LOCAL GOVERNANCE AND SERVICE DELIVERY PROJECT MINISTRY OF FINANCE AND PLANNING & LOCAL GOVERNMENT BOARD PROJECT NUMBER: P127079 ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED JUNE 30, 2018 Prepared in accordance with the Cash Basis of Accounting Method under the International Public Sector Accounting Standards (IPSAS) Local Governance and Service Delivery Project Reports and Financial Statements For the financial year ended June 30, 2018 CONTENTS PAGE I. PROJECT INFORMATION AND OVERALL PERFORMANCE...... ...... ............... ............ .. 2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES 3. REPORT OF THE JNDEPENDENT AUDITORS ON THE LGSDP PROJECT. .............. . .... ......... x 4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE PERIOD ENDED 30TH JUNE 2018 . 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2018 2 6. STATEMENTOF CASIFLOW FOR THE PERIOD 30fTr JUNE 2018........................ ............ ............. 3 7. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS..... 4 8. SIGNIFICANT ACCOUNTING POLICIES.............................. .........................OICI-5...... ......... .. ........... 5 9 NOTES TO THE FINANCIAL STATEM ENTSATEMENTS................................................. ...................... .............7 10 PROGRESS ON FOLLOW UP OF AUDITOR RECOMMENDATIONS .......................................................... 15 ANNEX I - VARIANCE EXPLANATIONS - COMPARATIVE BUDGET AND ACTUAL AMOUNTS 17 AN NEX 2A PEN D ING BILLSLLS................................................ - ...... .................................. -18 ANN EX 2B PEN DING STAFF BILLS.........................................-........L. -.. . -.......IS ............................................... 18 Local Governance and Service Delivery Project Report and Financial Statements For the financial year ended June 30, 2018 1. PROJECT INFORMATION AND OVERALL PERFORMANCE 1.1 Name and Registered Office Name: Local Governance and Service Delivery Project. Objective: The key objective of the project is to improve local governance and service delivery in participating counties in South Sudan. Address: The Project Coordination Offxe is Located at the: Local Government Board compound, west of the Bank of South Sudan, Juba, Igsdp2017@gmail.com The project also has offices/branches as follows; at State Ministry of Local Government offices; Rumbek, Yambio, Kapoeta/Torit, Kuajok, Aweil and Wau Contacts: The following are the project contacts E-mail: info.logoseed@gmaiLcon Website: www.goss.org 1.2 Project Information Project Start Date: The project start date is February 28, 2014 Project End Date: The project end date is December 31, 2018 Project Manager: The project manager is Mr Moses Mabior Deu Project Sponsor: The project sponsor is International Development Association (IDA) and -Trust Funds (TF) 1.3 Project Overview Line Ministry/State The project is under the supervision of the Ministry of Finance and Department of the Plarming and the Local Government Board of the Republic of South Sudan. project ___ _____________ ___ Project number IDA Credit No. 5213-SD and TF Grant No. 018138 Strategic goals of the The strategic goals of the project are as follows: project (i) Is to incentivize citizen engagement and county capacity development by providing grants through the intergovernmental fiscal transfer system to finance community- driven basic infrastructure and capacity of local government (ii) Facilitate and strengthen the engagement of communities in the planning, implementation and oversight of local development activities (iii) Increase the capacity of county governments to fulfil the roles and functions required to effectively implement the local development investment cycle Achievement of The project management aims to achieve the goals through the following strategic goals means: (i) Providing a Payam Development Grant (PDG) to the participating Counties. (ii) Facilitate planning process involving BDCs, PDCs and government representatives to identify priority infrastructure investments for financing under the annual grant envelope etc (iii) Engage a firm, to and training county officials and employ learning by doing Other important The total approved financing agreements amount to USD 56,980,505.00, background US$ 50.000,000 Fully Financed by International Development Association information of the (Credit no. IDA 5213-Sd) and US$ 6,980,505.00 Financed by Govermnent project of Demnark (TF 018138). Current situation that Forty years of conflict in South Sudan have weakened the historical the project was remnants of the local government system and undermined reliable local formed to intervene delivery mechanism. Nevertheless, the Government of South Sudan has already made significant progress in defining the legal and policy framework for decentralization and establishing basic local government structure and planning systems. But the county Councils, which are defined by the LGA as statutory local government, remain subordinated and highly dependent in their relation to state governments. There is a lack