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Crowe HOrwathTM

THE SOCIAL INVESTMENT FUND OF BELIZE

Financial Statements

For the year ended 31 March 2011 and the three months ended 31 March 2010

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The Social Investment Fund of Belize for the year ended 31 March 2011 and 3 months ended 31 March 2010

Index to the financial statements

Note Page Note

Independent auditors' report Special report on compliance with contractual agreement (Basic Needs Trust

Cumulative sources and uses of funds Fund) statements 3

Compliance schedule to Basic Needs

Statement of cumulative investments (cost Trust Fund

variance report) 5 Special report on compliance with

1 General information 6 contractual agreement (Caribbean

(a) Project Status-Basic Needs Trust Development Bank)

Fund 6 Compliance schedule to CDB Loan # I

(b) Project Status-Caribbean Compliance schedule to CDB Loan #2 Development Bank Loan# 1 7 Special report on compliance with

(c) Project Status-Caribbean contractual agreement (lBRD) Development Bank Loan#2 (SIF Compliance schedule to lBRD Loan 11) 7

(d) Project Status-Commonwealth Debt Report on supplemental schedules

Initiative 7 Project expenditures by funding source

(e) European Union: (Banana Support (categories)

Programme) 7 Project expenditures by funding source

(f) European Union: Poverty GOB project expenditures report Alleviation 8 (detailed)

(g) International Bank for COl project expenditures report (detailed) Reconstruction and Development

BNTF 5 project expenditures report (lBRD) 8

(detailed) (h) Project Status-IBRD 9

CDB Loan #1 project expenditures report (i) Department for International (detailed)

Development-Hurricane Iris COB Loan #2 project expenditures report

Recovery Project 9 (detailed)

2 Summary of significant accounting policies: 9 EU project expenditures report (detailed)

(a) Basis of preparation 10 BNTF 6 project expenditures report

(b) Foreign currency translation 10 (detailed)

(c) Recognition of revenue 10 World BanklIBRD project expenditures

(d) Expenses/costs 10 report (detailed)

3 Cash and bank balance 11 Performance Improvement Recommendations

4 Risk management 11 Site observations

5 Taxation 11

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36

Crowe Horwath,,,

Independent auditors' report

To the Board of Directors of The Social Investment Fund of Belize

Report on the financial statements

Horwath Belize LLP Member Crowe Horwath International

Jasmine Court, Suite 201 35A Regent Street, PO. Box 756 Belize City, Belize 501-227 -6860/6861/6629 501-227-6072 Fax [email protected] www.crowehorwath.bz

We have audited the accompanying financial statements of The Social Investment Fund of Belize (SIF) which comprise of the cumulative sources and uses of funds statements, the statement of cumulative investments, and a summary of significant accounting policies and other explanatory notes for the year ended 31 March 2011. The financial statements of SIF for the three months ended 31 March 20 I 0 were audited by other auditors whose report dated 4 August 2010 expressed an unqualified opinion on those statements. The activities of SIF are financed with funds from the Caribbean Development Bank (CDB), the European Union (EU), the Commonwealth Debt Initiative (CDI), the International Bank for Reconstruction and Development (lBRD) and local counterpart funds from the Government of Belize (GOB).

Management's responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing, and guidelines promulgated by the Caribbean Development Bank and the World Bank. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, 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 the 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

As described in Note 2, the accompanying cumulative sources and uses of funds statements. and the statement of cumulative investments were prepared using the cash basis of accounting in accordance with the Cash Basis International Public Sector Accounting Standards: Financial Reporting under the Cash Basis of Accounting. Cash basis accounting recognizes transactions and acts only when the cash (and/or cash equivalent) is received or disbursed by the entity, and not when they give rise to, accrue or originate rights or obligations although there was no cash movement.

1 Horwath Belize LLP, a Belize registered Limited Uability Partnership, is a member of Crowe Horwath International, a Swiss verein (Crowe HOnNath) Each member firm of Crowe Horwath is a separate and independent legal entity and is licensed to use "Crowe HOIwath" or ''Horwath'' in connection with the provision of audit, tax, advisory or other professional services to their clients Partners: SJP Ermeav FCA. Fellow of the Institute of Chartered Accountants in England and Wales. Lisa Zayden MSc Marketing. Member ofthe American Marketing Association. and Ann McField CPA, Member of the Institute of Chartered Accountants of Belize.

Opinion In our opinion, the accompanying financial statements give a true and fair view of the financial position of SIF as of 31 March 20 II, and of its financial performance for the period then ended in accordance with International Financial Reporting Standards modified by the basis of accounting described in the paragraph above and the accounting policies described in Note 2.

Report on other legal and/or regulatory requirements We did not observe any situations suggesting noncompliance with the financial and other covenants of the Basic Needs Trust Funds (BNTF) Programmes, the COB loans, and the IBRD loan during the period reviewed by us.

Emphasis of matter The Board of Directors of SIF elected to regularize SIF's year end with that of the GOB fiscal year starting with fiscal year 31 March 2010. As such the financial statements for the three months ended 3 J March 20 I 0 is not comparable to the twelve months ended 31 March 2011 .

