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"NIISLEL-AUDIT" LLC
AUDITOR'S REPORTUlaanbaatar Clean Air Project
No.5039-MNFinancial statements as of December 31, 2016
Ulaanbaatar 2017
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"NIISLEL AUDIT" LLC1CuJA1 - Certified audit, appraisal and accounting consultancy company
Date: .
INDEPENDENT AUDITOR'S REPORTTo: PMU Director N.Bayartogtokh
Ulaanbaatar Clean Air ProjectCredit No: 5039-MN
We have audited the Interim Financial Reports comprising the balance sheet, project source anduses of funds by project activity, disbursement report and the designated account statement ofUlaanbaatar Clean Air Project Credit No: 5039-MN for the year ended December 31, 2016.These reports are the responsibility of the project. Our responsibility is to express an opinionthereon based on our audit.
We conducted our audit in accordance with International Standards on Auditing issued by theInternational Auditing and Assurance Standards Board of the International Federation ofAccountants. These standards require that we plan and perform the audit to obtain reasonableassurance about whether the interim financial reports are free of material misstatement. An auditincludes examining on test basis, evidence supporting the amounts and disclosures in the interimfinancial reports. An audit also includes assessing the accounting principles used and significantestimates made by management as well as evaluating the overall statement presentation. Webelieve our audit provides a reasonable basis for our opinion.
The management policy of Ulaanbaatar Clean Air Project is to prepare the Interim FinancialReport on the cash receipts and payments basis in conformity with International Public SectorAccounting Standards (IPSAS). On this basis, cash receipts recognized when received and cashexpenditures are recognized when paid rather than when incurred.
In our opinion, the Interim Financial Reports have been prepared in accordance withInternational Public Sector Accounting Standard issued by the Public Sector Committee of theFederation of Accountants, present fairly the cash receipts and payments of the project during theyear ended December 31, 2016 and, in all material respects expenditure have applied to thepurpose intended in the Financing Agreement, Credit No: 5039-MN
NIISL A ILC
Ulaanbaatar city, Sukhbaatar distict, Baga toiruu-44 Phone/Fax: 31-89-18, 70120095E-mail: [email protected]
The Government of MongoliaThe International Development Association
Credit N: 5039-MNUlaanbaatar Clean Air Project
BALANCE SHEETas at December 31,2016
At Dec 31, At Dec 31,2016 2015
ASSETS
Cash and cash equivalent:Cash at bank:
Designated account 782,321.29 368,441.00Sub-Account - 15,734.62Management fee account 19,941.71 7,932.20PMU Debt Card Account 471.15
Cash on hand MNT 55.47 190.31Total cash and cash equivalents 4 802,789.62 392,298.13Cumulative project expenditures
Subsidies under part-A of the Project 4,525,257.44 4,525,257.44Good, Work, Consultants' services, Training andWorkshops, and Operating Costs under the Project 5 4,240,041.51 3,707,319.98Management Fee under Part C(3)(b) of the Project 6 1,408,024.27 1,129,017.28Other expenditure 7 62,078.05 61,500.38
Subtotal cumulative project expenditures 10,235,401.27 9,423,095.08TOTAL ASSETS 11,038,190.89 9,815,393.21
FUNDS
IDA's fund 10,962,528.78 9,749,675.69Net interest earned 8 26,915.67 18,147.83Tender Income 8 873.45 873.45Foreign exchange gain 8 1176.75Other Income . 46,696.24 46,696.24
TOTAL FUNDS 11,R38!190.89 9,815,393.21Prepared by: '' M g v A0
atun 4ayartogtokhMU Account t PM.A:Dfrector
"Niislel-Audit" LLC
"NIISLEL AUDIT" LLC3JI - Certified audit, appraisal and accounting consultancy company
Date:.
INDEPENDENT AUDITOR'S REPORTTo: PMU Director N.Bayartogtokh
Ulaanbaatar Clean Air ProjectCredit No: 5039-MN
We have audited the accompanying statement Sources and Uses of Funds of Ulaanbaatar CleanAir Project submitted to the World Bank during the year ended December 31, 2016 in support ofcredit withdrawals under the Financing Agreement, Credit No: 5039-MN.
