world bank documentdocuments.worldbank.org/curated/en/310811483434656022/...at march 31, 2016 in...

LIBERIA WILL RISE AGAIN DIASPORA ENGAGEMENT PROGRAM

World Bank Funded Project: Grant No. TF 12105

Assurance | Tax | Advisory

Independent Auditor’s Report and Financial Statements

For the Nine Months ended March 31, 2016

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Liberia Will Rise Again Diaspora Engagement World Bank funded Project Independent Auditor’s Report and Financial Statements For the Nine Months ended March 31, 2016

TABLE OF CONTENTS

CONTENTS PAGE

GENERAL INFORMATION 1

AUDITOR’S REPORT 2-3

STATEMENT OF RECEIPTS & PAYMENT 4

STATEMENT OF FUND BALANCE & CASH STATUS 5

STATEMENT OF FINANCIAL POSITION 6

NOTES TO THE FINANCIAL STATEMENTS 7-11

AUDITOR’S REPORT ON STATEMENTS OF EXPENDITURE 12-13

SUMMARY OF STATEMENTS OF EXPENDITURE 14

AUDITOR’S REPORT ON DESIGNATED ACCOUNT 15

PROJECT DESINATED ACCOUNTS RECONCILIATION 16

MANAGEMENT LETTER 17-23

CONCLUSION 24


GENERAL INFORMATION

PROJECT MANAGEMENT TEAM Project Financial Management Unit: Dr. Christopher Sokpor, Unit Manager Project Financial Management Unit (PFMU) Dr. Hussein Salia Senior Project Accountant Subozu Kollie Senior Assistant Project Internal Auditor Registered Office: Project Financial Management Unit (PFMU) Ministry of Finance and Development Planning Broad and Mechlin Streets Monrovia, Liberia Project Implementation Unit: Lloyd Scott Project Coordinator

Liberia Will Rise Again-Ministry of State without Portfolio Client Address: Ministry of States without Portfolio Capitol Hill, Liberia Bankers: Liberian Bank for Development & Investment 9th Street Sinkor Monrovia, Liberia Auditors: Baker Tilly Liberia Limited (Member of Baker Tilly International) Certified Public Accountants Kings Plaza 2nd-4th Floors Broad Street Monrovia

Page 1

PFMU

AUDITOR’S REPORT

To: Lloyd Scott Project Coordinator Ministry of States without Portfolio Capitol Hill, Liberia Monrovia-Liberia We have audited the financial statements of Liberia Will Rise Again Diaspora Engagement project funded by World Bank’s GRANT No. TF 12105 and implemented by Ministry of States without Portfolio. These financial statements comprise the project statement of financial position as at March 31, 2016 and the related statements of receipts and payment and statement of changes in fund balance & cash status for the Fiscal Year then ended. These financial statements are prepared in accordance with the accounting policies and other explanatory notes as set out on pages 6 to 9. Management’s Responsibility

The Project’s management is responsible for the preparation and fair presentation of these Financial Statements in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS) and in the manner required by the Project Grant Agreement. This responsibility includes: designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the Financial Statements that are free from material misstatement, whether due to fraud or error.

Auditor’s 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. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from 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 our 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.

King Plaza

2nd

– 4th Floors

Broad Street

P. O. Box 10-0011

1000 Monrovia 10

Liberia

T: +231 (0) 886 514 965

F: +1 905 469 0986

[email protected]

www.bakertillyliberia.com

Partners: G. Fonderson (Executive Chairman), T. Joseph (Managing Partner), A. Fumbah

An independent member of Baker Tilly International


An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates (if any) 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.

Opinion In our opinion, the financial statements give a true and fair view of World Bank Grant No. TF 12105 as at March 31, 2016 in accordance with International Public Sector Accounting Standards (IPSAS).

(Certified Public Accountants) July 29, 2016 Monrovia

Page 3


STATEMENT OF RECEIPTS AND PAYMENTS DURING THE FISCAL YEAR (JULY 1, 2015 TO MARCH 31, 2016)

In United States Dollars Note

1 July 2015 to

31 March

2016

1 July

2014 to

30 June

2015

Funds Available

Opening Fund balance 100,371

Receipts for the period( Grant No. TF12105) 4 99,019 98,569

Total Funds Available for Current Year 199,390 98,569

PAYMENTS

Development Networking/Coordination Capacity 5 25,504 -

of the Diaspora

Designing Diaspora Engagement Interventions 6 78,084 -

Project Management 36,655 1,802

Total Expenditure 140,243 1,802

Excess of Receipts Over Payments 59,147 100,371

The notes on pages 7to 11 are integral part of these project financial reports.

