Puntland State of Somalia Somali Urban Investment Planning ......Abdirizak Said Nur Accountant Accountant [email protected] General General Abdirizak Hassan Director Director

Puntland State of Somalia

Somali Urban Investment Planning Project

Project Number: P150374

Grant Number: TFOA1754

Auditor's Report and Financial Report

For the Period 29 July 2016 to 31 December 2016

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Puntland State of SomaliaSomali Urban Investment Planning ProjectProject Number: P151492 Grant Number: TFOA1754Auditor's Report and Financial ReportFor the Period 29 July 2016 to 31 December 2016

CONTENTS PAGE

GLOSSARY OF ABBREViATIONS 1

1 INTRODUCTION 2

1.1 BACKGROUND 21.2 PROJECT GENERAL INFORMATION 31.3 AUDIT OBJECTiVES 41.4 AUDIT SCOPE 41.5 AUDIT APPROACH 4

2. STATEMENT OF PROJECT MANAGEMENT'S RESPONSIBILITIES 53. AUDITOR GENERAL'S AUDIT REPORT 64. STATEMENT OF RECEIPTS AND EXPENDITURE 85. STATEMENT OF BUDGET COMPARISON WITH ACTUALS 9

6. STATEMENT OF RECEIPTS AND EXPENDITURE - CUMMULATIVE 107. NOTES TO THE FINANCIAL STATEMENT 11


GLOSSARY OF ABBREVIATIONS

EAFS External Assistance Fiduciary Section

ISSAls International Standards of Supreme Audit Institutions

International Public Sector Accounting Standard

Office of Auditor General

IPSAS

OAG

UNOP United Nations Office for Project Services

PIU Project Implementation Unit

SUIPP Somalia Urban Investment Planning Project

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Puntland State of SomaliaSomali Urban Investment Planning ProjectProject Number: P151492 Grant Number: TFOA1754Auditor's Report and Financial ReportForthe Period 29 July 2016 to 31 December 2016

1 INTRODUCTION

1.1 Background

The International Development Association, acting as the administrator of the Somalia Multi-Partner Fund signed a Grant Agreement with Federal Govemment of Somalia on 24February 2016 to finance the cost of the Somali Urban Investment Planning Project (SUIPP)in feasibility, assessment and preliminary design studies for urban investment activities inMogadishu, Hargeisa and Garowe Municipality. The SUIPP comprises a "project to preparea project". The main project - to be prepared by SUIPP is called the Somali UrbanDevelopment Project (SUDP). Subsequent to signing the Grant agreement, the Governmentof Puntland signed a Subsidiary Agreement with Federal Govemment of Somalia for thePuntland component amounting to US$ 650,000 which was expected to run for a duration of1 year from 30 June 2016 to 30 June 2017. However, the Project closure period has beenextended to 31 December 2017.

The Project in Puntland is under the supervision of the Garowe Municipality and its strategicgoal is to undertake technical and economic feasibility studies and preliminary design workfor portfolios of potential investments in urban infrastructure and the strengthening of urbanmanagement institutions in Garowe.

The activities to be undertaken by the recipient under SUIPP comprises enhancement of themain project preparation and implementation capacity through the hiring, training andequipping core specialists who will be charged with managing the implementation of theSUDP. Garowe Municipality is implementing these activities with procurement and financialmanagement support of the EAFS and in accordance with the Grant Agreement between theFederal Govemment of Somalia and the International Development Association (acting asadministrator of the Somalia Multi-Partner Fund), the SubSidiary Agreement between theFederal Govemment of Somalia and the Puntland State of Somalia and the ImplementationAgreement between the Puntland State of Somalia and the Garowe Municipality.

At 31 December 2016, SUIPProject Implementation Unit (PIU) had achieved the followingmilestones that are in line with the Project's objectives;• Recruitment of the PIU staff;• Participation in UNOP&IPE Global's feasibility study and preliminary design studies on

identified priority roads and bridges to estimate the costs; and• Facilitation of Garowe municipality institutional assessment exercise that was focused on

assessing the basic conditions of performance, strategic planning capacity, technical andoperational capacity, fiduciary accountability mechanism and environmental and socialmanagement of the municipality.

