~~- -- .,~~.:--' ;.;- ~ ,• , . ' '\ 'I. \ \ \ ,_) \ V • i'' ,,> .. I' BAU CHI STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2017 BAUCHI STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT REPORTS AND FINANCIAL STATEMENTS . . FOR THE YEAR ENDED 31 DECEMBER, 2017 CONTENTS PAGE Corporate information 3 Auditors' report 4 Accounting policies 6 Balance sheet 7 Statement of sources and uses of funds 8 Notes to the financial statements 9 Special Account Activity Statements 10 Statement of Special Account 11 Summary of statement of expenditures 12 IDA Disbursement 13 - Page 3 - BAUCH! STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT CORPORATE INFORMATION Project Implementation Unit: Eng. Aminu Aliyu Gita! Project Coordinator Ibrahim M Abubakar Project Accountant Shehu Y aha ya Jalam CSMO Abubakar Aliyu Fate M&E Officer Engr.Abdulmumin Mailafiya - W&SO Bala Ibrahim Dan Alfa Procurement Officer Muhammed Suleiman Darazo - Internal Auditor Idris D. Bello Environmental Safeguard Aliyu Musa Dambam Social Safeguard Officer Shehu A. Kobi PFMU Head (Retired in November, 2017 Adamu Aliyu Abdullahi PFMU Head (Appointed in May 2018) Project Office: Bauchi State Water and Sewage Corporation, Third National Urban water sector reform project Bauchi, Nigeria. IDA Credit N2: 54160 UNI Bankers: Diamond Bank Pie Auditors: Baker Tilly Nigeria, Chartered Accountants, Zion House, No. 16, Alaafin A venue, Opposite Ratcon Construction, Oluyole Industrial Estate, Ibadan, Nigeria. ~ BAKERTI V~~4 - NIGERIA Chartered Accountants Zion House, 46, Alaafin Avenue, Oluyole Industrial Estate, P. 0 . Box 36808 Ibadan, Nigeria. Tel: +234 (0) 8111474671 +234(0)8131826784 E-mail btnib@bakertillynigeria.com Website: www.bakertillynigeria.com REPORT OF THE INDEPENDENT AUDITORS ON THE FINANCIAL STATEMENTS OF THE BAUCH! STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT FOR THE YEAR ENDED 31 DECEMBER, 2017 CREDIT .M! 54160 UNI We have audited the accompanying financial statements of the World Bank Assisted NUWSRP 3 Project for the year ended 31 December, 2017 as set out on pages 7 to 13 and prepared on the basis of the accounting policies on page 6. The project is financed by the IDA Credit Number 54160 UNI. Respective responsibilities of the Project Management and Auditors The Project Implementation Unit coordinates the activities of the project and is as such responsible for the preparation of the financial statements. It is our responsibility as auditors to express an independent opinion, based on our audit, on the financial statements and to report our opinion to you. Basis of opinion We have conducted our audit in accordance with International Standard on Auditing and World Bank guidelines. These Standards and World Bank guidelines require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. An audit includes examination, on a test basis of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the estimates and judgements made by the project officers in the preparation of the financial statements, and whether the accounting policies are appropriate to the project circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations, which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free of material misstatements. In forming our opinion, we also evaluated the overall adequacy of the presentation of the financial statements. Opinion In our opinion, donor funds from World Bank have been provided and used in accordance with the conditions of the loan agreement with due attention to economy and efficiency and only for the purposes for which the fund was provided during the year under review. Counterpart funds have been provided during the year under review in accordance with the conditions of the World Bank. Goods and services financed have been procured in accordance with the Development Credit Agreement and Disbursement Letters. All necessary supporting documents, records and accounts have been kept in respect of all project ~., ,,,.,.,,.,, ••• ,.. activities, with clear linkages between the books of account and reports presented to the Govern~ent ~~~;!,~~~~ ¥nd World Bank, including expenditure reported via Summary Report. - Page 5 - The Designated Accounts have been maintained in accordance with the provisions of the Development Credit Agreement and Disbursement Letter. The Project financial statements have been prepared in accordance with generally accepted accounting principles and practices and relevant World Bank guidelines, and give a true and fair view of the financial position of the NUWSRP 3 Project as at 31 December, 2017 and for the resources and expenditure for the financial year then ended . The accounting and overall internal control system to