o p& a grantthornton - world bank · 2017. 7. 8. · report of independent auditors...

P& AO GrantThorntonAn instinct for growth

Punongbayan & Araullo20WFloor, Tower 1The Enterprise Center6766 Ayala Avenue1200 Makati CityPhilippines

Report of Independent Auditors Phi2ip8i228p T +63 2988 2288

F +63 2 886 5506grantthornton.com.ph

The Board of TmsteesConcerned Citizens of Abra for Good Government, Inc.2/F DZPA Building, Rizal corner Zamora StreetsZone 6, Bangued, Abra

Opinion

We have audited the accompanying project financial statements of Concerned Citizens ofAbra for Good Government, Inc. (the Organization) covering the Guarding the Integrityof the Conditional Cash Transfer Program Project (the Project) under the GlobalPartnership for Social Accountability (GPSA) Trust Fund Grant No. TF015863, for whichthe International Bank for Reconstruction and Development/International DevelopmentAssociation (the World Bank) acts as an administrator of grant funds. These projectfinancial statements, which are prepared from the books of accounts maintained by theOrganization for the Project, are comprised of the statement of financial position as atDecember 31, 2016, and the statement of funds received and uses of funds, statement ofexpenditures by project component and the statement of designated accounts for the yearended December 31, 2016 and a summary of significant accounting policies and otherexplanatory information.

In out opinion, the project financial statements present fairly, in all material respects, thefinancial position of the Project as at December 31, 2016, and of the funds received andexpenses incurred for the year ended December 31, 2016, as carried in the books ofaccounts maintained by the Organization for the Project, in accordance with theaccounting policies described in Note 2 to the project financial statements, the WorldBank guidelines, and the relevant terms of the GPSA Trust Fund Grant agreement.

Certified Public AccountantsPunongbayan & Araullo (P&A) is the Philippine member firm of Grant Thornton International Ltd

Offices in Cebu, Davao, Cavite

BOAPRC Cert. of Reg. No. 0002SEC Accreditation No. 0002-FR-4

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P& AO GrantThorntonAn instinct for growth

Basis for Opinion

We conducted out audit in accordance with Philippine Standards on Auditing (PSA). Ourresponsibilities under those standards are further described in the Auditors'Re.ponsibilities forthe Audit of the Project Financial Statements section of our report. We are independent of theOrganization in accordance with the Code of Ethics for Professional Accountants in thePhilippines (Code of Ethics) together with the ethical requirements that are relevant to outaudits of the project financial statements in the Philippines, and we have fulfilled our otherethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.

Responsibilities of Management and Those Charged with Governance for theProject Financial Statements

Management is responsible for the preparation and fair presentation of the projectfinancial statements in accordance with the accounting policies described in Note 2 to theproject financial statements, the World Bank guidelines, and the relevant terms of theGPSA Trust Fund Grant agreement, and for such internal control as managementdetermines is necessary to enable the preparation of these project financial statements thatare free from material misstatement, whether due to fraud or error.

Auditors' Responsibilities for the Audit of the Project Financial Statements

Our objectives are to obtain reasonable assurance about whether the project financialstatements as a whole are free from material misstatement, whether due to fraud or error,and to issue an auditors' report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with PSAwill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese project financial statements.

As part of an audit in accordance with PSA, we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

* Identify and assess the risks of material misstatement of the project financialstatements, whether due to fraud or error, design and perform audit proceduresresponsive to those risks, and obtain audit evidence that is sufficient and appropriateto provide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internalcontrol.

* Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Organization's internal control.

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Certified Public AccountantsPunongbayan & Arauilo P&A) is the Philippine member firm of Grant Thornton International Ltd

P&AO GrantThorntonAn instinct for growth

* Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

* Evaluate the overall presentation, structure and content of the project financialstatements, including the disclosures, and whether the project financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including anysignificant deficiencies in internal control that we identify during our audit.

Other Matter

This report is intended for the information of the Organization and the World Bank.However, upon release by the World Bank, this report is a matter of public record and itsdistribution is not limited.

