REPUBLIC OF KENYA ~ TRUCTURE,H0 £ 0'.JAN 2011 7 OFFICE OF THE AUDITOR-G I REPORT OF THE AUDITOR-GENERAL ON THE FINANCIAL STATEMENTS OF KENYA INFORMAL SETTLEMENTS IMPROVEMENT PROJECT (IDA CREDIT NO 4873-KE) FOR THE YEAR ENDED 30 JUNE 2016 MINISTRY OF LANDS, HOUSING AND 06 T URBAN DEVELOPMENT PROJECT NAME: KENYA INFORMAL SETTLEMENT IMPROVEMENT PROJECT IMPLEMENTING ENTITY: STATE DEPARTMENT FOR HOUSING AND URBAN DEVELOPMENT PROJECT ID: P113542 CREDIT NUMBER: 4873 ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JUNE 30, 2016 Prepared in accordance with the Cash Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS) Kenya Informal Settlement Improvement Project -ports and Financial Statements ir the financial year ended June 30, 2016 JNTENTS PAGE 1. PROJECT INFORMATION AND OVERALL PERFORMANCE................................................................................i 2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES.....................................................................vii 3. REPORT OF THE INDEPENDENT AUDITORS ON THE KENYA INFORMAL SETTLEMENT IM PR O V E M EN T PR O JEC T ..................................................................................................................................... iii 4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30TH JUNE 2016............................ 1 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2016.......................................... 2 6. STATEMENT OF CASHFLOW FOR THE YEAR ENDED 30TH JUNE 2016......................................................... 3 7. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS........................................................... 4 8. NOTES TO THE FINAN CIAL STATEM ENTS.......................................................................................................... 5 PROGRESS ON FOLLOW UP OF AUDITOR RECOMMENDATIONS ................................................................ 14 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 PROJECT INFORMATION AND OVERALL PERFORMANCE 1.1 Name and registered office Name: The project's official name is Kenya Informal Settlement Improvement Project. Objective: The key objective of the project is to improve living conditions of informal settlements in selected Counties in Kenya. Address: The project headquarters office is located in Nairobi County, Kenya. The address of its registered office is: Ardhi House, 1st Ngong Avenue, Nairobi Contacts: The following are the project contacts: P. O. Box 301119, 00100 Nairobi 1.2 Project Information Project Start Date: The project start date is 01.07.2011 Project End Date: The project end date is 30 05 2018 Project Manager: The project manager is Mrs Peris Mang'ira. Project Sponsor: The project sponsor is IDA, AFD, SIDA and GoK. 1.3 Project Overview Line Ministry/State The project is under the supervision of the Ministry of Land, Housing Department of the project and Urban Development. Project number P113542 Strategic goals of the The strategic goals of the project are as follows: project (i) Strengthening institutions and programme management (ii) Enhancing tenure security (iii) Investing in infrastructure and service delivery (iv) Planning for urban growth Achievement of strategic The project management aims to achieve the goals through the goals following means: (i) Strengthening institutions and programme management; (ii) Enhanced land tenure; (iii) Building of roads, floodlights, water and sewerage, and waste management; i Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 (iv) Extensive studies and planning on preventing informal settlements in future Other important The project completed its third year of implementation. background information of the project Current situation that the The project was formed to intervene in the following areas: project was formed to (i) lack of security of tenure intervene (ii) lack of physical infrastructure e.g. roads, foot paths, lighting, water, sewer and waste disposal Project duration The project started on 1st July 2011 and is expected to run until 30 June 2016. The time was extended to May 2018 1.4 Bankers The following are the bankers for the current year: Designated account: Equity Bank Limited Head Office, Equity Centre Branch Account No. 0810295112857 Project Account: Cooperative Bank of Kenya Upper Hill Branch Account No. 01141161460400 1.5 Auditors The project is audited by the Office of the Auditor General 1.6 Roles and Responsibilities The project has four components. Names Title designation Key qualification Responsibilities Peris Mang'ira Project Coordinator