We conducted our audit in accordance with generally accepted auditing standards thataccordingly included examination, on a test basis, of evidence supporting the amounts anddisclosures in the statement of Sources and User of Funds. An audit also includes assessing theaccounting principles used and significant estimates made by management as well as evaluatingthe overall statement presentation. We believe our audit provides a reasonable basis for ouropinion.
In our opinion, the statement of Sources and Uses of Funds submitted together with the internalcontrols and procedures involved in their preparation can be relied upon to support theapplication for credit withdrawals.
[I 7-
NIS D LLC
Ulaanbaatar city, Sukhbaatar distdct, Baga loiruu-44 Phone/Fax: 31-89-18, 70120095E-mail: info@niislelauditmn
The Government of MongoliaThe International Development Association
Credit K&: 5039-MNUlaanbantar Clean Air Project
PROJECT SOURCES AND USES OF FUNDSForthe year ended December 31, 2016
(in USD)Cumulative to For 2016 Cumulative toDec 31, 2016 Dec 31, 2015
FUNDSIDA's fund 10,962,528.78 1,212,853.09 9,749,675.69Net interest earned 26,915.67 8,767.84 18,147.83Foreign exchange gain 1,176.75 1,176.75 -Tender Income 873.45 - 873.45Other Income 46,696.24 - 46,696.24
TOTAL FUNDS 11,038,190.89 1,222,797.68 9,815,393.21
USES OF FUNDSSubsidies under part-A of the Project 4,525,257.44 - 4,525,257.44Good, Work, Consultants' services,Training and Workshops, andOperating Costs under the Project 4,240,041.51 532,721.53 3,707,319.98Management Fee under Part C(3)(b)of the Project 1,408,024.27 279,006.99 1,129,017.28Bank Service Charges 2,382.73 1,023.05 1,359.68Tender expenditure 1,659.99 - 1,659.99Foreign exchange loss 12,164.23 (445.38) 12,609.61Other expenditure 45,871.10 - 45,871.10
TOTAL USES OF FUNDS 10,235,401.27 - 9,423,095.08
Surplus of funds over uses 802,789.62 410,491.49 392,298.13
Prepared by: Approved by:
J.Batbuyant N.BayartogtPM AccountantP ector
"Niislel-Audit" LLC
A
"NIISLEL AUDIT" LLCg Certified audit, appraisal and accounting consultancy company
Date:..
INDEPENDENT AUDITOR'S REPORT
To: PMU Director N.BayartogtokhUlaanbaatar Clean Air ProjectCredit No: 5039-MN
We have audited the accompanying the Statement of Expenditures (SOEs) of Ulaanbaatar CleanAir Project submitted to the World Bank during the year ended December 31, 2016 in support ofcredit withdrawals under the Financing Agreement, Credit No: 5039-MN.
We conducted our audit in accordance with generally accepted auditing standards thataccordingly included examination, on a test basis, of evidence supporting the amounts anddisclosures in the Statement of Expenditures. An audit also includes assessing the accountingprinciples used and significant estimates made by management as well as evaluating the overallstatement presentation. We believe our audit provides a reasonable basis for our opinion.
In our opinion, the Statement of Expenditures submitted together with the internal controls andprocedures involved in their preparation can be relied upon to support the application for creditwithdrawals.
NIISLE D LLC
Ulaanbaatar city, Sukhbaatar district, Baga toiruu-44 Phone/Fax 31-89-18, 70120095E-maik info@niislelaudit. mn
The Government of MongoliaThe International Development Association
Credit N2: 5039-MNUlaanbaatar Clean Air Project
STATEMENT OF EXPENDITURES (IDA Withdrawals)Forthe year ended December 31, 2016
(In SD)
WA Application Claimed credited Amount AmountNumbers type date date claimed credited Difference
Up to December 31, 2015 (WAl-19) 10,361,649.52 9,749,675.69 611,973.83WA-191 Replenishment 16-Feb-2016 25-Feb-2016 611,973.83, 611,973.83
WA-20 Replenishment 14-Jun-2016 27-Jun-2016 436,628.79 436,628.79 -WA-21 Replenishment 1 1-Oct-2016 01-Nov-2016 164,250.46,. 164,250.46 -
_WA-2-2-J.plenishment- -28-Mar-201-7- -1-1-Apr-201t7 -210,794.45- -240r794,45 -
For the reporting period 2016(WA20-22) 811,673.70 811,673.70 -Up to December 31, 2016 (WA1-22) 11,173,323.22 11,173,323.22 -
1. The expenditure of USD 611,973.83 expensed in 2015, was claimed and credited through WA-19 in2016.
2. The expenditure credited through WA-22, which is amounting USD 210,794.45 expensed in 2016, butwas claimed to World Bank in 2017.