PUNONGBAYAN & ARAULLO

By: R to L NaiolaP tr

CPA Reg. No. 0090741TIN 109-228-427PTR No. 5908629, January 3, 2017, Makati CitySEC Group A Accreditation

Partner - No. 0395-AR-3 (until May 19, 2019)Firm - No. 0002-FR-4 (until Apr. 30, 2018)

BIR AN 08-002511-19-2015 (until Mar. 18, 2018)Firm's BOA/PRC Cert. of Reg. No. 0002 (until Dec. 31, 2018)

June 22, 2017

- 3-Certified Public AccountantsPunongbayan & Araullo (P&A) is the Philippine member firm of Grant Thornton International Ltd

CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC.STATEMENT OF FINANCIAL POSITION

DECEMBER 31, 2016

COVERING THE

GLOBAL PARTNERSHIP FOR SOCIAL ACCOUNTABILITY TRUST FUNDGRANT FOR GUARDING THE INTEGRITY OF THE CONDITIONAL

CASH TRANSFER PROGRAM PROJECT(GPSA TRUST FUND GRANT NO. TF015863)

Notes In Php In USD

ASSETS

Cash 3 P 2,303,438 $ 46,242Due from partners and employees 4 1,430,689 28,721

TOTAL ASSETS P 3,734,127 $ 74,963

LABILITIES AND FUND BALANCE

Accounts payable 5 P 323,234 $ 6,490Fund balance 3,410,893 68,473

TOTAL LIABILITIES AND FUND BALANCE P 3,734,127 $ 74,963

See Notes to Project Financial Statements.

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CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC.STATEMENT OF FUNDS RECEIVED AND USES OF FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2016

COVERING THE



YEAR ENDED ACCUMULATEDDECEMBER 31,2016 TO-DATE

In Php In USD In Php In USD

Funds Received:GPSA Trust Fund Grant P 7,551,699 5 160,000 P 27,110,872 S 600,000Interest income 1,779 39 101 226

7,553,478 160,039 27,120,982 600,226

Uscs of Funds*1. Third party monitoring of Pantawid Pamilyang

Pilipino Program (4Ps) and project management 3,033,175 66,660 8,096,345 180,560

2. Mobilizing household beneficiaries to engage

in applied social accountability at the

community level 5,470,638 120,227 7,716,384 170,747

3. Building the capacity of civil society organization(CSO) members of the Northern Luzon Coalitionof Good Governance (NLCGG) 730,345 16,051 2,671,473 59,718

4. Knowledge and learning 2,836,234 62,330 5,744,968 127,764

12,070,392 265,268 24,229,170 538,789

Effects of exchange rate changes 28,133 6,215 519,081 7,036

EXCESS (DEFICIENCY) OF FUNDS RECEIVEDOVER EXPENDITURES (P 4,488,781) (5 99,014) P 3,410,893 $ 68,473

* Please refer to Statement of Expenditures by Project Component for the breakdown of expenditures incurred.

See Notes to Project FinAncial Statementv.

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CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC.STATEMENT OF EXPENDITURES BY PROJECT COMPONENT


COVERING THE

GLOBAL PARTNERSHIP FOR SOCIAL ACCOUNTABILITY TRUST FUND

GRANT FOR GUARDING THE INTEGRITY OF THE CONDITIONALCASH TRANSFER PROGRAM PROJECT

(GPSA TRUST FUND GRANT NO. TF015863)

YEAR ENDED ACCUMULATEDDECEMBER 31,2016 TO-DATE

Notes In Php In USD In Php In USD

Component I - Third party monitoring of4Psprogram and project managementOperating cost

Operating costs 7 P 2,732,158 5 60,045 P 6,598,349 $ 147,018Trainings 6 301,017 6,615 1,214,226 27,158Goods - 283,770 6,384

3,033,175 66,660 8,096,345 180,560

Component 2 - Mobilizing household beneficiariesto engage in applied social accountability at thecommunity level

Trainings 6 5,060,441 111,212 6,893,366 152,445

Operating costs 7 410,197 9,015 823,018 18,302

5,470,638 120,227 7,716,384 170,747

Component 3 - Building the capacity of CSOmembers of the NLCGG

Operating costs 7 730,345 16,051 1,738,610 38,733

Trainings 6 - - 932,863 20,985

730,345 16,051 2,671,473 59,718

Component 4 - Knowledge and learningOperating costs 7 2,123,274 46,662 4,235,126 94,170

Trainings 6 712,960 15,668 1509,842 33,594

2,836,234 62,330 5,744,968 I7,764

TOTAL EXPENDITURES P 12,070,392 $ 265,268 P 24,229,170 $ 538,789

See Notes to PMject Financial Stements.

CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC.STATEMENT OF DESIGNATED ACCOUNTSFOR THE YEAR ENDED DECEMBER 31, 2016

COVERING THE



Bank: Philippine National BankAccount number: 173647700088

In Php In USD

Funds received from World Bank P 7,551,699 $ 160,000

Less: Total amount recovered by World Bank - -

Present outstanding amount advanced to

the designated account P 7,551,699 $ 160,000

Fund balance at beginning of year* (P 7,899,674) ($ 167,487)Balance of the designated account as of December 31, 2016 2,300,208 46,177Total amount of expenditures claimed during the year 12,070,392 265,268Total amount withdrawn and not yet claimed

as of December 31, 2016(Reason: Unliquidated funds transferred to partners andadvanced to employees and CSOs) 1,430,689 28,721

Other reconciling items:Cash on hand 3,230 65Interest income ( 1,779) ( 39)Accounts payable 323,234) 6,490)

Effects of exchange rate changes 28,133) 6,215)

Total funds received as accounted for P 7,551,699 $ 160,000

*Traced from project financial statements as of December 31, 2015.

See Notes to Project Financial Statements.

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CONCERNED CITIZENS OF ABRA FOR GOOD GOVERNMENT, INC.NOTES TO PROJECT FINANCIAL STATEMENTS

COVERING THE




1. PROJECT INFORMATION

11 The Implementing Organization

Concerned Citizens of Abra for Good Government, Inc. (CCAGG or theOrganization) is a civic organization that works in the remote, rural province of Abra inthe northern Philippines. It was incorporated and registered with the PhilippineSecurities and Exchange Commission on April 18, 1988. The Organization specializesin monitoring the implementation of infrastructure projects in the province of Abra.CCAGG's community-based approach relies on the voluntary efforts of area residentswho verify whether bridges, roads, and other infrastructure projects are executedaccording to contract regulations. These citizen audits are then verified by civilengineers working with CCAGG and turned into evidence-based reports that aim todisclose potential corruption in the implementation of public infrastructure projects.

The registered office address of CCAGG is located at 2/F DZPA Building, Rizalcorner Zamora Streets, Zone 6, Bangued, Abra.

1.2 Project Description

On March 28, 2014, the Organization received a grant from the International Bank forReconstruction and Development/International Development Association (the WorldBank) acting as administrator of grant funds provided by multiple donors under theGlobal Partnership for Social Accountability (GPSA) Trust Fund in an amount not toexceed United States (U.S.) $800,000. The fund is for the project entitled "Guardingthe Integrity of the Conditional Cash Transfer Program" (the Project). The Project'sobjective is to develop a model for civil society-government partnership for transparentand accountable implementation of the Pantawid Pamilyang Pilipino Program (4Ps),which will be implemented over a four-year period from March 28, 2014 to March 28,2018.

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The Project has four components as follows:

1. Third Party Monitoring (TPM) of 4Ps Program and Project Management

Strengthening the capacity of the Organization for sustained and systematic TPM tomonitor the Member Country's 4Ps, through inter alia:

a) The development of social audit tools to monitor the Member Country's 4Ps,particularly in relation to targeting, compliance verification, payment, and

grievance redress at the municipal level;b) The formulation and production of a handbook on third party monitoring of

4Ps;c) The carrying out of an analysis on relevant topics related to the Member

Country's 4Ps, including, targeting, compliance verification, payment, and

grievance redress;d) The establishment of a working group to support policy dialogue at national or

regional level and to discuss concerns with the 4Ps which may require policydecisions/adaption; and,

e) The implementation, monitoring and evaluation of the activities financed by thegrant including audits.

2. Mobilizing Household Beneficiaries to Engage in Applied Social Accountability atthe Community Level

Enhancing the effectiveness of the Family Development Sessions (FDS) as socialaccountability tool for the 4Ps, through inter alia:

a) The revision of the FDS Held manual for parent leaders; and,b) The provision of training to parent leaders in the 30 municipalities covered by

the 4Ps using the enhanced FDS.

3. Building the Capacity of the Civil Society Organization (CSO) Members of theNorthern Luzon Coalition for Good Governance (NLCGG)

Capacity building of member organizations of NLCGG through inter alia, thecarrying out of workshops and training with partner CSOs of the NLCGG tofacilitate the adoption of common TPM procedures and tools developed underComponent 1, common FDS training curriculum developed under Component 2,and a common menu of social accountability tools for use in the Project.