Physical Planner Overall programme coordination. Stella Gitimu Head of Component 1 Quantity Surveyor Manage component 1 activities Ann Mugo Head of Component 2 Surveyor Manage component 2 activities Jacinta Juma Head of Component 3 Architect Manage component 3 activities Cassius Kusienya Deputy Project Quantity Surveyor Manage component Coordinator and Head 4 activities of Component 4 11 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 1.7 Funding summary The Project duration is five years (from 2011 to 2016) with a further extension to May 2018. The financing budget of US$ 157.3 Million equivalent to KES 14.4 Billion as highlighted in the table below: (i) Grant SIDA $ 8,300,000 830,000,000 - _ 8,300,000 830,000,000 (ii) Loan IDA $100,000,000 8,800,000,000 53,446,927 4,993,859,805 46,553,073 3,806,140,195 E35,000,000/ AFD $39,000,000 3,900,000,000 - - $39,000,000 3,900,000,000 (iii) Counterpart funds Government of Kenya $10,000,000 880,000,000 4,592,935 404,178,301 5,407,065 475,821,699 Total 157,300,000 14,410,000,000 58,039,862 5,398,038,106 99,260,138 9,011,961,894 111 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 1.8 Summary of Overall Project Performance: Budget performance against actual amounts for current year was only 99 percent. Cumulatively, the disbursement is at 72 per cent and actual expenditure of 54 per cent compared to the project remaining life which is 22 months. Institutional strengthening of (i) A capacity building plan approved by the World MoLHUD and Counties Bank in was implemented, though individual courses, Support for program management Study Tours and County exchange programmes are and administration being planned for; the following courses were implemented within the year: (ii) High Level Leadership Development Programme (25); FIDIC Contract Management (20); Environmental Impact Assessment and Audit (70); Strategic Leadership Development Programme - SLDP (57); Senior Management Course -SMC (89); Records Management (16); Project Planning and Management (11); Supervisory Skills Development (28); Policy formulation (10); Secretarial Management (23) and Public Relations and Customer Care (82). (iii) KISIP started to document the achievements made so far in collaboration with Kenya Film Services Department of Kenya. So far, a documentary for works in Mombasa, Machakos, Nairobi, Nakuru and Eldoret has been made. (iv)RAPs for cluster 3 settlements in Kisumu, Kericho, Embu, Kitui and Malindi in Kilifi were undertaken, Reports submitted to the Bank and approved. (v) Grievance Redress was undertaken in the counties of Nairobi, Machakos and Nakuru (vi)Safeguards monitoring is continuous and consultants/contractors are advised on appropriate actions for health safety and safeguards. Component 2 Key result Progress Bulk surveys in settlements Perimeter of survey completed for Nyeri and Embu informal settlements. Tenure security-Part Development (i) PDPs for 4 settlements in Malindi (Muyeye), Plans Kakamega (Amalemba), Eldoret (Maili Nne) and Embu (Kathita) have been signed by the Director Physical Planning awaiting Principal Secretary's approval. Community mobilization and Sensitization for stake holders: iv Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 (ii) Sensitization and stakeholder's meetings have been held in seven settlements in Nairobi that includes: Kahawa Soweto, Kinyago Kanuku, Kitui, Mathare Mashimoni, Kambi Moto and Redeemed settlements. Socio-economic survey (iii) The exercise has been completed in all six (6) Mombasa settlements (Chaani Kalahari, Chaani Mathare, Chaani Kwarasi, Mwatate, Gana Hola, Likoni 203 and Majaoni) and verification ongoing). LOT 3. Planning and Survey for Beneficiaries (exact number will be determined) are settlements in Nairobi, Kisumu, expected in 30 settlements; Nairobi (1), Kisumu (2), Kakamega, Kericho, Garissa, Kitui, Kakamega (3), Nyeri (8), Kericho (2), Kilifi (8), Kitui (1), Nyeri and Kilifi. Garissa (5). * SEC formation carried out in December 2015. * Contract signed and Planning and surveying consultancy commenced in April 2016. The project kicked off on 27th April 2016. * Introduction of consultants (Clusters 1 to 4) to counties done in May 2016 and Inception reports submitted in June 2016. * Base maps and preliminary surveys carried out, socio-economic surveys done; preparation of Draft LPDP is underway Lot 4. Planning and Survey Beneficiaries (exact number to be determined) are expected in 25 settlements in Mombasa (5); Kisumu (5); Garissa (5); Nakuru (4); Uasin Gishu (1); and Nyeri (5) Counties. * Procurement of Planning and Survey