of sufficient financing for local public infrastructure and a lack of conducive incentives for county government to use available resources to improve II service. The project intervened the government efforts by putting into practices the established basic local government structure and planning systems, building the capacity of the county officials and disbursement PDG grants to the participating counties. Project duration The project started on 28"' February 2014 and is expected to run until 31 December 2018 1.4 Bankers The following are the bankers for the current year: i. Stanbic Bank (K) Ltd West Yat Business Center, Airport Road Juba, South Sudan 1.5 Auditors The project is audited by the National Audit Chamber, Republic of South Sudan 1.6 Roles and Responsibilities Names Title designation Responsibilities Moses Mabior Deu DG Aid coordination, MoFP Chairman of The Project Management Committee Guyson Adikobaa Project Coordinator Coordinate all project activities 1.7 Funding summary The Project is for duration of 4 years from 2014 to 2018 with an approved budget of US$ 98.5 Million equivalent to SSP 11,524.5 Million as highlighted in the table below: Below is the funding summary: 1Hi Source of funds Donor Commitment- Amount received to Undrawn balance to date date (30/ 06/ 2018) (30/ 06/ 2018) Donor SSP Donor SSP Donor SSP currency currency currency (A(A') B ) (B')? (A)-(B) ()( (i) Grant' Government of 13,500,000 1,579,500,000 6,980,505 963,309,690 6,519,495.00 617,190,310 Denmark Government of 25,000,000 2,925,000,000 0.00 0.00 25,000,000 2,925,000,000 Netherlands (declined) Government of 10,000,000 1,180,000,000 0.00 0.00 10,000,000 1,180,000,000 Norway (eclined) Sub Total - Grant 48,500,000 5,674,500,000 6,980,505 963,309,690 41,519,495 4,711,190,310 (ii) Loan - ------ -- International Development 50,000,000 5,850,000,000 41,326,031 5,765,621,931 8,673,968 1,210,153,069 Association (IDA) Sub Total - Loan 50,000,000 5,850,0000,000 41,326,031 5,765,621,931 8,673,968 1,210,153,069 (iii) Counterpart funds Government of the 0.00 0.00 0.00 0.00 0.00 0.00 Republic of South Sudan Sub Total 0.00 0.00 0.00 0.00 0.00 0.00 Total 98,500,000 11,524,500,000 48,306,536 6,739,510,576 8,671,210,153,069 1.8 Summary of Overall Project Performance: The Local Governance and Service Delivery Project commonly known as LOGOSEED, completed its fourth year of operation in 2017-18. The Project continued to perform its mandate of implementing small-scale infrastructure projects in the counties while strengthening the Local Government institutions through concerted capacity building efforts. During the year, LOGOSEED also continued engaging the communities to ensure the small projects are built in accordance with their priorities and to build their capacity in participating in local development. Unfortunately, the conflict that broke out in Juba at the start of the financial, in July 2016, was to significantly affect Project implementation in various ways. The insecurity that followed and From the beginning of the project, the Grant commitment was USD 48,500,000, but later, the Donors declined by turning down the agreement and leaving Grant commitment of USD 6,980,508.00 from government of Denmark, iv inaccessibility of project areas lead to severe delay of sub-project implementation, the temporary suspension of Project activities in all of Western Equatorial and Yei River in Central Equatorial and lkwoto and Magwi in Eastern Equatorial. The insecurity also led to the withdrawal of SNV, the facilitating partner for CES and EES while activities across the project slowed down drastically due to uncertainty regarding the continuity of the Project. Communal fighting and sporadic insecurity also hampered community engagement activities in Wau, Jur River, Lakes and Eastern Equatorial. Despite these challenges, the Project showed remarkable resilience as evidenced by the achievements highlighted below. Component 1: Effective utilisation of the PDG for 2016-17 projects was made during 2016-18 where 270 contracts were initiated. By the end of the year 246 of these had been completed, 14 were progressing towards completion. The high number of carried forward projects was attributed to the lack of Funds experienced during the year. Summary of Completion Progress per Sector as at 8th June 2018 Description Total Units Completed Units % Completion Education P/S Classroom Blocks 33 33 100% Health PHCC/PHCU 19 13 68% Markets Public Markets 3 2 67% Livestock Livestock Markets 1 1 100% Water Boreholes 81 81 100% Sanitation VIP Latrines 128 113 91% Storm Water Construction/ Rehabilitation of Dykes 1 1 100% Roads Rural Earth Roads 4 2 50% Overall 270 246 85% v Component 2: Community Engagement For FY 17/18 Community Engagement activities were significantly impacted by a lack of funding combined with a lack of clarity regarding the timeframe for additional financing. Facilitating Partners (FPs) continued their ongoing work with community capacity building, training groups how to organize and mobilize resources, manage sub-projects, and play a role in dealing with