monitor expenditure and other financial transactions are adequate, effective and ensured safe custody of project financed assets. The ledgers are maintained as required by the World Bank as well as a fixed assets register. The Project complied with Article IV financial covenant of the Loan Agreement. r Akobi Marcus Kayode F 1\ FRC/2013/ICAN/00000003486 for: BAKER TILLY NIGERIA CHARTERED ACCOUNTANTS IBADAN, Nigeria 14 May, 2018 - Page 6 - BAUCH! STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT STATEMENT OF ACCOUNTING POLICIES The following are the significant accounting policies followed m recording transactions and m reporting the results of operations of the Project: 1. Accounting convention The accounts are prepared under the historical cost convention. 2. Basis of accounting The cash basis was adopted in the preparation of Project's Financial Statements. 3. Fixed assets and depreciation (a) Fixed assets are those intended for use over a YEAR exceeding one accounting year and whose value per unit is not below NI 00,000. (b) Items with respective unit costs below N 100,000 are classified as " Special Project Assets" and included in a Special Project Assets Register. (c) In applying the capitalization policy, all related (landed) costs and installation costs are included in the acquisition cost of the fixed asset item. (d) Capital expenditure on contract works will be included on the basis of valuation certificates including retention. (e) No depreciation is charged on the project' s fixed assets as there are no revenues to be matched against such charges. 4. Inventory Inventory is valued at the lower of cost and net realizable value. 5. Debtors Debtors are stated after making specific provision for debts considered doubtful of recovery. 6. Foreign currency Income and expenditure items in foreign currencies are recorded in Naira at the rates rul ing at the transaction dates. Assets and liabilities expressed in foreign currencies are converted to Naira at the rates ruling at the balance sheet date and gains or losses on such conversions are credited or charged to reserve in the year which they arise. - Page 7 - BAUCHI STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT BALANCE SHEET AS AT 31 DECEMBER, 2017 Notes 2017 2016 N Fixed asset 2 379,707,375 30,857,052 Investment cost 3 273 ,156,941 40,386,645 Incremental operating costs 4 57,227,355 23 ,771 ,626 Cash and bank balances 5 603,815,487 1,010,023,748 Net current assets 1,313,907,158 1,105,039,071 1,313 ,907,158 1,105,039,071 Financed by: IDA Special account 7 892,609,156 885,141 ,575 State government contribution 6 416,289,920 216,883 ,804 Other Income 8 5,008,082 3,013,692 1,313,907,158 1,105,039,071 PROJECT COORDINATOR HEAD-PFMU ·····~ ·············· The accounting policies on page 6 and the notes on pages 10 and 11 form part of these financial statements. - Page 8 - BAUCHI STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 31 DECEMBER, 2017 - IN LOCAL CURRENCY (N) Cash receipts IDA 7,467,581 State government counterpart 199,406,116 Other income 1,994,390 Total funding 208,868,087 Expenditure by categories: Assets Water Equipments 251 ,336 ,209 Motor vehicles 85 ,888,898 Office equipment 606,896 Office furniture and fittings 4 ,501 ,622 JCT equipment 5,819,108 348,152,733 Works 697,590 348,850,323 Investment cost Consultancy 143 ,580, 144 Training 89,190,152 232,770,296 Incremental operating cost Transport and travelling 7,531 ,404 Advertisement 3,551 ,481 Repairs and maintenance 1,240, 145 Printing and stationeries 2,748,005 Bank charges 2,374,049 PFMU 2,013 ,000 Entertainment and meeting 1,863,998 Communication expenses 2,288,453 Office and general expenses 248,408 Insurance 7,641 ,111 Salaries and wages 240,000 Security 920,000 Fuel 795,675 Receipts less expenditure 33,455,729 (406,208,261) Cash and cash equivalent as at I /1/2017 1,010,023,748 Cash and cash equivalent at 31/12/2017 603,815,487 Represented by: Closing cash and bank balances: Counterpart fund 366,207,735 Special Account 230,316,720 Draw down Account 4,581 ,096 Interest Account 2,709,936 603,815,487 - Page 9 - BAUCHI STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT SPECIAL ACCOUNT ACTIVITY STATEMENT ASAT31 DECEMBER,2017 (US $ ACCOUNT) A/C N2 0045437547 - DIAMOND BANK PLC Year 2017 $ 1. Cumulative advances to the end of current reporting year 4,303,000.00 2. Cumulative expenditure to end of last reporting year 2,136,837.05 3. Outstanding advances to be accounted (line 1 minus line 2) 2,166,162.95 4. Opening SA balance at the beginning of reporting year 3,980, 122.45 5. Add/Subtract: Cumulative adjustments (if any) 6. Advances from World Bank during reporting year 3,980,122.45 7. Outstanding advances