Page 4


STATEMENT OF FUND BALANCE AND CASH STATUS

FOR THE FISCAL YEAR ENDED MARCH 31, 2016

In United States Dollars

Notes 2016 2015

A. FUND BALANCE

Balance of Project Fund 100,371 88,389

Add: Total Receipts during the period 99,019 11,982

Total fund available for operations 199,390 100,371

Less: Total payments during the period 140,243 -

Balance of project funds at the end of the year 59,147 100,371

B. CASH STATUS:

Cash on advance 1,500 -

Cash at bank 57,647 100,371

Total cash on hand and in bank 59,147 100,371

Difference between A and B - -

At the close of the project on March 31, 2016, there were outstanding commitments of US$18,150 which were settled after the close of the project, and the balance of the project fund of US$40,997 was returned to the Bank on June 21, 2016.


Page 5


STATEMENT OF FINANCIAL POSITION AS AT MARCH 31, 2016


Notes

1 July 2015

to 31

March 2016

1 July 2014

to 30 June

2015

Assets

Cash and cash equivalents 8 59,147 100,371

-

Total assets 59,147 100,371

The financial statements on pages 4 to 6 were approved by the Project Management Team on __________ 2016 and were signed on their behalf by: __________________ ______________________ Christopher Sokpor Lloyd Scott PFMU Manager Project Coordinator-LWRAP


Page 6


NOTES TO FINANCIAL STATEMENTS 1. Background and Information of the Project The objective of this IDF operation is to strengthen the capacity of the Government of Liberia's (GOL)

Diaspora Affairs Unit (in the Office of the Minister of State without Portfolio) to design and implement

the country Diaspora Engagement Program.

2. Use of Grant Proceeds

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

the amounts of the grant to each category and the percentage of expenditures for items to be financed in

each category:

Amount of

Grant Allocated

Expressed in

US$

% of

expenditure to

be financed

Category

Goods 17,600 100

Consultants Services 331,800 100

Training 93,600 100

Total 443,000

All categories of expenditure shown in these financial statements are fully financed by the World Bank

through the International Trust Fund (ITF)

3. THE AUDIT

We have been engaged by the Ministry of Finance and Development Planning, Project Financial

Management Unit to audit the financial statements of World Bank Grant No. TF012105, prepared by the

PFMU under the Ministry of Finance and Development Planning in accordance with the terms of

reference annexed to our contract.

3.1 Audit Objectives

The aim of the audit is to certify and express an opinion on the following:

i. the project financial statements and related notes to these financial statements.

ii. the statements of expenditure (SOE) - for the Nine Months ended 31 March 2016; and

iii. the Statement of Designated Account as at 31 March 2016.

Page 7


3.2 Audit Scope

The scope of this audit covered the expenditure stated in the Statements of Expenditure of the Project

for the Nine Months 31 March 2016. This includes payments from funds transferred by World Bank for

the project and direct payments processed by the World Bank at the request of the PFMU.

3.3 Audit Process and Methodology

We assessed the risks of material errors or misstatements in the expenditure stated in the SOE, whether

caused by error or fraud. Where necessary we designed and performed further audit procedures to

address risks identified. This work involved an assessment of the risks that:

i. the SOE is not reliable i.e. that it does not present, in all material respects, the actual

expenditure incurred for the Project in conformity with applicable contractual conditions;

ii. the Project funds provided by the World Bank have not, in all material respects, been used in

conformity with applicable contractual conditions;

iii. fraud and irregularities can occur or have occurred which have an impact on Project

expenditure and which are not detected and corrected in a timely manner; and

iv. the relevant Contractual Conditions of the Project are not complied with

4. Significant Accounting Policies Basis of accounting

The financial statement have been prepared in accordance with the Cash Basis International Public Sector

Accounting Standards (IPSAS) and in the manner required by the Project Grant Agreement as required

by the World Bank’s Operating Policies and Procedures and PFMU’s Financial Management manual. This

implies that all expenditures are expensed whether they are revenue or capital in nature and income is

recognized when funds are received from the World Bank.

Reporting currency

Financial reports have been presented in United States Dollars. Transactions denominated in other

currencies are translated into United States Dollars and recorded at the rate of exchange ruling at the date

of transactions. Balances denominated in other currencies are translated into United States Dollars at the

rate of exchange prevailing on the reporting date.