community conflict. In the, second half of the year, FP implementation began to falter; first due to a prolonged contracting process, and then as a result of a dramatic drop-off in funding. By April, funding for the FPs was sufficient to cover only basic monitoring activities and limited training opportunities. Achievements of Logoseed and its Facilitating Partners (FPs) during include: * 222 Project Supervision and Project Management Teams (PSTs & PMTs) were formed and trained in five counties with 2,368 people participating. * 807 community members in nine counties in four states participated in conflict management training, gaining valuable skills that enable them to help reduce the prevalence of conflict in their communities. * Conducted an impact evaluation of one FP (World Vision), which needs to be replicated with the other FPs when additional financing is secured Regardless of the reduction in field activities, several important trends are emerging through analysis of the FP field reports with regards to the transformative role of the community groups established through the community engagement process. These trends (which need to be confirmed through additional reporting, surveys and studies) point to the value of the investment in building capable, active and engaged community groups. * Community groups (aka commimity structures) are playing a significant leadership role in their communities including establishing active partnership with Government in identifying local priorities, providing oversight in the implementation of sub-projects identified in the engagement process, as well as mobilizing community members for a range of tasks and responsibilities. * Community groups are mobilizing local resources and funds, ranging from building materials, unskilled labor, water user fees for handpumps, constructing additional kitchens, storage rooms and teacher housing in schools. Luol community in Yirol West just recently donated SSP 1 million for the construction of a feeder road, which is a relatively significant donation, * Community groups have been leveraging funding and other resources from external sources e.g. food for schools from the World Food Programme (WFP), funding and technical assistance for the construction of additional latrines and handpumps, hygiene training and medical supplies from NGOs and donors (e.g. HARD, DORCAS and Johanitter International). * Community groups have achieved legitimacy and their priorities are being recognized and used by other organizations operating in the area * Comummity groups themselves have a high potential for sustainability. A recent review by the FPs of the status of the community groups (PDCs and BDCs) revealed that most of groups remain active regardless of the level of LGSDP activity, and many have taken on new projects; community tasks such as LGSDP activities are completed. * Community groups are playing an active role in conflict management and mediation in their communities (see attached testimonials). Their role has ranged. from performing an adjunct role to traditional courts to being actively engaged in mediating and resolving interpersonal and intercommunal disputes. vi The trends mentioned point to the need for LGSDP to revise and refine its reporting systems to better document and quantify the multiple impacts that are taking place. From the graph above, it is easy to see the extent to which the lack of funding had a significant impact in all project activities for 2017-18, particularly with regards to the establishment of community substructures (BDCs and PDCs). Section I: FP Field Achievements in Key Thematic Areas Participants engaged during the participatory planning process by financial year FY # Male # Female # Participants 2013/14 5,522 5,747 11,269 2014/15 8,190 620 14,810 2015/16 38,612 4 5, 433 84,045 2016/17 111,812 113,512 25,324 1 18 /2,003 1 1,407 3,410 Thematic area 1: Participatory planning for FY 7/18 including trainings and county conferences For this reporting FY 17/18, participatory planning was conducted in group 'B' payans of 2 counties; Kapoeta North (EES) and Juba (CES). For Warrap, WBGS and NBGS, participatory planning processes were completed in FY 6/17. For the former WES, the entire LGSDP activities were suspended till now. State Coumty #payams #bomas #PDC members #BDC members #people consulted (#PDCs) (#BDCs) M TF T M F T M F T EES *Kapoeta 04 20 28 16 44 160 60 220 1442 681 2123 North CES *Juba 02(05) 09(27) 14 08 22_72 _36 108 561 726 1287 Total 02 1442 07 232 2003 1407 3410 suspened tilVnow TotlaPrceta 0420 2 1 4C 6 0 5 22 1 42 810212 vii Summary of this table: 7 Six payams and twenty-nine bomas underwent participatory planning in FY 17/18, spread overtwo counties in two participating states; / this number of payams and bomas equals the number of PDCs & BDCs formed I Jn all 66 PDC members (4?M, 24F) and 328 BDCs (232M, 96F) underwent training on developing their own plans, constitution, holding meetings, acquiring leadership skills, mobilizing their community and resources, SA total of 3410 (2003,1407F) people including