In our opinion, the Statement of Sources and Uses of Funds submitted together with the internal

controls and procedures involved in their preparation can be relied upon to support the application for

credit withdrawals.

"Niislel-Audit" LLC



The Mongolia Improved Governance of Extractives ProjectGrant No: TF OA 2830

PROJECT SOURCES AND USES OF FUNDSFor the period from August 24, 2016 to December 31, 2017

(in USD)

Sources and Uses Funds Notes Cumulative to Aug 24, 2016Dec 31, 2017

SOURCES OF FUNDS:

IDA's fund 5 230,067.73Earned Interest 6 1,371.20

TOTAL SOURCES OF FUNDS 231,438.93

USES OF FUNDS:

Goods 4 2,102.20Consultant services 4 160,292.46Non consultancy services 4 2,335.71Training and Workshop 4 26,546.43Incremental Operating Costs 4 28,080.58

TOTAL USES OF FUNDS 219,357.38

SURPLUS OF FUNDS OVER USES 12,081.55


A.OTGONTU GALAG SH.TSOLMONFinancial Officer Project Coordinator

The Government of Mongolia

The World BankGrant No: TF OA 2830

The Mongolia Improved Governance of Extractives ProjectSTATEMENT OF USES OF FUNDS BY PROJECT ACTIVITY

For the period from August 24, 2016 to December 31, 2017

(in USD)

Cumulative Disbursement amountProcurementNo. Project Activities plan Consultant Non Training Incremental Total %

Goods consultancy and operatingservices services workshop costs

BUILDING STAKEHOLDERSI CAPACITY TO ENGAGE THRUOGH 50,058.43 - - - 24,140.06 - 24,140.06 48%

TRAINING AND CONFERENCE

STRENGTHENING EITI2 SECRETARIAT COMMUNICATIONS 68,484.34 - 2,374.80 2,335.71 2,406.37 2,524.16 9,641.04 14%

AND KNOWLEDGE BASE

MEETING EITI SECRETARIAT 322,357.83 2,102.20 157,917.66 25,556.42 185,576.28 58%OPERATIONAL NEED

4 CAPACITY BUILDING 9,099.40 - - - - - - 0%

TOTAL 450,000.00 2,102.20 160,292.46 2,335.71 26,546.43 28,080.58 219,357.38 49%


A.OTGONT GALAG SH.TSOLMONFinancia "Officer Project Coordinator

"NIlSLEL AUDIT" LLCCertified audit, appraisal and accounting consultancy company

Date:....... ....


To: PIU Coordinator Sh.Tsolmon


We have audited the accompanying Statement of Expenditures of the Mongolia Improved Governance

of Extractives Project submitted to the World Bank for the period from August 24, 2016 to December

31, 2017 in support of credit withdrawals under the Grant Agreement, Grant No: TF OA 2830.

We conducted our audit in accordance with generally accepted auditing standards that includedexamination, on a test basis, of evidence supporting the amounts and disclosures in the Statement of

Expenditures. An audit also includes assessing the accounting principles used and significant estimates

made by management as well as evaluating the overall statement presentation. We believe our audit

provides a reasonable basis for our opinion.

In our opinion, the Statement of Expenditures submitted together with the internal controls and

procedures involved in their preparation can be relied upon to support the application for credit

withdrawals.

"Niislel-Audit" LLC

Ulaanbaatar city, Sukhbaatar district, Baga toiruu-44 Phone/Fax: 31-89-18 70120095E-mail: [email protected]



STATEMENT OF EXPENDITURES (IDA Withdrawals)For the period from August 24, 2016 to December 31, 2017

(in USD)

WA Application Claimed Credited Amount Amount Differencenumbers type date date claimed credited

