SNG GrantThornton An instinct for growth' SNG Grant Thornton Director: CLEAR-AA 20 Morris Street East University of the Witwatersrand Woodmead, 2191 2 St David's Place. P.O. Box 2939 Parktown Saxonwold, 2132 Johannesburg 2015 T: 011 231 0600 28 January 2019 Dear Madam FINAL REPORT: Agreed Upon Procedures Engagement: World Bank Financed Projects, Centre for Learning on Evaluation And Results-Anglophone Africa (CLEAR-AA) for the period ended 1 January2017 to 30 June 2018. We have performed the procedures agreed with you and described with respect to the World Bank Grant Statement of Expenses (SOE) for the period 01 January 2017 to 30 June 2018 Scope Our engagement was unaertaKen in accordance Witn tne internationai Stanaara on Related Services 4400 applicable to Agreed-upon procedures engagements. Our procedures were performed solely to assist you with a response as per the stipulated procedures. This report is furnished solely for your information and should be used by you only for this purpose. The information is the responsibility of the University of Witwatersrand (Wits). Our responsibility is to report on our findings from the application of the procedures detailed below. The responsibility for determining the adequacy or otherwise of the procedures agreed to be performed and the completeness of information received, is that of the management of Wits. Procedures Performed We were engaged to perform the following procedures: General: 1. Obtain the funding agreement and verify that the agreement :S authorized by the relevant parties (WITS representative and World Bank Representative). 2. Obtain an understanding of the agreement and its terms and conditions. 3. Obtain an understanding of the control environment for the preparation of the project financial statements and compliance with the financing agreement. For income received: 1. Agree the Grant amounts in US$ to the Statement of Expenses (SOE); 2. Agree the exchange rate used to translate the Grant to published rates on the applicable date; 3. Reperform the calculation of the Grant in Rands; Victor Sdecme [ChiefExecutivc] A coWmrcmive list of al] Drclm is availableatohe SNG Or"Th IMo onareamobfinnofGrantThotoonlaminelLtd (GIL). GTIL andthe mecbwfri u amn aridwide company oflices or registed ofle pamhi. GTIL and ach mener firm i a sqalte l noity. Savices arcdelivea indqmudenlyby the member fims, GTtL does wtprovides"vic to liMt GTL md is iba ibr are net agmis of ax do not oblipt; one aneth ma are nt liablefor one another'a acts or omisions. SizwcNtse]nbaGabodo Grant Thomion Irporated gitraio Numbern 2005/t4639l2 sng-grantthornton.co.za 4. Prepare a reconciliation of the amounts as "received by the Project from the World Bank", with those shown as being disbursed by the Bank and agree the amounts received to those stipulated in the agreement; 5. Verify that all SOE used as a basis for the submission of loan withdrawal applications to the World Bank agree to underlying information; 6. Confirm through inspection that the Project Financial Statements include a schedule listing individual SOE or IFR withdrawal applications by specific reference number and amount. Expenditure: Select a sample expenses worth 50% in value of Capex, Payroll and operating expenses categories listed on the SOE: 1. Obtain all necessary supporting documents and records; 1.1 Third Party expenses- * Agree the expense to a purchase order, supplier invoice or other appropriate proof of documentation and proof of payment; * Inspect that the third party expense has been authorized by the appropriate authority. * Confirm that the third party expenses incurred are for the applicable programme. 1.2 Salary expenses * Inspect the employment contract of the selected employee and verify that it is approved by both the employer and employee. * Agree the salary costs per the contract to payroll records and to the employee pay slip. * Confirm that the salaries incurred are for the applicable programme 2. Based on the expenses selected and on the SOE, through inspection confirm that the funds have been used in accordance with the relevant financing agreement and only for the purposes for which they were provided. 3. Inspect and verify that assets procured from project funds exist and there is verifiable ownership by the implementing agency or beneficiaries in line with the financing agreement. 4. Review the treatment of Value Added Tax (VAT) on the expenses on the SOE and based on the World Bank Grant Agreement, determine if VAT has been correctly treated. 