.H~ ~ ~hP 29 June 2011 -- - -0

2

The Social Investment Fund of Belize for the year ended 31 March 2011 and 3 months ended 31 March 2010 (In Belize dollars)

Cumulative sources and uses of funds statements Cumulative Cumulative

2011 2010 2011 2010 Project Financing Government Funds: GOB - Capital III 16,931,880 16,931,880 Administrative Income 220,000 220,000 Consultancy Income 800 800 Reimbursement from IBRD to GOB (CAP III) (11,783,091) (11,783,091) Reimbursement from World Bank (204,706) (204,706) Capital II 1,140,000 300,000 13,191,260 12,051,260

Reimbursement from CDB to GOB (Cap III) BNTF 5 2,535,914 593,864 9,224,857 6,688,943

Reimbursement from CDB to GOB (Cap Ill) CDB Loan 5,510,664 413,853 12,409,707 6,899,043

IBRD: Initial advance to special account 150,000 150,000 Reimbursement to special account 266,295 266,295 Reimbursements made to GOB 204,706 204,706

Reimbursements made to GOB (CAP III) BNTF 5 (2,535,914) (593,864) 2,251,478 4,787,392 Reimbursements made to GOB(Cap III) CDB Loan (5,510,664) (413,853) (12,741,444) (7,230,780)

World Bank Loan - BMDP 1,172,207 1,172,207 PPF financing: 396,120 1,235,569 839,449 Repayment to IBRD by UNICEF (18,790) (18,790) JAPANESE GRANT 393,568 393,568 aDA 333,752 333,752 European Union 526,138 9,196,377 8,670,239 European Union Counterpart Funding 13,934 640,388 1,403,063 1,389,129 United Nations Children's Fund 163,084 163,084 Inter-American Development Bank 933,801 933,801 SUPPLEMENTAL LOAN 678,591 678,591 CDB/BNTF 1,387,076 1,387,076 PAHO/WHO 238,777 238,777 UKlBNTF 3,342,416 3,342,416 cm (Commonwealth Debt Initiative) 2,868,900 980,000 15,027,298 12,158,398 BNTF 5 Grant 959,052 13,631,705 12,672,653 BNTF 5 Counterpart Funding 840,064 1,922,044 1,081,980

BNTF 6 Grant 2,078,972 385,818 2,739,215 660,243

BNTF 6 Counterpart Funding 203,800 184,000 339,800 136,000 CDB Loan 857,680 15,195,640 14,337,960 CDB Loan Counterpart Funding 117,512 35,252 2,331,190 2,213,678 CDB Loan #2 (SIF Loan II) 175,000 175,000 Inter-bank I Organization transfers 409,391 409,391 Other income 137,620 37,830 1,657,683 1,520,063

Total financing 11,707,799 2,563,288 104,010,199 92,302,400

See notes to financial statements on pages 6 to 11.

The accompanying notes form an integral part of these financial statements. 3


Cumulative sources and uses of funds statements (continued) Cumulative

Project expenditures: Community projects Consultants' services and training Incremental operating costs PPF charges Recovery/other expenses-Projects Total expenditure

Net cash (outflow) inflow Beginning cash balance Ending c balance

~ () ~../ ) Executive Director ~~~~==~-------- )

) )

--l1-~I\--7?~--"\'-~. _ ~ Director

See notes to fmancial statements on pages 6 to 11.

2011 2010

6,691,670 2,901,634 397,533 198,579

1,767,632 380,072 505,935 211,060 119,884

9,573,830 3,600,169

2,133,969 (1,036,881 ) 3,073,640 4,110,521 5,207,609 3,073,640

The accompanying notes form an integral part of these financial statements.

2011

75,271,156 3,850,817

17,656,217 531,568

1,492,832 98,802,590

5,207,609

5,207,609

Cumulative 2010

68,579,486 3,453284

15,888,585 25,633

1,281,772 89,228,760

3,073,640

3,073,640

4

Statement of cumulative investments (cost variance report)

.- --- _ .... -, ____ a _~.~,

Investments

Access Agriculture Community Market Economic infrastructure Education Health Housing Integrated Pilot Project Maintenance Micro Enterprise Vulnerable groups Organizational strengthening Skills Training Social services Water and sanitation Community sub-projects

Consultants' Services

Goods Operating costs Incremental Costs

PPF charges Recovery/other expenses-Projects Total Investments

Cumulative 2010

1,187,873 473,530

62,091 1,882,035

25,738,000 4,915,940 2,408,266

609,761 847,079

2,028,595 -

705,238 523,361

3,395,946 23,801,771 68,579,486

3,466,724

1,125,402 14,749,743 15,875,145

25,633 1,281,772

89,228,760

Year Cumulative Cumulative 2011 2011 2010

694,562 1,882,435 3,823,200 - 473,530 581,948

269,368 331,459 2,870,350 - 1,882,035 10,156,367

1,115,340 26,853,340 35,589,343 394,227 5,310,167 12,651,202

- 2,408,266 622,334 - 609,761 4,370,100 - 847,079 1,876,100 - 2,028,595 3,935,315 - - -

341,078 1,046,316 4,492,420 107,384 630,745 4,388,600

1,176,648 4,572,594 9,086,171 2,593,063 26,394,834 48,786,779 6,691,670 75,271,156 143,230,229

397,533 3,864,257 3,041,118

31,246 1,156,648 780,086 1,736,386 16,486,129 15,609,965 1,767,632 17,642,777 16,390,051

505,935 531,568 -211,060 1,492,832 -

9,573,830 98,802,590 162,661,398

The accompanying notes form an integral part of these financial statements.

Year 2011

-

-800,000 720,000

2,559,600 759,000

-480,000 200,000

-460,000 165,000 809,000 194,000

3,803,000 10,949,600

-

94,000 1,947,606 2,041,606

683,147 -

13,674,353

-, . ---------- -- -- .....

