Audit of the Financial Statement of the Project "Greater Beirut Water Supply" Loan Number 7967-LE Beirut - Republic of Lebanon For the Year Ended December 31, 2017 Talal Abu-Ghazaleb & Co Member of Talal Abu-Ghazaleh Organization Index Contents: Page Independent Auditor's Report 1-2 Project Statement of Cash Receipts and Payments by Category 3 Notes to the Project Statement of Cash Receipts and Payments 4-9 TAG-Audk Talal Abu-Ghazaleh & Co. Global Company for Auditing and Accounting -Lavli4. .1A 2s,. Societe Civile (R.C. 671 (w P.W) SJ L S Certified Public Accountants Independent Auditor's Report To Messrs. Beirut and Mount Lebanon Water Establishment Beirut - Republic of Lebanon World Bank Loan Number 7967-LE Opinion We have audited the attached Financial Report of the project "Greater Beirut Water Supply" consisting of statements of cash receipts and payments by category for the year ending and cumulatively as at December 31, 2017 and notes which describes the significant accounting principles. In our opinion the Project Financial Statement (PFS) present fairly, in all material respects, the cash receipts and payments of the Greater Beirut Water Supply Project for the year ending December 31, 2017 and showing cumulative balances as at December 31, 2017 in accordance with the International Public Sector Accounting Standards (IPSAS), under the cash basis of accounting; and that the internal control over financial reporting involved in the preparation of replenishments, direct payments, payments through special commitments, and reimbursements i.e. expenditures reimbursed on the basis of statements of expenditures can be relied upon to support the related withdrawals as of December 31, 2017; also the project was in all material respects in compliance with the laws, regulations, guidelines and provisions governed by the Loan Agreement. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor 's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the establishment in accordance with the ethical requirements that are relevant to our audit of the financial statements in Lebanon and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for maintaining a financial system, including records and accounts, and prepare project financial statements in a format acceptable to the World Bank and adequate to reflect the operations, resources, and expenditures related to the projects. In addition, the management should maintain records and supporting documents for all expenditures with respect to which withdrawals from the loan account were made. Sanayeh-Al Mansour Bldg. = j -- Ut Tel.: +961 1754222 . F I IIRMS +i vt YI YI :6LL Fax: +961 1754 222 tagi.com +A11A Va YYV Uy1AL; P.O.Box: 11-7381, Beirut, Lebanon tagco.bierut@tagi.com AU11 I -.vv AI :y.U2 Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: a) Identify and assess the risks of material misstatement of the Financial Report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. b) Obtain an understanding of internal control relevant to the audit 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 Organization's internal control. c) Evaluate the overall presentation, structure and content of the Financial Report, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Talal Abu-Ghazaleh & Co. Beirut n January 18, 2019 2 � N VQ"� � Q�i N � Ою0 О�О 0�0 � � 6i W Ф'�t д� �D О О� �D [+ [+ � �+✓ р м� � +ri �о .••� м иi ^ r+i С� l� � � � � н С � м а� � � м N � � b U �„� = иь Ф^ R v7 � .им О� г+'1 t+ д' �г'� �О 1� rl С� � � р �� r�� О гi О 'aV О n� G� '�I 00 :J 1QрΡ е д� С� й м N�D О � � ��� b � �R ��Q N м b м tмv е т � °н � oNO о�о oNO oNo � у г t� г г r � Е С � м м м � � м � � � а са � �о �о �о W � д' U м г�л м r�+� � О � � � � �р � а� > [� V а (т� С�+ г�л f� � о�о М L � ,?+ 1� м � м [� .. �� I� Fw+' в� r� м�у 1 Q�t СЧ .