5. Inspect the supporting documentation for expenses and verify that the goods, works and services financed have been procured in accordance with the relevant financing agreements including specific provisions of the World Bank 6. Inspect and verify that designated accounts (if used) have been maintained in accordance with the provisions of the relevant financing agreements. 7. Inspect that ineligible expenditures included in withdrawal applications are identified and reimbursed to the Designated Accounts. 8. Inspect the SOE and verify that the financial performance of the project is satisfactory based on the requirements of the financing agreement Obtain the Project Financial Statements (PFSs) and; 1. Cast and cross cast the statements; 2. Verify that respective reports issued during the period were in agreement with the underlying books of accounts; 3. Verify that the PFS includes: a. A statement of funds received; showing funds from the World Bank, project funds from other donors and counterpart funds separately, and of expenditures incurred; b. A summary of the activity in the Designated Account; c. A Balance Sheet (if deemed necessary); d. A Summary of the principal accounting policies that have been adopted, and other explanatory notes; e. A list of material assets acquired or procured to date with project funds Findings General: 1. Obtained the funding agreement, inspected it and verified that the agreement has been authorized by the relevant parties (WITS representative and World Bank Representative) 2. Obtained an understanding of the agreement and its terms and conditions. 3. Obtained an understanding of the control environment for the preparation of the project financial statements and compliance with the financing agreement. Income received: 1. Agreed the grant receipt in US$ to the Statement of Expenses (SOE). 2. Agreed the exchange rate used to translate the grant receipts to rates obtained from OANDA.com. Refer to the table below for a summary of the grant receipts and the exchange rates used to translate the receipts. Date Grant name Amount in USD$ RMB Published rates Bank rate 22/03/2017 World bank Grant Nov and 115302,00 R13,35 R12,62 Dec 2016 CLEAR AA World Bank 11/05/2017 Funds January and February 140 127,00 R13,25 R13,54 2017 MARCH TO APRIL 29-Jun-2017 FUNDING FROM WORLD 271 068,24 R1 2.90 R12,99 BANK 29/06/2017 WORLD BANK ADVANCE 295 313,11 R12,86 R12,99 20/12/2017 WORLD BANK 12TH 272 123,00 R13,52 R12,74 DRAWDOWN 11/05/2018 MDTF FINAL TRANCHE ON 178 160,97 R11,88 R12,41 THE OLD CONTRACT The exchange rate differences between the bank rate and published rates were al less than 6% 3. Reperformed the calculation of the grant based on the bank rates, no exceptions were noted 4. Reconciled amount as 'received by the project from the world bank" with those shown as being disbursed by the bank and agreed amounts received to those stipulated in the agreements, no exceptions noted. For amounts received prior to the period under review, confirmed accuracy of the amount to the KPMG audit report that was issued to verify these amounts, no exceptions noted. 5. Verified through inspection of the withdrawal applications that all SOE used as a basis for the submission of loan withdrawal applications to the World Bank agree to underlying information. 6. Confirmed through inspection that the project financial statements included a schedule listing individual SOE withdrawal application by the specific reference number and amount. 3 Expenditure: 1. The total of expense items selected for testing amounted to R7.2 million. This represented 53% of the value of total expenses of R.2.3 million as listed on the SOE and R6.8 million thereof relating to staff costs. 1.1. Third party expenses - Agreed the expense to the purchase orders, supplier invoice and proof of payment. The following exceptions were noted: Supplier Name Invoice Number Expenditure Amount ZAR Difference Amount ( ZAR) (VAT Excl) Per the SOE Per invoice 1 GIMPA GIMPA/CLEAR170 360 644,40 343 170,00 17474,40 3001 2 GIMPA CL/0014 194663,22 193 900,50 762,72 3 GIMPA GIMPACLEAR 182 143,35 192 105,00 -9961,65 1703003 4 GIMPA GIMPA/CLEAR170 3001 G180 322,20 171 585,00 8 737,20 3001 5 GIMPA GIMPA/CLEAR170 90 588,74 137 100,01 -46 511,27 3004 6 SPEKE RESORT& 37597 58 693,98 55 950,02 2 743,96 CONFERENCE CENTRE 7 Eventia SA de CV 402 50217,09 48146,84 2070,25 9 GIMPA GIMPA/CLEAR170 40 231,89 38282,52 1 949,37 3001 The differences noted above were on USD denominated invoices and were due to different exchange rates used in preparation of the statement of expenditure versus the ones obtained from OANDA.com. The Wits University has a business banker who negotiates the exchange rates for the entire University for a given period, these would therefore not be the same as the rates obtained from OANDA.com. The difference between the value on the ledger versus the value actually paid is