JAMAICA SOCIAL INVESTMENT FUND JAMAICA INTERGRATED COMMUNITY DEVELOPMENT PROJECT (8356-JM) JAMAICA DISASTER VULNERABILITY PROJECT (8581-JM) FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2018 (Expressed in United States dollars) Jamaica Social Investment Fund Integrated Community Development Project (J1V-8356) Jamaica Disaster Vulnerability Project (JM-8581) Year ended March 31, 2018 TABLE OF CONTENTS Page Number Independent Auditor's Report 1-4 Financial Statements Statement of Sources and Uses of Funds 5 Statement of Cumulative Investments 6 Special Account Statement 7 Notes to Financial Statements 8-21 AUDITOR GENERAL'S DEPARTMENT 40 KNUTSFORD BOULEVARD P.O. BOX 455 ANY REPLY OR SUBSEQUENT REFERENCE KINGSTON 10 TO THIS COMMUNICATION SHOULD BE JAMAICA ADDRESSED TO THE AUDITOR GENERAL AND NOT-TO ANY OFFICER BY NAME Tel. No.: 926-8309/926-5963/926-5846 AND THE FOLLOWING REFERENCE Fax Number: 968-4690 QUOTED:- audeen@Dauditrreeneral.gov.im INDEPENDENT AUDITOR'S REPORT To the Board of Directors Jamaica Social Investment Fund INTERGRATED COMMUNITY DEVELOPMENT PROJECT (JM-3560) and JAMAICA DISASTER VULNERABILITY PROJECT (JM-8581) Period ending March 31, 2018 Opinion I have audited the accompanying Combined Financial Statements of the Jamaica Social Investment Fund, set out on pages 5 to 20, which comprise the Statement of Sources and Uses of Funds, as at March 31, 2018, Statement of Cumulative Investments by Categories and Designated Account Reconciliation Statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. In my opinion, the Statement of Sources and Uses of Funds, Statement of Cumulative Investments and Supplementary Financial Information reflects a fair presentation of the transactions of the Project for the period under review and the transactions conformed to the terms of the Grant Agreement and complied with the International Public Sector Accounting Standards (IPSAS) Cash Basis. Basis for Opinion The audit of the Project was conducted in accordance with: * The standard conditions for Agreement between the Government of Jamaica (GOJ) and the International Bank for Reconstruction and Development (IBRD) for the projects signed on: - Integrated Community Development Project dated May 6, 2014. - Jamaica Disaster VuInerability Project dated July 1, 2016, and * The International Standards of Supreme Audit Institutions (ISSAIs). 2 My responsibilities under ISSAIs are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of this report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. I believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the financial statements of the current period. I have determined that there are no key audit matters to report for the period. Management's Responsibility for the Financial Statements The executing agency, the Jamaica Social Investment Fund (JSIF), is responsible for the preparation and fair presentation of these financial statements, in accordance with International Public Sector Accounting Standards (IPSAS) Cash Basis. This responsibility includes: designing, implementing and maintaining internal controls, relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether, due to fraud or error; selecting and applying appropriate accounting policies that are reasonable in the circumstances. The Planning Institute of Jamaica is also required to present audited financial statements to the IBRD. The attached fin ancial statements and supplementary financial information which are described hereunder were submitted to me by the Project Execution Unit (PEU) to reflect the transactions of the Project for the period April 1, 2017 to March 31, 2018. Statement 1 Statement of Sources and Uses of Funds Statement 2 Statement of Cumulative Investments by Categories Designated Account Reconciliation Notes to the Financial Statements Auditor's Responsibility for the audit of the Financial Statements My responsibility is to express an opinion on these Financial Statements based on my audit. I conducted my audit in accordance with the auditing standards issued by the International Organization of Supreme Audit Institutions (INTOSAI). Those standards require that I comply with ethical requirements; plan and perform the audit to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISSAIs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in 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 ISSAls, we exercise professional judgment and maintain professional scepticism throughout the audit. 