Prepared by: Approved by:
J.Batbuyant N.BayartogtokhPMU Accountant PMU Direc,,.
"Niislel-Audit" LLC
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"NIISLEL AUDIT" LLCCertified audit, appraisal and accounting consultancy company
Date: ..
INDEPENDENT AUDITOR'S REPORTTo: PMU Director N.Bayartogtokh
Ulaanbaatar Clean Air ProjectCredit No: 5039-MN
We have audited the accompanying the Designated Account Statement of Ulaanbaatar Clean AirProject submitted to the World Bank during the year ended December 31, 2016 in support of
credit withdrawals under the Financing Agreement, Credit No: 5039-MN.
We conducted our audit in accordance with generally accepted auditing standards that
accordingly included examination, on a test basis, of evidence supporting the amounts and
disclosures in the Designated Account Statement. An audit also includes assessing theaccounting principles used and significant estimates made by management as well as evaluatingthe overall statement presentation. We believe our audit provides a reasonable basis for our
opinion.
In our opinion, the Designated Account Statement submitted together with the internal controls
and procedures involved in their preparation can be relied upon to support the application forcredit withdrawals.
NIISLEL T C
Ulaanbaatar city, Sukhbaatar distdct, Baga toirvu-44 Phone/Fax: 31-89-18, 70120095E-mail: [email protected]
The Government of MongoliaThe International Development Association
Credit X: 5039-MNUlaanbaatar Clean Air Project
DESIGNATED ACCOUNT STATEMENTfor year ended December 31, 2016
(In USD)At At Dec 31,
Dec3l,2016 2015
I Total advanced by the IDA 1,000,000.00 1,000,000.002 Less: Total amount recovered by the IDA
Equal present outstanding amount advanced to the3 1,000,000.00 1,000,000.00
special accountBalance of special account per attached bank statement ofdate 782,321.29
5 Total amount withdrawn but not yet claimed 203,164.34 -6 Amount claimed but not yet credited at date of bank
statement7 Interest earned (18,608.91) (18,147.83)8 Bank charge 1,760.89 1,359.689 Total advance accounted for 968,637.61 963,626.6810 Difference between total appearing on lines 3 and 9 31,362.39 36,373.32
Explanation of any difference between the totals appearingon lines 3 and 9All items should be indicated on the bank statementSub-Account - 15,734.62
Management fee account 19,941.71 7,932.20PMU debt cart account 471.15Cash on hand MNT 55.47 190.31Tender Income (873.45) (873.45)Other Income (46,696.24) (46,696.24)Tender Expenditure 1,659.99 1,659.99Foreign Exchange Loss 10,987.48 12,609.61Other expenditure 45,871.10 45,871.10Amounts over claimed WA-2 (54.82) (54.82)
31,362.39 36,373.32
Prepared by: Approved by:
J.Batbuyant N.BayartogtokhPMU Accountant PMU Director
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NOTES TO THE INTERIM FINANCIAL REPORTS
1. Project backgroundThe objectives of the Project are to enable consumers in ger areas to access
heating appliances producing less particulate matter emissions and to further developselected medium-term particulate matter abatement measures in Ulaanbaatar incoordination with development partners.
The Project consists of the following parts, subject to such modifications thereof,as the Recipient and the Association may agree upon from time to achieve the objectivesof the Project.