all categories (vulnerable, indigenous, disable, widows, etc.) were consulted during planning to produce the various community development priorities; this number also equals to those who are aware about LGSDP and its interventions Component 3: The activities undertaken under this component is as follows * The old 9 Counties plus 4 new counties in the seven former States received on job and classroom training on Planning, Budgeting and Financial Management (PBFM) as well as infrastructure and procurement capacity building support. * Various training materials were prepared for infrastructure, procurement and PBFM and have been reviwed by the Technical Working Groups awaiting final editorial and printing. Environment and social screening and appraisals of the 2017-18 PPLs were successfully completed in seven LOGOSEED States (EES, WES, Lakes, Warrap, NBeG, WBeG and CES); the projects were to be implemented in FY 2018-19. During the year, communications material on E&S Safeguards were produced and disseminated. The contract of the TA firm, Cowater International Inc., the implementing partner of Component three came to an end in April 28, 2018. That means from that date there were no active component three activities. viii 2. STATEMENT OF PROJECT MANAGEMENT RESPONSIBILITIES The Undersecretary for the Ministry of Finance and planning and the Project Coordinator for LGSDP 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 (period) ended on June 30, 2018. 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 Undersecretary for the Ministry of Finance and planning and the Project Coordinator for LGSDP 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 Undersecretary for the Ministry of Finance and planning and the Project Coordinator for LGSDP 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/period ended June 30, 2018, and of the Project's financial position as at that date. The Undersecretary for the Ministry of Finance and planning and the Project Coordinator for LGSDP 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 Undersecretary for the Ministry of Finance and planning and the Project Coordinator for LGSDP 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/period 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 Undersecretary for the Ministry of Finance and planning and the Project Coord for LGSDP project on 2018 and signed by them. Undersecretary Project Coordinator ix 3. REPORT OF THE INDEPENDENT AUDITORS ON THE LGSDP PROJECT REPORT ON FINANCIAL STATEMENTS We have audited the accompanying financial statements of LGSI)P Project, set out on pages 1 to 19 which comprise the statement of receipts and payments for the financial year/period ended June 30, 2018, and a summary of significant accounting policies and other explanatory notes. Responsibility for the Financial Statements The Undersecretary for the Ministry of Finance and planning and the Project Coordinator for LGSDP project are responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (IPSAS). 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. Auditor's Responsibility Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. 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. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depended on our professional judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we considered the internal controls relevant to the company's preparation and fair presentation of the financial statements in order to design audit procedures that were appropriate in the circumstances, but not for the purpose of expressing an opinion on the company's internal controls. An audit also includes evaluating the appropriateness of accounting polices used and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion the accompanying financial statements give a true and fair view of the state of financial affairs of the Local Governance and Service Delivery Project (LGSDP) for the financial year/period ended June 30, 2018 in accordance with International Public Sector Accounting Standards (IPSAS). x Emphasis of matter Without qualifying our opinion, we highlight that during the year under review, the Project transferred USD 1,834,815 to counties for implementation of activities. Although these transfers have correctly been reported in these financial statements, the actual audit of these amounts have been undertaken at the respective counties, and separate audit reports issued. REPORT ON PROJECT PERFORMANCE AND VALUE FOR MONEY ACHIEVEMENT Based on our audit, we report that nothing came to our attention to indicate substantial non- achievement of value for money objectives. However, we identified a few minor cases of non- achievement of value for money objectives, which have been included in our separate Management Letter to the Undersecretary for the Ministry of Finance and planning and the Project Coordinator for LGSDP project. REPORT ON COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS Based on our audit, we report that nothing came to our attention to indicate substantial non- compliance with applicable laws