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Puntland State of SomaliaSomali Urban Investment Planning ProjectProject Number: P151492 Grant Number: TFOA1754Auditor's Report and Financial ReportFor the Period 29 J4.1Y 2016 to 31 December 2016

1.2 Project General Information

Registered OfficeGarowe Municipality, Puntland

Designated Bank AccountFirst community BankKimathi Street BranchNairobi, Kenya

AuditorsAuditor GeneralOffice of the Auditor GeneralGarowe, Puntland

Fiduciary ManagementExtemal Assistance Fiduciary Section (EAFS)Office of the Accountant GeneralMinistry of FinanceGarowe, Puntland

Project Management

Name Role Position Contact Information

Abdirizak Said Nur Accountant Accountant [email protected] General

Abdirizak Hassan Director Director General [email protected]

Mohamed ProjectAbdirahmanGure coordination Project Manager [email protected]

Said Ismail Said Finance Director of EAFS [email protected] Section

Nuh Omar Muse FM Specialist FM Specialist for [email protected]

Abshir Abdulkadir Head of EAFS

Ahmed Procurement Procurement [email protected]

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Puntland State of SomaliaSomali Urban Investment Planning ProjectProject Number: P151492 Grant Number: TFOA1754Auditor's Report and Financial ReportFor the Period ~ July 2016 to 31 December 2016

1.3 Audit Objectives-

In line with the Grant Agreement and the Puntland Audit Law, the Office of the AuditorGeneral was mandated to carry out external audit of the project for the period 29 July 2016to 31 December 2016.

The specific objectives of the audit were to enable the Auditor General to express an opinionas to whether;

• The Project funds received and expenditures incurred during the fiscal year were for thepurpose intended;

• The Project books of accounts were kept based on the Generally Accepted AccountingPrinciples (GAAP) and the International Public Sector Accounting Standards (IPSAS)Cash Basis and the financial transactions therein reflect a true record of the transactionsthat took place during the period;

• Adequate Internal Control processes and systems were maintained by the implementingagencies during the period under the audit.

1.4 Audit Scope

The audit report covers the statement of receipts and expenditure of Somali UrbanInvestment Planning Project for the period 29 July 2016 to 31 December 2016. The auditalso assessed SUIPP's internal controls structure relevant to the Project Agreement and theproject financial management.

1.5 Audit Approach

In order to cover the scope of the financial audit for the SUIP Project for the period 29 July2016 to 31 December 2016, we performed the audit in accordance with InternationalStandards of Supreme Audit Institutions. The procedures involved, among others:-

• Tested transactions carried out during the period to ensure expenditure was supported,properly authorized and incurred for the Project.

• Reviewed the internal control structure and tested the controls in place to ensure that theProject funds and resources were utilized on Project activities and that goods, works andservices financed by the Project funds were procured in accordance with relevantfinancing agreement and specific provisions of World Bank guidelines, as applicable.

• Reviewed the accounting system of the Project as implemented by EAFS to ensure thatthe Project funds and resources were utilized on budgeted activities and were fullyaccounted for; and all supporting documents, records and accounts have been kept inrespect of all Project's activities.

• Tested the Project'scompliance with the Grant Agreement terms, Project ImplementationManual and applicable laws and regulations.

• Planned and executed the audit in accordance with Intemational Standards of SupremeAudit Institutions (ISSAls) and obtained from the implementing agency and fiduciaryagency a written confirmation conceming representations made during the audit.

• Tested the year end cash balance and grant receipt by doing confirmations to bank andWorld Bank respectively.

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Puntland State of SomaliaSomali Urban Investment Planning ProjectProject Number: P151492 Grant Number: TFOA1754Auditor's Report and Financial ReportFor the Period 29 J4Jy2016 to 31 December 2016

2. STATEMENT OF PROJECT MANAGEMENT'S RESPONSIBILITIES

The Project management is required to keep proper books of account and records of theProject's financial transactions adequate to reflect the operations, resources and paymentsrelated to the Project. The Project management is also responsible for designing,implementing and maintaining internal control relevant to the preparation and fair presentationof Project'sfinancial reportsthat are free of material misstatement, whether due to fraud orerror; selecting and applying appropriate accounting policies; and making accounting estimatesthat are reasonable in the circumstances.

The Project management accepts responsibility for the financial reports which has beenprepared using appropriate accounting policies supported by reasonable and prudentjudgments and estimates, in accordance with the International Public Sector AccountingStandards (IPSAS), Cash Basis.

The Project management is of the opinion that the Project financial reports gives a true andfair view of the state of the financial affairs of the Project. The management further acceptsresponsibility for the maintenance of accounting records that may be relied upon in thepreparation of the financial report as well as adequate systems of internal control.

Abdirizak S NuAccountant eneralMinistry of Finance

...:Lf. /fJ/:lP.J?t ...Date /.l

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3. AUDITOR GENERAL'S AUDITREPORT

I have audited the accompanying financial report of Somali Urban Investment PlanningProject, set out on pages 8 to 14 which comprise the statement of receipt and expenditure,statement of budget comparison with actual, statement of cumulative receipt andexpenditure for the period for the period 29 July 2016 to 31 December 2016 and notes tothe financial statements, including a summary of significant accounting policies.