�•г 1 1 1 � .ь н � � � м t� ,., оо cv � � � C�i N� U � N гмv cNV tм�t � о z ��А �°' ,� Е м �"� �' � и а м л N N 0�0 0�0 � �"С� �r Ri а+ С � � �' Гв •'" С(� О О мi М�О ri 00 ..�r � о ы у � � i � �г'ь И м ' ' е+� .� N Q 'r�' � �О r"' � VJ СО � � •--• л «. м � •�]у � 'G3 F�1 L � � �6 U .r 4i � i� � V у � � � гL 'S 47 � rг� � й V L а а м� � � N i о^�о 4�0 Ф � V �., `� еа `� т 3I � а°. а°, •� �' о; м г�i с, � сь, °r ��: N tV оо �' гл � 4, r�i н •л � ���� �., ,r �� 3�Q� � .. �� .-. `� � сд •� б�i � а � •0 � � [�л h+� �.�в ��.. i1' С� у�' L VZ а у О. �„" �"' и t� W � � � о � � ь�'. 'о ° � 'с С7 С v .� '� ' '� � �т � � v т " 'о ... гч а � � v с. � й О. �р р � м � � � � .Е й � °� � .� � � и �° с. w О и '�+ � '✓ ОА � .й � � � 'у z„ � С Lд cvi � � G ы � и ?, 'G С� С с� г�,{г � �" � iб •V у С � '� � � С 'fl р � е� г� � С•� л с�9 у и у � � � � � � `� д о .� � �С �6 � � `'� � о 3 'О � й и •q "�" .� ,� а 3'О � ео и рд � J о n. •� м� ��`,�° р W�.а U � и� 4 о о о�• а а еа еа •а "о � о аи; С7 С7 С7 n. о•а`�i s� а.��?н а�Nм Favu Notes to the Proiect Statement of Cash Receipts and Payment "Greater Beirut Water Supply Prooect Loan Number 7967-LE" For the year ended December 31, 2017 (Amounts are expressed in US Dollar) Note 1: Proiect Description: The objective of the Project is to increase the provision of potable water to the residents in the Project area within the greater Beirut region, including those in the low-income neighborhoods of southern Beirut, and to strengthen the capacity of the BML-WE in utility operations. The Project consists of the following parts: Part 1. Bulk Water Supply Infrastructure (a) Construction and construction supervision of bulk water supply infrastructure consisting of- (i) Water tunnel conveyors, including related intake, flow regulation and washout structures, and related vent and surge shafts and distribution chamber; (ii) Twin transmission pipelines; and (iii) Water storage reservoirs. (b) Design, construction, construction supervision and operation of a water treatment plant. (c) Financing of equipment associated with the bulk water supply infrastructure including pumps and valves. (d) Support to CDR for Project management related to the bulk water supply infrastructure through the financing of consultants services. Part 2. Supply Reservoirs, Distribution Network and Metering (a) Design, construction and construction supervision of supply reservoirs and associated pumping stations. (b) Design, construction and construction supervision of water supply distribution networks of pipelines across southern Beirut and parts of the Metn, Baabda and Aley areas. (c) Installation of household water meters in selected areas. (d) Installation of bulk water meters at the reservoirs and distribution chambers. 4 Part 3. Project Management, Utility Strengthening and National Studies (a) Establishment and operation of the PMU, including the financing of Incremental Operating Costs. (b) Capacity building and technical assistance to strengthen BMLWtE's capacity, and MOEW's capacity for project oversight, and financing of consultants' services for the BMLWE special purpose audits. (c) Provision of equipment to strengthen BMLWE, such as telemetry or supervision control and data acquisition systems, geographical information system, customer information system and international accounting system. (d) Carrying out high priority national studies on key sector areas, such as wastewater management, utility operations and regulation of the water, sanitation and irrigation sectors, water resource management, water supply augmentation and inter-basin transfers, to be selected with the agreement of the bank, in alignment with the priorities set forth in the National Water Sector Strategy currently under preparation by the Borrower. Note 2: Basis of Accounting: The financial statements are prepared following the cash basis of accounting under the cash basis revenues are recorded when received and expenses are recorded when paid. �00 м,-✓ v� оо COCO�D � о о Q С О И� С О О О О С� д !