Consultancy, short listing done and received a no- objection from the Bank in February 2016. Component 3 Key result Progress Construction works (i) Cluster 1 contracts (Mombasa, Nakuru and Eldoret) for access roads, footpaths, high mast floodlighting, and water and sanitation commenced in 2014 and have been on-going. All works in Mombasa in the 3 lots are substantially complete while in Eldoret Lot 1 and 2 are substantially complete and in Nakuru Lot 2 and 3 are substantially complete. (ii) Cluster 2 contracts (Nairobi, Naivasha and Machakos) also commenced and projects are at various levels of performance. Naivasha Lot 1 was terminated and re- advertised and evaluation done, Lot 2 is substantially complete while Lot 3 is on-going (iii) V Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 Subsidiary Agreements with Athi * Subsidiary Agreements were signed by Principal Water Service Board Secretary, National Treasury, Ministry of Water, Environnent and Natural Resources and CEOs of (i) Athi Water, (ii) Lake Victoria North Water and (iii) Coast Water Services Boards to facilitate implementation of the water projects. * Works with AWSB and LVNWSB are substantially complete while progress with CWSB is very slow Component 4 Key result Progress Procurement of consultancy to A meeting held with Mombasa county, Concepts designed, support formulation of a housing TORs developed and forwarded to the bank for a no policy for Mombasa County. objection; Brief Done to the Housing Secretary and Principal Secretary to seek consent to advertise; consent granted and REOI advertised ; REOI evaluated and firms shortlisted and RFP received and evaluated. Procurement of consultancy to TORs developed and forwarded to the Bank for a no undertake a study on housing objection delivery strategies for Mombasa County. Emerging Issues, Challenges and Lessons a) The guidelines of the World Bank procurement process have been challenging as they are lengthy and laborious. The No Objection process needs to be reviewed and speeded up. b) Capacity challenges as more Relocation Action Plans and Environmental and Social Safeguards are to be implemented. c) County teams are not effectively deployed in project management, following devolution and government reorganization. Facilitation of these teams through County Agreements with the Treasury will enhance project implementation. d) Continuous nature of grievance redress that is expensive and time consuming 1.9 Summary of Project Compliance: The project has complied fully with the financing agreement with the IDA in terms of utilization of donor funds. vi Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Principal Secretary for the Ministry of Land, Housing and Urban Development and the Project Coordinator for Kenya Informal Settlement Improvement Project are responsible for the preparation and presentation of the project's financial statements, which give a true and fair view of the state of affairs of the project for and as at the end of the financial year ended on June 30, 2016. This responsibility includes: (i) maintaining adequate financial management arrangement and ensuring that these continue to be effective throughout the reporting period; (ii) maintaining proper accounting records, which disclose with reasonable accuracy at any time the financial position of the project; (iii) designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the financial statement, and ensuring that they are free from material misstatements, whether due to error or fraud; (iv) safeguarding the assets of the project; (v) selecting and applying appropriate accounting policies; and (vi) making accounting estimates that are reasonable in the circumstances. The Principal Secretary for the Ministry of Land, Housing and Urban Development and the Project Coordinator for Kenya Informal Settlement Improvement Project accept responsibility for the project's financial statements, which have been prepared on the Cash Basis Method of Financial Reporting, using appropriate accounting policies in accordance with International Public Sector Accounting Standards. The Principal Secretary for the Ministry of Land, Housing and Urban Development and the Project Coordinator for Kenya Informal Settlement Improvement Project are of the opinion that the project's financial statements give a true and fair view of the state of project's transactions during the financial year ended June 30, 2016, and of the project's financial position as at that date. The Principal Secretary for Ministry of Land, Housing and Urban Development and the Project Coordinator for Kenya