3 1 also: * Identify and assess the risks of material misstatement of the financial statements, 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 my 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. * 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 Project's internal control. * Evaluate the appropriateness of accounting policies used and related disclosures made by management. * Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in my auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. The conclusions are based on the audit evidence obtained up to the date of my auditor's report. However, future events or conditions may cause the Project to cease to continue as a going concern. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that presents a true and fair view. I have communicated with the Planning Institute of Jamaica regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that was identified during the audit. 4 REPORT ON ADDITIONAL REQUIREMENTS OF THE LOAN AGREEMENTS COMPLIANCE WITH APPLICABLE LAWs, REGULATIONS AND FINANCIAL CLAUSES OF THE LOAN AGREEMENT During the period under review, I examined compliance by the PEU of the Executing Agency with the applicable laws and regulations related to the Project's financial activities and with the accounting/financial/ management clauses of the Loan Agreements. There was general compliance with the following articles contained in the Loan Agreement mentioned: Article I - Section 1.01 - 1.02: General Conditions; Definitions Article II - Section 2.01- 2.07: Loan Article Ill - Section 3.01 - 3.02: Project Article IV - Section 4.01 - 4.02: Remedies of the Bank Article V - Section 5.01- 5.03 Effectiveness, Termination Article VI - Section 6.01 - 6.03: Recipient's Representative; Addresses OPINION - GENERAL In my opinion, the Project Execution Unit maintained an adequate accounting system based on separate and clearly identifiable accounts which enabled the recording, monitoring and reporting of the operations and costs under the project in accordance with satisfactory accounting/financial/management practices and standards as required by the Loan Agreement. AUDIT OF THE DESIGNATED BANK ACCOUNT I have examined the appended Designated Account Reconciliation Statements, reflecting the movement in the Designated Bank Accounts for the period ended March 31, 2018. The Designated Bank Accounts are maintained in United States Dollars in the name of the Ministry of Finance and Planning. My examination was made in accordance with the standards of the International Organisation of Supreme Audit Institutions (INTOSAI) and accordingly included such tests of the accounting records and other procedures I considered necessary. OPINION - DESIGNATED BANK ACCOUNTS In my opinion, the Designated Account Reconciliation Statements reflects the total amount advanced to the Designated Accounts as at March 31, 2018 and has reconciled to the outstanding (undocumented) amount advanced to the account as at March 31, 2018 in conformity with IPSAS Cash Basis and IBRD guidelines. Auditor General of Jamaica Date 5 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) & Jamaica Disaster Vulnerability Project (8581-JM) Statement of Sources and Uses of Funds Year Ending March 31, 2018 ICDP (JM83560) JDVRP (JM 8581) Year Ended Cumulative Cumulative as at Year Ended Cumulative Cumulative as at as at as at Notes 31-Mar-18 31-Mar-18 31-Mar-17 31-Mar-18 31-Mor-18 31-Mar-11 US USS USS USS USS USS SOURCES OF FUNDS Designated Account 7,8 6,201,443 11,496,393 5,294,950 957,398 1,117,398 160,000 Front End Fees _ 105,000 105,000 - 75,000 75,000 Total Receipts (A) 6,201,443 11,601,393 5,399,950 957,398 1,192,398 235,000 USE OF FUNDS Component 1 3,132,075 6,016,334 2,884,259 598,789 598,789 - Component 2 1,283,117 2,293,332 1,010,215 69,989 69,989 Component 3 391.666 426,913 35,247 - Component 4 809,352 2,112,879 1,303,527 24,691 26,136 1,445 DirectProject Expenditures 9 5,616,210 10,849,458 5,233,248 693,469 694,914 1,445 Front End