to be accounted for (add lines 4 and 6) 8. Closing SA balance at end of current reporting year (as of December 31 , 2017) 2,166,162.95 9. Add/Subtract: Cumulative adjustment 10. Expenditure for current reporting year 11. Add Lines 9 and 10 12. Activity closing balance (December 31 , 2017) 2,166,122.95 13. Difference (if any) less interest on SA 14. Actual SA balance 2,166,122.95 - Page 10 - BAUCH! STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2017 I. The Project The Federal Republic of Nigeria entered into a credit agreement with International Development Association. The Project Credit Number 54160 UNI became effective in Bauchi State in February, 2017. The project development objective are to increase access to improved water supply services in Bauchi , to improve the financial viability of existing water utilities in the state and to increase the investment planning capacity of the State. For the year Cumulative Cumulative 2017 2017 balance 2016 N N N 2. Fixed Assets Goods 348,152,733 365,755,573 17,602,840 Works 697 590 13,951,802 13,254,212 348,850,323 379,707,375 30,857,052 ---- ----- ----- ,., -'· Investment cost Consultancy 143,580,144 169,503,272 25,923 ,1 28 Training 89,190,152 103,653,669 14,463,517 232,770,296 273,156,941 40,386,645 4. Incremental operating cost Bank charges 2,374,049 2,940,010 565,961 Transport and travelling 7,531,404 19,943,610 12,412 ,206 Advertisement 3,551,481 10,046,311 6,494,830 Repairs and maintenance of vehicle & Gen 1,240,145 1,798,320 558,175 Printing and stationeries 2,748,005 3,132,765 384,760 PFMU 2,013,000 3,641,550 1,628,550 Entertainment and Meeting 1,863 ,998 2,387,323 523,325 Telephone , internet and postages 2,288,453 3,096,617 808,164 Office and general expenses 248,408 644,063 395 ,655 Insurance 7,641,111 7,641 ,111 Salary and wages 240,000 240,000 Security 920,000 920,000 Fuel 795,675 795,675 33,455,729 57,227,355 23,771 ,626 === ===== === 5. Bank and cash balances Counterpart fund 366,207,735 208,745,154 Special Account 230,316,720 797,844,246 Drawdown account 4,581 ,096 729,355 Interest Account 2,709,936 2,704,993 603,815,487 1,010,023 ,748 ==== ===== 6. State government contribution 199,406, 116 416,289,920 216,883,804 === ==== - Page 11 - For the year Cumulative Cumulative 2017 2017 balance 2016 N N N 7. IDA Special account Balance at 1 January, 2017 885,141,575 796,000,000 Drawings during the year 7,467,581 7,467,581 89,141,575 Balance as at 31 December, 2017 7,467,581 892,609,156 885,141 ,575 ====== === 8. Other Income Balance as at 1 Jan 2017 Sales of tender document 230,000 440,000 210,000 Interest on Account 1,763 ,312 4,536,980 2,773,668 Miscellaneous Income 1 078 31,102 30,024 1,994,390 5,008,082 3,013 ,692 ===== == - Page 12 - BAUCH! STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT STATEMENT OF SPECIAL ACCOUNT AS AT 31 DECEMBER, 2017 ACCOUNT N2 0045437547 - BANK: -DIAMOND BANK PLC $ Total amount received from IDA 4,303,000.00 4,3 03,000.00 Less: Withdrawal applications based on eligible expenditure 2,136,837.05 Balance as at 31 December, 2017 2,166, 162.95 ==== - Page 13 - BAUCH! STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT SUMMARY OF STATEMENT OF EXPENDITURES SUBMITTED FOR WITHDRAWAL APPLICATIONS FOR THE YEAR ENDED 31 DECEMBER, 2017 Category of Contract Currency and Total amount of Eligible Invoice amount Amount paid total amount of invoices covered financing eligible for from special contract by application % financing account (Net of retention) N N N $ Operati ng cost 1,111,948.57 1,1 11 ,948.57 90 1,1 11 ,948.57 3,657.75 Training/study tours 3,313,658.50 3,313,658.50 90 3,313,658.50 10,900.20 Consultancy 3,017,175.68 3,017,175.68 90 3,017,175.68 .2.,924.92 7,442,782.75 7,442,782.75 7,442,782.75 24,482.87 -------- --------- ---------- ======== - Page 14 - BAU CHI STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT LIST OF ADDITIONS TO FIXED ASSETS DURING THE YEAR FURNITURE AND OFFICE EQUIPMENT N Heavy duty Printer Heavy duty photocopier 3 Lap top computer Fire Proof Filing Cabinet 5,108,517.77 Voice recorder Photo gallery Standing Fan Office chair &Senior Executive table Junior Executive table with chair 4 Bookshelves MOTOR VEHICLES 3 Nos of 4*4Double cabin Pick up van & I No of Salon car 85,888,897.64 EQUIPMENT Water works equipments 247,868,05-9.66 Dual pump 3,468,150.00 251,336,209.66 ICT Creation of History of website 5,819,107.93 348,152,733 .00 ===== - Page 15 - BAUCHI STATE WORLD BANK ASSISTED THIRD NATIONAL URBAN WATER SECTOR REFORM PROJECT IDA DISBURSEMENT FOR THE YEAR ENDED31 DECEMBER 2017 WA Description Amount Requested Amount Paid N N 006 Reimbursement 14,557.95 14,557.95 007 Reimbursement 9,924.92 9,924.92 24,482.87 24,482.87