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Federal Democratic Republic of Ethiopia MINISTRY OF AGR!CULTURE AND NATURAL RESOURCES

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r. Teklu Tesfaye ask Team Leader, DRDIP orld Bank Ethiopia Country Office

, ddis Ababa

Dear Sir,

Audited financial Statements. Designed Accounts and ICM report for.

the year ended 07 July 2017.

Enclosed. herewith. please find two original copies 'of audited report

which comprises financial statements, designated account report and

ICM of Development response to Displacement Impacts Project for the

year ended 07 July 2017.

• DRDIP Finance MoANR

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2 t FEB 2018

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011646-20,.03 0116-46-22-73 Fax No

·, Website www.moa.gov.et

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MINISTRY OF AGRICULTURE AND NATURAL RESOURCE

DEVELOPMENT RESPONSE TO DISPLACEMENT IMP ACTS

FINANCIAL STATEMENTS AND AUDIT REPORT FOR TBE YEAR ENDED 7th JULY 2017

Kokeb & Melkamu Audit Partnership Chartered Certified Accountants (UK)

Authorized Auditors in Ethiopia

P. 0. Box 33645 Addis Ababa, Ethiopia Telephone 251-11-515-07-52 E-mail: kokmelk@ethionet.et

Mob.Tel. 251-91-120-37-78/51-61-46 Fax 251-11-552-26-88

~-!EC!E ~VIE lD 2 8 FEB 2018

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MINISTRY OF AGRICULTURE AND NATURAL RESOURCE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS

FINANCIAL STATEMENTS AND AUDIT REPORT FOR THE YEAR ENDED 7th JULY 2017

TABLE OF CONTENTS

Independent Auditors' Report ............................................. -......................................... 1-2

The Statement of Financial Position ................................................................................ 3

The Statement of Sources and Uses of Funds ................................................................. 4

The Statement of Designated Account- IDA .................................................................. 5

Notes to the Financial Statements ............................................................................... 6-10

Reconciliation of Amounts Received by the Program and Funds Disbursed by the World Bank ................................................................................................................................ 11

Lists of Audited Accounting Entities ............................................................................ 12

Management Letter ............... :: .................................................................................. 13-22

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Kol(eb & Mell(amu Audit Partnership Chartered Certified Accountants (UK)

INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF MINISTRY OF AGRICULTURE AND NATURAL RESOURCE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT (DRDIP)

We have audited the accompanying financial statements of the Development Response to Displacement Impacts Project (DRDIP), for the year ended July 7th, 2017, set out on pages 3 to 11 which have been prepared under the historical cost convention and the accounting policies set out on page 6 to 7.

These financial statements are the responsibility of the Management of the Project. Our responsibility is to express an independent opinion on these financial statements based on our audit.

We conducted our audit in accordance with the International Standards on Auditing applicable to the audit of financial statements. Furthermore, we have audited the Project's compliance with the provisions and covenants of the World Bank Financing Agreements, i.e. IDA Credit No. 58320 ET.

The Standard require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether the Project has complied with the Financing Agreements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

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We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial position and balance of the Special Accounts of the Development Response to Displacement Impacts Project (DRDIP), as at July 71\ 2017 and the Statement of Sources and Uses of Funds for the year then ended in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. In addition, the Programme was, in all material respects, in compliance with the Financing Agreements and Contracts as at July 71

h, 2017.

P. 0. Box 33645 Addis Ababa, Ethiopia Telephone 251-11-515-07-52

E-mail: kokmelk@ethionet.et Mobile Tel. 251-91-120-37-78/51-61-46

Fax 251-11-552-26-88

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With respect to the statements of sources and uses of funds submitted during the period listed on page 4, in our opinion:

(a) The statements, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals;

(b) The proceeds of the Disposition Fund have been used exclusively for eligible expenditures and provisions and covenants of the Financing Agreement and Separate Agreement have been substantially respected.

