SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE OF AZERBAIJAN IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4395-AZ AND INTERNATIONAL BANK FOR RECONSTRUCITON AND DEVELOPMENT 8096-AZ REPORT OF INDEPENDENT AUDITORS AND SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4395-AZ AND INTERNATIONAL BANK FOR RECONSTRUCITON AND DEVELOPMENT 8096-AZ TABLE OF CONTENTS Page Statement of management responsibilities 3 Report of independent auditors 4-5 Balance Sheet 6 Statement of sources and uses of funds 7 Statement of special account 8 Statements of expenditure withdrawal schedule 9-10 Notes to the special purpose financial statements 11-15 STATEMENT OF MANAGEMENT RESPONSIBILITIES Management has prepared and is responsible for the special purpose financial statements and related notes of the IDP Economic Development Support Project (the "Project") implemented by the Social Fund for the Development of Internally Displaced People ("SFDI") and financed under the Development Credit Agreements 4395-AZ and 8096-AZ between the Government of the Republic of Azerbaijan and the International Development Association and International Bank for Reconstruction and Development dated 15 May 2008 and 16 November 2011 respectively. They have been prepared in accordance with the basis of accounting described in Note 2 of the accompanying special purpose financial statements. SFDI maintains internal accounting control systems and related policies and procedures designed to provide reasonable assurance that assets are safeguarded, that transactions are executed in accordance with management's authorisation and properly recorded, and that accounting records may be relied upon for the preparation of financial statements and other financial information. The system contains self- monitoring mechanisms that allow management to be reasonably confident that controls, as well as SFDI's administrative procedures and internal reporting requirements operate effectively. There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error or the circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statements preparation. Sabir Ahmadov Lala Shikhaliyeva General Manager, SF I Chief Accountant, SFDi 28 June 2016 Baku, Azerbaijan 3 MOORE STEPHENS Moore Stephens Azerbaijan Limited 13, Zeynalabdin Taghiyev Street Baku AZ1005, Azerbaijan +994 12 490 77 47/48/49 +994 12 490 77 50 REPORT OF INDEPENDENT AUDITORS To the Supervisory Board of the Social Fund for the Development of Internally Displaced People of Azerbaijan: 1 We have audited the accompanying special purpose financial statements of IDP Economic Development Support Project (the "Project") implemented by the Social Fund for the Development of Internally Displaced People ("SFDI") and financed under the Development Credit Agreements 4395-AZ and 8096-AZ between the Government of the Republic of Azerbaijan and the International Development Association and International Bank for Reconstruction and Development dated 15 May 2008 and 16 November 2011 respectively, which comprise the balance sheet at 31 December 2015, and the related statement of sources and uses of funds, statement of special account and statement of expenditure ("SOE") withdrawal schedule for the year then ended, and a summary of significant accounting policies and other explanatory notes (collectively referred to as the "special purpose financial statements"). We have also audited the Project's compliance with the requirements and conditions of the World Bank's Guidelines, Credit Agreements and laws and regulations of the Republic of Azerbaijan. Management's responsibility for the financial statements 2. Management is responsible for the preparation and fair presentation of these financial statements in accordance with the basis of accounting described in Note 2 of the accompanying special purpose financial statements. 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; and making accounting estimates that are reasonable in the circumstances. Management is also responsible for compliance with the relevant Loan Agreements, the World Bank guidelines, laws and regulations. Auditors'responsibility 3. Our responsibility is to express an opinion on these special purpose financial statements and on compliance based on our audit. We conducted our audit in accordance with International Standards on Auditing ("ISA") applicable to the audit of financial statements and to compliance auditing, with special reference to ISA 800 "The Independent Auditor's Report on Special Purpose Audit Engagements" and to relevant World Bank guidelines. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement and about whether the Project has complied with the conditions of the relevant agreements, guidelines, laws and regulations. 4 MOORE STEPHENS 4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 5. