IIII3 TAY TAY

I3 AUDITORS' REPORT TO THE FINANCIAL STATEMENTS OF

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MINISTRY OF AGRICULTURE AND NATURALRESOURCES-AGRICULTURAL GROWTH

PROGRAM II

III AS AT AND FOR PERIOD ENDED 7 JULY 2016

I,I .TAY & Co.

Chartered Certified Accountants & Authorized AuditorsAddis Ababa, Ethiopia

Tel. 251-11-442-1336 Fax 251-11-442-1338 E-mail: taycon_lethionet.etP.O.Box 1335 Addis Ababa, Ethiopia

Ethio-china Friendship Street Wongelawit Tadesse Building 1st FloorWebsite: www.tavauditin(z.com

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ITAY&Co.TAAYCe

INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS OFI MINISTRY OF AGRICULTURE AND NATURAL RESOURCESAGRICULTURAL GROWTH PROGRAM II

We have audited the accompanying financial statements of Ministry of Agriculture and NaturalResources-Agricultural Growth Program IDA Credit 5605-ET, and AECID Grant for the period ended 7July 2016.

Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements inaccordance with Generally Accepted Accounting Principles, and for such internal control asmanagement determines is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.

I Auditor's ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with International Standards on Auditing. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessment, the auditors considers internal control relevant to the entity'spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purposes of expressing an opinion on the effectivenessof the entity's internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by management, as well asevaluating the overall presentation of the financial statements.

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

I OpinionIn our opinion, the financial statements give a true and fair view of the financial Ministry of AgricultureI and Natural Resource- Agricultural Growth Project IDA Credit 5605-ET and AECID Grant as at 7 July2016 and of its sources and uses of funds for the period then ended in accordance with GenerallyAccepted Accounting Principles and are in agreement with the records maintained by the program.

In addition, with respect to the Interim Financial Reports submitted during the period ended 7 July 2016,in our opinion,

The ith the procedures and internal controls involved in their preparation, canbe u s the relevant withdrawals; andI - ex nditures a e ig le for financing under IDA Credit 5605-ET and AECID Grant.

I TAY& o.Charter r ifiec ccou d Addis AbabaAuthoriz -lilnary 02, 017

3 1 Aj Ahinn Friend%hin Street Wencelawit Tadesse Buildina 1st Floor

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MINSTRY OF AGRICULTURE AND NATURAL RESOURCE

I AGRICULTURAL GROWTH PROGRAM II

BALANCESHEETAS AT 07 JULY 2016

Notes Birr

ICURRENT ASSETS

IDebtors and prepayernents 4 65,664,157.38

Cash on hand and at bank 5 270,567,159.80

336,231,317.18

ITOTAL ASSETS 336,231,317.18

IREPRESENTED BY:

IFUND BALANCE 6 336,231,317.18

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II MINSTRY OF AGRICULTURE AND NATURAL RESOURCES

AGRICULTURAL GROWTH PROGRAM II

STATEMENT OF SOURCES AND USES OF FUNDS

FOR THE PERIOD ENDED 7 JULY 2016

ISOURCES Notes

Birr

IDA Credit 35,324,550.00

Grant received 357,773,253.61393,097,803.61

I OTHER INCOMEGain on forex currency 5,249,354.31

398,347,157.92

IUSESAgricultural Public Support Services 7 2,940,177.85

Agricultural Research 8 19,378,595.50

Small-Scale Irrigation Schemes 9 812,745.55

I Project Management, Capacity Buildingand Monitoring And Evaluation 10 38,984,321.84 62,115,840.74

EXCESS OF SOURCES OVER USES 336,231,317.18

III I 4/~ ~sed C .

C.Box1335Adds Ababa

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MINSTRY OF AGRICULTURE AND NATURAL RESOURCESAGRICULTURAL GROWTH PROGRAM II

NOTES TO THE ACCOUNTFOR THE PERIOD ENDED 7 JULY 2016

I1. BACKGROUND OF THE PROGRAM

I1.1 AGP IDA Credit

Financing agreement was signed on 07 May 2015 between the Federal DemocraticRepublic of Ethiopia (FDRE) and the International Development Association (IDA)according to which a special drawing right (SDR) 248,300,000 USD is available in theform of credit was extended to the FDRE to implement the Second Agricultural GrowthProgram. The first fund transfer for the program was received on 04 February 2016. Thecredit will be repaid on each September 15 and March 15, commencing September 15,2021, to and including March 15, 2053.