Kokeb & Melkamu Audit Partnership Chartered Certified Accountants (UK) Authorized Auditors in Ethiopia

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P. 0. Box 33645 Addis Ababa, Ethiopia Telephone 251-11-515-07-52

E-mail: kokmelk@ethionet.et Mobile Tel. 251-91-120-37-78/51-61-46

Fax 251-11-552-26-88

Addis Ababa February 6, 2018

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DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) STATEMENT OF FINANCIAL POSITION AS AT JULY 7, 2017

ASSETS CURRENT ASSETS

Cash at bank and on hand Debtors and prepayments

Total Assets

CURRENT LIABILITIES

Payables

REPRESENTED BY

Fund Balance

Total Liabilities and Fund

3 4

5

6

Currency: ETB

130,608, 113 40,009,971

170,618,084

134,770

170,483,314

170,618,084

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DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP)

STATEMENT OF SOURCES AND USES OF FUNDS FOR THE YEAR ENDED JULY 7. 2017

Currency: ETB

Notes

SOURCES MAIN 7

IDA Credit 7.1 155, 722, 700

!DA-Direct payment 7.2 37,688,702

193,411,402

OTHER

Gain on foreign currency exchange 4,463,120

197 ,87 4,522

USES 8

Social and Economic Services and lnfastructure 8.1 4,258,141

Sustainable Enviornmental Management 8.2

Livelihood Programs 8.3

Monitoring & Evaluation 8.4 23, 133,066

27,391,208

EXCESS OF SOURCES OV.ER USES 170,483,314

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DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) STATEMENT OF DESIGNATED ACCOUNT- IDA FOR THE YEAR ENDED 7, JULY 2017

IDA Credit

Account number Depository Bank Related Credit and Grant

Address Currency

102061300001

National Bank of Ethiopia IDA Loan No. 58320 ET and Project ID No. P152822

Addis Ababa, Ethiopia

USO

Opening balance brought forward,8 July 2016 Transferred from World Bank-Credit Reimbursement from advance payment

7,000,000 155,722,700

Less:- Transferred to Birr account, to Regions & Other expenditures Bank charges

Add:- Gain on exchange

Ending balance, 7 July 2017 •.

7 ,000,000 155, 722, 700

(2,005,000) (44,656,964)

(2,005,000) (44,656,964) 4,463, 120

4,995,000 115,528,856

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MINISTRY OF AGRICULTURE AND NATURAL RESOURCE DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT (DRDIP) FOR THE YEAR ENDED 7th JULY 2017

Currency: Ethiopian Birr

1. BACKGROUND

The Federal Democratic Republic of Ethiopia (GoE) and the International Development Association (IDA) have signed a Financing Agreement (FA) on June 15, 2016 for Development Response to Displacement Impacts Project (DRDIP). The project covers a period of five years (from 2016 -2021). IDA will finance the project by investing 100 million US Dollar which will be spent in community driven development activities in five targeted regions viz', Afar, Benshingule, Gambella, ... Somali and Tigray . 1

The development objective of DRDIP is to mitigate the impact of refugee presence on the hosting communities, through expanding access to community demand-driven social and economic services. DRDIP has five components; (i) Social and Economic Services and Infrastructure; (ii) Sustainable Environmental Management; (iii) Livelihoods Program (iv) Project Management and M&E and (v) Regional Coordination, Knowledge and Capacity

i. Social and Economic Services and Infrastructure:-

DRDIP will support the Social and Economic Services and Infrastructure which aims to promote refugee hosting communities' access to basic social and economic services and infrastructures prioritized by beneficiary communities. It will strengthen decentralized and participatory planning procedures at the Community, Kebele and Woreda levels by building community based institutions and pertinent capacities at both the community and local government levels. The process will follow a community-driven development approach.

ii. Sustainable Environmental Management:-..