Cumulative Cumulative Year Cumulative 2011 2010 2011 2011

3,823,200 2,635,327 (694,562) 1,940,765 581,948 108,418 - 108,418

3,670,350 2,808,259 530,632 3,338,891 10,876,367 8,274,332 720,000 8,994,332 38,148,943 9,851,343 1,444,260 11,295,603 13,410,202 7,735,262 364,773 8,100,035

622,334 (1,785,932) - (1,785,932) 4,850,100 3,760,339 480,000 4,240,339 2,076,100 1,029,021 200,000 1,229,021 3,935,315 1,906,720 - 1,906,720

460,000 - 460,000 460,000 4,657,420 3,787,182 (176,078) 3,611,104 5,197,600 3,865,239 701,616 4,566,855 9,280,171 5,690,225 (982,648) 4,707,577

52,589,779 24,985,008 1,209,937 26,194,945 154,179,829 74,650,743 4,257,930 78,908,673

3,041,118 (425,606) (397,533) (823,139)

874,086 (345,316) 62,754 (282,562) 17,557,571 860,222 211,220 1,071,442 18,431,657 514,906 273,974 788,880

683,147 (25,633) 177,212 151,579 - (1,281,772) (211,060) (1,492,832)

176,335,751 73,432,638 4,100,523 77,533,161

5

The Social Investment Fund of Belize for the year ended 31 March 2011 and 3 months ended 31 March 2010 Notes to the financial statements (In Belize dollars)

Notes

1. General Information

The Social Investment Fund of Belize (SIF) was established in May 1996 as a statutory body under the Social Investment Fund Act, Chapter 43 of the Laws of Belize. The Mission of the SIF is to respond to the basic human needs of the poorest of the poor in Belize in an efficient, transparent and ethnically sensitive manner utilizing a participatory, collaborative and demand driven approach. SIF works in close collaboration with other social services institutions in Belize to deliver services that are more sustainable in the medium to long term, especially considering Belize's geographic spacing, ethnic diversity, and gender equity and is funded through grants and loans provided by the Caribbean Development Bank (CDB), the International Bank for Reconstruction and Development (IBRD), the Commonwealth Debt Initiative (CDI), the European Union (EU), the Government of Belize (GOB) and other donors.

(a) Project Status - Basic Needs Trust Fund

The office of the Basic Needs Trust Fund (BNTFO), which operated under the Ministry of National Development, was closed in Belize City in December 2001. The BNTFO was responsible for executing community sub-projects financed through the CDB's BNTF 4 Programme, the UK Provision for Basic Needs Programme and the GOB. The BNTF 4 Programme was completed 11 December 2002. At the time the Belize City office was closed, several community sub-projects were still being implemented. In 2002, SIF was given the responsibility for completing those community sub-projects that were under implementation and for implementing those that had already been approved.

On 26 March 2002, the GOB signed a grant agreement with the CDB for US$ 3,254,203 to finance a Basic Needs Trust Fund 5th Programme which funds basic social infrastructural small and large sub-projects in areas such as water and sanitation, education, health, skills training, community markets, access and maintenance projects. The GOB contributed US$ 1,133,000 as was required under the agreement.

In June 2003, GOB was granted an additional amount of US$ 2,006,897 by the Canadian International Development Agency to fund large sub-projects under the Basic Needs Trust Fund 5th Programme. The additional grant was approved on the terms and conditions set out in Grant Agreement No. GA 23/BZE dated 26 March 2002 between the CDB and the GOB.

On 30 January 2009 the GOB was provided with another grant of US$ 3,005,596 from the Special Funds Resources of the CDB to finance the Basic Needs Trust Fund 6th Programme, which funds sub-projects focused on groups such as women, youth and poor households. GOB is also expected to contribute US$ 1,072,180 under the terms and conditions of Grant GA 30/BZE. In 2010, several projects were initiated under this grant, including: Queen Square Market, San Luis Rudimentary Water System, and August Pine Ridge School, etc.

6


(b) Project Status - Caribbean Development Bank Loan #1

On 1 March 2004, the GOB entered into a loan agreement with the CDB for funds totaling US$ 7,073,000 (Loan No. 15 SFR-OR-BZE). The Terminal Disbursement Date of this loan agreement has been extended to 30 September 2011.

These funds are used for social and economic infrastructure, social services and organizational strengthening sub-projects aimed at reducing poverty in Belize and for the institutional support of SIF. CDB Projects initiated in 2009 include: Holy Ghost Primary School, Pomona Multipurpose Building and Stann Creek Ecumenical High School Computer Lab. Projects initiated in 2010 include: Rudimentary Water Systems in Maya Center/Kendall, Sundaywood, San Antonio, Buena Vista, Blackman Eddy/Ontario, Santana/Corozalito; Resource/Library and/or IT Centers in San Ignacio, Esperanza, Santa Clara/San Roman, Guinea Grass, Gracie Rock, San Joaquin, San Jose Succotz; Trial Farm Drainage Project (Phase 1); Mopan Health Clinic (Phase 2) and San Pedro Columbia Health Center; St. Ann's Women's Group; Queen Square Market; small infrastructural projects at Roaring Creek Nazarene School and other schools throughout the country.

(c) Project Status - Caribbean Development Bank Loan #2 (SIF Loan II)

The GOB entered into a loan agreement with the CDB for funds totaling US$ 15,000,000 (Loan No. 19/5FR-OR-BZE) on 16 November 2010 (SIF Loan II). The funds are earmarked for projects in six main categories including water and sanitation, health, economic/other infrastructure, education, social services and organizational strengthening. The period of disbursement is up to 30 September 2015. The borrower is expected to contribute not less than BZ$ 3,597,000. At year end, CDB had not yet made its first disbursement. Through counterpart funding by GOB, works has commenced on the Golden Haven Home in Hattieville.