Fees - 105,000 105,000 - 75,000 75,000 Total Expenditures (B) 5,616,210 10,954,458 5,338,248 693,469 769,914 76,445 RECEIPTS LESS EXPENDITURES Net Change in Cash (A - B) 585,233 646,935 61,702 263,929 422,484 158,555 Foreign Exchange adjustment-gain(loss) 2,666 4,812 2,146 (617) (2,265) (1,648) 587,899 651,747 63,848 263,312 420,219 156,907 55 Designated Account 1,647 - - 2,925 - - Project Accounts 62,201 - - 153,982 _ Total Opening Balance 12 63,848 - - 156,907 - Net Funding Available as at Year End 651,747 651,747 63,848 420,219 420,219 156,907 Closing Cash Balances Designated Account 2,922 2,922 1,647 87,685 87,685 2,925 Project Accounts 648,825 648,825 62,201 332,534 332,534 153,982 Total Closing Balance 12 651,747 651,747 63,848 420,219 420,219 156,907 Approved foiisspe of Project on ..... .S .......... and signed on its behalf by: Chairi-ma .... ...- ...t.. Managing-Directo . -& .. .. .... .....-.-. The accompanying notes pages 8 p 19 form an integral part of the statemen 6 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) & Jamaica Disaster Vulnerability Project (8581-JM) Statement of Cumulative Investments by Disbursement Categories Year Ending March 31, 2018 Integrated Community Development Project (8356-JM) Current Current Year Prior Year No. Categories Year Actual Cumulative Cumulative Us$ US$ USS Goods, works, non-consulting services, consultants' services 1 and operating costs for parts 1(a) through to (h), 2,3 and 4 of the Project. 5,616,210 10,849,152 5,232,942 Goods to serve as RB Incentives for NSWMA under Part 2 1(h)(4)(A) of the Project. - Salary supplement and goods and/or works under Sub- projects to serve as RB Incentives for Environmental 3 Wardens and Community Based Organizations, respectively, all under Part 1 (h)(4)(B) of the Project. - 306 306 TOTAL EXPENDITURE (Note 9) 5,616,210 10,849,458 52 28 Jamaica Disaster Vulnerability Reduction Project (8581-JM) Current Current Year Prior Year No. Categories Year Actual Cumulative Cumulative Us$ Us$ USS I Goods, non-consulting services, consultants' services for component 1, and training for component 1(a) to (c) and (e). 598,789 598,789 2 Training for component 1(d) - - Goods, works, non-consulting services, consultants' services 3 for component 2. 69,989 69,989 4 Emergency expenditures under component 3 - - - Goods, non-consulting services, consultants' services, 5 training and operating costs For component 4 24,691 26,136 1,445 TOTAL EXPENDITURE (Note 9) 693,469 694,914 1,445 The accompanying notes pages 8 to 19 form an integral part of the statements. 7 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) & Jamaica Disaster Vulnerability Project (8581-JM) Designated Account Reconciliation Year ended March 31, 2018 ICDP JDVRP Notes US$ us$ I Total Advanced by The World Bank 7,8 11,496,393 1,117,398 2 Less: Eligible expenditure for the current year ended MARCH 31, 2018 documented by World Bank (2,338,602) (310,997) 2 (a) Less: Cumulative eligible expenditure for the prior periods ended MARCH 31, 2017 documented by World Bank (5,233,248) (1,445) 3 PRES ENT OUTSTANDING AMOUNT ADVANCED TO THE DESIGNATED ACCOUNT 11-2 (a)] 3,924,543 804,956 4 Balance of Designated Account per Bank Reconciliation Statement at March 31, 2018 10 2,922 87,685 5 Balance of Project Accounts per Bank Reconciliation Statement at March 31,2018 10 648,825 332,534 6 Plus: Eligible Expenditure for the Current Year Documented After the Period End 3,277,608 382,472 7 Plus. Total Amount Withdrawn and Not Yet Claimed - - 8 Total Advance Accounted for (No- 4 through No. 7) 3,929,355 802,691 9 DIFFERENCE (3 - 8) Explanation of difference shown in Line 9: The difference rep resents the cumulative foreign exchange gain/(]oss). (4,812) (2,265) The accompanying notes pages 8 to 19 form an integral part of the statements. 