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4. Knowledge and Learning (K&L)

Consolidation of knowledge and learning products to be developed inComponents 1, 2 and 3 of the Project, through inter alia; the development andimplementation of a K&L plan focused on:

a) Enhancing CSO partners knowledge of global good practices for improvingconditional cash transfer (CCT) social accountability;

b) Extracting best lessons from project implementation experiences using a varietyof tools such as case studies;

c) Sharing of experience within the 4Ps Program through peer learning,workshops, and publication and dissemination of K&L products;

d) Exchange of experiences with the global community of CCT practitioners,particularly with countries in the Latin America and Carribean region with moremature CCT programs experiences; and,

e) Providing technology and technical assistance to upgrade existing capabilities ofCCAGG and the Responsible Citizens, Empowered Communities andSolidarity for Social Change Inc. (RECITE) to undertake K&L activities.

Prior to the implementation of the Project activities, the Organization had entered intoseparate agreements with RECITE, Affiliated Network for Social Accountability - EastAsia Pacific (ANSA-EAP) and Partnership for Transparency Fund (PTF) for theexecution of Components 2, 3 and 4, respectively, of the Project. The mentionedpartners are in-charge in carrying out the technical implementation of their respectiveresponsibilities. From the proceeds of the grant, the Organization will cover theoperating costs related to the discharge of their responsibilities. CCAGG has solefiduciary responsibility under the Project, including procurement and financialmanagement.

The Project's components and amounts budgeted under the Grant Agreement follow:

In PhilippineDescription Pesos In U.S. Dollars

1.) Third Party Monitoring of 4PsProgram and Project Management P 11,319,939 $ 251,750

2.) Mobilizing Household Beneficiariesto Engage in Applied SocialAccountability at the CommunityLevel 12,770,060 284,000

3.) Building the Capacity of CSOMembers of the NLCGG 2,697,900 60,000

4.) Knowledge and Learning 9,184,101 204.250

P 35,972,000 $ 80000

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis ofPreparation

The accompanying project financial statements have been prepared and maintained ona modified cash basis of accounting. Under this basis, grant funds are to be recordedwhen contracts are signed and apportioned or spread out over the year of projectimplementation and expenses are recognized when paid rather than when obligation isincurred, except for accrual of certain personnel, benefits, and other operating costs.

2.2 Functional and Presentation Currency

The accompanying project financial statements are presented in Philippine Peso, thecurrency of the country in which the Project is operating, as well as in U.S. Dollar.The translation of the Philippine Peso amounts into the U.S. Dollar amounts isincluded for the convenience of the users of the project financial statements.Statement of financial position accounts are translated using the Bangko Sentral ngPilipinas dosing rate on December 31, 2016 at P49.813:US$1. Grant funds receivedare presented on the actual grant amount in U.S. Dollar and converted using the spotrate on the date of receipt. On the other hand, actual expenditures are translated usingthe weighted average of the exchange rates used to convert the grants received for theyear ended December 31, 2016 and the period March 28, 2014 to December 31, 2015at P45.503:US$1 and P44.453:US$1, respectively. Any exchange rate differences arerecognized in the statement of funds received and uses of funds.

2.3 Cash

Cash includes cash on hand and in bank and are restricted to specific purposes boundby the contracted agreements.

2.4 Due from Partners and Employees

Due from partners and employees comprise of cash advances made to project partnersand employees that are not yet liquidated.

2.5 Accounts Payable

Accounts payable are obligations on the basis of normal credit terms and do not bearinterest.

2.6 Fund Balance

The amount included in fund balance includes accumulated excess of grant fundsreceived over expenses reduced by funds returned to funding agencies/partners andother adjustments.

2.7 Grant Funds

The World Bank advances grant funds into a designated account of the Organizationto finance eligible expenditures for the Project and for which supporting documentsare provided at a later date.

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2.8 Costs and Expenses

Costs and expenses are decreases in economic benefits during the accounting period inthe form of outflows or decrease of assets or incurrence of liabilities that result indecreases in fund balance. Costs and expenses are recognized in the statement offunds received and uses of funds when paid rather than when the obligation isincurred, except for accrual of certain personnel, benefits, and other operating costs.

2.9 Provisions

Provisions, if any, are recognized when the Project has a present obligation (legal orconstructive) as a result of a past event, it is probable that an outflow of resourcesembodying economic benefits will be required to settle the obligation, and a reliableestimate can be made of the amount of the obligation.

2.10 Goods

Goods include office equipment and fixtures, materials and supplies including servicessuch as repairs and maintenance of equipment.