and regulations, as well as essential external financing covenants. However, we identified a few minor cases of non-compliance, which have been included in our separate Management Letter to the Undersecretary for the Ministry of Finance and planning and the Project Coordinator for LGSDP project. REPORT ON CONTRACTS WITH DEBARRED FIRMS Based on our audit, we report that nothing came to our attention to indicate that debarred firms, both by the government and external financiers, were awarded any contracts under the Project during the financial year/period under review. Auditor General, REPUBLIC OF SOUTH SUDAN Date xi Local Governance and Service Delivery Project Report and Financial Statements For the financial year ended June 30, 2018 4. STATEMENT OF RECEIPTS AND PAYMENTS FOR THE PERIOD ENDED 30TH JUNE 2018 Note Cumulative 2017/18 2016/17 to-date US$ US$ USs RECEIPTS Transfer from Government entities 8.2 0 0 0 Proceeds from domestic and foreign grants 8.3 0 0 6,980,505 Loan from external development partners 8.4 8,143,983 10,347,446 41,325,556 Miscellaneous receipts 8.5 0 0 475 Total receipts 8,143,983 10,347,446 48,306,536 PAYMENTS Category 1: Grants under part 1: PDG Sub-Project...........................8.6 0 0 769,214 Category 2: GDS, WKS, CS, NCS, OP, TRG Part 2, 3, 4............................8.7 0 0 3,253,511 Category 3: PPA Pre-financing Part 2, 3, 4............................8.8 0 0 1,374,807 Category 4: Grants under part 1: PDG Sub-Project............................8.9 1,834,815 275,794 6,141,397 Category 5: GDS, WKS, CS, NCS, OP, TRG Part 2, 3, 4............................ 8.10 8,516,499 10,430,085 34,805,409 TOTAL PAYMENTS 10,351,314 10,705,878 46,344,338 SURPLUS/DEFICIT FOR THE YEAR -2.2033 -358,432 The accounting policies and explanatory notes to these financial statements are an integral part of the financial statements. Undersecretary Project Coordinator Date Date 1 5. STATEMENT OF FINANCIAL ASSETS AND LIABILITIES AS AT 30TH JUNE 2018 Note 2017/18 2016/17 US$ US$ FINANCIAL ASSETS Cash and Cash Equivalents Bank Balances 8.1IA 1,929,626 4,101,703 Cash Balances 8.11B 7,446 6,378 Cash Equivalents 8.1IC 0 0 Imprests and Advances 8.11 D 25,203 61,526 TOTAL FINANCIAL ASSETS 1,962,275 4,169,606 REPRESENTED BY: Cash and cash equivalents b/fwd 8.12 4,169,606 4,528,038 Surplus/Deficit for the year -2,207,331 -358,432 Prior year adjustments 8.13 0 0 NET FINANCIAL POSITION 1,962,275 4,169,606 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The financial1atements were approved on 2018 and signed by: Undersecretary Project Coordinator Date Date 2 6. STATEMENT OF CASHFLOW FOR THE PERIOD 30T11 JUNE 2018 2017/18 2016/17 Receipts for operating income USD USD Transfer from Government entities 0 0 Proceeds from domestic and foreign grants 0 4,550,505 Miscellaneous receipts 0 0 Payments for operating expenses Compensation of employees 0 0 Purchase of goods and services 10,351,314 10,705,878 Net cash flow from operating activities - 10,351,314 - 10,705,878 CASHFLOW FROM INVESTING ACTIVITIES Acquisition of Assets 0 0 Net cash flows from Investing Activities 0 0 CASHFLOW FROM BORROWING ACTIVITIES Proceeds from Foreign Borrowings 8,143,983 10,347,446 Net cash flow from financing activities 8,143,983 10,347,446 NET INCREASE IN CASH AND CASH -2,207,331 -358,432 EQUIVALENT Cash and cash equivalent at BEGINNING of the year 4,169,606 4,528,038 Cash and cash equivalent at END of the year 1,962,275 4,169,606 The accounting policies and explanatory notes to these financial statements form an integral part of the financial statements. The usial statements were approved on 2018 and signed by: Undersecretary Project Coordinator Date Date 3 7. STATEMENT OF COMPARATIVE BUDGET AND ACTUAL AMOUNTS Actual on Original Adjust Final Comparable % of Receipts/Payments Item Budget ments Budget Basis Variance Variance a b c=a+b d e=d-c f=ec % Receipts Proceeds from borrowings 27,960,583 0 27,960,583 8,143,983 19,816,600 8% Miscellaneous receipts 0 0 0 0 0 Total Receipts 27,960,583 0 27,960,583 8,143,983 19,816,600 8% Payments as per categories Category 1 0 0 0 0 0 Category 2 0 0 0 0 0 Category 3 0 0 0 0 0 Category 4 - PDG to Counties 19,973,000 0 19,973,000 1,834,814 18,138,185 91% Category 5 - Comp 2,3 & 4 12,157,189 0 12,157,189 8,516,500 3,640,690 30% Total Payments 32,130,189 0 32,130,189 10,351,314 21,778,875 68% Note: The significant budget utilisation/performance differences in the last column are explained in Annex 1 to these financial statemenwr e49. Undersecretary Project Coordinator Date Date 4 8. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these financial statements are set out below: 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 are presented in United States Dollars, which is the functional and reporting currency of the Project and all values are rounded to the nearest one Dollar. 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. iL 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 South Sudan and/or 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/period. 