8 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 1. IDENTIFICATION General background Jamaica Social Investment Fund (the company) is incorporated in Jamaica under the Companies Act as a company limited by guarantee. The company is the vehicle used to carry out all the activities of the Jamaica Social Investment Fund (JSIF). The registered office of the company is 11 Oxford Road, Kingston 5, Jamaica, W.I. The Jamaica Social Investment Fund (the Fund) is a temporary, autonomous Government of Jamaica (GOJ) sponsored project designed to assist the Government in its poverty alleviation programme. In order to achieve this, the Fund mobilizes resources from the GOJ, project donors and international lending agencies. The Company is the entity through which the Fund executes several projects and all expenses incurred by the Company are absorbed by the projects. 2. OVERVIEW The operations of the JSIF are partially financed by the following sources: (a) Loan No. 83 56-JM between the International Bank for reconstruction and Development (IBRD), and the Government of Jamaica U042--0 GOD Loan agreement No. 8356-JM dated 6 May 2014 between the Government of Jamaica and IBRD for the financing of activities under the Jamaica Integrated Community Development Project (ICDP). The agreement has a closing date of 1 May 2020. The financing of the Integrated Community Development Project (ICDP) is to be administered as follows: % of Expenditure to be Allocation of Financed by Category Expenditure US$ the Loan 1. Goods, works, non-consulting services, consultants' services and Operating costs 41,430,726 100 2. Goods to serve as Results based Incentives for NSWMA 285,714 100 3. Salary Supplement and goods and/or works under Subprojects to serve as Results Based Incentives for Environmental Wardens and Community Based Organizations respectively 178,560 100 Front End Fee 105,000 - 9 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 2. OVERVIEW (CONT'D) (b) Loan No. 8581 -JM between the International Bank for Reconstruction and Development (IBRD) and the Government of Jamaica US-a30MR0.000 Loan agreement No. 8581 -JM dated 1 July 2016 between the Government of Jamaica and IBRD for the financing of activities under the Jamaica Disaster Vulnerability Reduction Project (JDVRP). The agreement has a closing date of 30 June 2022. The financing of the Jamaica Disaster Vulnerability Reduction Project (JDVRP) is to be administered as follows: % of Expenditure to be Allocation of Financed by Category Expenditure US$ the Loan 1. Goods, non-consulting services, consultants' services for component 1, and training for component l(a) to (c) and (e). 3,465,000 100 2. Training for component 1(d). 350,000 100 3. Goods, works, non-consulting services, consultant 23,610,000 100 services For component 2. 4. Emergency expenditures under component 3. - - 5. Goods, non-consulting services, consultants' services, training and operating costs for component 2,500,000 100 6. Front End Fee 75,000 - 10 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 3. PROJECT COMPONENTS Integrated Community Development Project (8356-JM) The objective of the Project is to enhance access to basic urban infrastructure and services and to contribute towards increased community safety in selected economically vulnerable and socially volatile inner city communities of the Borrower. The Project consists of the following parts: Component I - Basic Infrastructure and Access to Services: Developing infrastructure investments across Project Communities according to identified community priorities, including, inter alia: (a) Widening, rehabilitating and paving existing roads; (b) Improving storm water drainage; (c) Installing water supply and sanitation household connections and promoting behavioural change for the use and maintenance of water supply and sanitation infrastructure; (d) Improving electricity connections and lighting through: (1) installing street lighting; (2) extending the electricity network and regularization of illegal electricity connections; (3) promoting behavioural change for the supporting environmentally sustainable lighting; (e) Rehabilitating educational facilities; (f) Removing zinc fences and replacing with permanent structures; (g) Constructing community integrated spaces and mobile mediation centers; and (h) Improving the cleanliness of Project Communities through: (1) the provision of equipment; (2) the construction of skip enclosures around dumpsters; (3) the carrying out of clean-up and maintenance activities by Environmental Wardens; and (4) the provision of RB Incentives to: (A) National Solid Waste Management Authority (NSWMA) of the provision