PROJECT MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL REPORT

The Project management is responsible for the preparation and fair presentation of thisfinancial report in accordance with Generally Applicable Accounting Principles and theInternational Public Sector Accounting Standards - Cash Basis. This responsibilityincludes: designing, implementing and maintaining internal controls relevant to thepreparation and fair presentation of the financial report that is free of material misstatement,whether due to fraud or error; selecting and applying appropriate accounting policies; andmaking accounting estimates that are reasonable in the circumstances.

AUDITOR'S RESPONSIBILITY

My responsibility is to express an independent opinion on the financial report based on theaudit conducted. I conducted the audit in accordance with International Standards forSupreme Audit Institutions (ISSAls). Those standards require that i comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether thefinancial report is free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial report. The procedures selected depend on the auditor'sjudgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders intemal control relevant to the Project's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the reliability of theProject's internal control. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by the ..Project management, as well as evaluating the overall presentation of the financialstatements.

I believe that the audit evidence i have obtained is sufficient and appropriate to provide abasis for my audit opinion.

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OPINION

In my opinion, the financial report presents fairly, in all material respect, the financial statusof Somali Urban Investment Planning Project for the period 29 July 2016 to 31 December2016 in accordance International Public Sector Accounting Standards (IPSAS), CashBasis.

I have communicated with Project management regarding, among other matters, theplanned scope and timing of the audit and significant audit findings, including anysignificant deficiencies in internal control that I identified during our audit.

Jama Mohamed OsmanAuditor GeneralGarowe, Puntland State of Somalia

...................... &.~o/.2017

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Puntland State of SomaliaSomali Urban Investment Planning ProjectProject Number: E'151492 Grant Number: TFOA1754Auditor's Report and Financial ReportFor the Period 29 July 2016 to 31 December 2016

4. STATEMENT OF RECEIPTS AND EXPENDITUREFOR THE PERIOD 29 JULY 2016 TO 31 DECEMBER 2016

Notes 2016US$

2015US$

RECEIPTSGrant receipts 7.2 219,990.00

Total receipts 219,990.00

EXPENDITURE BY BUDGET COMPONENTS

Component 1: Consultancy serviceComponent 2: GoodsComponent 3: Operating costs

7.37.4

7.5

26,016.60

2,957.85

Total Expenditure 28,974.45

GRANT BALANCE 191,015.55

REPRESENTED BYDesignated bank account balance 7.7 191,015.55

The st I~ment of receipt ~nd expe~diture wa5~pproved by the Project Management on.:1:,/ 0 2017 d Signed on ItSbehalf by. -

Abdirizak S· r ----~Accountant eneralMinistry of Finance

The accounting policies and notes set out on pages 11 to 14 form an integral part of thefinancial report.

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Puntland State of SomaliaSomali Urban Investment Planning ProjectProject Number: P~1492 Grant Number: TFOA1754Auditor's Report and Financial ReportFor the Period 29 July 2016 to 31 December 2016

5. STATEMENT OF BUDGET COMPARISON WITH ACTUALSFOR THE PERIOD 29 JULY 2016 TO 31 DECEMBER 2016

2016 ACTUAL BUDGET PERCENTAGEBUDGET OUTTURN VARIANCE VARIANCE

RECEIPTS US$ US$ US$ %World Bank(Somalia 220,000.00 219,990.00 10.00 0.00%Multi-Partner Fund)

TOTAL RECEIPTS 220,000.00 219,990.00 10.00 0.00%

EXPENDITURE

Consultancy service

Goods

38,300.00

76,824.00

26,016.60 12,283.40

76,824.00

2,957.85 68,653.76

32.07%

100.00%

Operating cost 71,611.61 95.87%

TOTAL EXPENDITURE 186,735.61 28,974.45 157,761.16 84.48%

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6. STATEMENT OF RECEIPTS AND EXPENDITURE - CUMULATIVEAT 31 DECEMBER2016

RECEIPTS Balance BIF Current Year Cumulative BalanceUS$ US$ US$

Grant receipts 219,990.00 219,990.00

TOTAL RECEIPTS 219,990.00 219,990.00

Expenditure by budget components

Component 1: Consultancy service 26,016.60 26,016.60Component 2: GoodsComponent 3: Operating costs 2,957.85 2,957.85

TOTAL EXPENDITURE 28,974.45 28,974.45

Grant Balance 191,015.55 191,015.55

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Puntland State of SomaliaSomali Urban Investment Planning ProjectProject Number: P151492 Grant Number: TFOA1754Auditor's Report and Financial ReportFor the Period 29 Ju~y2016 to 31 December 2016

7. NOTES TO THE FINANCIAL STATEMENT

7.1 Significant Accounting Policies

a) Basis of Preparation of the Financial Report

The Project's financial report is prepared in accordance with the International Public SectorAccounting Standards (IPSAS), Cash Basis.