Goods and works

Goods and works (fixed assets) are expensed on acquisition, but a comprehensive fixed assets register is

maintained to account for and monitor those assets.

Page 8


NOTES TO FINANCIAL STATEMENT (continued)

Grant

Grant from World Bank is held in a deferred income account when received and are only recognized in

the Project’s income statement when utilized.


1 July 2015 to

31 March 2016

1 July 2014

to 30 June

2015

4. Grant

Analysis of revenue is as follows:

LWRA/MOF/001 - 88,389

LWRA/MOF/002 - 10,180

LWRA/MOF/TF1205 99,019 -

99,019 98,569

5. Development Networking/Coordination Capacity

of the Diaspora

L. Scott sal Oct. 5,000 -

L. Scott fees in the US 3,500 -

L. Scott sal No. 5,000 -

L. Scott sal Dec. 5,000 -

Llyod Scott- Sal 5,000 -

L. Scott sal sept 2,004 -

25,504 -

Page 9




6. Designing Diaspora Engagement Interventions

1 July 2015 to

31 March 2016

1 July

2014 to

30 June

2015

Anthony J. Quowonkpa 3,536 -

Lloyd F. Z. Scott 3,150 -

Lloyd F.Z. Scott 3,536 -

Edwin Paye Kakia 3,536 -

Paye S. Gbelayan 3,536 -

B.V. Davies Sal.Oct,2015 3,800 -

Eagle Electrical Corp 1,596 -

Super Cold Service 1,750 -

Brussels Airlines 18,810 -

Abratha P. Doe 4,330 -

Anthony J. Quiwonkpa 4,330 -

Edwin Kakia 4,330 -

Llod F. Scott 4,330 -

Lloyd F. Scott 2,000 -

Lloyd F. Scott 1,654 -

Paye S. Gbelayan 4,330 -

Sylveser M. Grigsby 4,330 -

B.V.DaviesSal.11Jan-20jan 2,500 -

crown Graphics, Inc. 2,700 -

78,084 -

Page 10




7. Project Management

1 July 2015

to 31 March

2016

1 July 2014

to 30 June

2015

Bank charges for JULY 30 -

Bank charges for AUG 30 -

Bank charges for SEPT 30 -

Lib observer advert 1,050 -

New Demo advertisemnt 1,050 -

Bank charge for October 30 -

Dennis Y. Bus refurbishin 663 -

L. Scott catering service 1,654 -

BANK CHARGES NOV 30 -

Bank charges DEC 30 -

Love Tours-air tickets 7,880 -

LWRAP Petty cash 1,500 -

TRANSFER FEE 158 -

ASR Int catering 10,500 -

Love Travel & Tour airfar 9,422 -

Bank charges for Jan 30 -

ComNet- Website 2,904 -

Bank charges for Feb 30 -

Bank charges for Mar 30 -

Adjustments for difference between

intermediary bank charges and petty cash (396) -

36,655 -

8. Cash & Bank

Cash on advance 1,500 -

Cash at bank 57,647 -

59,147 -

Page 11


AUDITOR’S REPORT ON STATEMENTS OF EXPENDITURE

To: Lloyd Scott Project Coordinator Ministry of States without Portfolio Capitol Hill, Liberia Monrovia-Liberia

We have audited the Statements of Expenditure (SOE) of Liberia Will Rise Again Diaspora Engagement

project funded by World Bank’s GRANT No. TF 12105 and implemented by Ministry of States without

Portfolio for the Nine Months ended 31 March 2016 submitted to the World Bank to request for fund

and in support of application for reimbursement of expenditure in accordance with the Grant Agreement

dated June 29, 2012 as set out on pages 14 to 16.

Management’s Responsibility

The Project Financial Management Units management is responsible for the preparation and the fair presentation of these Statements of Expenditure in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS) and in the manner required by the Project Grant Agreement. This responsibility includes: designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the Financial Statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these Statements of Expenditure based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from 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 our 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 (if any) 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.



King Plaza

2nd

– 4th Floors

Broad Street

P. O. Box 10-0011

1000 Monrovia 10

Liberia

T: +231 (0) 886 514 965

F: +1 905 469 0986

[email protected]



Opinion

In our opinion, the Statements of Expenditure, along with the supporting summary sheets and information submitted are reliable and in respect of withdrawals for the purpose of the program in accordance with the provisions of World Bank Grant No. TF12105.