Part A. Ger Area Particulate Matter Mitigation
Implementation of a stove replacement program and a low pressure boiler replacementprogram, including:
(1) Provision of capital subsidies to eligible households for the purchase of selectedheating appliances, including stoves (beginning September 2013 or upon completionof the stove component of the Millennium Challenge Corporation's Energy andEnvironment Project, whichever comes earlier), stoves for heating walls and lowpressure boilers from eligible stove and pressure boiler producers and suppliers, andstove replacement;
(2) technical support to stove and a low pressure boiler suppliers, including;(a) goods, technical assistance, and Operating Costs for the Stove Emissions and
Efficiency Testing Laboratory;(b) technical assistance and equipment for technical advice in addressing problems
with the design and production of the stoves and low pressure boilers;(c) technical assistance in the development of emissions standards for stoves and
low pressure boilers;(d) market development support and technical assistance to design and implement
adjustment to the stove replacement program and for accommodating lowpressure boilers; and
(e) technical assistance in the establishment of a system of monitoring the quality ofproducts supported by the Project;
(3) monitoring and evaluation; and(4) training for knowledge exchange.
Part B. Central Ulaanbaatar Particulate Matter Mitigation
(1) Mitigation of fugitive dust from lack of city greeningPreparation of an action plan for city greening, and preparation and implementation ofpilot, including: (a) assessment of greening programs in Ulaanbaatar, evaluation ofoptions and development recommendation to improve greening, (b) preparation of apilot project including support for bid document preparation; and (c) investment supportfor the supply and installation of grass and other eligible plants and trees in Ulaanbaataron a pilot basis.
(2) Mitigation of dust from power plant emissions and ash pondsCarrying out of feasibility study for:(a) the installation of improved emission controls inUlaanbaatar's combined heat and power plants; and (b) the mitigation of dust frompower plant ash ponds, the study of their environmental impacts, and recommendingcost effective solutions.
(3) District heating feasibility study and knowledge building
"Niislel-Audit" LLC
UJAO
(a) Carrying out of feasibility study for rehabilitation and sustainable expansion ofdistrict heating in Ulaanbaatar.
(b) Complementary training on district heating policy, regulation and management.(4) Affordable housing policy technical assistance
(a) Carrying out of assessments of current policies, laws and practices for affordablehousing provision in Ulaanbaatar, evaluation of effectiveness towards meetingpolicy objectives, and introduction of lessons from international experiences onaffordable housing.
(b) Development of an affordable housing strategy for Ulaanbaatar.
Part C. Public Awareness Raising, Program Coordination, and Project Management
(1) Air quality monitoring, management and analysis(a) Air quality monitoring and analysis equipment, including for the Ulaanbaatar Air
Quality Agency.(b) Training urban air quality analysis and management.
(2) Program Coordination support(a) Consultants' services to assist Ulaanbaatar's air pollution program coordination,
including to maintain links with stakeholders, collect, synthesize and archiveinformation on air quality for use by decision makers and the public; and provide tosupport to air quality working groups or coordination mechanism to improveeffectiveness and sharing of information.
(b) Training on air quality management and policy-making.(3) Project management, public awareness, and monitoring and evaluation.
(a) Assistance to the development of a communication program for the Project.(b) Management Fee for Project management services.(c) Monitoring and evaluation.
The Closing Date is June 30, 2017.
The following table specifies the categories of Eligible Expenditures that may be financed outof the proceeds of the Financing ("Category"), the allocations of the amounts of the Financingto each Category, and the percentage of expenditures to be financed for Eligible Expenditureseach
I Category:Percentage of
Amount of the Financing epentre obCategory Allocated (expressed in Finan .dius of
SDR) Financed (mnclusive ofTaxes)
(1)Subsidies under part-A of the Project 4,470,000.00 100%(2)Good, Work, Consultants' services, 3,940,000.00 100%Training and Workshops, and OperatingCosts under the Project(3)Management Fee under Part C(3)(b) 900,000.00 100%of the Project(4)Unallocated 370,000.00TOTAL AMOUNT 9,700,000.00
"Niislel-Audit" LLC
2. Summary of significant accounting policies
a) Statement of compliance
The financial statements of the project comprise the Balance Sheet, Summary of Source andUses of Funds, and the Designated Account Reconciliation Statement. The formats of thesereports are agreed with the World Bank.
b) Basis of preparation
The financial statements are prepared in accordance with International Public SectorAccounting Standards (IPSASs) issued by the International Public Sector Accounting StandardsBoard (IPSASB) of the International Federation of Accountants and cash receipts anddisbursement basis of accounting has been applied. On this basis, receipts are recognized whenreceived or direct payment to creditors are made rather than when income is earned anddisbursements are recognized when paid rather than when expenses are incurred.