The objective of this component is to ensure environmental and natural resources are carefully and sustainably managed to support current and future needs and livelihoods of the beneficiary communities. Supply side interventions of this component will support enhanced and sustainable environmental and ecosystem services including integrated natural resources management; development of small scale, micro and household irrigation schemes. On the other hand; demand side interventions of this component will support the reduction of the unsustainable exploitation of natural resources, including mitigation of risks and other challenges and help address gender issues by reducing drudgery (time and energy spent on collecting fuel wood), exposure to risks and violence as well as improving health and indoor air pollution through the use of cleaner fuels and fuel saving cooking technologies.

iii. Livelihoods Program:-

The objective of this component is to improve livelihoods and increase incomes of refugee hosting communities based on a market-system approach. The component will support interventions aimed at improving the productivity of traditional livelihoods and non-traditional livelihoods. Traditional livelihoods will be supported by increased production, improved market linkages and adoption of best practices. Non-traditional livelihoods will be identified based on market assessment to impart skills for increased employability, enterprise development and promote other income generating activities. The component will strengthen existing Community Based Organizations . ~· that is an

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organized community groups established for discussing and solving social issues in varies aspects of development. It also supports formation of new Community Based Organizations.

iv. Project Management, Monitoring and Evaluation:-

The objective of this component is to ensure the timely implementation of the project according to its core principles and Project Development Objectives (PDOs), effective monitoring and Evaluation (M&E) of results, including results related to crosscutting issues. M&E activities will include regular monitoring of implementation performance, independent process monitoring (including inter alia regular assessments of community level planning and review of the effectiveness and quality of capacity building efforts), outcome/impact evaluations at midterm and end of project, and annual thematic studies.

v. Regional Support for Coordination, Knowledge and Capacity:-

The key objective of this component is to support the establishment of the Regional Secretariat on Forced Displacement and Mixed Migration.

2. ACCOUNTING POLICIES

DRDIP follows the government's accounting policy of modified cash basis of accounting system which is the cash basis of accounting applies except for recognition of Revenue & Expenditure when aid in kind is received.

Similarly, all Fixed Asset purchases are charged to expenses up on purchase & the project shall maintain a Fixed Asset Register Books accordingly.

Transaction occurred in foreign currencies are translated at the prevailing exchange rate at the time of the transaction.

DRDIP accounting system is ·a computerized accounting system which is Peachtree accounting software. The accounting cycle for DRDIP is not different from the government accounting cycle.

Federal Coordinating Unit (FPCU), Regional (RPCU) and Project Woredas will keep the original book of accounts for their own financial transactions and posts to the general ledger, Project woreda keeps all financial documents and prepare monthly financial statements using Peachtree accounting program and submit to RPCU. RPCU will prepare quarterly financial statement for its own financial transactions and woreda expenditures and submit to FPCU; FPCU prepares a consolidated financial report and submit to the World Bank and MoANR. The period for preparing the accounting report is from 81h July to 7th July of a given year.

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DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS F>ROJECT(DRDIP) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JULY 7. 2017 8. USES OF FUNDS BY PROJECT COMPONENTS AND SUB-COMPONENTS

Project Components & Subcomponents Annual Budget Annual Actual

Utilization

8.1 COMPONENT 1-SOCIAL AND ECONOMIC SERVICES AND INFRASTRUCTURE Sub component 1.1 Community Investment Fund 1.2 Capacity Building for Local Planning and Decentralized Service Delivery 82,423,400

8.2 COMPONENT 2- SUSTAINABLE ENVIRONMENTAL MANAGEMENT Sub component Integrated Natural Resources Management Supply of Alternative Energy Sources

8.3. COMPONENT 3- LIVELIHOODS PROGRAM Sub component Support to Traditional & Non Traditional Livelihood

4,258,141

39, 100,000 23, 133,066.37

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Notes & Findings

The project performance shows only 18% achievement.

Annual Budget Variance

78,165,259

% of ·Budget

Utilization

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DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP) LIST OF ACCOUNTING ENTITIES COVERED IN THE AUDIT OF 2016/2017 FOR THE YEAR ENDED 7 JUL7 2017

There are 15 accounting entities covered during the audit work - Federal Project Coordination Unit (1) - RPCUs and Woredas as follow (14)

RPCU Woreda

Somali Kebribevah

Abe re

Afar Asa vita

Gambella Etang

Gambel/a Zuria

Tigray Asegid Tsembila

Tselemti

Benishangul Maokoma

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Kol(eb & Mell(amu Audit Partnership.