Page 13


SUMMARY OF STATEMENT OF EXPENDITURE


Grant Received:

1 July 2015 to 31 March

2016

LWRA/MOF/008 29-Oct-15

21,428

LWRA/MOF/009 1-Dec-15

64,966

LWRA/MOF/010 12-Jan-16

12,626

Total Received

99,019

Amount Spent:

Development Networking/Coordination Capacity of the Diaspora Unit 25,504

Designing Diaspora Engagement Interventions in Socio-Economic Dev’t

78,084

Operation Expenses including Audit of the IDF Grant

36,655 140,243

Excess of Expenditure Over Income

(41,224)

Balance as at July 1, 2015

100,371 Balance as at March 31,2016

59,147

Page 14



AUDITORS’ REPORT ON STATEMENT OF DESIGNATED ACCOUNT

To: Lloyd Scott Project Coordinator Ministry of States without Portfolio Capitol Hill, Liberia Monrovia-Liberia

We have audited the Designated Account Statement (United States Dollar Account No.

001USD21320509413) of World Bank Trust Fund Grant No. TF012105 titled “Liberia Will Rise Again

established under the Diaspora Engagement Program” dated July 1, 2015 for the Nine Months ended 31

March 2016.

The Designated Account Statement preparation and fair presentation is the responsibility of the Project Management Team. This responsibility includes: designing, implementing, and maintaining internal control relevant to the fair presentation of the Special Account Statement that is free from all material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates (if any) that are reasonable in the circumstances. Our responsibility is to express an opinion on the financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing (ISA) insofar as these

standards can be applied in the specific context of a contractual compliance audit. Those standards

require that we plan and perform the audit to obtain reasonable assurance about whether the designated

account is free of material misstatement. An audit includes examining on a test basis, evidence supporting

the amounts and disclosures in the designated account statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the

overall presentation of the Statement.

The accompanying designated account statement was prepared on the basis of cash deposits and

withdrawals for the purpose of complying with the Grant Agreement.

We believe our audit provides a reasonable basis for our opinion.

Opinion:

In our opinion, the receipts have been properly accounted for and withdrawals were made for the purpose of the project in accordance with the provisions of the International Bank for Reconstruction and Development IDF Grant No. TF 012105.


King Plaza

2nd

– 4th Floors

Broad Street

P. O. Box 10-0011

1000 Monrovia 10

Liberia

T: +231 (0) 886 514 965

F: +1 905 469 0986

[email protected]





PROJECT DESIGNATED ACCOUNT STATEMENT

Account Number: 001USD21320509413 Account Type: Current Account Depository Bank: Liberia Bank for Development and Investment Address: 9th Street, Sinkor Monrovia, Liberia Related Grant Agreement: World Bank (IDA) Grant No. TF 12105

Currency: United States Dollar

In United

States Dollars

2016

Total IDA Grant received 199,390

_______

Total grant income reported 199,390

Amount spent 140,243

_______

Balance as at March 31, 2016 59,147

LESS: Outstanding Commitments

Bank Charge - April-June (Including Transfer fee) 180.00

Lion Stationery Furniture 13,700.31

Audit Fees 2015 & 2016 4,270.00 18,150

Balance Returned (Reference 299298) 40,997

Page 16


MANAGEMENT LETTER

To: Lloyd Scott Project Coordinator Ministry of States Without Portfolio, R. L. Capitol Hill, Liberia Monrovia-Liberia

Dear Sir:

During the course of our audit of the financial statements of the Liberia Will Rise Again project for Nine Months ended March 31, 2016 a number of matters arose which we consider should be brought to your attention. Accompanying this letter is a memorandum noting these points together with any recommendations we have for possible improvements which could be made. These matters came to light during the course of our normal audit tests which are designed to assist us in forming our opinion on the financial statements. Our tests may not necessarily disclose all errors or irregularities and should not be relied upon to do so. However, if any irregularity did come to our attention during our audit tests, we would, of course, inform you immediately. A system of grading the management report observations on the operation and accounting issues has been used as follows: Grade 1: Observations are those which are particularly significant and the involvement of Management may be

required for their resolution. Grade 2: Observations are those which may have a significant impact on the control environment. Grade 3 Observations are less significant than grades 1 and 2 but nevertheless merit attention. This report has been prepared for the sole use of the management of Project Financial Management Unit (PFMU) and must not be shown to third parties without our prior consent. No responsibilities are accepted by Baker Tilly Liberia towards any party acting or refraining from action as a result of this report.