of waste collection and recycling services; and (B) Community-Based Organizations and environmental Wardens for the carrying out of litter management and collection; all located in RB Community Areas. Component 2 - Public Safety Enhancement and Alternative Livelihoods: (a) Supporting the development and roll-out of programs that focus on key safety concerns and high risk groups through, inter alia: (i) Implementing the Violence Interrupter Programs; and 11 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 3. PROJECT COMPONENTS (CONT'D) Integrated Community Development Project (8356-JM) Component 2 - Public Safety Enhancement and Alternative Livelihood (Cont'd): (ii) Strengthening school and commuity based violence prevention interventions in Selected Communities, including, inter aila: (1) the Safe Passages Program; (2) the Programme for Alternative Student Support; and (3) school-community and after-school programs. (b) Supporting alternative livelihoods through, inter alia: (i) Implementing programmes (selected pursuant to the criteria set forth in the Project Operational Manual) to engage youth in leadership and civic participation. (ii) Improving participation in community cleanliness through: (1) implementing cleanup programs (selected pursuant to the criteria set forth in the Project Operational Manual); and (2) strengthening public awareness programmes to improve the cleanliness of Project Communities. (iii) Strengthening micro-enterprises through: (1) designing a skills and knowledge transfer programme; and (2) providing training in the following areas: business plan development, operations, accounting, marketing, human resources and finance. (iv) Implementing youth eduation and recreation programmes (selected pursuant to the criteria set forth in the Project Operational Manual) to enhance learning and develop social and conflict mediation skills. Component 3 - Institutional Strenghtening for Urban Management and Public Safety Supporting institutional strenglitening activities for selected entities of the public safety through, inter alia: (a) Carrying out capacity building activities for selected entities of the Borrower responsible for urban management through, inter alia: (i) providing technical assistance to the Ministry of Transport, Works and Housing (MTWH) to identify options for low-income housing in densely populated areas, including the development of a strategy to incorporate the private sector and Non-governmental Organisations (NGOs) in low- income housing development; (ii) providing equipment and technical assistance to the National Land agency (NLA) through: (1) improving the systems to pre-check survey plans and cadastral maps for the general registration of land titles; and (2) preparing a national policy on land regularization; 12 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31,2018 Expressed in USD 3. PROJECT COMPONENTS (CONT'D) Integrated Community Development Project (8356-JM) Component 3 - Institutional Strenghtening for Urban Management and Public Safety (Cont'd): (a) Carrying out capacity building activities for selected entities of the Borrower responsible for urban management through, inter alia (Cont'd): (iii) preparing an urban renewal plan for communities in and around Downtown Kingston, including actions to address poor infrastructure and housing; (iv) preparing an urban renewal plan for inner city communities considering infrastructure and housing stock; and (v) carrying out capacity building activities, as required, for the borrower's governmental agencies responsible for the operation and maintenance of basic infrastructue, including: roads, water pipelines, sanitation facilities, drainage works, educational facilities, community centers, public spaces, skips and drums. (b) Carrying out capacity building activities for selected entities of the Borrower responsible for public safety through, inter alia: (i) improving the coverage, range and distribution of data collected by the Crime Observatory, including, inter alia: (]) expanding coverage; (2) improving the software to analyze data collected; (3) carrying out capacity building activities for staff to analyze and disseminate a greater volume of information; (4) carrying out two