WA-1 Advance 2016.08.22 2016.08.24 50,000.00 50,000.00 -

WA-2 Replenishment 2016.09.01 2016.09.06 44,968.66 44,968.66 -





Total 230,067.73 230,067.73 -


A.OTGONT GALAG SH.TSOLMONFinancial officer Project Coordinator


Grant No: TF OA 2830The Mongolia Improved Governance of Extractives Project

DETAILED STATEMENT OF EXPENDITURES (IDA Withdrawals)For the period from August 24, 2016 to December 31, 2017

(in USD)CLAIMED AMOUNT CREDITED AMOUNT

WA_CATEGORIES CATEGORIESWA

numbers NnIncremental DifferenceGoods Consultant Non Training and operatin Total Component Component Component ComponentGosconsultancy Wrsoosrtsn Total Totalservices services Workshop #1 #2 #3

WA-01 ADVANCE 50,000.00 ADVANCE 50,000.00WA-02 - 39,079.97 - - 5,888.69 44,968.66 - - 44,968.66 - 44,968.66 -WA-03 - 23,890.69 - 3,506.94 5,792.99 33,190.62 3,506.94 - 29,683.68 - 33,190.62 -WA-04 - 27,752.04 - 9,475.25 6,385.65 43,612.94 9,475.25 - 34,137.69 - 43,612.94 -WA-05 - 21,686,63 1,649.28 3,173.33 3,539.61 30,048.85 3,173.33 1,649.28 25,226.24 - 30,048.85 -WA-06 2,102.20 21,419.09 - 947.31 3,778.06 28,246.66 947.31 - 27,299.35 - 28.246.66 -

TOTAL 2,102.20 133,828.42 1,649.28 17,102.83 25,385.00 230,067.73 17,102.83 1,649.28 161,315.62 - 230,067.73 -

Prepared by: A proved by:

A.OTGONT GALAG SH.TSOLMONFinancial officer Project Coordinator

"NIISLEL AUDIT" LLCCertified audit. appraisal and accouInting consultancy company

Date:............


To: PIU Coordinator Sh.TsolmonThe Mongolia Improved Governance of Extractives Project

Grant No: TF OA 2830

We have audited the accompanying Designated Account Statement of the Mongolia Improved

Governance of Extractives Project submitted to the World Bank for the period from August 24, 2016to December 31, 2017 in support of credit withdrawals under the Grant Agreement, Grant No: TF OA2830.


examination, on a test basis, of evidence supporting the amounts and disclosures in the Designated

Account Statement. An audit also includes assessing the accounting principles used and significant

estimates made by management as well as evaluating the overall statement presentation. We believe

our audit provides a reasonable basis for our opinion.

In our opinion, the Designated Account Statement submitted together with the internal controls and


withdrawals.

"Niislel-Audit" LLC



The World Bank


The Mongolia Improved Governance of Extractives Project

DESIGNATED ACCOUNT STATEMENTFor the period from August 24, 2016 to December 31, 2017

(in USD)

Notes Dec 31, 2017 Aug 24, 2016

PART A - Account transactions

Beginning balance - -

Add 231,438.93 -IDA Advance 5 50,000.00 -

Replenishment 180,067.73 -

Earned Interest 6 1,371.20 -

Deduct 4 219,357.38 -Goods 2,102.20 -

Consultant services 160,292.46 -Non consultancy services 2,335.71 -

Training and Workshop 26,546.43 -

Incremental Operating Costs 28,080.58 -

Ending balance 12,081.55 -

PART B - Account reconciliations

Amount advanced by the IDA 5 50,000.00 -


Add 40,921.04 -Sub-account (MNT) ending balance 3 1,631.39 -Amount withdrawn but not claimed yet 5 39,289.65 -

Goods - -

Consultant services 26,464.04 -

Non consultancy services 686.43 -

Training and Promotion 9,443.60 -

Incremental Operating Costs 2,695.58 -

Deduct 1,371.20 -

Earned Interest 6 1,371.20 -

Total advance to Designated account for 50,000.00 -

Prepared by Approved by:

A.OTGONT NGALAG SH.TSOLMONFinancial Officer Project Coordinator

"NIISLEL AUDIT" LLCCertified audit appraisal and accounting consultancy company

Date:............