Informal Settlement Improvement Project further confirm the completeness of the accounting records maintained for the project, which have been relied upon in the preparation of the project financial statements as well as the adequacy of the systems of internal financial control. The Principal Secretary for the Ministry of Land, Housing and Urban Development and the Project Coordinator for Kenya Informal Settlement Improvement Project confirm that the project has complied fully with applicable Government Regulations and the terms of external financing covenants, and that project funds received during the financial year under audit were used for the eligible purposes for which they were intended and were properly accounted for. Approval of the Project financial statements The Project financial statements were approved by the Principal Secretary for the Ministry of Land, Housing and Urban Development and the Project Coordinator for Kenya Informal Settlement Improvement Project on U V / / 2016 and signed by them. Principal Secretary Pr e' t Coordinator VV vii REPUBLIC OF KENYA Telephone: +254-20-342330 P.O. Box 30084-00100 Fax: +254-20-311482 NAIROBI E-mail: oag@oagkenya.go.ke Website: www.kenao.go.ke OFFICE OF THE AUDITOR-GENERAL REPORT OF THE AUDITOR- GENERAL ON KENYA INFORMAL SETTLEMENTS IMPROVEMENT PROJECT (IDA CREDIT NO 4873-KE) FOR THE YEAR ENDED 30 JUNE 2016 - MINISTRY OF LANDS, HOUSING AND URBAN DEVELOPMENT REPORT ON THE FINANCIAL STATEMENTS I have audited the accompanying financial statements of Kenya Informal Settlement Improvement Project (IDA Credit No.4873-KE) set out at pages 1 to 16, which comprise the statement of financial assets and liabilities as at 30 June 2016, and the statement of receipts and payments, statement of cash flow, statement of comparative budget and actual amounts and the special accounts statement for the year then ended, and a summary of significant accounting policies and other explanatory information in accordance with the provisions of Article 229 of the Constitution of Kenya, Section 35 of the Public Audit Act 2015, and the Financing Agreement No. 4873-KE dated 23 May 2011 between International Development Association (IDA) and the Republic of Kenya. I have obtained all the information and explanations which, to the best of my knowledge and belief, were necessary for the purpose of the audit. Management's Responsibility for the Financial Statements The Accounting Officer - Ministry of Land, Housing and Urban Development and the Project Coordinator are responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (Cash Basis), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The management is also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions of Section 47 of the Public Audit Act, 2015. Auditor-General's Responsibility My responsibility is to express an opinion on these financial statements based on the audit and report in accordance with the provisions of Section 48 of the Public Audit Act, 2015 and submit the audit report in compliance with Articles 229(7) of the Constitution. The audit was conducted in accordance with International Standards of Supreme Audit Institutions. Those standards require compliance with ethical requirements and that the of audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial Report of the Auditor- General on Kenya Informal Settlements Improvement Project (IDA CREDIT No 4873- KE) for the year ended 30 June 2016 Promoting Accountability in the Public Sector 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 financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion in the effectiveness of the Project's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements present fairly, in all material respects the financial position of Kenya Informal Settlements Improvement Project as at 30 June 2016, and of its financial performance and its cash flows for the year then ended, in accordance with International Public Sector Accounting Standards (Cash Basis) and comply with the Financing agreement. In addition, the special accounts statement presents fairly, the special account transactions and the ending balance have been reconciled with books of account. Other Matter Budgetary Control and Performance The statement of comparative budget and actual amounts reflect total budgeted expenditure of Kshs. 2,446,000,000 against actual expenditure of Kshs. 1,641,543,056 resulting to a net budget under utilization of Kshs. 804,456,944 or 32% of the total budget as detailed below:- Category Final Budget Actual Amount Variance % Kshs. Kshs. Kshs. Purchase of Goods and