c) Basis of measurement
The financial statements are presented in U.S.Dollar (USD). Cash balances denominated incurrencies other than USD are translated into USD at year end rates of exchange stated by theBank of Mongolia. Transactions denominated in currencies other than USD are translated atrates at the dates of the transaction stated by the depository bank. Any gains and losses arereflected in the Statement of Sources and Uses of Funds.
d) Basis of presentation
The accounts balances in the financial statements as December 31, 2016 have been presentedon December 31, 2015
e) Bank accounts and cash
In according to the Disbursement Letter, the project opened the Designated Account which isone segregated account for the loan financing at the Ulaanbaatar City Bank acceptable to theWorld Bank.
ILI
LI "Niislel-Audit" LLC
0 42
NOTES TO THE PROJECT FINANCIAL STATEMENTS
3. Disbursement progress
In the year of account, 1,212,853.09 USD worth investment was made on behalf of the International
Development Association, and a total of 10,962,528.78 USD investment was received, and bank interest
income worth 26,915.67 USD was assumed.
4. Cash and cash equivalents2015.12.31 2016.12.31
Designated account 368,441.00 782,321.29Sub-Account 15,734.62 -
Management fee account 7,932.20 19,941.71PMU Debt Card Account 471.15
Cash on hand MNT 190.31 55.47Total 392,298.13 802,789.62
5. Good, Work, Consultants' services, Training and Workshops, and Operating Costs
under the Project
Expenditure 2015.12.31 For 2016 2016.12.31
Goods 405,250.99 94,911.82 500,162.41
Works 235,350.13 17,154.32 252,504.45
Consultants' services 2,893,818.01 367,779.69 3,261597.70
Training 119,582.14 34,551.81 154,133.95
Operating costs 53,319.11 18,323.89 71,643.00
Total 3,707,319.98 532,721.53 4,240,041.51/
6. Management Fee under Part C(3)(b) of the Project
Expenditure 2015.12.31 For 2016 2016.12.31Public Awareness Raising Cost 139,195.43 6,778.91 145,974.34Stationary Cost 4,952.73 1,155.07 6,107.80Transportation and Fuel Cost 24,010.43 10,231.26 34,241.69
Rental cost 98,154.54 36,439.25 134,593.79
Communication and Telephone 7,405.04 1,840.24 9,245.28CostOffice Supply and Administration 21,485.42 4,463.78 25,949.20CostPMU Staffs Travel Cost 32,282.02 39,306.49 71,588.51Advertisement Cost 3,229.32 1,519.44 4,748.76
Auditing 4,292.71 3,771.71 8,064.42
PMU Staffs Salary 705,427.33 173,500.84 878,928.17
L Purchase furniture's for PMU 25,096.48 25,096.48StaffsPurchase a Vehicles for PMU 63,485.83 63,485.83
L Total 1,129,017.28 279,006.99 1,408,024.27
[] "Nilslel-Audit" LLC
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7. Other Expenditure
2015.12.31 For 2016 2016.12.31Bank Service Charges 1,359.68 1,023.05 2,382.73Tender Expenditures 1,659.99 1,659.99Foreign Exchange loss 12,609.61 (445.38) 12,164.23Other expenditures 45,871.10 45,871.10
Total 61,500.38 577.67 62,078.05
8. Other income
2015.12.31 For 2016 2016.12.31Interest Income 18,147.83 8,767.84 26,915.67Tender Income 873.45 873.45Foreign Exchange Gain - 1,176.75 1,176.75Other Income 46,696.24 - 46,696.24Total 65,717.52 9,944.59 75,662.11
9. Procurement of contracts
In the year of account, 6 new contracts were signed, contract payments worth 231,923.85 USD from theprevious year was made, and training expenses worth 34,551.81 USD was spent. Auditing inspections inaccordance with international standards inspected all contracts and preliminary documents pertaining tothe supplier selection and purchasing procedures and established that no violations were made.
10. Event after year end
The project's end date has been extended to June 30, 2018 as requested by the Ministry of Finance.
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U "Niislel-Audit" LLC