Victimization Surveys; and (5) updating existing community profiles through the inclusion of new data on crime and violence and outreach to communities to obtain information; (ii) strenghtening the borrower's governmental agencies' capacity to: (1) carry out impact evaluation and evidence-based crime and violence reduction interventions; and (2) collect public safety data. (iii) providing training to community mobilizers and para-professionals for the incorporation of evidence-based principles and approaches for the implementation of Part 2(a) of the Project. Componenet 4 - Project Management: Supporting project management through, inter alia: (a) carrying out Project audits; (b) carrying out financial management and procurement requirements under the Project; 13 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 3. PROJECT COIPONENTS (CONT'D) Integrated Community Development Project (8356-JM) Componenet 4 - Project Management (Coni'd): (c) monitoring and evaluation of Project activities; (d) providing equipment and training for the PIU; (e) carrying out workshops and outreach activities to promote positive environmental and social behaviour related to the Project; Supporting project management through, inter alia: (a) hiring an Independent Verification Agent for purposes of Part 1(h) (4) of the Project; (b) providing technical assistance to support: (i) crime and violence prevention activities under the Project; (ii) environmental and social management under the Project; and (iii) financial and procurement management under the Project; and (c) financing operating costs. Jamaica Disaster Vulnerability Reduction Project (8581-Ji) The objective of the Project is to enhance the Borrower's resilience to disaster and climate risk. The Project consists of the following components: Component 1 - Technical Assistance for hnproved Disaster and Climate Resilience Provision ofgoods, consultants' services and Training for: (a) strengthening the seismic monitoring network; (b) establishing a National Risk Information Platform to include the Coastal Risk Atlas; (c) preparing multi-hazard risk assessments for coastal areas, including ecosystems-based analyses and micro zonation studies; (f) supporting implementation of the National Building Code; and (e) promoting public awareness related to climate change and disaster risk management. 14 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 3. PROJECT COMPONENTS (CONT'D) Jamaica Disaster Vulnerability Reduction Project (8581-JM) Component 2 - Risk Reduction: Retrofitting, constructing or rehabilitating priority infrastructure (bridges and urban drainage); retrofitting or constructing and equipping critical public facilities (schools and fire stations); and establishing or improving coastal protection measures, all identified in agreement with the Bank, through the provision of goods, works, and consultants' services. Component 3 - Contingent Emergency Response: To improve the borrower's response and recovery capacity in the event of an eligible crisis or emergency, as needed. Component 4 - Project Administration: Programme management costs, which includes: Project audits, monitoring and evaluation, equipment, training and operating costs. 4. MANAGEMENT REPORT The Annual Report is submitted by management for the Integrated Community Development Project (ICDP) and the Jamaica Disaster Vulnerability Project (JDVRP) year ended March 31, 2018. 5. AUDITING OF THE PROJECT The Project is currently audited by the Auditor General's Department of Jamaica. The Auditors, Auditor General's Department, 40 Knutsford Boulevard, Kingston 5, Jamaica. 15 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 6. SIGNIFICANT ACCOUNTING POLICIES 1) Basis of Preparation These financial statements are prepared under the historical cost convention, using the cash basis of accounting, in accordance with the Cash Basis IPSAS: Financial Reporting under the Cash Basis Accounting. Cash Basis accounting recognises transactions and acts only when the cash and/or cash equivalent is received or disbursed by the entity, and not when they give rise to, accrue or originate rights or obligations although there was no cash movement. This accounting policy is a comprehensive basis of accounting other than that required under International Financial Reporting Standards (IFRS), where transactions should be recorded when they occur and not when they are paid. 11) Recording of Transactions Transactions are entered in local currency. However, transactions are converted into the United States of America currency for preparation of the financial statements, unless otherwise stated. Receipt and expenditure in local currency are translated into US dollars, by applying the exchange rate at which the funds were transferred from the Designated Account. 