Services 150,000,000.00 130,749,912.00 19,250,088.00 13% Acquisition of Non- Financial Assets 2,096,000,000.00 1,316,758,241.00 779,241,759.00 37% Transfer to other Government Entities 200,000,000.00 194,034,903.00 5,965,097.00 3% Total 2,446,000,000.00 1,641,543,056.00 804,456,944.00 33% Continued budget underutilization could have adverse effect on planned project activities. FCPA Edward R. 0. Ouko, CBS AUDITOR-GENERAL Nairobi 21 December 2016 Report of the Auditor- General on Kenya Informal Settlements Improvement Project (IDA CREDIT No 4873- KE) for the year ended 30 June 2016 2 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 . STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED 30TH JUNE 2016 Note Cumulative 2015/2016 2014/2015 to date Kshs Kshs Kshs RECEIPTS Transfer from Government entities 8.2 115,000,000 252,000,000 404,178,301 Proceeds from domestic and foreign grants 8.3 - - - Loan from external development partners 8.4 2,200,000,000 989,011,100 4,993,859,805 Miscellaneous receipts 8.5 134,486,172 42,500 134,528,672 Total receipts 2,449,486,172 1,241,053,600 5,532,566,778 PAYMENTS Compensation of employees 8.6 - - Purchase of goods and services 8.7 130,749,912 68,329,037 265,764,690 Social security benefits 8.8 - . . Acquisition of non-financial assets 8.9 1,3 16,758,241 1,958,818,964 4,120,280,753 Transfers to other government entities 8.10 194,034,903 52,409,660 246,444,564 Other grants and transfers and payments 8.11 - - - TOTAL PAYMENTS 1,641,543,056 2,079,557,661 4,632,490,006 SURPLUS/DEFICIT FOR THE YEAR 807,943,116 (838,504,061) 900,076,772 The accounting policies and explanatory notes to these financial statements are an integral part of the fin al statements. Principal Secretary Pr 3t Coordinator Date Date 1 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 .5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2016 Note 2015/2016 2014/2015 Kshs Kshs FINANCIAL ASSETS Cash and Cash Equivalents Bank Balances 8.12A 817,546,893 9,633,078 Cash Balances 8.12B - - Cash Equivalents 8.12C - Imprests and Advances 8.12D 29,400 - TOTAL FINANCIAL ASSETS 817,576,293 9,633,078 REPRESENTED BY: Cash and cash equivalents b/fwd 9,633,078 848,137,139 Surplus/Deficit for the year 807,943,116 (838,504,061) Prior year adjustments - - NET FINANCIAL POSITION 817,576,194 9,633,078 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The financial statements were approved on o, / / 7 2016 and signed by: Principal Secretary Pro t Coordinator Date Date 2 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 o. STATEMENT OF CASHFLOW FOR THE YEAR ENDED 30TH JUNE 2016 2015/2016 2014/2015 Notes Kshs Kshs Receipts for operating income Transfer from Government entities 8.2 115,000,000 252,000,000 Proceeds from domestic and foreign grants 8.3 - - Miscellaneous receipts 8.5 134,486,172 42,500 Payments for operating expenses Compensation of employees 8.6 - - Purchase of goods and services 8.7 (130,749,912) (68,329,037) Social security benefits 8.8 Transfers to other government entities 8.10 (194,034,903) (52,409,660) Other grants and transfers 8.11 - Net cash flow from operating activities (75,298,644) 131,303,803 CASHFLOW FROM INVESTING ACTIVITIES Acquisition of Assets 8.9 (1,316,758,241) (1,958,818,964) Net cash flows from Investing Activities (1,316,758,241) (1,958,818,964) CASHFLOW FROM BORROWING ACTIVITIES Loan from external development partners 8.4 2,200,000,000 989,011,100 Net cash flow from financing activities 2,200,000,000 989,011,100 NET INCREASE IN CASH AND CASH 807,943,116 (838,504,061) EQUIVALENT Cash and cash equivalent at BEGINNING of the year 9,633,078 848,137,139 Cash and cash equivalent at END of the year 817,576,194 9,633,078 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The entity financial statements were approved on -7, I z 2016 and signed by: Principal Secretary Pr bct Coordinator Date Date 3 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS Note: The significant budget utilisation/performance differences in the last column are explained in Annex 1 to these financial statements. Actual on Receipts/Payments Original Comparable % of Item Budget Adjustments Final Budget Basis Variance Variance a b c=a+b d e=c-d f-e/c % Receipts Transfer from Government entities 246,000,000 - 246,000,000 115,000,000 131,000,000 53 Proceeds from domestic and foreign grants Proceeds from borrowings 2,200,000,000 - 2,200,000,000 2,200,000,000 - - Miscellaneous receipts - 134,486,172 (134,486,172) Total Receipts 2,446,000,000 - 2,446,000,000 2,449,486,172 (3,486,172) (0) Payments Compensation of employees Purchase of goods