To: PIU Coordinator Sh.TsolmonThe Mongolia Improved Governance of Extractives Project


We have audited the accompanying Sub-Accounts Statement of the Mongolia Improved Governanceof Extractives Project submitted to the World Bank for the period from August 24, 2016 to December

31, 2017 in support of credit withdrawals under the Grant Agreement, Grant No: TF OA 2830.


examination, on a test basis, of evidence supporting the amounts and disclosures in the Sub-Accounts

Statement. An audit also includes assessing the accounting principles used and significant estimates

made by management as well as evaluating the overall statement presentation. We believe our audit

provides a reasonable basis for our opinion.

In our opinion, the Sub-Accounts Statement submitted together with the internal controls and


withdrawals.

"Niislel-Audit" LLC



The World bankGrant No: TF OA 2830

The Mongolia Improved Governance of Extractive Project

SUB-ACCOUNTS STATEMENTFor the period from August 24, 2016 to December 31, 2017

(in USD)

Notes Dec 31, 2017 Aug 24, 2016

Beginning balance - -

Add 177,386.07 -Replenishment from Designated Account 176,932.46 -

Earned Interest 6 453.61 -

Deduct 175,754.68 -

Goods 177.96 -Consultant services 122,613.47 -

Training and Workshop 24,942.67 -

Incremental Operating Costs 28,020.50



A.OTGONT GALAG SH.TSOLMONFinancia officer Project Coordinator


The World bankGrant No: TFOA 2830

The Mongolia Improved Governance of Extractive ProjectNOTES TO THE FINANCIAL STATEMENTSFor the period from Aug 24, 2016 to Dec 31, 2017

1. PROJECT BACKGROUND

On July 06, 2016, the International Bank for Reconstruction and Development/InternationalDevelopment Association "World Bank" and the the Government of Mongolia (represented by theMinistry of Finance) signed the Financing Agreement Grant No.TFOA 2830 to implement theMongolia Improved Governance of Extractive Project (MIGEP). The total approved amount was USD450,000 and the project closing date is December 31, 2018.

The objective of the project is enhance transparency and accountability in the management ofMongolia's extractives sector through an inclusive and sustainable EITI process. Project consists ofthe following components.

Component 1: Building stakeholders capacity to engage through training and conferences.Capacity building of stakeholders in the EITI process, training, sub-national conference in fourregions, training and awareness raising workshop for civil society members and community leaders onEITI and support for dissemination and awareness campaigns, including television campaign, articlesand interview through daily newspapers, websites and radio channels and printing of EITI reports andother promotional materials.

Component 2: Strengthening Mongolia EITI Secretariat's communication and knowledge base.Through the provision of a study tour for the Mongolia EITI, and training and promotion of the EITI.

Component 3: EITI secretariat operational needs. Provision of support to the Mongolia EITISecretariat for purposes of carrying out of the day-to-day Project activities including financialmanagement, procurement, environmental and social management, communication and monitoringand evaluation of project activities.

Component 4: Capacity building. Support for local EITI sub councils' members and otherstakeholders through training, including EITI soum level roadshows for local community and otherstakeholders.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Statement of compliance: The Annual Financial Reports comprise Balance Sheet, Uses of Fundsby Category, Uses of Funds by Project Activity, Disbursement report and the Designated AccountStatement. These reports have been prepared as agreed with the World Bank.

b) Basis of preparation: The financial statements were prepared in accordance with the InternationalPublic Sector Accounting Standards (IPSASs) issued by the International Public SectorAccounting Standards Board (IPSASB) of the International Federation of Accountants. Thefinancial statements have been prepared on a cash basis. On this basis, cash receipts are recognizedwhen received and disbursements are recognized when paid rather than when expenses areincurred. The project financial activities carried out in compliance with the project Financialmanagement manual which has been accepted by the World Bank.

