AUDIT OF THE FINANCIAL STATEMENT OF THE

"EMERGENCY NATIONAL POVERTY TARGETING PROGRAM (ENP)"COUNCIL OF MINISTERS

BEIRUT - REPUBLIC OF LEBANON

FOR THE YEAR ENDED DECEMBER 31, 2015

TALAL ABU-GHAZALEH & COMEMBER OF TALAL ABU-GHAZALEH ORGANIZATION

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Index

Contents: Page

Independent Auditor's Report 1

Project Statement of Cash Receipts and Payments 2

Notes to the Project Statement of Cash Receipts and Payments 3-8

Annex 1: Fixed Asset Schedule 7

Annex 2: Reconciliation 9

VJ ITAGAudbsTalal Abu-Ghazaleh & Co.

Global Company for Auditing and Accounting . . j A3 L Z..

Alliance with Russell Bedford International More than 120 member & correspondent firmsand 280 offices in Europe, the Americas & Asia-Pacific

Societe Civile (R.C. 67) .*4zi ) . .

Certified Public Accountants

Independent Auditor's Report

To Council of MinistersEmergency National Poverty Targeting Program (ENPTP)Beirut - Republic of Lebanon

We have audited the accompanying financial statement compromising of the Statement of CashReceipts and Payments by category of Emergency National Poverty Targeting Program (ENPTP)for the year ended December 31, 2015.

We have also audited compliance with the laws, regulations, guidelines and provisions governed bythe Grant Agreement for the period January 1, 2015 (inception) till December 31, 2015.

We conducted our audit in accordance with International Standards on Auditing (ISA). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement and about whether the First MunicipalInfrastructure Project has complied with laws, regulations, guidelines and provisions governed by theGrant Agreement. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statement. An audit also includes assessing the accounting principles usedas well as evaluating the overall statement presentation. We believe that our audit provides areasonable basis for our opinion.

In our Opinion:a. the project Financial Statement (PFS) present fairly, in all material respects, the cash receipts and

payments of the Emergency National Poverty Targeting Program (ENPTP)for the periodfrom January 1, 2015 till December 31, 2015 in accordance with the International Public SectorAccounting Standards (IPSAS), under the cash basis of accounting;

b. internal control over financial reporting involved in the preparation of replenishments, directpayments, payments through special commitments , and reimbursements i.e. expendituresreimbursed on the basis of statements of Expenditures can be relied upon to support the relatedwithdrawals for the year ended December 31, 2015;

c. The project was in all material respects in compliance with the laws, regulations, guidelines andprovisions governed by the Grant Agree t.

Waref M. Kumayba(License N 1927)

Beirut on June 24, 2016

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Tel.: +9611754 222 Fo1 1 s - 1 Y IFax: +9611754 222 tagi.com +ill I Y YP.O.Box: 11-7381, Beirut, Lebanon Tageo.bierut@tagi.com ;.UMI &L ,:.a j iI-. rAv :y.VT

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Council of MinistersEmereency National Poverty Targeting Program Project

For the year ended December 31, 2015(Amounts are expressed in US Doll"r

Note 1: Project Background:

The Emergency National Poverty targeting Program (ENPTP), supported by a US$8.2 Million grant from the Trust fund for Lebanon (TFL), became effective onAugust 18, 2014.

The Emergency NPTP project consists of two technical components and a fiduciaryoperations component. Specifically, the components are:(i) Administration of the NPYP,(ii) Provision of Social Assistance, and(iii) Fiduciary Operations.

compollent 1:Administration of the National Poverty Targeting Program (US$ 14 Million totalcost, of which US$ 3.89 Million financed from TFL, and US$ 6.9 Million from theGOL).This component's objective is to ensure an effective and efficient administration andimplementation of the NPTP through its structures in the MOSA and the PCM, sothat it can expand the coverage and enhance the Social Assistance to extremely poorLebanese households and those affected by the Syrian crisis. This component willalso improve the efficiency of the NPTP.

Component 2:Provision of Social Assistance (US$ 202 Million total cost, of which US$ 3.46Million financed from TFL; US$ 3 Million from the UNHCR; US$ 78 Million fromthe GOL).This component provides a package of Social Assistance benefits to 350, 000extremely poor Lebanese households and those affected by the Syrian Crisis for athree-year period. The package of Assistance consists of- (i) comprehensive healthcoverage in public and private hospitals through the waiver of 10-15 presentcopayments for hospitalization; (ii) comprehensive primary health care coverage atMinistry of Public Health (MOPH) primary health care facilities or at the MOSASocial Development Centers; (iii) coverage of chronic disease prescriptionmedication; (iv) basic food needs through the e-card food voucher program.

Compoiteist 3:Fiduciary Operations Team (FOT) (US$ 0.55 Million total cost, financed fromTFL).The Fiduciary Operations Team (FOT) will be responsible for implementation of theprocurement and financial functions of the project, working closely with the teamsin MOSA and the PCM who are implementing the program activities.The FOT will play two key roles in the project: (i) managing the procurementprocess through the various stages for all contracts (goods, consulting services, andoperating costs), are well updating and implementing the procurement plan; and (ii)handling financial management, including payments for all contracts, financialreporting, and ensuring external audits are undertaken in compliance withrequirements. The FOT will be composed of. (i) Procurement Specialist, (ii)Procurement Officer, (iii) Financial Management Specialist, (iv) Procurementassistant, and (v) an Internal Audit.

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