1 1.2 AGP AECID Grant

The grant agreement was signed betweenthe Presidency of the Spanish Agency forInternational Development Cooperation (AECID) and the Federal Democratic Republicof Ethiopia (FDRE), for total grant amount of 1,500,000 Euros, with the aim of financingin Ethiopia, the Agricultural Growth Program. The first fund transfer for the programwas received on 09 February 2016.

The Ministry of Agriculture and Natural resources is responsible to ensure that requiredprogram activities are implemented appropriately by coordinating various federalinstitutions and regions that are selected to implement the Program. These include variouszones and weredas of Tigray Region, Oromia Region, Amhara Region, Southern NationsNationalities and People (SNNP), Gambella Region, Benishangul Gumuz Region, Harari

Region, and Dire Dewa City Administration. In addition of the Ministry of Agriculture andNatural Resources, two federal institutions were also involved in the implementation-Ministry of Livestock and Fisheries and Ethiopian Institute of Agricultural Research EIAR.

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2. OBJECTIVE OF THE PROGRAM

General Objective of the ProgramThe objective of the Program is to increase agricultural productivity

andcommercialization of smallholder farmers targeted by the program.

Specific Objectives of the ProgramThe specific objectives of the Program are to support and improve:

1) Agricultural Public Support Services

2) Agricultural Research3) Small-Scale Irrigation Schemes

4) Agriculture Marketing and Value ChainsSchemes

5) Program Management, Capacity Building and Monitoring and Evaluation

3. Accounting PoliciesThe principal accounting policies adopted by the Program are set out below.

Basis of AccountingModified cash basis of accounting is used in the recognition of sources and uses of fund.

Expenditures of Capital natureExpenditures of capital nature are directly charged to program expense upon purchase.

StocksStocks are expensed when they are purchased or aided by donors.

Foreign currency TranslationCash receipts and payments arising from transactions in a foreign currency are recorded

in the financial statements using the actual rate of exchange prevailing on the date of the

transaction. Cash balances maintained in the foreign currency is converted to Birr at the

exchange rate prevailing at the balance sheet date which islUSD: 21.8308Birr.

CurrencyThe reporting currency for the Program FinancialStatements is Ethiopian Birr.

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II MINSTRY OF AGRICULTURE AND NATURAL RESOURCES

AGRICULTURAL GROWTH PROGRAM IINOTES TO THE ACCOUNTFOR THE PERIOD ENDED 7 JULY 2016

I 4. DEBTORS AND PREPAYEMENTS

BirrProject advance(Note 4.1) 65,496,463.38

Staff debtors 167,694.00

3 65,664,157.38

3 4.1 PROJECT ADVANCE

Oromia Region 23,685,421.52Amhara Region 13,855,530.98SNNPR AGP 3,961,581.84

Tigray Region 3,563,026.95

Gambella Region 3,517.74Benishangul Gumuz Region 525,932.53

Harari Region (14,180.85)

Dire Dewa C.A 23,115.14

Ministry of Livestock 1,271,113.03EIAR 18,621,404.50

65,496,463.38

I 5. CASH ON HAND AND AT BANK

Cash on Hand 20,550.00

I Cash at bankSpecial bank account (Note 5.1) 250,131,257.92Birr bank account 20,415,351.88 270,546,609.80

270,567,159.80

5.1 SPECIAL BANK ACCOUNTIDA 213,642,107.92AECID 36,489,150.00

250,131,257.92;-

6. FUND BALANCE

Fund Balance incorporates both realized and unrealized gain on exchange rates.