King Plaza

2nd

– 4th Floors

Broad Street

P. O. Box 10-0011

1000 Monrovia 10

Liberia

T: +231 (0) 886 514 965

F: +1 905 469 0986

[email protected]





We would be grateful if you could enter the organization’s comments against each point under the "Management’s Comment" column of the memorandum and return it to us in due course. Finally, we would like to express our thanks to all members of the organization's staff who assisted us in carrying out our work.

Yours faithfully,

For: BAKER TILLY LIBERIA LIMITED (Certified Public Accountants) Arthur W.B Fumbah; MPA, CA, FCITG PARTNER

July 29, 2016 Monrovia

Page 18



1. Absent of Comprehensive Diaspora Engagement Program

Observations Annex A:Scope of Service of the Program coordinator provides that “The rationale of the IDF grant is to strengthen the capacity of the newly formed Diaspora Engagement Unit to communicate, undertake consultation and outreach, and design a comprehensive Diaspora Engagement Program.”. During our review, we did not sight and Comprehensive Diaspora Engagement program that service as the basis for the numerous outreaches undertaken during the period under review. The proposed Diaspora Engagement Program supposed to be formulated with inputs and feedback from consultations with members of the Liberian Diaspora and insights drawn from global practices. Grade 2

Implications Absent of a comprehensive Diaspora Engagement Program would deny assurance that the main objective of the program was achieved. Recommendations The management of the Liberia Diaspora Engagement Program should ensure that a comprehensive Diaspora Engagement Program is produce to facility formulation of National Strategy and Policy to address the critical gaps in post-conflict reconstruction and transformation that will harness the financial and intellectual capital of the Liberian Diaspora. Management’s Comment

Per the Project documents and work plan, the Draft National Comprehensive Diaspora Engagement Program Policy was to have been written AFTER an exhaustive list of activities, including multiple Study tours and Consultative Dialogues and this was to conclude at the end of an eighteen month time-frame (by December 2016); subsequent to the Program’s expiration in early 2016, the donor agreed to hire a Draft Policy Consultant to draft the Comprehensive Diaspora Engagement Program as they still sought additional funding for the continuation of the program. In fact, prior to the official expiration of the Program on January 31, 2016, the donor had promised to address this concern; in March, 2016, the donor informed us that funding was made available out of the Public Sector Modernization Program (PSMP) for the hiring of the Policy Draft Consultant for up to July 31, 2016. Unfortunately, the supervising agency for this process, the CSA, was unable to finalize the hiring of the Consultant prior to July 31, 2016.

In July 2016, the donor agreed to extend this deadline for up to sixty (60) working days for the Consultant to prepare this policy, after his hire. Unfortunately, as of the writing of this report, the Assistant (and Acting) Project Coordinator of the PSMP, Darlington Smith, at the CSA has willfully failed and refused to act on this important policy mandate and objective of the President, despite repeated attempts to get him to appreciate the urgency of time. We are waiting for the CSA to finalize and sign the contract with the Consultant (Mr. Melvin Crawford) who has already been identified, selected and negotiated with so that this work can be done.

Page 19


2. Outstanding Petty Cash Liquidation Report

Observations

Section C: “Records and Accounts” of the Terms of Reference of the Program Coordinator requires that

“The Consultant shall keep, and shall cause its Sub-Consultants to keep, accurate and systematic records

and accounts in respect of the Services, which will clearly identify all charges and expenses.”

During our review, we observed that there is outstanding petty cash liquidation report relating to Cash

advanced made by Project Financial Management Unit (PFMU) in the form of petty cash to Ministry of

Ministry of States without Portfolio in the amount of US$1,500.

relate to expenditure incurred from balance on Designated Account for the Nine Months ended 31

March 2016. We observed that the liquidation report of said amount US$ 1,500 remain outstanding

which represents the Un-liquidated cash balance of Designated Account as of 31 March 2016.

Grade 2

Implications Absent of petty Cash Liquidation Report, program expenses could be understated with corresponding overstatement of cash balance at the end of the period. Recommendations The management of the Liberia Diaspora Engagement Program should ensure that a petty Cash Liquidation report is promptly submitted to the Project Financial Management Unit to facilitate proper bookkeeping of the project account. Management’s Comment

The Petty Cash report was subsequently submitted by the Project Coordinator and it has since been analyzed and recorded appropriately into the Sun Accounting Systems.

