financial statement for the global partnership...global partnership on output- based aid statement...

THE WORLD BANK

FINANCIAL STATEMENT

FOR THE

GLOBAL PARTNERSHIPON OUTPUT- BASED AID

PROJECT

TF 16279 IN VANUATU

For the 19 Months Period Ended 31 December 2015

Prepared Under IPSAS: Financial Reporting Under the Cash Basis Accounting

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TABLE OF CONTENTS

PROJECT BACKGROUND ................................................... 3

AUDITOR'S REPORT ...................................................... 5

FINANCIAL STATEMENTS .................................................. 6

STATEMENT OF CASH RECEIPTS AND PAYMENTS ...................... 6

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL ......................... 7

STATEMENT OF ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS FOR THE 19MONTH PERIOD ENDED 31 DECEMBER 2015...... .... ..................... 8

1. Accounting Policies.....................................................8

2. Government counterpart funding ............................................. 10

3. Donor grant assistance ............................................. ...... 10

4. Operating Expenditure .................................................. 11

5. Capital Expenditure....................................................11

6. Closing cash balance........................................................ 12

7. Revenue variance between budget and actual ....................... 2........12

8. Expenditure variance between budget and actual ................................ 12

9. Debtors and other receivables .................... ................... ..... 12

10. Creditors and other payables .............................. ............. 12

11. Imprests ............................................................ 12

12. Payments by Third Parties................. ....................... ...... 12

13. Statement of Commitments ......................................... ..... 13

14. Related Parties.......................................................... 13

2 Global Partnership on Output-Based Aid Project - Financial Statenents, 2015

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PROJECT BACKGROUND

Global Partnership on Output - Based Aid Project (GPOBA) provides Grant Funding of US $ 4.85

million to the Department of Energy (DoE) to support households to the grid network within the

concession areas (Port Vita in Efate, Luganville, Espiritu Santo, Lenakel, Tanna and Lakatoro,

Malekula) by 2018 when the project is expected to be concluded.

The project under the oversight of the Department of Energy (TF 16279) - is planned to connect

4,375 households to the grid network within the concession area by 2018. The objective of the project

is to increase sustainable access to formal grid-based electricity services within the Recipient's

electricity concession service areas for low-income customers through targeted subsidies. The project

consists of the following parts:

Part 1: New Service connections for Low-Income Households

Provision of OBA Subsidies to assist in covering the costs of connecting Eligible Households to grid-

based electricity services.

Part 2 : Household wiring for Low-Income Households

Provision of OBA Subsidies to assist in covering the costs of household wiring and energy saving

light bulbs for Eligible Households gaining electricity connections under Part 1.

Part 3: Project Management, Monitoring and Evaluation, Communications and Outreach, and

Training

Carry out activities to support implementation of the project, including among other things:

a) Raising Beneficiaries' awareness of the OBA Subsidies under Part I and Part 2 and training

on safe electrical practices;

b) Development and adoption of technical standards and a licensing scheme for household

wiring, including delivering training programs for electricians and monitoring compliance

with standards;

c) Monitoring and evaluation, financial management, supervision, and audit of the Project; and

d) Teclmical training, support, and incremental operating costs for the Department of Energy.

3 Global Partnership on Output-Based Aid Project - Financial Statements, 2015

Part 4: Independent Verification

Carrying out independent monitoring and verification connections through an independent agent.

This report provides the financial statement for the Global Partnership on Output-Based Aid Project

(GPOBA) TF 16279 for the 19 months ended 31 December 2015. The GPOBA project commenced in

June 2014 and will end on 30 June 2018.

Mr Jesse BenjaminDirector GeneralMinistry of Climate Change Adaptation, Meteorology, Geo-Hazards, Environment & Energy30 June 2016

4 -7 Global Partnership on Output-Based Aid Project - Financial Statements, 2015

CliTERFD ACiCOUNTA1 AH U INE,6 ADVItFI

Independent Auditors' Report

Global Partnership on Output-Based Aid

The Auditor-General is the auditor of Global Partnership on Output-Based Aid (GPOBA). The Auditor-General hasappointed Law Partners to undertake the audit of GPOBA pursuant to Section 24(1) of the Expenditure Review andAudit Act [CAP 241].