B i r r -4 t h o dOpening balanceExcess of sources over uses 336,231,317.18

336,231,317.18

MINSTRY OF AGRICULTURE AND NATURAL RESOURCES

AGRICULTURAL GROWTH PROGRAM II

NOTES TO THE ACCOUNT

FOR THE PERIOD ENDED 7 JULY 2016

7. Component 1: Agricultural Public Support Services

Benishangul

Amhara Oromia SNNP Gumuz Total

Perdiem and transportation 152,647.29 64,380.00 363,898.00 - 580,925.29

Repair and Maintenance - -

Plant and Machinery - -

Training and workshop 1,380,551.28 - 541,133.00 248,299.40 2,169,983.68

Advertisement - - - -

Stationery and other supplies - - 86,677.51 1,499.99 88,177.50

Telephone, fax and postage - - - - -

Livestock - -

Fuel and lubricants 2,582.18 12,774.00 42,494.20 - 57,850.38

Fees and charges - -

Freight - 11,000.00 - - 11,000.00

Entertainment - 32,241.00 - 32,241.00

Rent - - -

Miscellaneous - - - - 00 1

Total 1,535,780.75 88,154.00 1,066,443.71 249,799.39 2,940,1 ,

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MINSTRY OF AGRICULTURE AND NATURAL RESOURCES

AGRICULTURAL GROWTH PROGRAM II

NOTES TO THE ACCOUNT

FOR THE PERIOD ENDED 7 JULY 2016

I8. Component 2: Agricultural Research

Birr

Salary and related benefits 3,156,248.07

Perdiem and transportation 4,119,473.20

Repair and Maintenance 947,595.93Plant and Machiner 2,142,945.71

Training and workshop 5,942,994.32

Advertisement 2,428.80

Stationery and other supplies 952,078.86

Telephone, fax and postage 16,312.07

Veternary 8,600.00

Fertilizer 477,191.93

Fuel and lubricants 814,342.31

Consultancy 22,140.00

Fees and charges 27,473.41

Freight 12,720.00

Entertainment 13,407.19

Research 722,643.70

Total 19,378,595.50

II 9. Component 3: Small-Scale Irrigation Schemes

Amhara RegionBirr

Perdiem and transportation 759,838.50

Stationery and other supplies 23,951.90

Fuel & Lubricant 28,955.15812,745.55

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I4 'jh %ze35

STRY OF AGRICULTURE AND NATURAL RESOURCES1ICULTURAL GROWTH PROGRAM II'ES TO THE ACCOUNT, THE PERIOD ENDED 7 JULY 2016

imponent 5: Project Management, Capacity Building and Monitoring and Evaluation

Benishangul Ministry of HeadTigray Amhara Oromia SNNP Gumuz Gambella Harari Dire Dewa Livestock Ouarter Total

ary and related benefits 207,717.69 313,272.70 - 118,225.37 266,464.82 273,899.55 62,900.00 - - - 1,242,480.13-diem and transportation 483,638.69 1,022,081.52 2,867,713.53 2,277,780.20 155,552.77 155,209.00 108,568.66 154,687.00 39,900.00 443,866.00 7,708,997.37pair and Maintenance 42,500.00 - - 7,448.00 - - 460.00 - - - 50,408.00nt and Machinery - - - 1,176,014.19 402,508.70 107,599.20 - - 31,098.30 - 1.717,220.39lining and workshop 1,007,519.47 3,454,170.74 6,678,102.98 8,395,038.06 632,872.21 404,223.41 241,043.19 217,761.31 4,922,840.52 - 25,953,571.89vertisement - - - - - - - 2,865.55 - - 2,865.55tionery and other supplies - 26,417.77 43,331.73 995,671.38 55,981.20 22,133.50 391.00 - - - 1,143,926.58ephone, fax and postage - - - - 1,210.00 - 300.00 - - - 1,510.00,estock - - - 5,450.00 - - - - - - 5,450.00:1 and lubricants 42,788.20 125,597.99 98,909.24 150,571.38 10,791.38 21,609.60 5,433.00 - - - 455,700.79:s and charges 300.00 1,300.00 700.00 390.00 95.00 60.00 60.00 60.00 735.15 371,091.12 374,791.27:ight - - - 13,088.39 - - - - - - 13,088.39Lertainment - - - 296,713.10 - - 138.00 6,624.00 - - 303,475.10at - - - 8,736.38 - - - - - - 8,736.38scellancous - - - - 2,100.00 - - - - - 2,100.00