(d) Project Status - Commonwealth Debt Initiative

In December 2002, SIF received funding under the UK Debt Relief Programme (Commonwealth Debt Initiative) and commenced implementation of community sub-projects in 2003. Additional funds were granted thereafter. At the end of 2011, a cumulative amount of BZ $15,027,298 was used to fund community sub-projects. Some of the projects funded by CDI in 2010 include: Hope Creek Methodist School and installation of water facilities in three villages - Cotton Tree, St. Matthews and Frank Eddies.

(e) European Union (Banana Support Programme)

The European Union (EU) entered into a comprehensive development project agreement with SIF aimed at alleviating poverty and improving living conditions of select rural communities in the banana producing areas of Belize through improvement of primary education and other water and sanitation infrastructure. The EU provided a grant of £1 ,840,608.90. Projects funded under this grant include: United Community Primary School Extension Project, Cowpen/Garage Rudimentary Water System Construction Project, San Juan Satellite Health Center Extension Project and the Independence Primary School Extension Project. The implementation period for this agreement ended on 30 April 2008.

7


(f) European Union: Poverty Alleviation

In June 1999, the European Union entered into a comprehensive development project agreement with SIF to alleviate poverty and improve the living conditions of the most vulnerable groups in Belize. This included improving primary education and training center facilities and supporting small scale productive projects in the poorest communities by enabling access to a microenterprise credit scheme. The project was completed 31 December 2002.

The total funding was 1,600,000 Million European Currency Units (MECU) of which 400,000 MECU was slated for the education component and 1,200,000 MECU for the micro-enterprise credit project. Main results of the project were:

1. Eight primary schools and training centers rehabilitated and functioning. 2. Micro-entrepreneurs had access to over 2,250 short and medium term loans. 3. Family income was expected to increase by 40% to 60% for participating entrepreneurs. 4. The lasting effect of Belizean Micro-Finance Institutions and Training Centers.

On 21 December 2007, an agreement was signed between the Ministry of Economic Development (MED) and the EU for the implementation of Emergency Reconstruction after Hurricane Dean in Belize. The total cost of the action eligible for financing by the European Union was estimated at € 600,000. The project aimed to reduce poverty by mitigating the vulnerability of poor rural families affected by Hurricane Dean and rehabilitating the rural productive sector, thereby contributing to increased income, employment and livelihood options. Works continued in 2010 at Independence Primary School.

On 15 May 2009, an agreement was signed between the MED and the EU for € 483,181.81 to implement a water system for Crooked Tree Village in order to improve the living and working conditions of residents of this poor community by providing a reliable, potable, safe and yearround water supply to Crooked Tree village. Works continued in 2010.

(g) International Bank for Reconstruction and Development (IBRD)

Loan Agreement No 4142-0 BEL was executed on 14 May 1997 between Belize, (Borrower) and IBRD (Lender) to fund SIF. The loan was for US$ 7,000,000 repayable in twenty-three installments of US$ 290,000 and one final payment of US$ 330,000. Repayment is to be made twice yearly on 15 November and 15 May, commencing 15 November 2002 and ending 15 May 2014.

In 2001, a Supplementary Loan (No. 4142-1 BEL) of US$ 1,400,000 was secured under the "Agreement Amending the Loan Agreement." This second agreement amends the first and is inclusively repayable in twenty-three semi-annual installments of US$ 60,000 on 15 May and 15 November of each year, commencing 15 November 2006 and ending 15 May 2018, with a final payment of US$ 20,000. Interest will be charged on the principal amount withdrawn and outstanding from time to time at a rate of three fourths of one percent, while the first loan shall accrue interest at one half of one percent annually.

8


(g) International Bank for Reconstruction and Development (IBRD) (continued)

Projects were executed by SIF, an independent executing agency, who reported to the World Bank and the GOB. GOB was directly responsible for the overall SIF promotion, coordination, appraisal, financing, supervision, execution and completion of community projects. SIF was also responsible for the preparation and submission of quarterly financial reports to the World Bank. The project was completed in March 2003.

(h) Project Status - IBRD

On 2 December 2010, Loan Number 7958-BZ was executed between the GOB and the IBRD for US$ 15,000,000 to improve access to basic municipal infrastructure and to enhance the service delivery and municipal management in selected towns. The Belize Municipal Development Project is designed into 3 categories: municipal infrastructure investments, technical assistance and capacity building for TeC's MLLGRD and MNRE and project management. Prior to the signing of said loan, the IBRD provided an advance facility in respect of the loan agreement of up to US$ 800,000 (Project Preparation Advance No. IBRD P4520-001 agreement signed on 16 July 2009 between the GOB and IBRD). The advance facility was used in 2010 for the preparation of a project designed to improve municipal service delivery and its sustainability in up to seven selected municipalities (San Ignacio/Santa Elena, Belmopan City, Benque Viejo Del Carmen, Dangriga, Punta Gorda, Corozal and Orange Walk), including consultancies on traffic management, municipal finance and revenue enhancement, participatory investment planning and municipal development strategies, and workshops on municipal capacity building, social assessment and indigenous framework.

(i) Department for International Development - Hurricane Iris Recovery Project

As a result of Hurricane Iris, funds equivalent to £ 305,112 from the UK Department for International Development were provided to SIF for the implementation of recovery projects. These included the construction of starter houses, rudimentary water systems and hurricane shelters. Funds were originally granted to BNTF 4 under the Provision for Basic Needs Programme, which completed in 2002.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

9


2. Summary of significant accounting policies (continued)

(a) Basis of preparation

The financial statements have been prepared in Belize dollars (BZ$) under the historical cost convention and conform with International Public Sector Accounting Standards (IPSAS), "Financial Reporting under the cash basis of accounting" issued by the Public Sector Committee of the International Federation of Accounts and World Bank guidelines appropriate to the activity in which SIF operates.