February 6, 2018

Ministry of Agriculture and Natural Resource Development Response to Displacement Impacts Project(DRDIP) Addis Ababa

Chartered Certified Accountants (UK)

RE: INTERNAL CONTROL MEMORANDUM ON THE ACCOUNTS OF DEVELOPMENT RESPONSE TO DISPLACEMENT IMPACTS PROJECT(DRDIP)

Dear Sirs,

During our review of the accounts for the year ended 7 July 2017, we examined certain aspects of the Project's control and attach here to a memorandum containing recommendations on possible way in which the system could be improved to overcome weaknesses in internal control, which came to our notice during that examination together with other comments and observations (Pages 14-22).

It must be appreciated that the matters referred to in this memorandum came to our notice during the conduct of our normal audit procedures which are designed primarily with a view to the expression of our opinion on the accounts of the Project. Therefore, our comments cannot be expected to include all possible improvements in internal control and to disclose all defalcations and other irregularities, which a more extensive special examination might develop and reveal.

We are in a position to offer constructive suggestions for improvements in accounting and control procedures but our work in these areas is not designed for the purpose of expressing an opinion on the effectiveness of the various control systems and accordingly, would not extend into all areas in which improvements may be warranted. Accordingly, in as much as our audit examinations do not include a 100% detailed audit of transactions, they would not necessarily disclose defalcations or irregularities, if any.

We are grateful to all members of the Project's staff for the courtesy and assistance rendered to our representatives during the conduct of the audit. If you would like us to assist you in implementing any of our recommendations, please do not hesitate t~co,ta:Ji~,~

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Chartered Certified Accountants (UK) * \UK) ::, _ Ji

Authorized Auditors in Ethiopia ..... +0~b oR ,-t,.~""'l;t 'v ·r., & 1.,e, :4;· ,·

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P. 0. Box 33645 AddisKoaba, Ethiopia

Telephone 251-11-515-07-52 E-mail: kokmelk@ethionet.et

Mobile Tel. 251-91-120-37-78/51-61-46 Fax 251-11-552-26-88

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. We have listed down the notes and findings we have come up during our audit for the year FY 2017 in respect to Development Response to Displacement Impacts project {DRDIP) under MoANR {FEDERAL) and five regions namely Tigray, Somali, Afar, Gambella and Benishangul:-

I. FEDERAL

1. The budget plan (annual budget allocation) for Regions does not show the detailed allocation amount for the current period thus, it is not clear on what base the money is disbursed to RPCU and the budget variation cannot be identified as well.

..,. Recommendation: Management shall provide exhaustive & detailed annual budget plan by regio~s duly signed and approved.

Management Comment: Noted.

2. As indicated below the annual performance of the project has a budget variation of birr 122, 107, 792.21, i.e. there is only 18% project achievement. In addition, the amount of component 4 -monitoring and evaluation cost of Birr 23, 133,066 is somewhat exaggerated when compared to the core performance achieved under component 1 (Birr 4,258, 141). We also noted that monitoring and evaluation cost includes motor vehicle maintenance of Birr 525,087.82 for non-project motor vehicles.

Project Annual Actual Annual Budget % of budget

Components & Subcomponents

Utilization Variance Utilization

149,500,000 L' 27,391,207,79 122, 107, 792.21 18%

Recommendation The cause of the budget variation and the project performance has to be investigated.