1,784,464.05 4,942,840.72 9,688,757.48 13,445,126.45 1,527,576.08 984,734.26 419,293.85 381,997.86 4,994,573.97 814,957.12 38,984,321.84

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I ANNEX 1

MINSTRY OF AGRICULTURE AND NATURAL RESOURCES

AGRICULTURAL GROWTH PROGRAM II

RECONCILIATION OF DISBURSEMENT WITH RECEIPTS

FOR THE PERIOD ENDED 7 JULY 2016

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Received by the Disbursed by Received by the

Prgram World Bank AECID Program in Birr

in USD in USD in USD in USD

IDA CREDIT 16,786,270.22 16,786,270.22 357,773,253.61

I AECID 1,668,645.13 - 1,668,645.13 35,324,550.00

Total 18,454,915.35 16,786,270.22 1,668,645.13 393,097,803.61

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ANNEX 2

I MINSTRY OF AGRICULTURE AND NATURAL RESOURCESAGRICULTURAL GROWTH PROGRAM IIINDIVIDUAL APPLICATIONFOR THE PERIOD ENDED 7 JULY 2016

IWe have verifed the following withdrawal applications for the six months peiod ended 7 July 2016and the applications are in agreeement with the grant received.

Application No. Amount in USD

MOANR-AGP 11-001 13,091,919.61MOANR-AGP 11-002 3,694,350.61

Total 16,786,270.22

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ANNEX3

MINSTRY OF AGRICULTURE AND NATURAL RESOURCESAGRICULTURAL GROWTH PROGRAM IILIST OF VISITED IMPLEMENTING AGENCIES, REGIONS ANDWEREDASFOR THE PERIOD ENDED 7 JULY 2016

In addition to the federal institutions, we also visited, on a sample basis, selected weredas in most ofthe regions which participated in the program during the period under audit. Below is the list of visitedfederal agencies, regions and weredas:

IRegion/Agency Bureaus Wereda Contact person

Oromia Region Regional AGP CU Solomon Demelew

Amahara Region Regional AGP CU Enarj Enawgam Adamu Maru

Yilmana Densa

Tigray Region Regional AGP CU Tatay Koraro Askalu

Gumer

GetoSNNP Region Regional AGP CU Habtamu

Arbegona

Melega

Hararri Region Bureau of Agriculture Samrawit

Ministry of Agriculture and NaturalResources Woinshet

I Ethiopian Institute of Agricultural

Research Teshome

Ministry Livestock and Fisheries Simret

eCer 4

1II

j TAY TAY

IAUDITORS' REPORT ON THE DESIGNATED ACCOUNTS

OF

II MINISTRY OF AGRICULTURE AND NATURAL RESOURCE (MoANR)-

AGRICULTURAL GROWTH PROGRAMME- I

II

AS AT AND FOR THE YEAR ENDED 7 JULY 2016

II

I TAY & Co.

Chartered Certified Accountants & Authorized AuditorsAddis Ababa, Ethiopia

Tel. 251-11-442-1336 Fax 251-11-442-1338 E-mail: tayco(a)ethionet.et

P.O.Box 1335 Addis Ababa, Ethiopia

Ethio-china Friendship Street Wongelawit Tadesse Building Ist Floor

Website: www.tayauditin.com

II

ITAY & Co.

INDEPENDENT AUDITOR'S REPORT ON THE DESIGNATED ACCOUNT OFMINISTRY OF AGRICULTURE AND NATURAL RESOURCE-AGRICULTURAL GROWTH PROGRAMME I

We have audited the accompanying designated account ofMinistry of Agriculture and Natural Resource(MoANR)-Agricultural Growth Programme IDA Credit 47830 ET,IDA Grant H6000ET,MDTF GrantI TF No 99729,AECID Grant 1811/1 1,GAFSP Grant TFO1 1306, and Italian Development Cooperationfor the year ended 7 July, 2016.

I Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of designated accounts inaccordance with Generally Accepted Accounting Principles, and for such internal control asI management determines is necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.

I Auditor's ResponsibilityOur responsibility is to express an opinion on designated accounts based on our audit. We conducted ouraudit in accordance with International Standards on Auditing. Those standards require that we complyI with ethical requirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

I An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessment, the auditors considers internal control relevant to the entity'spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purposes of expressing an opinion on the effectivenessof the entity's internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by management, as well asevaluating the overall presentation of the financial statements.