1Il) Fluctuation rate and fees All fees and charges for un-disbursed loan funds, as well as losses due to exchange rate fluctuations are not considered eligible project costs and are absorbed by the Government of Jamaica. IV) Equipment and other fixed assets Equipment and other fixed assets procured with project resources are recorded at their acquisition cost at the date of purchase. Depreciation is not charged on these assets and is also not reflected in these financial statements. V) Exchange Rate for the period Expenses paid from the Jamaican dollar project accounts held with Sagicor Bank Jamaica Limited and National Commercial Bank Jamaica Limited, were converted by applying the exchange rate at which the funds were transferred from the Designated Bank account to the local Administrative Bank accounts. 16 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 7. DISBURSEMENT REQUEST This represents the total advance issued to the respective Loans by the IBRD for the current and cumulatively to March 31, 2018. (a) Integrated Community Development Project (ICDP): Advance Request Date Advance Number Amount Us$ Balance as at April 1, 2017 5,294,950 April 19,2017 6C 110,484 May 11, 2017 7 1,746,401 June 13, 2017 7A 1,597,984 November 15, 2017 8 1,508,923 February 1, 2018 8A 1,237,651 Total receipt for the year ended March 31, 2018 6,201,443 Cumulative Advance as at March 31, 2018 11,496,393 (b) Jamaica Disaster Vulnerability Reduction Project (JDVRP) Advance Request Date Advance Number Amount US$ Balance as at April 1, 2017 160,000 July 10, 2017 2 657,398 February 13, 2018 4 300,000 Total receipt for the year ended March 31, 2018 957,398 Cumulative Advance as at March 31, 2018 1,117,398 17 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 8. SOURCE OF FUNDS (ICDP and JDVRP) The amount of US$7,158,841 (cumulatively US$12,613,791) was received from the World Bank for the period reviewed. Year ended Cumulative to March 31, 2018 March 31, 2018 US$ US$ ICDP 6,201,443 11,496,393 JDVRP 957,398 1,117,398 7,158,841 12,613,791 9. USE OF GRANT FUNDING (ICDP and JDVRP) Total funds invested during the period amounts to approximately US$6,309,679 (cumulatively US$11,544,372). Year ended Cumulative to March 31, 2018 March 31, 2018 US$ US$ ICDP 5,616,210 10,849,458 JDVRP 693,469 694,914 6,309,679 11,544,372 10. FIXED ASSETS (a) Integrated Community Development Project (ICDP): Furniture, Motor Fixtures & Computer Vehicle Equipment Total Cost US US$ US$ US$ Balance at 1" April 2017 21,444 45,681 21,807 88,932 Additions 43 - 8,529 8,572 Balance at 3 1" March 2018 21,487 45,681 30,336 97,504 18 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 10. FIXED ASSETS (CONT'D) (b) Jamaica Disaster Vulnerability Reduction Project (JDVRP): Furniture, Motor Fixtures & Computer Vehicle Equipment Total Cost US US$ US$ us$ Balance at P April 2017 - - - - Additions - - 1,383 1,383 Balance at 3 1 " March 2018 - - 1,383 1,383 11. CASH AVAELABILITY (ICDP and JDVRP) The cash available as at March 31,2018, as expressed in US dollars is: March 31, 2018 March 31, 2017 us$ US$ Bank of Jamaica (BOJ) 90,607 4,572 National Commercial Bank (NCB) 332,534 153,982 Sagicor Bank 648,825 62,201 Available cash balance 1,071,966 220,755 The Designated account held at BOJ is used to hold monies advanced on Loan for the purpose of making payments for eligible expenses relating to the Project. Monies are periodically transferred from the Designated account to a local currency account, the Project account, held at NCB and Sagicor Bank from which such expenses are paid directly. 