SIF's accounting and financial reporting system aims to enable users to assess its accountability for the funds available for its activities. In order to satisfy this objective, the following accounting policies were adopted:

(b) Foreign currency translation

Items included in the financial statements are measured using the currency of the economic environment in which the entity operates ('the functional currency'). The financial statements are presented in Belize dollars, which is the organization's functional and presentation currency. SIF recognizes foreign currency amounts received from funding agencies at the Belize equivalent credited to them by the Central Bank of Belize without accounting for any foreign exchange gain or loss.

(c) Recognition of revenue

The fund receipts (cash received from the Bank/or GOB) are recognized and accounted for when they are effectively deposited (value-date) in the Fund's bank account. The expenses are recognized when they are paid (check's date or value-date of direct payment by the Fund).

SIF's Cumulative Sources and Uses of Funds Statements reflect receipts and disbursements relating to the community projects and operating costs.

Funds available in the Special Account are restricted to SIF's purposes only. Fixed assets procured with SIF funds belong to SIF and are restricted to SIF purposes until SIF's completion. SIF is obliged to maintain adequate records to control and protect all its fixed assets as well as other resources secured from SIF funding.

(d) Expenses/Costs

All costs related to SIF's activities are classified where appropriate, according to the work plan budget for the period. The statement reflects fixed assets as "Goods" and are recorded and reported at acquisition cost at date of purchase. No depreciation is charged to these fixed assets acquired by SIF's funds.

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3. Cash and bank balances

Cash and cash equivalents may include cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.

Cash at bank

4. Risk management

Credit Risk and interest Rate Factors

2011 BZ$

5,207,609

2011 US$

2,603,805

2010 BZ$

3,073,640

2010 US$

1,536,820

Financial instruments which potentially subject SIF to concentrations of credit risk consist principally of deposits with financial institutions.

5. Taxation

Under the Social Investment Fund Act, Chapter 43 of the Laws of Belize, Revised Edition 2000, SIF is exempt from the payment of income tax and property tax. All instruments executed by or on behalf of SIF are also exempt from stamp duty.

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i~. Crowe Horwath'M


To the Basic Needs Trust Fund (BNTF) Programme


Jasmine Court, Suite 201 35A Regent Street, P.O. Box 756 Belize City, Belize 501-227-6860/6861/6629 501-227-6072 Fax [email protected] www.crowehorwath.bz

We have audited the cumulative sources and uses of funds statements, and the statement of cumulative investments for the year ended 31 March 2011 for the Social Investment Fund (SIF) of Belize, entered into by the Government of Belize (GOB), the Caribbean Development Bank (CDB), the European Union (EU), the Commonwealth Debt Initiative (CDI), the International Bank for Reconstruction and Development (IBRD), executed by SIF, and have issued our report thereon dated 29 June 20 II.

In relation to our audit, we determined compliance with financial and accounting contractual clauses and articles within the Special and General Provisions of the BNTF 5th and 6th Grant Agreements, and compliance with the applicable provisions of the SIF's Operating Regulations as of 31 March 2011. We have examined the Special Conditions described in Sections 3 and 5 ofthe BNTF's Operations Manual.

We conducted our audits in accordance with International Standards on Auditing and guidelines promulgated by the CDB. Those standards require that we plan and perform the audit to obtain reasonable assurance that the SIF has complied with the pertinent Grant Agreement contractual clauses, applicable laws and regulations, and the provisions contained in the BNTF Operations Manual. The audit includes examining, on a test basis, the appropriate evidence.

In our opinion, for the year ended 31 March 2011 the SIF complied in all material respects with financial and accounting contractual clauses of the BNTF's Grant Agreements, and with all applicable laws and regulations and the Operating Regulations of the Fund.

II ~ '&1m J 4A (J 29 June 2011 ~r~"qv

Horwath Belize LLP. a Belize registered Limited Liability Parlnership, is a member of Crowe Horwath International, a Swiss verem (Crowe Horwath). Each member firm of Crowe Horwath is a separate and independent legal entity and is licensed to use "Crowe Horwath" or "Horwath" in connection with the provision of audit, tax, advisory or other professional services to their cfients. Partners.' SJP Ermeav FCA, Fellow of the Institute of Chartered Accountants in England and Wales, Lisa Zayden MSc Marketing, Member of the American Marketing Association, f~ Ann McField

CPA. Member of the Institute of Chartered Accountants of Belize.


Basic Needs Trust Fund (5th and 6th Programmes)

This is a summary of compliance with SIP's BNTF Operations Manual, exceptions noted in the Management Letter.

3.02

5

5.06

5.26

The following represents the minimum staff component of the BNTFO:

a) Project Manager

b) Administrative I Accounting Officer (AO)

c) Community Liaison Officer

d) Confidential Secretary I Receptionist

e) Engineer

Pro

The stages of the sub-project cycle are:

a) Identification

b) Preparation

c) PSC Approval

d) CDB Appraisal IApproval INo Objection

e) Engagement of Consultants for Design and Supervision

1) Procurement

g) Monitoring and Evaluation

h) Completion and Hand-Over

i) Operation

and Screen

Upon receipt of sub-project requests, appropriately prepared on the BNTF Request Form, the Community Liaison Officer (CLO) and the BNTFO will record basic data on the ect.

Compliant

Compliant with exceptions noted in the Management Letter

Compliant

13

..