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion 6. In our opinion: a) the accompanying special purpose financial statements present fairly, in all material respects, the financial position of the Project referred to above at 31 December 2015 and related sources and uses of funds, movements in special account and statement of expenditure withdrawal schedule, for the year then ended in accordance with the basis of accounting described in Note 2 to the accompanying special purpose financial statements; and b) the Project was, in all material respects, in compliance with the requirements and conditions of the World Bank Guidelines, Development Credit Agreement and laws and regulations of the Republic of Azerbaijan during the year ended 31 December 2015. 28 June 2016 5 SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE OF AZERBAIJAN IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4395-AZ AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CREDIT NUMBER 8096-AZ BALANCE SHEET AT 31 DECEMBER 2015 (Expressed in US dollars) Note 2015 2014 ASSETS AND CUMULATIVE EXPENDITURE Cash at bank Project bank account - Government of Azerbaijan 4 10 Project bank account - Community 75,979 28,102 Project bank account - Microcredit (interest) 116,967 122,519 International Development Association ("IDA") special account - - International Bank for Reconstruction and Development ("IBRD") special account 28,715 93,681 5 221,665 244,312 Cumulative project expenditure 105,324,628 79,622,890* Front end fee 125,000 125,000 Total assets and cumulative expenditure 105,671,293 79,992,202 CUMULATIVE SOURCES OF FUNDS IDA Loan No. 4395- AZ 26,344,395 26,344,395 IBRD Loan No. 8096-AZ 43,371,942 25,567,261 Government 34,130,837 26,325,945 Community 1,808,167 1,414,889 Microcredit (interest) 402,681 315,324 106,058,022 79,967,814 Accumulated foreign exchange difference (386,729) 24,388 Total cumulative sources of funds 105,671,293 79,992,202 * The expenditure on works and goods amounting USD 16,296 expensed in the year ended 31 December 2009 out of Government share under IDA 4034-AZ agreement was omitted from cumulative project expenditure by an error. Sabir Ahmadov Lala Shikhaliyeva General Manager, SFDI Chief Accountant, SFDI The notes set out on pag s 11-15 form an integral part of these financial statements 6 SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE OF AZERBAIJAN IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4395-AZ AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CREDIT NUMBER 8096-AZ STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in US dollars) Note 2015 2014 OPENING BALANCES Project bank accounts 150,631 257,229 IDA* special account - - IBRD** special account 93,681 81,889 244,312 339,118 ADD: FUNDS RECEIVED BY SOURCES IDA Loan No. 4395- AZ - - IBRD Loan No. 8096-AZ 17,804,681 15,214,177 Government 7,804,892 11,124,364 Community 393,278 267,567 Microcredit (interest) 87,357 142,232 26,090,208 26,748,340 LESS: EXPENDITURE Works and goods 8,050,011 4,598,904 Housing Renovation 12,176,849 14,594,856 Youth Support 2,058,021 3,322,022 Income Generating Activities 1,430,009 2,112,616 Consultant services and training 1,070,465 938,195 Operating costs 916,383 1,083,930 Micro-credit financed by WB-8096 - 192,234 Front end fee - 25,701,738 26,842,757 ADDI(LESS): FOREIGN EXCHANGE DIFFERENCE Government & community (318,208) (389) IBRD (92,909) - IDA - - (411,117) (389) CLOSING BALANCES Project bank accounts 5 192,950 150,631 IDA Loan No. 4395- AZ special account 5 - - IBRD Loan No. 8096-AZspecial account 5 28,715 93,681 221,665 244,312 *IDA - International Development Association **IBRD - International Bank for Reconstruction and Development Sabir Ahmadov Lala Shikhaliyeva General Manager, SFDI Chief Accountant, SFDI The notes set out on pag s 11-15 form an integral part of these financial statements 7 SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE OF AZERBAIJAN IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4395-AZ AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CREDIT NUMBER 8096-AZ STATEMENT OF SPECIAL ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2015 (Expressed in US dollars) Account number AZ291BAZ381900284093308781208 Depository Bank International Bank of Azerbaijan Address 67 Nizami street, Baku AZ1005, Azerbaijan 2015 2014 Balance at 1 January 93,681 81,889 ADD: 93,681 81,889 IDA replenishments - - IBRD replenishments 17,804,681 15,214,177 IBRD share of bank charges - - 17,804,681 15,214,177 DEDUCT: Amount of expenditure 17,776,738 15,202,385 Exchange Difference 92,909 - IDA share of bank charges IBRD share of bank charges - - 17,869,647 15,202,385 Balance at 31 December 28,715 93,681 Sabir Ahmadov Lala Shikhaliyeva General Manager, SFDI Chief Accountant, SFDI The notes set out on pages 11-15 form an integral part of these financial statements 8 m> O Ln C N* CD N Øou'> CD -æ Cro co r, nG0 M Nr o on.«3e r- M M N N -0 ø 114 c G60 i 0 Cd ~ CF;' te - .L0r«, on E G> -D >> Q> m > © N O .c C -e ~ca - - -.. 0 LO co r- V) m o 14 T) o 0) e Q 0c mo u" N N C m N w Ncr- m w o M CD L ^ t^: CM C C> 0 z < < E 03 < o j O0c-r - I æi©R c o- 0 N LLj. ~- CI L E % o o I. Z 0 - E CL 0) o - * ao o -©o w ZW -J <. OUw - 0. =~ . M to Q 0 0 CD U) OO _- <" NIrOCO<> 0 Nc- 0.r0 m..zmo -- - -- ---- -N zE- -ø - J zur-_ - fo - M M W O co 0 V E 0< f Z 0> - O c~t~ ILC0G LL a.< -J X nWN*oC\ DC oC) D& COM (0 0 ~w -. . -~« LO U" M-) < ICJ< J Ln L &nUi IL~5 0-ø- -- _ 2 0J 0 _i z £ r - ！〕然！ SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE OF AZERBAIJAN IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4396-AZ AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CREDIT NUMBER 8096-AZ NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015 (Amounts are expressed in US dollars unless otherwise indicated) NOTE 1. BACKGROUND The objective of the Project is to improve living conditions for Internally Displaced People ("IDP's") through demand-driven community based infrastructure and service micro-projects. The executing agency responsible for implementation, operation and management of the Project is the Social Fund for the Development of Internally Displaced People ("SFDI"). SFDI is an integral part of the Government of Azerbaijan's strategy to improve the living conditions of fDP's. It is a social development agency that manages funds allocated for needs of IDP's in a sustainable manner. SFDI is an autonomous organisation reporting to a Supervisory Board which is headed by the Chairman of the Azerbaijan Republic's Committee for Refugees and IDP's and consists of the representatives of various state agencies such as the Deputy Minister of Finance and representatives from various international agencies. SFD1 has an independent financial and management system and is a non-profit organisation established by the Government of Azerbaijan (the "Government") according to the Presidential Decree # 216 on 6 December 1999 with the assistance of the International Development Association ("IDA"). The legal address of SFDI is 57 Tbilisi Avenue, Baku, Azerbaijan; the actual address is 65 Fuzuli Street, Baku, Azerbaijan. SFDI has two key objectives: i. raising the living standards of IDP's by providing required funding for the rehabilitation of small-scale social and economic infrastructure; ii. implementation of actions ensuring creation of new work places, increasing of employment rate of the population and providing opportunities for income-generation activities through the financing of various community micro-projects and the implementation of microfinance programmes. SFDI finances the programmes in two main directions: Community Micro - Projects (CMP) CMPs address community needs rather than individual needs. CMPs subdivide into (i) infrastructure and (h) services (non-infrastructure) micro-projects. Infrastructure micro-projects (IMP) include rehabilitationl construction of various infrastructures. Service micro-projects (SMP) consist of cleaning of garbage, waste disposal or support to cultural centres or community activities. Micro - Finance Programmes (MFP) MFPs are income generating programmes for the assistance to the poor IDP directed to overcome poverty, improve their living standards, increase their income and provide assistance in employment generation in their micro-enterprises through participation of financial intermediaries. To finance this programme, in August 1998 the World Bank approved a USD 20 million equivalent IDA credit (cr.31090-AZ) for a "Pilot Reconstruction Project". The credit was complemented by the World Bank financing from different sources such as the United Nations Development Programme ("UNDP'), the United Nations High Commissioner for Refugees ("UNHCR") and the European Union ("EU") and supported by a Government contribution of USD 9.5 million. The purpose of the Project was to help Azerbaijan rebuild economic and social infrastructure in the war ravaged regions and allow as many IDP as possible to return to their places of origin. To address the needs and help improve the living conditions of IDP from other regions, the World Bank agreed in June 1999 to provide a USD 10 million equivalent "Supplemental Credit" to the "Pilot Reconstruction Project' (Cr,31091-AZ). The Supplemental Credit was to finance the Project micro-projects with social and economic objectives and to provide micro-credits to enhance the economic opportunities of IDP. The "Pilot Reconstruction Project" closed on 30 June 2005. SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE OF AZERBAIJAN IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4395-AZ AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CREDIT NUMBER 8096-AZ NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 (Amounts are expressed in US dollars unless otherwise indicated) NOTE 1. BACKGROUND (CONTINUED) On 3 June 2005, the World Bank and the Government signed the Project Agreement and the Development Credit Agreement "IDP Economic Development Support Project" ("IDP-EDS") with credit number 4034-AZ whereby IDA agreed to lend to the Government an amount in various currencies equivalent to SDR 7.5 million (seven million five hundred thousand Special Drawing Rights) or USD 11.5 million. This is a "repeater project" that replicates part of the "Pilot Reconstruction Project" (Cr. 31090/31091-AZ), and its objective, like that of its predecessor is to help improve the living conditions of IDP's and enhance their economic opportunities and prospects for social integration. IDA Credit Agreement 4395-AZ On 15 May 2008, IDA and the Government signed the Project Agreement and the Additional Financing Agreement (credit number 4395-AZ) for the purpose of providing additional