5 SIGNIFICANT ACCOUNTING POLICIES (Continued) iv. Pending bills Pending bills consist of unpaid liabilities at the end of the financial year/period arising from contracted goods or services during the year/period or in past years/periods. 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 regulations issued by the Ministry of Finance and Economic, Planning, as well as by the participating development partners, as detailed in the Government of South Sudan Budget Printed Estimates for the year. A high-level assessment of the Project's actual performance against the comparable budget for the financial year/period under review has been included in an annex to these financial statements. vi. Exchange rate differences The accounting records are maintained in United States Dollars, which is the main currency used for major payments under the Project. A smaller percentage of payments are however made in the South Sudanese Pound (SSP). Those transactions are converted into the United States Dollars 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 the local currency are recognised in the statements of receipts and payments. vii. Comparative figures Where necessary comparative figures for the previous financial year/period 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/period end with a significant impact on the financial statements for the year ended June 30, 2018. 6 9 NOTES TO THE FINANCIAL STATEMENTS 9.1 RECEIPTS FROM GOVERNMENT OF THE REPUBLIC OF SOUTH SUDAN There were no counterpart funds from the Government of the Republic of South Sudan during the fiscal year. 9.2 PROCEEDS FROM DOMESTIC AND FOREIGN GRANTS During FY2016/17 and FY 2017/18 the project did not receive any grant. The grant received from Government of Denmark was received in FY 2014/15 and FY 2015/16. There were no direct payments from the Grants fund. 9.3 LOAN FROM EXTERNAL DEVELOPMENT PARTNERS During the 12 months to 30 June 2018 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 Multilateral Donors (International Organizations) 31/10/2016 323,230 323,230 17/12/2016 551,353 551,353 07/02/2017 695,592 695,592 08/05/2017 787,612 787,612 31 July 2016 - 7,989,660 7,989,660 30 June 2017 July 24,2017 812,196 812,196 International Development Dec 8,2017 106,368 106,368 Association (IDA) Dec 21,2017 224,857 224,857 Jan 30, 2018 216,213 216,213 Mar 7, 2018 212,713 212,713 Apr 10, 2018 257,739 257,739 May 5, 2018 101,463 101,463 June 1,2018 241,804 241,804 31 July 2017 - 5,970,630 5,970,630 30 June 2018 Total 8,143,983 10,347,446 7 NOTES TO THE FINANCIAL STATEMENTS (Continued) 9.4 MISCELLANEOUS RECEIPTS There were no miscellaneous receipts during the year. 9.5 CATEGORY 1: PDG to Counties (From May 2013 to December 2014) s/n Date SSP Exchange usS County Name rate I 03-Jun-14 IbbaCounty 185,634 3.00 61,878. 2 03-Jun-14 Ezo County 444,579 3.00 148,193 3 03-Jun-14 Rumber East Cn 579,915 3.00 193,305 4 03-Jun-14 Yirol Couty 487,350 3.00 172,450 5 Bank Charges; DA-l SSP stanbic 30 6 18-Dec-14 Ibba County 185,634 3.10 59,882 7 18-Dec-14 Ezo County 444,579 3.10 143,413 8 31-Dec-14 Bank Charges; DA-1 SSP stanbic 64 |__ _ Grant Total Category 1 2,327,691 769,215 9.6 CATEGORY 3: PPA Pre-financing 2017/18 2016/17 Cumulative US$ Us$ Us$ Goods 0.00 0.00 789,992.05 Works 0.00 0.00 59,249.40 Consultancy 0.00 0.00 1,675,259.46 Training 0.00 0.00 199,289.70 Fuel, advert, staff travels, M&E and others 0.00 0.00 529,720.61 0.00 0.00 3,253,511.22 9.7 CATEGORY 2: GDS, WKS, CS, NCS, OP, TRG 2017/18 2016/17 Cumulative US$ US$ US$ Goods 0.00 0.00 250,478.76 Works 0.00 0.00 37,725,06 Consultancy 0.00 0.00 875,358.70 Training 0.00 0.00 121,034.00 Fuel, advert, staff travels, M&E and others 0,00 0.00 90,210.34 0.00 0.00 1,374,806.86 8 NOTES TO THE FINANCIAL STATEMENTS (Continued) 9.8 CATEGORY 4: PDG to Counties (From Jannary 2015 to June 30, 2018) s/n Date SSP Exchange US$ County Name rate 1 28-Feb-15 Yirol West County 487,350.00 3.10 157,209.68 2 28-Feb-15 Rumbek East County 579,915.00 3.10 187,069.35 Bank Charges; DA-I SSP 28-Feb-I5 stanbic 51.61 . 344,330.64 Transfers FY 2015/16 3 01-Jun-16 Rumbek East County 15,459,118.56 36.00 429,419.96 4 01-Jun-16 Yirol West County 13,007,207.70 36.00 361,311.33 5 01-Jun-16 WUlu County 5,187,856.50 36.00 144,107.13 6 01-Jun-16 Iba County 5,352,507.27 36.00 148,680.76 7 01-Jun-16 Mvovlo county 6,134,567.22 36.00 180,404.65 8 01-Jun-16 Kapoeta East county 20,597,745.51 36.00 572,159.60 9 01-Jun-16 Ikwotos county 10,692,734.67 36.00 297,020,41 10 01-Jun-16 Gogrial West coutity 30,574,658.43 36.00 849,296.07 I 01-Jun-16 Twic county 25,704,291.67 36.00 714,008.10 Bank Charges 50.25 Total FY 2015/16 . 