and services 150,000,000 - 150,000,000 130,749,912 19,250,088 13 Social security benefits Acquisition of non- financial assets 2,096,000,000 - 2,096,000,000 1,316,758,241 779,241,759 37 Transfers to other govemment entities 200,000,000 - 200,000,000 194,034,903 5,965,097 3 Other grants and transfers Other payments Total Payments 2,446,000,000 - 2,446,000,000 1,641,543,056 804,456,944 33 Principal Secretary Pr *ect Coordinair Date Date 4 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 . NOTES TO THE FINANCIAL STATEMENTS The principal accounting policies adopted in the preparation of these financial statements are set out below: 8.1 Statement of compliance and basis of preparation The financial statements have been prepared in accordance with and comply with International Public Sector Accounting Standards (IPSAS) with particular emphasis on Cash Basis Financial Reporting under the Cash Basis of Accounting. The financial statements comply with and conform to the form of presentation prescribed by the Accounting Standards Board of Kenya. The financial statements are presented in Kenya Shillings, which is the functional and reporting currency of the Project and all values are rounded to the nearest one Shilling. The accounting policies adopted have been consistently applied to all of the years presented. The financial statements have been prepared on the cash basis following the Government's standard chart of accounts. The cash basis of accounting recognises transactions and events only when cash is received or paid out by the Project. i. Recognition of revenue and expenses The Project recognises all revenues from the various sources when the event occurs and the related cash has actually been received by the Project. In addition, the Project recognises all expenses when the event occurs and the related cash has actually been paid out by the Project. ii. In-kind donations In-kind donations are contributions made to the Project in the form of actual goods and/or services rather than in money or cash terms. These donations may include vehicles, equipment or personnel services. Where the financial value of in-kind donations can be reliably determined, the Project includes such value in the statement of receipts and payments both as revenue and as an expense in equal and opposite amounts; otherwise, the donation is not recorded. iii. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at bank, short-term deposits on call and highly liquid investments with an original maturity of three months or less, which are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Bank account balances include amounts held at the Central Bank of Kenya and at various commercial banks at the end of the financial year/period. For the purposes of these financial statements, cash and cash equivalents also include short term cash imprests and advances to authorised public officers and/or institutions which had not been surrendered or accounted for at the end of the financial year. 5 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 NOTES TO THE FINANCIAL STATEMENTS (Continued) iv. Pending bills Pending bills consist of unpaid liabilities at the end of the financial year arising from contracted goods or services during the year or in past years. As pending bills do not involve the payment of cash in the reporting period, they are simply disclosed as an Annex to the financial statements. When the pending bills are finally settled, such payments are included in the statement of receipts and payments in the year in which the payments are made. v. Budget The budget is developed on the same accounting basis (cash basis), the same accounts classification basis, and for the same period as the financial statements. The Project's budget was approved as required by Law and National Treasury Regulations, as well as by the participating development partners, as detailed in the Government of Kenya Budget Printed Estimates for the year. A high-level assessment of the Project's actual performance against the comparable budget for the financial year under review has been included in an annex to these financial statements. vi. Exchange rate differences The accounting records are maintained in the functional currency of the primary economic environment in which the Project operates, Kenya Shillings. Transactions in foreign currencies during the year are converted into the functional currency using the exchange rates prevailing at the dates of the transactions. Any foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statements of receipts and payments. vii. Comparative figures Where necessary comparative figures for the previous financial year have been amended or reconfigured to conform to the required changes in financial statement presentation. viii. Subsequent events There have been no events subsequent to the financial year end with a significant impact on the financial statements for the year ended June 30, 2015. 