Page 20


3. Foreign Travel Reports not signed

Observations One of the good qualities of the financial information is its value to represent what it purports to represent. Meaning, it should show what really are present and what really happened, as the case may be. Good report should contained adequate or full disclosure of all necessary information, fairness and freedom from bias, and no inaccuracies and omissions. The reports submitted to us by the project coordinator pertaining to foreign travels undertaken during the period under review, it was observed that none of the reports were signed by relevant authority within the Ministry of States without Portfolio. Grade 2

Implications The lack of full disclosure of necessary information such as authorized signature could cause doubt on the accuracy of the report. Recommendations Management should ensure that all information emanating from the ministry should bear the authorized signature to enhance the quality of the information provided in said report. Management’s Comment

All World Bank Travels are approved by the Task Team Leader (TTL) and duly executed by the Project Coordinator. PFMU accept travel reports that are signed by the Coordinator based on the clearance provided by the TTL. The World Bank only queries travels which are not cleared by the TTL. The project coordinator is the appropriate signature for the authorization of project’s expenditure including foreign travels. This procedure was fully adhered to in this instance.

Page 21


4. No evidence of payment of withholding tax on salaries and contract

Observation

Section 200 (a) of the revised Revenue Code of Liberia provides that “An annual income tax is hereby imposed on the annual taxable income of every natural person resident in Liberia (including resident Liberian citizens employed by an embassy, a diplomatic mission, or international organization”. During our Financial Statements audit of the entity for the period under review, we sighted no withholding for salary payments made to the program personnel including the coordinator. Besides; there was also no withholding on payments made to local contractors. Grade 1

Implication

This implies management may be in violation of section 200 and 1028 of the revenue code of Liberia which states that personal income tax should be held on individual’s salary and services performed respectively.

Recommendation we therefore, recommend that management meet up with its tax obligations.

Management’s comments

The Consulting Services Manual of the World Bank states that:

“The Loan Agreement and the disbursement letter outline the procedures to be followed for the loan, including retroactive financing provisions. The Bank normally finances the full amount of the foreign and local cost of consultant service contracts’ net of local taxes as far as these can be identified.”

Additionally, the revised Consultant Guidelines of the World Bank adds that:

“2.26 Financial negotiations shall include clarification of the Consultant’s tax liability in the Borrower’s country (if any) and how this tax liability has been or would be reflected in the contract.”

Consultants negotiated with the Project Implementation Unit (PIU) and signed contracts whose monthly payments

are net of taxes. Taxing the amount net of tax would be a violation of their contract which has legal implications.

Moreover, the funding provided by the donors has components and several deliverables attached to them. With an

approved budget, spending is allowed for several line items in the budget. An attempt to gross up any contract sum

will have a negative impact on the project’s deliverables because the funds available will be reduced. Going forward,

the PIU will be alerted into incorporating the tax component when signing new contract (addendum). What we

then envisage is consultants asking for their contract that were previously net of tax to be grossed up in order to

cover the tax component.

Page 22


5 No competitive bidding documents for website contract

Observation

Prudent procurement of goods and services requires a judicious, economic and efficient use of

project resources and to ensure that public procurement is carried out in a fair, transparent and

non-discriminatory manner. This principle is key in both PFMU and Liberian Procurement

guides.

During our Financial Statements audit of the entity for the period under review, we observed that there was no competitive bidding for the awarding of website building and design contract for Liberia Will Rise Again. Grade 1

Implication

This implies management has violated the PFMU and PPCC procurement laws which require competitive bidding in awarding services-related contracts to contractors.

Recommendation we recommend that management adhere to the prudent procurement practices outlined in both PPCC law and PFMU procumbent guides in awarding contracts.

Management’s comments

All Procurements activities carried out during the project implementation were duly implemented in compliance with the donor’s regulation which was verified by PFMU based upon which Payment was made to the website designer. PFMU does not make any payment without reviewing the procurement process from the PIU’s end. The procurement process for hiring the website designer was duly followed.

Page 23


GENERAL CONCLUSION

We thank you very much for giving us the opportunity to serve you and we do hope that your entity will derive tangible benefits from this aspect of our audit.

Many thanks to the Management and Staff of PFMU-Liberia Will Rise Again Project for the level of cooperation and cordiality accorded us during the course of this audit.

Page 24

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