3,686,458.24 Transfers FY 2016/17 12 24-Feb-17 Gogrial Wet county 3,331,081.00 117.80 28,519.53 13 24-Feb-17 Twic county 12,181,693.00 117.80 104,295.32 14 03-Apr-17 Mvolo county 994,751.74 120.00 8,289.60 15 03-Apr-17 Gogrial West county 2,581,646.49 120.00 21,513.72 17 03-Apr-17 Yirol West county 420,000.00 120.00 3,500.00 18 03-Apr-17 Rumbek East county 420,000.00 120.00 3,500.00 18 03-Apr-17 Twic county 2,237,533.00 120.00 18j646.11 19 03-Apr-17 Kapoeta East county 2,425,072,00 120.00 20,208.93 20 03-Apr-17 lkwoto county 2,107,510.67 120.00 18,562.59 21 03-Apr-17 Wulu county 420,000.00 120.00 3,500.00 22 24-May-17 Yirol West County 5,670,810.60 137.00 41,392.78 23 24-May-17 Ikwotos county 605,711.40 137.00 4,421.25 31-May-17 Bank Charges FY 2016/17 443.78 Total FY 2016/17 275,793.60 9 Transfers FY2017/18 S/N Date County Name Amount(in SSP) Ex. rate Eq. in US$ 1 01-Jul-17 lkwoto county 5,670,616.00 138.00 41,091.42 2 01-Jul-17 Rumbek East county 6,274,862.00 138.00 45,470.01 3 01-Jul-17 Yirol West county 2,175,534.OQ 138,00 15,764.74 4 01-Jul-17 Wulucounty 2,617,342.00 138.00 18,966.25 5 01-Jul-17 Twic county 13,750,717,00 138.00 99,642.88 6 12-Oct-17 Kapoeta East county 14,551,677.00 122.08 119,200.91 7 12-Oct-17 Mvolo county 1,217,062.00 122.08 9,969.63 8 12-Oct-17 Gogrial West counly 25,123,729.00 122.08 205,802.48 9 12-Oct-17 RUmbek East county 2,690,598.00 122.08 22,040.19 10 12-Oct-17 lkwoto county 5,052,750.00 122.08 41,389.89 11 12-Oct-17 Twic county 7,101,694.00 122.08 58,173.94 12 12-Oct-17 Yirol West county 7,115,203.00 122.08 58,284.60 13 13-Dec-17 Wulu county 1,548,795.00 125.15 12,375.74 14 13-Dec-17 Yirol West county 4,048,675.00 126.48 32,010.40 15 13-Dec-17 lkwoto county 2,933,218.00 126.48 23,19.116 16 16-Feb-18 Twic county 3,812,857.00 131.31 29,037.50 17 16-Feb-18 Rumbek East county 3,142,740.00 131.96 23,815.85 18 16-Feb-18 Jur RiverCounty 11,562,947.00 131.96 87,624.64 19 16-Feb-18 Juba County 481,425.00 131.96 3,648.26 20 16-Feb-18 Aweil East County 481,425.00 131.96 3,648.26 21 16-Feb-18 AweilNorth County 481,425.00 131.96 3,648.26 22 03-Mar-18 Juba County 9,412,915.00 132.48 71,051.59 23 03-Mar-18 Twic county 602,313.00 132.50 4,545.76 24 03-Mar-18 Kapoeta East county 3,275,910.00 13250 24,723.85 25 03-Mar-18 Yirol West county 1,019,797.00 132.50 7,696.58 26 27-Mar-18 Juba (Rajaf) county 16,356,423.00 133.95 122,111.25 27 27-Mar-18 lkwoto county 1,944,858.00 133.99 14,514.95 28 27-Mar-18 Aweil North county 5,545,261.00 133.99 41,385.63 29 28-Mar-18 Mvolo county 1,108,230.00 133.99 8,270.99 30 29-Mar-18 Wulu cou nty 4,064,304.00 133.99 30,332.89 31 30-Mar-18 Jur River county 8,557,602.00 133.99 63,867.47 32 20-Apr-18 Yirol West county 391,160.00 133.99 2,919.32 33 20-Apr-18 Aweil North county 6,538,190.00 135.27 48,335.89 34 20-Apr-18 Aweil East County 25,425,301.00 135.2 187,886.72 35 24-May-18 Yirol West County 1,722,760.00 136.77 12,595.87 36 24-May-18 Jur River county 10,476,816.00 137.05 76,442.48 37 24-May-18 Aweil North county 2,854,691.00 137.05 20,828.81 38 24-May-18 Aweil East County 18,171,066.00 137,05 132,582.39 39 24-May-18 Twic county 2,429,594.00 137.05 17,727.16 Total Transfers 1,842,616.62 Bank Charges FY 2017/18 108.77 Adjustment as per client connection -7,910.51 _ Total FY2017/18 1,834,814.88 Main Total- Cumulative Category 4 6,141,397.37 10 NOTES TO THE FINANCIAL STATEMENTS (Continued) Summary of PDG transfer to Counties During the 12 months to 30 June 2018 and cumulative to date the project transferred funds to reporting counties as shown below: FY 2017/18 FY 2016/17 Cumulative to County Name US$ US$ date Ibba County 0.00 0.00 270,440.70 Ezo County 0.00 0.00 291,605.58 Rumbek East County 91,326.06 3,500.00 904,620.37 Yirol West County 129,271.51 44,892.78 855,135.30 Wulu County 61,674.88 3,500.00 209,282.01 Mvolo County . 18,240.62 8,289.60 196,934.87 Kapoeta County 143,924-75 20,208.93 736,293.28 lkwoto County 120,187.42 21,983.84 439,191.67 Gogrial West County 205,802.48 50,033.25 1,105,131.80 Twic County 209,127.23 122,941.43 1,046,076.76 Jur River County 227,934.58 0.00 227,934.58 Juba County 196,811.11 0.00 196,811.11 Aweil East County 324,117.38 0.00 324,117.38 Aweil North County 114,198.60 0.00 114,198.60 Total 1,842,616.62 275,349.83 6,917,774.01 The Project Management Unit has confirmed that the counties received the finds and recorded these as inter-entity receipts. 11 NOTES TO THE FINANCIAL STATEMENTS (Continued) 9.9 CATEGORY 5: GDS, WKS, CS, NCS, OP, TRG Categories 2017/18 2016/17 Cumulative US$ US$ us$ Goods 173,342.15 41,716.00 844,313.78 Works 34,032.76 19,52.55 208,802.13 Consultancy 7,510,415.45 9,680,294.55 30,274,761.89 Training 227,326.82 91,203.45 855,424.39 Fuel, advert, and staff travels, 571,382.34 597,218.09 2,622,106.32 M&E and others Total ,516,49.52 10,430,084.64 34,805,408.51 9.10 CASH AND CASH EQUIVALENTS C/FWD 2017/18 2016/17 US$ US 9.10A Bank Accounts Foreign Currency Accounts Stanbic Bank [Alc No 0200000062536J 1,888,930.32 3,732,355.32 Stanbic Bank [A/c No 0200000062552] 36,912.52 360,681.42 Total Foreign Currency balances 1,925,842.84 4,093,036.74 Local Currency Accounts Stanbic Bank [A/c No 0200000062544] 1,846.20 1,386.29 Stanbic Bank [A/c No 0200000046263] 1,937.25 7,280.07 Total local currency balances 3,783.45 8,666.36 Total bank account balances 1,929,626.29 4,101,703.10 2017/18 2016/17 US$ US$ 9.JOB Cash in hand USD Petty Cash at PMU 5,000.00 5,000.00 SSP Petty Cash at PMU 2,446.00 1,377.66 7,446.00 6,377.66 12 NOTES TO THE FINANCIAL STATEMENTS (Continued) 2017/18 2016/17 US$ US$ 9.10C Cash equivalents (short-term deposits) None 0.00 0.00 9.10D Imprests Balances 9. 