Scope

We have audited the financial statements of Global Partnership on Output-Based Aid Project for the financial yearended 31 December 2015 consisting of the statement of cash receipts and payments, statement of comparison ofbudget and actual amount and accompanying notes set out on pages 6 to 13.

Members' responsibility for the financial statementsThe Director of Ministry of Climate Change Adaption, Meteorology, Geo-Hazards, Environment and Energy isresponsible for the preparation and fair presentation of these financial statements in accordance with InternationalPublic Sector Accounting Standards: Financial Reporting under the Cash Basis of Accounting. This responsibilityincludes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentationof financial statements that are free from material misstatements, whether due to fraud or error selecting andapplying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditors' responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our auditin accordance with International Standards on Auditing. These standards require that we comply with relevantethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statementsare free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on our judgement, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, weconsider internal control relevant to the entity's preparation and fair presentation of the financial statements in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness ofaccounting principles used and the reasonableness of accounting estimates made by management, as well asevaluating the overall presentation of the financial statements.

Opinion

In our opinion, the financial statements present fairly in all material respects the cash receipt and payments and cashflows of the Project for thel9 months ended 31 December 2015, in accordance with International Public SectorAccounting Standards: Financial Reporting under the Cash Basis of Accounting and the project administrationcomplies with relevant Vanuatu legislation and regulations.

LAW PARTNERSChartered Accountants(Qualified auditors under Section 130 of the Companies Port Vila

Act No. 25 of 2012 of the Republic of Vanuatu) 30 June 2016

TEL+67o 22 091FAX+678 23665

51 mail Fawpartnersvanuatu.com

PRINCIPALS LAW PARTNERS HOUSEJONATHAN LAW PO BOX 212

www. laJpaftners vanuatu.com VICKI JOE PORT VILA IVANUATU

FINANCIAL STATEMENTS

GLOBAL PARTNERSHIP ON OUTPUT- BASED AIDSTATEMENT OF CASH RECEIPTS AND PAYMENTSFOR THE 19 MONTH PERIOD ENDED 31 DECEMBER 2015

2015

Notes Receipts/ (Payment) Direct Payments Project

to Third Parties Total

(VUV) (VUIA) (VUV)CASH RECEIPTS

World Bank Grant Received 3 15,560,631 - 15,560,631

World Bank - Funds transferred to 3 860,001 - 860,001Development Fund

World Bank - Payments made directly to third 12 - 10,550,040 10,550,040Partics

TOTAL CASH RECEIPTS 3 16,420,632 10,550,040 26,970,672

CASH PAYMENTS

Consultants Services Under Part 4 of the 4,026,370 - 4,026,370Project

OBA Subsidies Under Part I and Part 2 of the - 10,550,040 10,550,040ProjectGoods 5 2,620,691 - 2,620,691

Workshops and Trainings - -

Incrementing operating Costs 404,411 - 404,411

Unallocated funds - -

TOTAL CASH PAYMENTS 4 & 5 7,051,472 10,550,040 17,601,512

CASH RECEIPTS LESS CASH PAYMENTS 9,369,160 - 9,369,160

INCREASE/(DECREASE) IN CASH 9,369,160 - 9,369,160

Cash at 2 June 2014 - - -

Cash at31 December 2015 6 9,369,160 - 9,369,160

This statement is to be read in conjunction with the accompanying notes and accounting policies.

Mr Jesse Benjamin

Director General

Ministry of Climate Change Adaptailibfr Meteorology, Geo-Hazards, Environment & Energy

Port Vila, 30 June 2016

6 1Global Partner.ship on Output-Basved Aid Project - Financial Statementsy, 2015

GLOBAL PARTNERSHIP ON OUTPUT- BASED AID

STATEMENT OF COMPARISON OF BUDGET AND ACTUALFOR THE 19 MONTH PERIOD ENDED 31 DECEMBER 2015

(Expressed in Vanuatu Vatt)

2015

ACTUAL BUDGET FINAL BUDGET Difference

Actual versus 19-Notes month Budget

19 Months 19 Months 49 Months

CASH INFLOWS

World Bank 7 26,970,672 106,719,570 436,500,000 (79,748,898)

Total Receipts 26,970,672 106,719,570 436,500,000 (79,748,898)

CASH OUTFLOWS

Category 1:

Goods 2,620,691 2,362,860 2,362,860 257,831

Workshops and Trainings - - 2,157,938

Incremental Operating Costs 404,411 707,400 3,185,100 (302,989)

Category 2:

OBA Subsidies Under Part I and Part 2 orthe Project 10,550,040 96,750,000 387,000,000 (86,199,960)

Category 3:

Consutants Services Under Part 4 of theProject 4,026,370 4,501,284 32,202,000 (474,914)

Unallocate Funds - 2,398,026 9,592,102 (2,398,026)

Total Payments 8 17,601,512 106,719,570 436,500,000 (89,118,058)

NET CASH FLOWS 9,369,160 - - 9,369,160

This statement is to be read in conjunction with the accompanying notes and accounting policies.


GLOBAL PARTNERSHIP ON OUTPUT- BASED AIDSTATEMENT OF ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS FOR THE19 MONTH PERIOD ENDED 31 DECEMBER 2015

1. Accounting Policies

a. Reporting Entity

The Global Partnership on Output-Based Aid Project (GPOBA) is administered by the

Department of Energy (DoE). The Grant is for Global Partnership on Output-based Aid Project

(GPOBA) which the objective of the project is to increase sustainable access to formal grid-

based electricity services within the Recipient's electricity concession service areas for low-

income customers through targeted subsidies. The project consists of the following parts:

(i) New Service Connections for Low-Income Households

(ii) Household Wiring for Low-Income Households

(iii) Project Management, Monitoring and Evaluation, Communication and Outreach, and

Training

(iv) Independent Verification

b. Authorization Date

The financial statements of the Grant TF 16279 was for the 19 months ended 31 December 2015

and was authorized for issue on June 2016 by Mr. Jesse Benjamin for the Department of

Energy. No other body has the power to amend these financial statements once they have been

issued.

c. Basis of Preparation

The financial statements of the Grant have been prepared in accordance with requirements of the

Public Finance and Economic Management Act [ CAP 244J which includes the requirement to

comply with generally accepted accounting practice.

The financial statements comply with IPSAS "Financial Reporting under the Cash Basis of

Accounting" for the 19 months ended 31 December 2015.

As this is the first period of reporting for the project, there are no comparative figures.



d. Presentation currency

The financial statements are presented in Vanuatu Vatu (VUV).

e. Foreign currency

The receipts received from the World Bank in foreign currency (USD) and reported in these

financial statements have been converted by the Reserve Bank of Vanuatu at the rate of the day

of transaction.

f. Cash and Cash equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known

amounts of cash and which are subject to an insignificant risk of changes in value.

Department of Energy receives the grant from the World Bank which is managed through the

centralized Smartstream system. Under this arrangement the Department of Energy does not

control the grant as their own bank account but rather the central entity will make payments on

behalf of the department after appropriate authorization and documentation. These transactions

have been disclosed in a separate column in the "Statement of cash receipts and payments".

g. Property, Plant & Equipment

Purchases of fixed assets have been included in the statement of Cash Receipts and Payments

under Goods. Separate disclosure has been disclosed in Note 5 of these accounts.

Fixed assets are stated at cost at the date of purchase.

There are no fixed assets purchased on hire purchase schemes and no depreciation is being

charged.

h. Budget

The budget is prepared on a cash basis when cash is expected to be received and paid. The

classification of the budget is prepared on the common revenue sources and expenditure is

classified on the nature of expenditure normally incurred by the project. Goods are treated as part

of normal operational expenditure.



h. Budget (continued)

The final budget is the budget that was approved by the World Bank dated 02 June 2014.

The approved budget is developed on the same accounting basis, classification basis, as the

financial statements. The budget presented has been prepared for the whole project period of

49 months which is different to the 19 months period prepared for these financial statements.

The reason for presenting a different period of budget to actual is because the grant agreement

was only approved according to the budget given over the project life.

The Grant Agreement identified the budget categories according to the following components

to be procured under the project. It encompasses the same entities as the financial statement.

Category 1: Goods, Consultant services, Incremental Operating Costs, Training and

Workshops under Part 3 of the Project.

Category 2: Output -Based Aid (OBA) Under Parts 1 and 2 of the Project

Category 3: Consultants' services under Part 4 of the Project

The budget was originally designed in USD and was converted into VUV at the rate of USD

1= VUV90 as per summary of disbursements.

i. Changes in accounting policies

There have been no changes in accounting policies during the financial year.