financing for the activities related to the Original Project - IDP Economic Development Support Project. IDA agreed to extend a credit of SDR 9.6 million (USD 15.5 million). The credit agreement 4395-AZ provides that the Project is financed by the proceeds received from IDA in the following proportions: Amount of credit Percentage of Category allocated Expenditure to (SDR) be Financed (%) (1) Works and Goods 8,250,000 72% (2) Consultants' services including audit 575,000 75% (3) Training 10,000 75% (4) Operating Costs 765,000 75% (5) Unallocated - - 9,600,000 IBRD Credit Agreement 8096-AZ On 16 November 2011, IBRD and the Government signed the Project Agreement and the Financing Agreement (credit number 8096-AZ) for the purpose of providing financing for activities related to the lDP Living Standards and Livelihoods Project. IBRD agreed to extend a credit for an amount equivalent to USD 50 million. The closing date is June 2016. The Project consists of the following parts: Part A: Micro-Projects Provision of works, goods and services for: (1) community mobilization and outreach for micro-project proposal development; (2) repair or rehabilitation of basic infrastructure (e.g. water supply, power supply, access roads, drainage systems); and (3) repair or rehabilitation of social infrastructure such as schools and community centres. Part B: Housing Renovation Provision of works, goods and services for the rehabilitation and full scale repair of about 95 lOP collective accommodation centers including improvement of common space areas (bathrooms, corridors, kitchens, etc.), enhancement of structural features (such as sewerage, roofing and water systems) as well as improvement of conditions in individual apartments such as replacement of windows, doors, and electricity to improve the overall living conditions including safety and efficiency. 12 SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE OF AZERBAIJAN IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4395-AZ AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CREDIT NUMBER 8096-AZ NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 (Amounts are expressed in US dollars unless otherwise indicated) NOTE 1. BACKGROUND (CONTINUED) Part C: Livelihood Support 1. Provision of vocational training and financial and technical support for small business development to IDP youth. 2. Provision of: (a) technical support and mobilization in selected communities leading to the establishment of about 200 self-help groups and formulation by such self-help groups of proposals for income generating activities; and (b) Small Grants to eligible self-help groups with approved proposals for income generating activities to set up small businesses and micro-enterprises. 3. Financing of Micro-credits for IDPs through eligible credit unions. Part D: Prolect Management and Capacity Building Provision of goods, consultants' services and Training for the proper management, implementation, supervision and monitoring and evaluation of the Project and capacity building of the Project Implementing Entity. The following table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the credit agreement 8096-AZ ("Category"), the allocation of the amounts of the Loan to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category: Amount of the Loan Percentages of Category Allocated Expenditures to be Cateory lloctedfinanced (expressed in USD) (ne (Net of VAT) (1) Goods, works, non-consulting services, and consultants' services including audit, Small Grants, Micro- 49,875,000 75% Credits Training and Operating Costs for the Project (2) Front-end fee 125,000 - (3) Interest Rate Cap or Interest Rate Collar premium 50,000,000 Effective from 2008 the funding of international financial institutions is subject to the Value Added Tax ("VAT") and customs duties. This is applicable to the both financings received under credit agreement 4395-AZ and 8096-AZ. NOTE 2. ACCOUNTING POLICIES Basis of Accounting These special purpose financial statements are prepared in accordance with the International Public Sector Accounting Standard ("IPSAS") Financial Reporting under the Cash Basis of Accounting issued by the international Public Sector Accounting Standards Board ("IPSASB"), an independent standard-setting body within the International Federation of Accountants ("IFAC") and incorporate the following principal accounting policies, which have been consistently followed in all material respects and comply with the World Bank's Guidelines. These special purpose financial statements have been prepared under the historical cost convention. Project financing is recognised as a source of project funds when cash is received. Project expenditure is recognised as a use of project funds when payment is made. 13 SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE OF AZERBAIJAN IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4395-AZ AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CREDIT NUMBER 8096-AZ NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016 (Amounts are expressed in US dollars unless otherwise indicated) NOTE 2. ACCOUNTING POLICIES (CONTINIUED) Transactions and balances in