^ М О С ц3 vi � О О С О С ОQ М у � � О О� С' Oh Q� О Q О О G О!� � � V �D О О� 'д' � И� О О О О О д О� � � •0 Й Й G� Й Й �� О G О И О И t^ д , р`., Мо�оии O�Oi о� йцi �N �О � о ...i ..-� О+ �у О � � О G � C�i � � Й 'r �о �о er � vi и �G ,n-� > о� о, н гч ��о оо О 'ь+ ..у+ �О �О О о О^ Ot �D N s� с� м � � м И й �� � � _ � � � М � �А � � �� м�,м еQц„ � .. а � C�i Йи ии � � м � � U � � 00 оо О� О� М у О � вд+ �О �D 00 00 т� l� G�i � А А о о ry,cnч о с � ь м � � м �� �D �С � � � � � � м r.. � � � Q О � � � � � � L4 ,+ М М N N �О б G о о О д О О О О о О О Q О v .� а оооо оо acv,o Фсооо ++ рΡ О С С О О С С О О С Q Q О Q � в+ � G О С О О О Q О О О Q рΡ G О д д�� Ф О О Q о о С С О О О� д О О О О О О О С Q Q О О Ф С O G С � � ar,9 С о о С Ф о С о о С О О О О о U о � и С и О о 0 0 0 0 С7 И О И С � �С ��--� �--i .-� Vi й й й О м�D О � U N оо и �О �о м М N � о � L" ц 'о 7 i: у j� и 'о �r' L у� Я � Goi 0 .- б7 С •� � �� Lw' � � W L •у D w' U гЛ 4� � = Д b о t ц ° .о "� � ь�. � с � °' ..� °' °' � о °� �O ;� ° .. 3 � � � `о й о � � � о о 3 � � . +✓ �о Е� V � и � � � у 3 � о � � й_ и � W � = и� 3 А�� � �� а+ �" � а о са �+ w L .., � • • о R � � С �' й � � с 'Г.о. °� и � '� у •° ь" � � � ... ° Ч: о � � � м � � 'С 0+ � а°i � Ч � р V а � ° � а`3 � .го. � � ц а � �А ` �b�� �"а_ �"�� в° � 8 г�i ' м � `' 'а �' � о [1 ] "" 'о � `.' й = о к О о о � aoi � i ы aoi b а a��i�:n ,�UE�w �� еа °�3а`. о0 °а�й д4 VA W �' а Е Е Е �` s� о cti sS ci о сд о cti � ci � U U V й � �j м N М м � w о Z Note 4: Designated Account Reconciliation Statement PMU-AWALI: USD 1. Beginning balance of S/A per PW records 269,051 2. Add: Total replenishment for SIA from the WB 222,354 3. Balance 491,405 4. Less: Total expenditures made for this year (272,375) 5. Less: Difference of PV-amount incurred but not recorded in the PMU records 6. Less: Bank charges/other payment not financed by this counterpart - 7. Ending balance of S/A Rep PMU records 219,030 8. Balance of special account per attached Bank Statement as of date 12/31/2017 242,000 9. Less: Total checks issued not yet withdrawn/BDL (22,970) 10. Less: Total wire transfer not yet withdrawn - 11. Total amount account after adjustments 219,030 Note 5: Special Designated Account Reconciliation Statement CDR: USD I Beginning balance of S/A per CDR records 348,458 2. Add: Total replenishment for S/A from the WB 578,383 3. Balance 926,841 4. Less: Total expenditures made for the year (518,082) 5. Less: Difference of PV-amount incurred but not recorded in the PMY records 6. Less: Bank charges/other payment not financed by this counterpart - 7. Ending balance of S/A Rep CDR records 408,759 8. Balance of special account per attached Bank Statement as of date 12131/2017 408,759 9. Less: total checks issued not yet withdrawn/BDL - 10. Less: Total wire transfer not yet withdrawn - 11. 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Desktop PC Acer + Screen 10-Oct-10 600.00 Phonesyst Phone System, Central, Wiring I O-Oct- 10 1,964.84 LJP1005 HP laser jet 10-Oct-10 154.00 OJHP7000 A3 HP later jet A3 I O-Oct- 10 280.00 WATCOOLI Water Cooler 22-Dec- 10 165.00 COFI Coffee Machine 28-Dec- 10 990.00 Laptop PD Toshiba Laptop + Case 31-Dec-10 1,980-00 MeeTABLEI Meeting Table 2-Feb- 11 614.93 AE2013HW 3 Aeron Charis 2-Feb- 11 4,640.80 DskPD Desk for Project Coo 2-Feb- 11 1,754.16 HC90/200 High Cabinet 2-Feb- 11 555.29 Darina 4 Chairs 2-Feb- 11 2,239.50 FAXI Samsung Colored multi-use I -Aug- 11 676.62 Fax2 Panasonic Fax Mach 2-Feb-14 270.00 Laptops HP-Toshiba-printer 27-Oct-14 5,960.00 Total 23,445.14 9