2.11 Contigencies

Contingent liabilities are not recognized in the project financial statements. They aredisclosed in the notes to the project financial statements unless the possibility of anoutflow of resources embodying economic benefits is remote. Contingent assets arenot recognized in the project financial statements but are disclosed in the notes toproject financial statements when an inflow of economic benefits is probable.

2.12 Events After the End of the Reporing Peiod

Any post-year-end event that provides additional information about the Project'sfinancial position at the end of the reporting period (adjusting event) is reflected in theproject financial statements. Post-year-end events that are not adjusting events, if any,are disclosed when material to the project financial statements.

3. CASH

This account is composed of the following as of December 31, 2016:

In PhilippinePesos In U.S. Dollars

Cash on hand P 3,230 $ 65Cash in bank 2,300,208 461177

P 2,303,438 S 46,242

Cash in bank generally earn interest based on daily bank deposit rates. Interest incomeearned on savings deposits amounted to P2,598 (U.S.$57) in 2016 and P8,331(U.S.$187) for the period March 28, 2014 to December 31, 2015.

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4. DUE FROM PARTNERS AND EMPLOYEES

The composition of this account as of December 31, 2016 is as follows:


Due from:CSOs P 1,249,796 $ 27,273Partners 173,059 1,291Project employees 7,834 157

P 1,430,689 $ 28.72

5. ACCOUNTS PAYABLE

The composition of this account as of December 31, 2016 is as follows:


Accounts payable P 281,168 $ 5,645Salaries payable 37,043 744Payables to government 5,023 101

P 323,234 $ 6,

6. TRAININGS

Trainings represent expenditures incurred by CCAGG to conduct training, includingpurchase and publication of materials, rental of facilities, course fees and travel andsubsistence of trainees.

The details of training expenses by nature are shown below.

Year Ended AccumulatedDecember 31, 2016 To-date

In Philippine In U.S. In Philippine In U.S.Pesos Dollars Pesos Dollars

Trainings andseminars P 5,143,039 $ 113,027 P 7,925,455 $ 175,619

Accommodation 463,763 10,192 1,262,386 28,158Travel and

transportation 267,090 5,870 574,166 12,778Meetings 170,456 3,746 307,525 6,829Professional fees 21,000 462 424,000 9,528Materials 9,070 198 52,880 1,184Others - -- 3.885 86

1 S 133,495 P1,550= S 234,182-B13-

The summary of training expenses incurred by each project component is shownbelow.

Year Ended AccumulatedDecember 31. 2016 To-date


Component 1 P 301,017 $ 6,615 P 1,214,226 $ 27,158Component 2 5,060,441 111,212 6,893,366 152,445Component 3 - - 932,863 20,985Component 4 712,960 15,668 1,509842 33.594

P 0441 $ 133,495 P10,55M 29 234,2

7. OPERATING COSTS

Operating costs mean reasonable recurrent expenditures incurred by CCAGGrequired for the implementation, monitoring and evaluation of the Project, and byRECITE, ANSA-EAP and PTF, respectively, required for the implementation ofsome of the activities under the Project, including salaries of staff of CCAGG and itspartners working on the Project, office rental, supporting staff for the Project,transportation, basic utilities (electricity and water), and communications expenses, butexcluding the salaries of officials of the Member Country's civil service; and any otherreasonable expenditures as may be agreed upon by the World Bank.

The details of operating costs by nature are shown below.



Salaries and otheremployee benefits P 3,590,139 $ 78,899 P 8,294,087 $ 184,718

Transportation andtravel 1,061,832 23,336 2,157,400 47,982

Office operatingcosts 378,498 8,318 977,766 21,799

Honorarium 312,100 6,859 625,736 13,915Audit cost 308,000 6,769 308,000 6,769Office rental 144,000 3,165 396,000 8,834Office supplies 69,088 1,518 231,497 5,172Meetings 58,501 1,286 89,093 1,974Utilities 25,999 571 55,400 1,232Meals 24,496 538 46,328 1,029Communication 21,164 465 158,630 3,557Printing - - 27,743 624Others 2.157 49 27,423 618

P,995, L 94 131773 P13 395M $ 298223

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The summary of operating costs incurred by each project component is shown below.



Component 1 P 2,732,158 $ 60,045 P 6,598,349 $ 147,018Component 2 410,197 9,015 823,018 18,302Component 3 730,345 16,051 1,738,610 38,733Component 4 2,123,274 46,662 4,235,126 94.170

PW599974 B11,773 P1350 $2223

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