1 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour qualified audit opinion.

1 OpinionIn our opinion, the financial statements thereof present fairly, in all material respects , the financialposition of the designated accounts of Ministry of Agriculture and Natural Resource-AgriculturalGrowth Programme I IDA Credit 47830 ET,IDA grant H6000ET,MdTF Grant 99729,AECID Grant1811/11,GAFSP 06 and Italian Development Cooperation as at 7July, 2016 and themovements in ountssfo year then ended in accordance with Generally Accepted AccountingPrinciples a gre the records maintained by the project.

TAY&Co eChartered 8i d Acch an and Addis AbabaAuthorized t January 02, 2017

b n-hinn FriAndshin Street Wenaelawit Tadesse Buildina 1st Floor

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MINISTRY OF AGRICULTURE AND NATURAL RESOURCE-

AGRICULTURE GROWTH PROGRAMMESTATEMENT OF DESIGNATED ACCOUNT

FOR THE YEAR ENDED 7 July 2016

I Account Number 02615/013817/00

Depository bank National Bank of Ethiopia

Related Credit and Grant IDA Credit (47830-ET) and IDA Grant (H600-ET)

Address: Addis Ababa, Ethiopia

I Currency USD

I 2015

Initial Balance 12,169,426.40 6,987,079.16

Add:- Transferred from World Bank Credit 8,900,019.07 47,647,778.53

Refund from different payements 26,079.00 8,926,098.07 14,691.62

21,095,524.47 54,649,549.31

1Less:- Transfer to pool birr account 7,980,000.00

Transfer To ATA 1,500,000.00

Expenditure During the year 3,006,440.05

12,486,440.05 42,480,122.91

Ending Balance 8,609,084.42 12,169,426.40

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MINISTRY OF AGRICULTURE AND NATURAL RESOURCE-AGRICULTURE GROWTH PROGRAMSTATEMENT OF DESIGNATED ACCOUNTFOR THE YEAR ENDED 7 July 2016

IAccount Number 02615/013818/00

Depository bank National Bank of EthiopiaRelated Grant MDTF No 099729Address: Addis Ababa, EthiopiaCurrency USD

2015

Initial Balance 998,442.77 1,141,442.54Add:- Transferred from World Bank Credit 22,500,000.00 16,257,000.23

I 23,498,442.77 17,398,442.77

Less:- Transfer to pool birr account 21,943,477.91

Transfer To ATA 1,500,000.00

Expenditure During the year 54,964.86

23,498,442.77 16,400,000.00

1 Ending Balance - 998,442.77

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MINISTRY OF AGRICULTURE AND NATURAL RESOURCE-AGRICULTURE GROWTH PROGRAMSTATEMENT OF DESIGNATED ACCOUNTFOR THE YEAR ENDED 7 July 2016

IAccount Number 02615/0141003/00Depository bank National Bank of EthiopiaRelated Grant GAFSP TF 011306Address: Addis Ababa, EthiopiaCurrency USD

I__2015

I Initial Balance 3,501,824.00 5,901,824.00

Add:- Transferred from World Bank - 15,000,000.00

3,501,824.00 20,901,824.00

Less:- Transfer to pool birr account 1,819.44

Transfer To ATA 3,500,000.00

I Expenditure During the year 4.56

3,501,824.00 17,400,000.00

Ending Balance - 3,501,824.00

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MINISTRY OF AGRICULTURE AND NATURAL RESOURCE-

AGRICULTURE GROWTH PROGRAM

STATEMENT OF DESIGNATED ACCOUNTFOR THE YEAR ENDED 7 JULY 2016

IAccount Number 100071300320

Depository bank National Bank of Ethiopia

Related Grant Italian Development co-operative

I Address: Addis Ababa, Ethiopia

Currency USD

2015

Initial Balance 89,597.47

Add:- Fund received - 7,089,597.47

89,597.47 7,089,597.47

Less:- Transfer to pool birr account 89,373.48 7,000,000.00

Bank service charge 223.99 -

89,597.47 7,000,000.00

Ending Balance - 89,597.47

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