2. Government counterpart funding

The project does not receive any funds from the Vanuatu Government as this project is fully

funded by the World Bank.

3. Donor grant assistance

In 2014, the Department of Energy signed a grant agreement (World Bank Grant No. TF16279)

with the World Bank. The purpose of the project is to increase sustainable access to formal grid-

based electricity services within the Recipient's electricity concession services areas for Low-

income customers through the targeted subsidies (Vanuatu Utilities Infrastructure Limited and

UNELCO) the arrangement was for US$ 4,850,000 from 2014 to 2018.

10 1 Global Partnership on Output-Based Aid Project - Financial Statements, 2015


(Expressed in Vanuatu Vatu)

3. Donor grant assistance (continued)

The grant agreement specifically sets out the areas for spending of which US$ 350,000 allocated

for the Goods, consultant services, Incremental Operating Costs, Training and workshops under

Part 3 of the Project. OBA Subsidies under Parts I and 2 of the Project are allocated US$ 4,300,000

and US$ 200,000 allocated for Consultants' services under Part 4 of the Project.

As at 31 December 2015, US$254,827 (total grant received as at 31 December 2015 equivalent to

VUV26,970,672) had been drawn down from World Bank with a remaining balance of US$

4,595,173 (approximately VUV505,377,127) to be drawn down from 2016 to 2018.

The funds transferred directly to Development Fund of VUV 860,001, was received on 22

December 2015, but was recorded into Smartstream on 14 January 2016.

4. Operating Expenditure

2015

Consultants Fees 4,026,370Subsistence Allowances 5,000Vehicles Fuel 50,000Telephone / Fax- Communications 1,000Vehicles Repairs & Maintenance 19,890Lighting Utilities 10,550,040

Local Travel 32,200Advertising - Communications 273,000Printing -Communications 19,000Stationery - Communications 4,321Total 14,980,821

5. Capital Expenditure

2015

Equipment - Additional General 270,691Vehicle - Additional Vehicle 2,350,000

[TOW 2,620,691]

Ii I Global Partnership on Output-Based Aid Project - Financial Statements, 2015


(Expressed in Vanuatu Vau,i)

6. Closing cash balance

2015Made up as follows:

Smartstream central account 8,509,159

World Bank- Funds Transfer directly to Development Fund 860,001Total 9,369,160

7. Revenue variance between budget and actualThe difference of VUV79, 748,898 represents the actual amount received being less than the period

budget. The variance relates to the funding from the World Bank that was delayed due to the project

starting later than anticipated and also the different exchange rate used in the final budget which is $ 1

= VUV 90 and the actuals that used the exchange rate on the transaction date.

8. Expenditure variance between budget and actualThe project underspent VUV 89,118,058 against the budget of VUV 106,719,570. This is due to the

late commencement of the project which required the establishment of new systems, processes and

procedures compliant with World Bank requirements. These have now been established and many of

the grant activities are progressing well.

9. Debtors and other receivablesThe Project has no outstanding debtors as at 31 December 2015.

10. Creditors and other payablesThe total payable of the Project as at 31 December 2015 is VUV8,848,534 which represents subsidy

claims from UNELCO and VUI including audit fee.

11. Imprest AccountAs at 31st December 2015, there are no outstanding Imprest Account for the Trust Fund.

12. Payments by Third Parties

There are four direct payments made to the two subsidies (UNELCO & VUI) in 2015 amounting to

VTV10,550,040. Direct Payment was made in the World Bank Financial System (Client Connection)

for the Subsidy Claim payments. For reporting purposes, the Department of Energy is required to

keep a record of every transaction that occurs in Client Connection. Therefore, a general journal has

been prepared and processed into SmartStream by debiting the Lighting Utilities account and

crediting the Global Partnership Output-Based Aid: World Bank Contributions.



(Expressed in Vanuatu Vatu)

13. Statement of CommitmentsAs at 31 December 2015, Global Partnership Output-Based Aid project signed contracts with localconsultants. These contracts extended beyond balance date as outlined below:

Contractual Commitments 2015

Due not later than 1 year 3,562,520Due between 1 and 5 yearsTotal 3,562,520

14. Related PartiesThere are no related parties during the year.

13 1 Global Partnership on Output-Based Aid Project - Financial Statements, 2015

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