Crowe Horwath'M


To the Caribbean Development Bank


Jasmine Court, Suite 201 35A Regent Street, P.O. Box 756 Belize City, Belize 501-227 -6860/6861/6629 501-227-6072 Fax [email protected] www.crowehorwath.bz

We have audited the cumulative sources and uses of funds statements, and the statement of cumulative investments for the year ended 31 March 2011 for the Social Investment Fund (SIF) of Belize, entered into by the Government of Belize (GOB), the Caribbean Development Bank (COB), the European Union (EU), the Commonwealth Debt Initiative (CDI), the International Bank for Reconstruction and Development (IBRD), executed by SIF, and have issued our report thereon dated 29 June 2011.

In relation to our audit, we determined compliance with financial and accounting contractual clauses and articles within the Special and General Provisions of COB Loans #1 and #2, and compliance with the applicable provisions of the SIF's Operating Regulations as of 31 March 2011. We have examined the Special and General Provisions described in the respective loan agreements.

We conducted our audits in accordance with International Standards on Auditing and guidelines promulgated by the COB. Those standards require that we plan and perform the audit to obtain reasonable assurance that the SIF has complied with the pertinent loan contractual clauses, applicable laws and regulations, and the provisions contained in the BNTF Operations Manual. The audit includes examining, on a test basis, the appropriate evidence.

In our opinion, for the year ended 31 March 2011, the SIF complied in all material respects with financial and accounting contractual clauses of the respective loan agreements, and with all applicable laws and regulations and the Operating Regulations of the Fund,

If~ ~J.v~f 29 June 2011

Horwath Belize LLP, a Belize registered Limited Liability Partnership, is a member of Crowe Horwath International, a SWISS verein (Crowe Horwath). Each member firm of Crowe H0r.:at~ IS a separate and independent legal entity and is licensed to use "Crowe Horwath" or "HDlwath" in connection with the provision of audit, tax, advisory or other prof~sslonal ~ervlces to their clients Partners SJP Ermeav FCA, Fellow ofthe Institute of Chartered Accountants in England and Wales. Lisa Zayden MSc Marketing, Member ofthe Amencan Marketing ASSOCiation, 'f14Ann McFleld

CPA. Member of the Institute of Chartered Accountants of Belize


Caribbean Development Bank Loan #1

This is a summary of compliance with the loan agreement, exceptions noted in the Management Letter.

Article VII

S7.01 (4)

Article IV 4.04

S6.02

Provisions applicable to sub-projects

Conditions for financing of sub-projects

General

Procurement

uirements

Quarterly reports of status portfolio

Schedule of Cumulative Commitments and Disbursements and Anticipated Approvals and Disbursements for the next six months

Annual work

Audited Statements

Consultants Report on Impact Evaluation

Project Completion Report

Compliant

Compliant

Compliant

Compliant

Compliant

Compliant

Due within 6 months of project completion (i.e. 30 March 2012)

15


Caribbean Development Bank Loan #2

This is a summary of compliance with the loan agreement. (During this fiscal period, CDB did not make its first disbursement.)

Article V

S 5.01

Article IV

S4.01

Article IV

S4.03

Article VI

Article VI

S6.01

Article VI

S6.05

Article VIS 6.06

Conditions precedent to first disbursement

Establish special bank account at commercial bank acceptable to COB.

Create and fill two additional positions (1 engineer and I social development officer).

Withdrawal and application of loan

Procurement

Activities

Particular conditions

Execution of the Project (staffing)

GOB to implement through the Ministry of Local Government the portion of the Technical Assistance Component in respect of the institutional and operational framework of the Village Water Boards.

GOB to procure that the Statistical Institute of Belize implement the portion of the Technical Assistance Component for the update of the Poverty Map and Poverty Index

Environmental Screening Checklist (Site specific checklist) for sUb-projects.

Project Proposal to Increase Sustainability of sub-projects Due 31 December 20 I 0

Compliant

No loan draw downs were made during this fiscal .

Not yet commenced

Qualified management personnel in place at SIF, the Executing

Technical Assistance Component not yet commenced.

Technical Assistance Component not yet commenced.

SIF currently utilizes its Environmental Screening Checklist for other COB funded loans/grants.

Not commenced

16


Caribbean Development Bank Loan #2 (continued)

Article VII Sub-projects Not yet commenced

S7.01 Appraisal, financing and supervision of sub-projects

Design, inspection and certification of infrastructure loans

Eligibility of sub-projects

Sub-project limits

Sub-project approvals

Approval of contracts / variations in respect of sub-projects

General Provisions

Article VI Guarantee Agreement Undetermined S6.01 (a)(i)

Article VI Requirement for non-CDB members Not Applicable S6.01 (a)(ii)

Article VI Legal Opinion Compliant S 6.01 (a) (iii) (iv)

S6.01 (a)(v) Designation of Representatives and Authorization for Compliant and (vi) Withdrawals

S6.08 Reporting Requirements

Quarterly reports of status portfolio Not applicable at this stage.

Schedule of Cumulative Commitments and Disbursements and Not applicable at this Anticipated Approvals and Disbursements for the next six stage. months

Annual work plan and budget Not applicable at this stage.

Audited Statements Not applicable at this stage.

Consultants Reports (Review of Village Water Boards, June 2011, May 2011, Development of Monitoring and Evaluation System, Oct 2011 and Dec Development of Poverty Map and Index, Impact Evaluation 2013 respectively including Beneficiary Assessment.

Environmental Performance Report Due 31 May 2012

Annual Monitoring and Evaluation Report Due within 30 days of the end of the financial year

Project Completion Report Due within 6 months of project completion.