allocated to an account called 'forex gains and losses' an account based at central finance. The USD amounts per the invoices were agreed to the USD amount per the Purchase orders and no differences were noted. Other: Supplier Name Invoice Number Expenditure Amount ZAR Amount (ZAR) (VAT Excl) Difference Per the SOE Per invoice 1 TRAVEL WITH FLAIR 0377663 41011,39 43882,19 -2870,80 JOHANNESBURG PTY LTD * Inspected that the third party expense have been authorised by the appropriate authority. No exceptions were noted. * Confirmed that the third party expenses incurred are for the applicable programme as it was coded "CLEAR1 4" 1.2. Salary expenses- * Inspected the employment contracts of the selected employees and verified that they were approved by both the employer and employee. No exceptions were noted. * Agreed the salary cost per the contract to the employee pay slip to confirm that the amount paid to the employee is what was agreed on as per contract. No exceptions were noted. * Inspected the employment contract and confirmed that the employees were appointed to be part of the staff of CLEAR-AA, therefore confirmed that the salaries incurred are for the applicable programme. 2. Confirmed through inspection of the invoices and employment contracts, and considering the nature of the expenses, that the funds have been used in accordance with the relevant financing agreement and only for the purposes for which they were provided. 3. There were no assets that were procured from the project funds in the period under review. 4. Reviewed the treatment of VAT on the expenses on the SOE. The expenses on the SOE are exclusive of VAT, no exceptions noted. 5. Inspected the supporting documentation for expenses (POs, invoices, Payment requisitions etc) and verified that the goods, works and services financed have been procured in accordance with the relevant financing agreements including specific provisions of the World Bank procurement (the procurement Policies and Policies of the University were used which is allowable in terms of the agreement). 6. Inspected and verified that the designated accounts have been maintained in accordance with the provisions of the relevant financing policies and procedures. 7. Inspected and confirmed that there were no ineligible expenditures were included in the withdrawal applications as all proposed expenditure were approved by the funder. 8. Inspected the SOE and noted that the project made a loss of R3 080 105.15 for the period 16 January 2017 to 30 June 2018, resulting in a loss of R519 601.51 as at 30 June 2018 (Opening profit of R2 560 503.64). Further noted that all funds allowable per the agreement have been depleted as at the period under review. Project Financial Statements (PFSs) 1. The mathematical accuracy of the SOE was found to be correct. No exceptions were noted. 2. Verified that respective reports issued during the period were in agreement with the underlying books of accounts. 3. Verified the following regarding the PFS: a) A statement of funds received, showing funds from the World Bank, project funds from other donors and counterpart funds separately, and of expenditures incurred was included. b) A summary of the activity in the Designated Account was included. c) There was no Balance sheet included because there were no assets acquired for CLEAR-AA. d) A Summary of the principal accounting policies that have been adopted, and other explanatory notes was included. a) There were no material assets acquired or procured to date with project funds. Conclusion As the above procedures do not constitute either an audit or a review made in accordance with statements of International Standards on Auditing or International Standards on Review Engagements, we do not express any opinion or assurance on the related financial model with regards to the statements of International Standards on Auditing or International Standards on Review Engagements. If we had performed additional procedures in accordance with Intemational Auditing Standards, other matters might have come to our attention that would need to be reported to you. Our report is solely for the purpose set out in the first paragraph of this report, and for your information, and is not to be used for any other purpose, nor to be distributed to any other parties, without our prior written consent which will not be withheld unreasonably. We would like to thank management for their kind assistance and co-operation during our procedures. Should you have any concerns, please contact Vincent Motholo on 083 271 7299. Yours faithfully, Vincent Motholo SizweNtsalubaGobodo Grant Thornton Inc. Director Registered Auditor 28 January 2019 20 Morris Street East Woodmead