19 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 12. CASH MOVEMENT Funds Available cash received Proje Available cash resources as at during the rou es resources as at year ended March 31, March 31, April 1, 2017 2018 2018 March 31,2018 US$ US$ UsS US$ I3RD (ICDP) 63,848 6,201,443 (5,613,544) 651,747 IBRD (JDVRP) 156,907 957,398 (694,086) 420,219 220,755 7,158,841 (6,307,630) 1,071,966 Variance in the Project (outflows) less recoveries as at March 31, 2018 above, in comparison to the cumulative investment showed on the Statement of Sources and Uses of Funds (Page 5) and the Statement of Cumulative Investment by Categories (page 7) for the ICDP and JDVRP Project, respectively, is due to the foreign exchange adjustment gain/(loss)- (ICDP-US$2,666, DVRP-(US$617)) during the current financial year, as reflected on page 5. 13, LOAN FUNDING AVAILABLE: (a) Integrated Community Development Project (ICDP): Category Loan Disbursement Balance US$ Us$ US$ Goods, works, non-consulting services, consultants' services and operating costs for parts 1(a) through to (h), 2,3 and 4 of the Project. 41,430,726 10,849,152 30,581,574 Goods to serve as RB Incentives for NSWMA under Part I (h)(4)(A) of the Project. 285,714 - 285,714 Salary supplement and goods and/or works under Sub-projects to serve as RB Incentives for Environmental Wardens and Community Based Organizations, respectively, all under Part ! (h)(4)(B) of the Project. 178,560 306 178,254 41,895,000 10,849,458 31,045,542 20 Jamaica Social Investment Fund Integrated Community Development Project (8356-JM) Jamaica Disaster Vulnerability Project (8581-JM) Notes to the Financial Statements Year Ended March 31, 2018 Expressed in USD 13. LOAN FUNDING AVAILABLE (CONT'D): (b) Jamaica Disaster Vulnerability Reduction Project JDVRP): Category Loan Disbursement Balance US$ US$ US$ Goods, non-consulting services, consultants' services for component 1, and training for component 1(a) to (c) and (e). 3,465,000 598,789 2,866,211 Training for component 1(d) 350,000 - 350,000 Goods, works, non-consulting services, consultants' services for component 2. 23,610,000 69,989 23,540,011 Emergency expenditures under component 3. - - - Goods, non-consulting services, consultants' services, training and operating costs for component 4 2,500,000 26,136 2,473,864 29,925,000 694,914 29,230,086 AUDITOR GENERAL'S DEPARTMENT 40 KNUTSFORD BOULEVARD P.O. BOX 455 KINGSTON 10 JAMAICA Tel. No.: 926-8309/926-5963/926-5846 Fax Number: 968-4690 Email: audgen5@cwjamaica.com JAMAICA SOCIAL INVESTMENT FUND INTERGRATED COMMUNITY DEVELOPMENT PROJECT (JM-3560) and JAMAICA DISASTER VULNERABILITY PROJECT (JM-8581) Period ending March 31, 2018 AUDIT OF STATEMENTS OF EXPENDITURE (SOE) PROCEDURES In the course of the Audit of the Foundations for Competitiveness and Growth Project for the period ended March 31, 2018, 1 examined the following statements of expenditure submitted to the IBRD during the financial year under review in support of applications for advance of funds from the Loan Account in accordance with the Loan Agreement: (a) Integrated Community Development Project (ICDP): Date of Disbursement Disbursement Number Request US$ 6C April 19, 2017 110,484 7 May 11, 2017 1,746,401 7A June 13, 2017 1,597,984 8 November 15, 2017 1,508,923 8A February 1, 2018 1,237,651 Total 6,201,443 (b) Jamaica Disaster Vulnerability Reduction Project (JDVRP): Date of Disbursement Disbursement Number Request US$ 2 July 10, 2017 657,398 4 February 13, 2018 300,000 Total 957,398 The examination was done in accordance with generally accepted auditing standards and procedures prescribed by INTOSAI and accordingly, included such tests as the verification of the internal control systems and of the accounting records, tests of the origin and eligibility of expenditures, certification and procurement procedures for goods and services, filing of supporting documents and such other auditing procedures as I considered necessary in the circumstances. Opinion In my opinion, the statements of expenditure and the annexes submitted in support of them, together with the internal controls procedures used in their preparation can be relied upon to support the applications for advance in conforming to the requirements of the Loan Agreement. Auditor General of Jamaica Date This document is not intended for public scrutiny