c) Basis of measurement: The financial statements are presented in U.S.Dollars (USD). Thepayments made by Mongolian currency (MNT) which were transferred into USD based on officialexchange rate, as of the date of payment.

d) Basis of presentation: The account balances in the financial statements cover transactionsbetween August 24, 2016 to December 31, 2017.

e) Designated account: In accordance with the Disbursement Letter dated July 6, 2016, the projectopened the Designated Account (DA) for the credit financing acceptable to the World Bank. Theceiling of the designated account is USD 50.000 (fifty thousand dollars). DA is located in StateBank and maintained in USD account number 104900069526.

f) Operating accounts: As specified in the Disbursement Letter, the project opened the MNTOperating Account (OA) to be opened at the same bank which is maintained with ceiling ofequivalent to USD 20,000. The OA will be used for reasonable expenditures related to training andoperational activities with approval of EITI coordinator. Uses of the advance in OA will be reportedand reconciled with the DA on a monthly basis based on the budget approved by MOF on aquarterly basis. The OA MNT was located in State bank until December 31, 2017 and maintainedby the PIU, account number 104900069518. The payments for the eligible expenditures trainingand workshops and incremental operating costs are paid from OAs.

3. CASH AND CASH EQUIVALENTS

The summary of transaction statement of Designated account and Sub-accounts for the period betweenAugust 24, 2016 and December31, 2017 is indicated as follows:

(in USD)

December 31, 2017 August 24, 2016

Cash at the bank:- Designated account 10,450.16 -

- Sub-account 1,631.39

TOTAL 12,081.55

4. CUMULATIVE PROJECT EXPENDITURES

The total disbursed amount of USD 219,357.38 for the period between August 24. 2016 and December31, 2017 is indicated by eligible expenditures and categories as follows:

(in USD)

Non Training IncrementalComponent names Goods Cons consultancy and operating Total

services Workshop costsComp#1:Building stakeholders -capacity to engage - - - 24,140.06 - 24,140.06though training andconference

Consultant Non Training IncrementalComponent names Goods consultancy and operating Total

services Workshop costs

Comp#2:Strengthening EITI

secretariat - 2,374.8 2,335.71 2,406.37 2,524.16 9,641.04communications andknowledge baseComp#3:Meeting EITI 2,102.20 157,917.66 - - 25,556.42 185,576.28secretariat operationalneedComp#4:Capacity building

TOTAL 2,102.20 160292.46 2,335.71 26,546.43 28,080.58 219,357.38

For the reporting period under the EITI total of 3 contracts were committed through shopping and DCmethods. Goods for the total amount of USD 2,102.20 in accordance with the procurement guidelinesissued by World Bank and PPL.

Goods: The total commitment USD2,102.20 and disbursed USD 2,102.20 for the period betweenAugust 24, 2016 and December 31, 2017 as follows:

Contract Description Contract Payment Total amount

number of the goods date date (in MNT) (in USD)

Purchse of Summit Computer1 11/17/105 Lap top tcoputer 9/10/2017 9/11/2017 4,699,000 2,102.20Lap top technology LLC

computer I

TOTAL AMOUNT 4,699,000 2,102.20

Consultant services: The total disbursed USD160.292.46 for the period between August 24, 2016 andDecember 31, 2017 as follows:

(in USD)

Contract Description Name of the Contract Closing Total Total~N of the committed disbursed

number contractor date dateconsultants amount amount

I MIGEP Consultancy Bayarsaikhan.N 11/19/2017 02/19/2018 2,000.00 1,344.5006/17 fee for PSA