6 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8.2 RECEIPTS FROM GOVERNMENT OF KENYA These represent counterpart funding and other receipts from government as follows: 2015/2016 2014/2015 Cumulative Kshs Kshs to-date Counterpart funding through Ministry ofLand, Housing & Urban Development Counterpart funds Quarter 1 - 20,000,000 20,000,000 Counterpart funds Quarter 2 - 115,000,000 115,000,000 Counterpart funds Quarter 3 115,000,000 - 121,569,780 Counterpart funds Quarter 4 - 117,000,000 147,608,521 Other transfers from government entities Appropriations-in-Aid __ _ 115,000,000 252,000,000 404,178,301 8.3 PROCEEDS FROM DOMESTIC AND FOREIGN GRANTS During the 12 months to 30 June 2016 we received grants from donors as detailed in the table below: Grants Received from Bilateral Donors (Foreign Governments) Grants Received from Multilateral Donors (International Organisations) - Grants Received from Local Individuals and organisations - Total 7 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8.4 LOAN FROM EXTERNAL DEVELOPMENT PARTNERS During the 12 months to 30 June 2016 we received funding from development partners in form of loans negotiated by the National Treasury donors as detailed in the table below: Loans Received from Bilateral Donors (Foreign Governments) Insert name of foreign Government 01/07/2015 - - - - Loans Received from Multilateral Donors (International Organisations) INTERNATIONAL DEVELOPMENT ASSOCIATION 01/07/2015 21,658,290 2,200,000,000 - 2,200,000,000 989,011,100 Total - 2,200,000,000 989,011,100 8.5 MISCELLANEOUS RECEIPTS FY 2015/16 FY 2014/15 Cumulative Kshs Kshs Kshs Sales of goods and services - - - Administrative fees and charges - - - Fines, penalties and forfeitures - - - Voluntary transfers other than grants - - - Other receipts not classified elsewhere 134,486,172 42,500 134,528,672 134,486,172 42,500 134,528,672 The receipt during the year is payment from performance guarantee in favour of KSC Ltd 8 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8.6 COMPENSATION OF EMPLOYEES (Continued) 2015 2014 Cumulative Kshs Kshs Kshs Other personnel payments No personnel payments 8.7 PURCHASE OF GOODS AND SERVICES 2015/2016 2014/2015 Cumulative Kshs Kshs to-date Utilities, supplies and services 11,326,465 18,520,291 37,278,900 Communication, supplies and services 8,030,235 4,592,445 16,800,680 Domestic travel and subsistence 36,416,044 33,751,459 97,576,583 Foreign travel and subsistence - - Printing, advertising and - - information supplies & services 9,127,599 5,123,533 26,100,158 Rentals of produced assets - Training expenses 53,358,022 67,195,893 Hospitality supplies and services 2,293,774 424,750 2,718,524 Routine maintenance - - vehicles and other transport equipment 10,197,773 5,916,559 18,093,952 130,749,912 68,329,037 265,764,690 9 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8.8 SOCIAL SECURITY BENEFITS There were no social security benefits. 8.9 ACQUISITION OF NON-FINANCIAL ASSETS 2015/2016 2014/2015 Cumulative Kshs Kshs to-date Construction of civil works 935,53 1,898 1,529,464,870 2,974,124,531 Purchase of vehicles & other transport equipment - 54,715,500 82,478,360 Purchase of office furniture & general equipment 2,444,205 34,084,944 85,297,583 Research, studies, project preparation, design & supervision 378,782,138 340,553,649 978,380,278 1,316,758,241 1,958,818,964 4,120,280,753 10 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8.10 Transfers to other government entities During the 12 months to 30 June 2016, we transferred funds to reporting government entities as shown below: Financial Financial Year Cumulative Year 2014/15 2013/14 To date Kshs Kshs Kshs Transfers to National Government entities Athi Water Services Board 70,000,000 52,409,660 162,409,660 Coast Water Services Board 25,200,000 25,200,000 Lake Victoria North Water Services Board 98,834,903 98,834,903 TOTAL 194,034,903 52,409,660 286,444,564 8.11 Other grants and transfers and payments No Other grants and transfers and payments 8.12 CASH AND CASH EQUIVALENTS C/FWD 2015/2016 2014/2015 Kshs Kshs Bank accounts (Note 12A) 814,996,893 7,083,078 Cash in hand (Note 12B) - Cash equivalents (short-term deposits) (Note 12C) - Outstanding imprests and advances (Note 12D) 