foreign currencies The Project is domiciled in the Republic of Azerbaijan where the local currency is the Azerbaijani manat ("AZN"). Because the majority of the Project's transactions are funded and expended in United States dollars and in accordance with the requirements of the World Bank, these special purpose financial statements are presented in United States dollars ("US dollar", "USD" or "US$"), which is the reporting currency of the Project. Transactions in other currencies are treated as transactions in foreign currencies. Cash receipts and payments arising from transactions in a foreign currency are recorded in the Project's reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of receipt and payment. Cash balances held in a foreign currency are reported using the closing rate, which is the spot exchange rate at the reporting date. Unrealised gains and losses arising from changes in foreign currency exchange rates are not cash receipts and payments. However, the effect of exchange rate changes on cash held in a foreign currency is reported in the statement of sources and uses of funds and other statements in order to reconcile cash at the beginning and the end of the period. These amounts are presented separately from cash receipts and payments and include the differences, if any, had those cash receipts and payments and balances been reported at end-of-period exchange rates. At 31 December 2015 the official AZN/USD exchange rates set by the Central Bank of Azerbaijan ("CBAR") were 1.5594 and comparative 31 December 2014 were as 0.7844. NOTE 3. METHODS OF WITHDRAWAL The methods of withdrawal used from the inception of the financing up to and including 31 December 2015 were as follows: (a) IBRD account Certain disbursements were made by IBRD directly to third parties following the submission of an Application for Withdrawal, with the relevant supporting documents. (b) Special account Available amounts were drawn down within the limits determined by the relevant loan agreements for the direct payment of eligible expenditure for sub-projects from the Special Account, a designated account of the Project. (c) Statement of expenditure (SOE) Under the SOE method, the Projects forward to the Bank an application for reimbursement of payments already made using an Application for Withdrawal, with SOE forms as the only documentation. (d) Project account The project maintains a separate account where the Government and Community funds are accumulated. The funds are disbursed to sub-contractors based on the Government and Community share of the expenditure incurred. NOTE 4. EXPENSES BY SOURCE OF FINANCE For the year ended 31 December 2015: Consultants' Huig Yuh Icm Source of Works & sultand Operating MicrocreditHousing Youth Income finance goods services and costs Renovation Support Activitng Total training Activities IBRD 8096- AZ 5,114,993 720,448 703,935 - 8,659,654 1,555,107 1,115,510 17,869,647 Government 2,743,882 350,017 212,170 - 3,436,904 502,914 314,499 7,560,386 Community 191,136 - 278 - 80,291 - - 271,705 % of Mcr - - - - - - - Total 8,050,011 1 1,070,465 916,383 - 12,176,849 2,058,021 1,430,009 25,701,738 14 SOCIAL FUND FOR THE DEVELOPMENT OF INTERNALLY DISPLACED PEOPLE OF AZERBAIJAN IDP ECONOMIC DEVELOPMENT SUPPORT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 4395-AZ AND INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT CREDIT NUMBER 8096-AZ NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2015 (Amounts are expressed in US dollars unless otherwise indicated) NOTE 4. EXPENSES BY SOURCE OF FINANCE (CONTINUED) For the year ended 31 December 2014: Source of Works & Consultants Operating Microcred Housing Youth Income finance goads Cservices oti ircRe ousin Yot Generating Total and training costs it Renovation Support Activities 18RD 8096-AZ 2,498,681 581,196 818,213 - 7,811,818 1,886,860 1,605,617 15,202,385 Government 1,965,053 357,001 265,410 - 6,629,456 1,435,162 506,853 11,158,935 Community 135,169 - 306 - 153,582 - - 289,057 %of Mcr - - - 192,234 - - 146 192,380 Total ( 4,598,903 938,197 1,083,929 192,234 14,694,856 3,322,022 1 2,112,616 26,842,757 NOTE 5. CASH IN BANK 2015 2014 Project bank accounts 192,950 150,631 IBRO Loan No. 8096-AZ special account 28,715 93,681 221,665 244,312 NOTE 6. LIABILITIES ACCRUED AS AT THE YEAR END The standard terms of contracts signed by the Project for undertaking construction works or purchasing equipment under the Works & Goods category of the IDA Credit Agreements are such that 5% of the total contract fee is paid to a supplier subsequent to the expiration of a three month period provided that no deficiencies were revealed in connection with the works done or goods supplied. As a result, the Project's total amount outstanding as payable to suppliers at 31 December 2015 was equal to USD 1,140,902 (2014: USD 5,628,788). NOTE 7. OPERATING ENVIRONMENT The Project's principal activities are within the Azerbaijan Republic. Laws and regulations affecting organisations operating in Azerbaijan are subject to rapid changes and the Project's assets and operations could be at risk due to negative changes in the political and economic environment. 15