17

Crowe Horwath'M


To the International Bank for Reconstruction and Development


Jasmine Court, Suite 201 35A Regent Street, PO Box 756 Belize City, Belize 501-227 -6860/6861/6629 501-227-6072 Fax eall [email protected] www.crowehorwath.bz

We have audited the cumulative sources and uses of funds statements, and the statement of cumulative investments for the year ended 31 March 2011 for the Social Investment Fund (SIF) of Belize, entered into by the Government of Belize (GOB), the Caribbean Development Bank (CDB), the European Union (EU), the Commonwealth Debt Initiative (CDI), the International Bank for Reconstruction and Development (IBRD), executed by SIF, and have issued our report thereon dated 29 June 2011.

In relation to our audit, we determined compliance with financial and accounting contractual clauses and articles within the Special and General Conditions of the loan agreement, and compliance with the applicable provisions of the SIF's Operating Regulations as of 31 March 2011. We have examined the Special and General Conditions described in the loan agreement.

We conducted our audits in accordance with International Standards on Auditing and guidelines promulgated by the World Bank. Those standards require that we plan and perform the audit to obtain reasonable assurance that the SIF has complied with the pertinent loan contractual clauses, applicable laws and regulations, and the provisions contained in the loan agreement. The audit includes examining, on a test basis, the appropriate evidence.

In our opinion, for the year ended 31 March 2011 the SIF complied in all material respects with financial and accounting contractual clauses of the loan agreement, and with all applicable laws and regulations and the Operating Regulations of the Fund .

.tI ~ tBttnw/.v/-vP 29 June 2011 - -- cf

HOfwath Belize LLP, a Belize registered Limited Liability Partnership, is a member of Crowe Horwath International, a Swiss verein (Crowe Horwath). Each member firm of Crowe Horwath IS a separate and independent lega/ entity and is licensed to use "Crowe Horwath" or "Horwath" in connection with the provision of audit, tax, advisory or other professional se':'lces to their clients Partners: SJP Ermeav FCA, Fellow of the Institute of Chartered Accountants in England and Wales, Lisa Zayden MSc Marketing, Member of the American Marketing Association. f'8' Ann McFleld CPA, Member of the Institute of Chartered Accountants of Belize.


International Bank for Reconstruction and Development

This is a summary of compliance with the loan agreement, exceptions noted in the Management Letter.

Article V

5.01

5.02

Environmental and social safeguards established

S2 '>r,.,. .. ~.n .... and Evaluation

S 2 - B.

Annual audited financial statements

S3 Procurement

Procurement Plan

S VI Other Covenants - staff

Implementation Plan presented to World Bank's mission on their recent visit to Belize late March 2011.

Compliant, SIF has documented these safeguards in its: Environmental Management Framework, Land Acquisition and Involuntary Resettlement Policy Framework and the Framework.

Not due until June 2011

Not due now

Not due now

Compliant, except contract with auditors was not signed until May 2011

Compliant, recently revised April 2011. See Letter.

19

.. ,:?1, Crowe Horwath'M



Jasmine Court, Suite 201 35A Regent Street, PO. Box 756 Belize City, Belize 501-227-6860/6861/6629 501-227-6072 Fax [email protected] www.crowehorwath.bz

To the Minister of Finance and the Social Investment Fund of Belize Board of Directors

We have audited the cumulative sources and uses of funds statements, and the statement of cumulative investments for the year ended 31 March 2011 for the Social Investment Fund (SIF) of Belize, entered into by the Government of Belize (GOB), the Caribbean Development Bank (COB), the European Union (EU), the Commonwealth Debt Initiative (CDI), the International Bank for Reconstruction and Development (lBRD), executed by SIF, and have issued our report thereon dated 29 June 2011.

We conducted our audits in accordance with International Standards on Auditing. Those standards require that we plan and perfonn the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements.

We conducted our audits for the purpose of expressing an opinion on the sources and uses of funds statements and the statement of cumulative investments of the SIF taken as a whole. The accompanying supplementary financial infonnation is presented for the purpose of additional analysis and should not be considered necessary to the presentation of the basic financial statements. We have read this information and verified that it is consistent with the infonnation provided in the financial statements and is part of the audit mentioned in the first paragraph and, in our opinion, except for the limitations mentioned in our report on the basic financial statements, is fairly presented, in all material respects, when taken as a whole with the basic financial statements.

II~ ~~A"J~ 29 June 20 I I ~. "1"

Horwath Belize LLP, a Belize registered Limited Liability Partnership, is a member of Crowe .Horwath Intern~tional, a S~/SS verein .(Crowe HOlwath). Each member firm of Crowe Ho~at~ is a separate and independent legal entity and IS licensed to use "Crowe Horwath" or "Horwath" In conn~ctlon With the proVISIon of audit, tax, advisory ~r other prof~sslonaJ ~efVlces to their clle,?ts Partners: SJP Ermeav FCA Fellow of the Institute of Chartered Accountants in Eng/and and Wales, Lisa Zayden MSc Marketmg, Member of the Amencan Marketmg Assoclatlon'2f1 Ann McFteld