Consultancy

2 MIGEP fee for Batpurev.A 11/18/2017 12/25/2017 2,500.00 1,030.1007/17 Media

promotion

MIGEP Project Tsolmon.Ts 08/01/2016 12/31/2018 68735.00 48,055.003.1 Coordinator

2 MIGEP Financial Otgontungalag.A 08/01/2016 12/31/2018 53,685.00 37,617.663.3 Officer

MIGEP Communica Delgermaa.1 08/01/2016 12/31/2018 50,626.00 36,110.003.4 tion Officer

MIGEP IT080/061//284 Ganbat.G 50,626.00 36,134.00

3.2 consultant

TOTAL AMOUNT 228,172.00 160,292.46

Non consultancy services: The total disbursed USD2,335.71 for the period between August 24, 2016and December 31, 2017 as follows:

Total amountContract Contract Supplier Contract Paymentnumber description name date date (in MNT) (in USD)

MIGEP Printing for EITI Nimus1 2.2.4-1 promotional plus LLC 6/08/2017 12/15/2017 2,386,000.00 1,003.96

materials

MIGEP Printing for EITI Admon2 2.2.4-2 promotional printing 6/08/2017 12/15/2017 3,165,000.00 1,331.75

materials LLC

TOTAL AMOUNT 5,551,000.00 2,335.71

Training and workshop: The total disbursed USD26,545.43 for the period between August 24, 2016and December 31, 2017 as follows:

(in USD)

Training and Number of Number of theWorkshop the training participants

Comp#1: Building stakeholders capacity to 24,140.05 19 557engage through training and conferences

Comp#2: Strengthening Mongolia EITISecretariat's communication and knowledge 2,406.37 3 8base

TOTAL 26,546.43 22 565

Incremental operating cost: The total disbursed USD28,080.58 for the period between August 24,2016 and December 31, 2017 as follows:

(in USD)

Comp#2: Strengthening EITI Comp#3: Meeting EITIComponent names secretariat communications and secretariat operational Total

knowledge base need

Utilities (office phone, 1,378.39- 1,38.391,378.39domain, internet)

Office rent (MGF and PIU) 16,064.69 16,064.69Office expenditures - 6,770.13 6,770.13Publish EITI series in daily 2,524.16 2,524.16newspapers

Postal cost - 349.38 349.38

Other costs 925.13 925.13

Bank charge - 68.70 68.70

TOTAL 2,524.16 25,556.42 28,080.58

5. IDA'S FUND

As of December 31, 2017 the project had received USD 230.067.73 (51.12% of the total credit) through

the Designated Account as financing from IDA Credit TFOA 2830 and disbursed USD 219,357.58.

(in USD)

WA Claimed Credited Amount Amount

numbers Application type date date claimed credited

WA-01 Advance 22-Aug-16 22-Aug-16 50,000.00 50,000.00

WA-02 Replenishment 01-Sep-16 06-Sep-16 44,968.66 44,968.66

WA-03 Replenishment 28-Nov-16 09-Dec-16 33,190.62 33,190.62

WA-04 Replenishment 31-Mar-17 14-Apr-17 43,612.94 43,612.94

WA-05 Replenishment 06-Jul-17 31-Jul-17 30,048.85 30,048.85

WA-06 Replenishment 26-Sept-17 09-Oct-17 28,246.66 28,246.66

TOTAL 230,067.73 230,067.73

Below expenditure of USD had claimed to the World Bank but not credited by the year end of

December 31, 2017. However, it was claimed to the World Bank in January 9, 2018 and January 22,

2018 replenished to the in January 2018.

(in USD)

WA Claimed Credited Amount Amount

numbers Application type date date claimed credited

WA-07 Replenishment 09-Jan-18 22-Jan-18 39,289.65 39,289.65

TOTAL 39,289.65 39,289.65

6. EARNED INTEREST

For the reporting period, total accumulated interest income was USDI,371.20 from the designated

account and sub-accounts.

(in USD)

December 31, 2017 August 24, 2016

Designated account (USD) 917.59 -

Operating account (MNT) 453.61

TOTAL -1,371.2

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