29,400 - 815,026,293 7,083,078 11 Kenya Informal Settlement Improvement Project Reports and Financial Statements For the financial year ended June 30, 2016 NOTES TO THE FINANCIAL STATEMENTS (Continued) 8.12A CASH AND CASH EQUIVALENTS C/FWD (Continued) 2015/16 2014/15 Kshs Kshs Local Currency Accounts Co-operative Bank of Kenya -A/c No. 01141161460400 814,996,893 7,083,078 Others ( Co-operative Bank of Kenya amount held by Bank as collateral) 2,550,000 2,550,000 Total local currency balances 817.546,893 9Q633078 8.12B Cash in hand 2015/16 2014/15 Kshs Kshs Cash in hand Accountants Till 8.12C Cash equivalents (short-term deposits) 2015/16 2014/15 Kshs Kshs Local Currency Accounts Co-operative Bank of Kenya -A/c No. 01141161460400 Others (specify) Total local currency balances There were no short-term deposits held by the project. 12 〕件 C卜 ' С О � � с� С у сб . , з з � � . . 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B. K. Ledger Account ------------------------------------------ 22,395,104.58 Add: Total Amount deposited by W orld Bank ------------------------------------------ 16,438,081.07 Total Interest earnings if deposited in account Total amount refunded to cover ineligible expenditure Deduct: Total amount withdrawn ------------------------------------------- 2-1,65822-9-02-2-4 Total service charges if not included above in amount withdrawn Ending balance on 30th June,2016 ------------------------------------------- 17,17418-9-52-4-1- AUTHORISED REPRESENTATIVE SIGNATURE: 7 w& ------------------------------------- CENTRAL BANK OF KENYA DATE ------------ t ------------------------ AUTHORISED REPRESENTATIVE EXTERNAL RESOURCES SIGNATURE: ------------------------------- DEPARTMENT-TREASURY DATE I d Id I c ------------------------------------- NOTE:The ending balance as per Central Bank of Kenya Ledger Account and the off -shore Special Account as at 30th June,2016 have been reconciled and a copy of the supporting Reconciliation Statement is attached. KENYA INFORMAL SETTLEMENT IMPROVEMENT PROJECT STATEMENT OF SPECIAL (DESIGNATED) ACCOUNT RECONCILIATION FOR THE YEAR ENDED 30 JUNE 2016 Credit No.: IDA LOAN NO. CREDIT NO.4873-KE Bank Account No.: 0810295112857 Held with EQUITY BANK NAIROBI NOTES AMOUNT AMOUNT USD USD I Amount advanced by IDA _ _67,260,886.48 Less: 2 Total amount documented -_44,361,759.18 3 Outstanding amount to be documented 22,899,127.30 Represented by: 4 Ending Special account Balance as as 30 June 2016 17, 163,643.4 5 Amounts claimed but not credited as at 30th June 2016 6 Amounts withdrawn and not claimed 5,735,483.89 7 Service Charges (if not included in lines 5 and 6 above) 8 Interest earned (if included in Special Account) 9 Total advance to Special Account Year ended 30 June 2016 22,399,127.30 Discrepancy between total appearing on line 3 and 9 Notes: I Explain the discrepancy between totals appearing on lines 3 and 9 above (e.g amount due to be refunded to cover ineligible expenditures paid fron the Special/Designated Account) 2 Indicate if amount appearing on line 6 is eligible for financiang by IDA and provide reasons for not claiming the expenditures The amount appearing on line 6 is eligible for financing by World Bank and shall be documented in subsequent IFRs AUTHORISED REPRESENTATIVE RESOURCE MOBILTSATION DEPARTMENT DATE: 3iJ THE NATIONAL TREASURY CENTRAL BANK OF KENYA - RECONCILIATION STATEMENT AS AT: 30/06/2016 G.L A/C NO: 1000134337 OFF-SHORE A/C NO: 810295112857 KENYA SLUM UPGRANDING PROJECT DETAILS CURRENCY AMOUNTS REMARKS ACTION TAKEN 1.BALANCE AS PER OFFSHORE STATEMENT: USD 17,163,643.41 2.ADD DE3ITS NOT IN NRB 3.LESS CREDITS NOT IN N.B 4.ADD DEBITS NOT IN OFFSHORE 28,/6/2016 11252.00 REVERS PA 1 !-'35 Que.ried Pnymens S-cticn 29/6/2C5 5.LESS CREDITS NOT IN OFFSHORE 6.1ALANCE AS PER CBK LEDGER -17,174,895.41 17,174,895.41 - Prepared By: Abdulphani Checked by: Approved By: Date: 1l,/7016 Da ta: Da t3 e: /~ T -L De, D- * DEFAULT WINDOWS PRINT ... - SP M MUTHUIMMCENTRALBNK.GO.K B Yall Listening, Caring Prne KENYA SLUMH U PGADING PROJECT PREPAÀTIO: ADAVANCE N U A/C No. F..30K: EG000-002001 Id RFrom To 0010295112007 - CuPREME BUGX?IEss Acc'iUNi - 01-06-2016 30-6- 201Z Date Value Particulars Money Out Money In Balance - 2 . 1 , , ' 0--201 T ~TR((/PMT INT B'NK FO EOET2995.0 1,:.'M 06-0N,6 RGNM T INTL 2EVEZLOPMET ASS. 3,. 8,0.0 14, -3 0. -1221 YRNl OM T IT B,A'NK OR R.EC.NST 2.6997 5.020 17,163,0 . a i - te: Any ornission or errors in [his statement should be promptly advised in wrirg lo the Branch Manager within 30 davs ironi Lhe dale of receipt otherwise the account will be presumed to be in