CPA. Member of the Institute of Chartered Accountants of Belize


Project expenditures by funding source (categories) CDB CDB WORLD 2011 2010

Expenditures: GOB cm BNTF5 LOAN#1 LOAN#2 EU BNTF6 BANKlIBRD TOTAL TOTAL

Access 411,047 12,625 270,890 694,562 243,768 Consultancy 33,895 23,217 12,000 150,914 66,022 111,485 397,533 198,579 Education 541,658 366,547 53,516 14,810 138,809 1,115,340 759,041 Goods 25,110 6,136 31,246 2,928 Health 140,931 253,296 394,227 121,801 Operational expenses 1,392,497 400 5,522 267,365 3 (81,341) 29,673 122,267 1,736,386 377,144 Organizational strengthening 157,130 183,948 341,078 48,331 Recovery/other expenses-Projects 3,224 64,811 43,025 100,000 211,060 119,884 Skills training 89,302 18,082 107,384 8,947 Social services 70,042 59,965 908,977 9,999 127,665 1,176,648 448,638 Community markets 16,247 253,121 269,368 Water and sanitation 965,295 1,172,649 423,072 32,047 2,593,063 1,271,108 PPF refinancing 505,935 505,935 TOTAL 1,454,726 2,152,590 1,881,876 2,593,036 10,002 (23,506) 765,419 739,687 9,573,830 3,600,169

71

L


Project expenditures by funding source CDB COB WORLD 2011 2010

Expenditures: GOB COl BNTF5 LOAN#1 LOAN#2 EU BNTF6 BANKlIBRD TOTAL TOTAL

Advertisement 10,109 10,109 2,780 Audit Fees 17,212 17,212 22,881 Bank Charges 2,160 400 560 507 3 264 177 4,071 1,097 Board of Directors expense 14,414 14,414 1,628 Computer 20,629 6,136 40,854 67,619 2,928 Equipment 4,218 4,218 598 Furniture 264 17,819 18,083 Consultancy 33,895 23,217 12,000 150,914 66,022 619,961 906,009 198,579 Fuel 69,487 1,303 70,790 18,671 Income tax 0 39 Insurance 53,970 53,970 10,670 Licensing 1,400 1,400 400 Miscellaneous expense 22,051 115,280 (38,580) 102,179 46,717 247,647 6,718 Postage 3,309 3,309 545 Promotional expense 16,944 4,962 1,689 23,595 1,625 Rental 61,352 61,352 14,963 Salaries 708,787 167,527 29,040 905,354 210,393 Severance 546 Gratuity 171,475 48,897 220,372 10,775 Social Security employer's contribution 18,434 18,434 5,163 Staff advance - personal loans 2,533 2,533 (4,559) Staff advance - travel (330) -330 330 Supplies 27,248 (434) 26,814 6,738 Training 7,116 (3,835) 3,281 21,949 Travel 51,313 (446) (l1O) 50,757 19,964 Utilities 81,216 (36) 81,180 19,645 Maintenance 55,520 55,520 12,532 General operating costs 14,446 14,446 Projects 2,128,973 1,858,218 2,109,947 9,999 14,810 569,724 6,691,671 3,012,571 TOTAL 1,454,726 2,152,590 1,881,876 2,593,036 10,002 (23,506) 765,419 739,687 9,573,830 3,600,169

22


Gob project expenditures report (detailed)

Expenditures:

Advertisement Audit Fees Bank Charges Board of Directors expense Computer Equipment Furniture Consultancy Fuel Income tax Insurance Licensing Miscellaneous expense Postage Promotional expense Rental Salaries Severance Gratuity Social Security employer's contribution Staff advance - personal loans Staff advance - travel Supplies Training Travel Utilities Maintenance General operating costs Projects TOTAL

2011

10,109 17,212 2,160

14,414 20,629

4,218 264

33,895 69,487

53,970 1,400

22,051 3,309

16,944 61,352

708,787

171,475 18,434 2,533

(330) 27,248

7,116 51,313 81,216 55,520

1,454,726

2010

(1,884) 15,925

365 1,628

521 18,671

39 10,670

400 5,218

481 742

14,963 175,180

546

5,163 (4,559)

330 3,321 7,328

15,575 19,645 12,532

302,800

23

The Social Investment Fund of Belize for the year ended 31 March 2011 and 3 months ended 31 March 2010 Notes to the financial statements (In Belize dol/ars)

CDI project expenditures report (detailed)

Expenditures:


2011 2010

400 78

23,217

2,128,973 204,674 2,152,590 204,752

24


BNTF 5 project expenditures report (detailed)

Expenditures:


2011 2010

560 92

6,136

12,000

4,962 883

8,947

1,858,218 934,622 1,881,876 944,544

25


CDB Loan #1 project expenditures report (detailed)

Expenditures:


2011 2010

507 155

150,914 88,621

115,280

167,527 33,233

48,897 10,775

(36)

2,109,947 1,319,800 2,593,036 1,452,584

26

The Social Investment Fund of Belize for the year ended 31 March 2011 and 3 months ended 31 March 2010 Notes to the financial statements (In Belize dol/ars)

CDB Loan#2 project expenditures report (detailed)

Expenditures:


2011 20]0

3

9,999 10,002

27


EU project expenditures report (detailed)

Expenditures:


2011

264

(38,580)

14,8\0 (23,506)

2010

6,956 129

304

553,475 560,864

28


BNTF 6 project expenditures report (detailed)

Expenditures:


2011

177

66,022 1,303

102,179

1,689

29,040

(434) (3,835)

(446)

569,724 765,419

2010

1,400

47

2,928 598

3,180

( 119)

1,980

2,788 3,834 1,649

18,285

29

The Social Investment Fund of Belize for the year ended 31 March 2011 and 3 months ended 31 March 2010 Notes to the financial statements (III Belize dollars)

World BankllBRD project expenditures report (detailed)

Expenditures:


2011

40,854

17,819 619,961

46,717

(110)

14,446

739,687

2010

3,264

231

106,257

1,315 64

629 1,840 2,740

116,340

30

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