The measurement basis applied is the historical cost basis, except where otherwise statedin the accounting policies below. The accounting policies adopted have been consistentlyused throughout.

b) Foreign Currency Transactions

The functional currency is the United States dollar and the reporting currency is also theUnited States dollar. Items included in the financial statements are measured in thecurrency of the primary economic environment in which the entity operates.

c) Reporting Period

The reporting period for these financial statements is the 2016 financial year of theGovernment, which runs from January 1, 2016 to December 31, 2016. However the Projectperiod is less than a year, from 29 July 2016 to December 2016.

d) Grant Receipt

Receipts represent cash received by the Project during the period and comprise solely grantsreceived from the World Bank under the Somalia Multi-Partner Fund (SMPF). These grantreceipts have been recognized when received into the Projects Designated Account (DA) inline IPSAS Cash Basis.

e) Project Expenditure

Expenditure represents outlays of cash made by the Project and/or the World Bank for and onbehalf of the Project. The expenses comprise both operating and capital expenditure and arerecognized in the books of account when paid out in line with IPSAS Cash Basis.

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7.2 Grant Receipt

During the period ended 31 December 2016, the World Bank disbursed US$ 219,990 toSUIPP as follows:-

Date Received Reference Description Amount

10/11/2016 RV/33/11/2016 World Bank GrantUS$

219,990.00

Total Grant Received 219,990.00

7.3 Component 1: Consultancy Service

Actual BudgetUS$ US$

Sub-component 1.1: Project coordinator 13,650.00 13,350.00Sub-component 1.2: Safeguard specialist 4,416.60 5,300.00Sub-component 1.3: Financial management 3,900.00specialistSub-component 1.4:Procurement specialist 3,900.00SUb-component 1.5: M&E specialist 7,950.00 7,950.00Sub-component 1.5: Project engineer 3,900.00

26,016.60 38,300.00

7.4 Component 2: Goods


Sub-component 2.1 - Procurement ofEquipment 76,824.00

76,824.00

7.5 Component 3: Operating Costs


Sub-component 3.1: Costs of specialized andshort training for staff 2,623.00 32,613.00sub-component 2.7: Costs related to the PIUoperations 334.85 38,998.61

2,957.85 71,611.61

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7.6 Reconciliationbetween Application for Withdrawals and Receipts from the World Bank

WithdrawalApplication Actual Receipt

Date of Application Amount Date of Amount DifferenceApplication Number US$ Receipt US$ US$

03/11/2016 1 220,000.00 10/11/201E 219,990.00 10.00

Total 220,000.00 219,990.00 10.00

7.7 Designated Bank Account Balance

The designated account balance as at 31 December 2016 is detailed below:-

Designated Account Reconciliation Statement

I IGrant Number TFOA1754Bank Name: First Community BankBranch Name: Kimathi Branch, NairobiBank Account Number: 0012488207Part I US$1. Cumulative receipts to end of current reporting period 219,990.002. Cumulative expenditures to end of current reporting period 28,974.453. Outstanding advances to be accounted (1-2) 191,015.55

Part II4. Opening balance at beginning of reporting period (per Bank statement) -5. Add/Subtract: Cumulative adjustments, including interest earned andrecoveries -6. Grants received from the World Bank during current reporting period 219,990.007. Closing balance at end of current reporting (per Bank statement) 191,015.558. Outstanding amount of advances to be accounted for (4+5+6-7) 28,974.459. Total Expenditures reported for current reporting period, including this 28,974.4510. Difference (if any) 9-8 -Remarks None

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7.8 Comparatives

This is the first financial reporting by the Project hence no comparative. Performance havebeen compared to budget, where necessary.

7.9 Events after Reporting Date

There are no subsequent events that have occurred after the reporting period which are eitherto be disclosed that could materially affect the financial report of the Project, or curtails itsactivities in attaining its objectives.

7.10 Capital Expenditure

The Project had not incurred any capital expenditure as at the end of the period.

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Documents

Puntland State of Somalia Somali Urban Investment Planning ......Abdirizak Said Nur Accountant Accountant [email protected] General General Abdirizak Hassan Director Director