10D.1 Ibnprest for operations to the Project Stale Offices Name of the Former States FY 2017/18 FY 2016/17 Year-end Exchange rate Year-end Exchange rate 1USD=127.64 SSP IUSD=125.946 SSP SSP Eqv in. USD SSP Eqv in. USD Lakes state 733,492.90 5,746.58 846,429,70 6,720.56 Western Equatoria State 87,079.87 682.23 52,940.98 420.35 Eastern Equatoria State 235,469.72 1,844.80 377,652.28 2,998.52 Warrap State 766,549.09 6,005.56 135,562.80 1,076.35 Western Bahr el Ghazal 67,395.32 528.01 818,519.72 6,491.02 Northern Bahr el Ghazal 253,771.18 1,988,18 1,895,175.00 15,047.49 Central Equatoria State 0.00 0.00 76,175.00 604.82 Total Balance year end 2,143,758.08 16,795.36 4,202,455.48 33,359.11 The imprest balance in the former Lakes state, and Warrap state were on the higher side. This is because of the advance for various workshops and training under component three. The County officials and contractors were trained on how to prepare the bids and tender documents for the Payan sub projects and they were also trained on procurement procedures, PBFM and administration functions at county level. 13 NOTES TO THE FINANCIAL STATEMENTS (Continued) 9.10D.2 Advance to project stafffor field missions -SSP Special account S/N Name and Description Amount (USD) Remarks I Nargis Mibimbi 704.00 Imprest holder is reminded to account for 2 Sunday Manyang_ 1,452.00 1mprest holder is reminded to account for 3 !iHenry Deng 171-00 Refunded after year end 4 Joseph Garang 50.00 Agreed to be refunded It was not due by the year end and already 5 Batali James 1,372.00 accounted 6 Emmanuel Nyarli 704.00 Accounted 7 David Pitia- From NAC 344.00 Imprest holder is reminded to account for It was not due by the year end already 8 Emmanuel Candiga. 896.00 accounted Total 5,693.00 9.1OD.3 Advance to project stafffor field missions USD Special Account Exchange Rate SSP 130.88 per $1 S/N Nane and Description Amount Remarks In SSP Eqv. in USD Imprest holder is reminded I Nargis Mbimbi - Office items 101,985.00 779.23 to account for 2 Achire Charles 134.00 1.02 Advised to refunded EES - Audit Exercise 72,000.00 550.12 It was not due by the year 3 end already accounted Tickets were bought, the Martha Yosia- Air Tickets for State 78,501.0 599.79 acknowledgement receipts Coordinators from travel agent were obtained after year end. Accounted for, but Kiir Yor Lual - Accommodation for supporting documents still 9,500.00 72.59 at state office. Will de 5 training at County level documented once the document reach PMU 6 Candiga Emmanuel - Operations 99,270.0 758.48 It was not due by the year Yambio - - end already accounted . Total 361,390.00 2,761.23 14 衍 司一當蔔一才奮一’ 中！& ANNEX I - VARIANCE EXPLANATION$ - COMPARATIVE 13UDGET AND ACTUAL AMOUNTS Actual on Original Adjust Final Comparable % of ments.1tein Budget ments et Basis Variance Variance a b c=a-fb d e=d-c f-ek % Receipts Proceeds froin borrowings 27,960,583 0 27,960,583 8,143,983 19,816,600 8% Miscellaneous receipts 0 0 0 0 0 TotalReceipts 27,960,583 0 27,960,583 9,1431983 19,816,600 8% Payments as per categories Category 1 0 0 0 0 0 Categ ory 2 0 0 0 0 0 Category 3 0 0 0 0 0 Category 4 - PDG to Counties 19,973,000 0 19,973,000 1,834,814 18,139,185 9160 - - - - ---------- ---- Category 5 - Comp 2,3 & 4 12,157,189 0 12,157,189 8,516,500 3,640,690 1 30% Total Payments 32,130,189.. 0 32,130,189 10,351,31 L- 21,778,875 68% Remarks about Variances beyond 50% Category 4: Grants under Part 1- PDG to Counties Category 4 is the one with variance beyond 50%. 'rbe performance of this category was below the average, only 9% of the budgeted amount were transferred to the counties. There Were two main reasons which contributed to slow down of the transfer of PDO to the counties, the inflation rate and delay of approval of additional financing. Due to the inflation, the price of the materials were increased significantly, then, some of the contractors decided to abandon the site waiting the approval of the contract variations. By the end of this financial year, some of the invoices were submitted and the verification process were stiff going on. The payment process was finalized in July 2018. The second reason caused under performance is that, the project experienced a shortage of funds, the available balance of funds was not enough to guarantee all budgeted contracts for IPFs FY 2016/17, as result, just few sub projects were selected to continue with implementation, a big number of them were put on hold until the additional financing get approved which did not happen up to the end of this financial year. 17 ANNEX 2A PENDING BILLS 2017/18 2016/17 USS US$ Construction of buildings 0.00 0.00 Construction of civil works (PDG Sub Projects) 320,027.00 0.00 Supply of goods (Starter Kits for counties) 136,927.25 0.00 Supply of services 895,47.92 0.00 1,352,702.17 0.00 ANNEX 2B PENDING STAFF BILLS 2017/18 2016/17 UsS usS Permanent employees - management 0.00 0.00 Permanent employees - others 0.00 0.00 Temporary employees-(Consultants) 125,177.00 0.00 Others (specify) 0.00 0.00 125,177.00 0.00 18