Management Comment: As we tried to explain at the time of auditing the project in the year July 8, 2016-July 7, 2017 was at the preparation and institutional arrangement stage. The disbursement

. was done on the basis of proposal. The disbursement were for Salary, Launching workshop, Awareness creation, Sensitization and office layout. Component 4/Four/ does not only Mean Monitoring and Evaluation. It Is Project Management, Monitoring, Evaluation and Learning. From this perspective component 4 /Four/ was the most active component in the year audited. Also the project was under preparation phase all operational costs like Salary, awareness creation, launching workshop, sensitization, office layout and maintenance were parts of the component activities. The rest project components are standing active in the current budget year. The reflected Vehicles maintenance cost /Birr525,087.82/ was expended for 12 /TwelveNehicles which were assigned legally by letter to DRDIP by the Minister of Agriculture and Natural Resources to be under control of the project until the Procurement of vehicles is

completed. The letter was presented to the auditors during their req. u _~;:~ "''/.\'~(\ ~ ,~'- · /,· IHi/i)> ~ II' I' --~ - . ~-. . ~ ~

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3. The regional project coordination unit balance (receivable from regions) as of July 7, 2017 shown in the interim financial report is not the same with the balance in the Trial Balance.

Per Trial Balance Advance to regions Per Interim financial

Difference FPCU report Afar 61,814.97 61,914.97 100.00 Ethic-Somali 0.00 (158,349.13) -158,349.13 Gambell a 15,719.24 16,319.24 600.00

Recommendation. The balance difference between the federal project coordination unit & regional project coordination unit has to be investigated and cleared soonest possible.

Management Comment:

3.1 We will follow-up and correct the difference noted on Tigray RPCU. 3.2 The reason for amount make difference at Afar and Gambella woredas was a deposit for the

Bank account opining and reported in the IFR as woredas deposit. Because it is not part of DRDIP fund & we told them to clear it soon.

3.3 The Balance represented in Ethic-Somali region was a pension contribution payable account that will be filed to regional Public Servants' Social Security Agency. The balance is shown on IFR as payable as of July 7,2017.

· 4. Fixed asset list acquired by the Project fund was not reported together with the financial statements

Management Response: The inventory list was presented to the auditors during their auditing at Federal Level.

Auditors' comment: The list does not contain assets purchased at regions and woredas.

5. A total of birr 673,500 is paid for employees as an advance for 90 and 85 days duration for the purpose of field work (birr 300 per day) and the whole amount is recognized as an asset for the period. As a result the period expenditure and asset are understated and overstated respectively by birr 516,300 as the detail is shown below.

• As indicated in the memo dated 19/08/2009 approved by deputy Minster. the above advance amount is paid for activities which are not related with the DRDI project.

No. of days Current

Duration No of Amount Total No of covered in

Period employees per day days the current

Expenditure period

29/04/17- 24 300 90 69 496,800 27/07/17

29/04/17- 1 300 85 65 19,500 27/07/17

Total ~· ·~ ./.. "''t.\110,,, ·~ 516!300

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Recommendation. Management shall look into an over and understatement of asset & expenditure respectively for br. 516, 300. 00. Similarly, the budget diversion for the aforementioned amount has to be accounted too.

Management Comment: We give due attention to support the emerging region because it is the direction of Ethiopian Government. Hence employees are assigned to provide technical support for a long period of time/from two to three months/. It is also believed that output for special support is an output of DRDIP and It is done with the consent of the Ministers.

6. An application for the demand of purchase of the IT materials is presented on Dec 15, 2016 but "' they are procured late on July 11, 2017. These materials worth of birr 385,825 are received a~d

distributed to employees on July 6, 2017. However, the expenditure is not recognized for the current period.

Recommendation. Purchase of materials shall be executed timely and expense incurred has to be recognized accordingly.

Management Comment: It is occurred because of the let submission of the goods and payment request by supplier. we will take care of it in the operation of the Project

7. The sum of total expenditure (fund utilized by the Federal Project Coordination Unit) on trial balance is less by birr 610,098.28 from the amount shown on annual report.

Utilized fund per annual report--------- 7,781,958.59 Utilized fund per trial balance --------- 7, 171,860.31 Difference ------------------------------- 610.098.28

•. Recommendation. Management has to clear the difference between annual report prepared with that of the finance report.

Management Comment: When the annual Physical report was prepared the process to procure office furniture was undergone but unfortunately the process was failed.

8. Bank service charge amounting to ETB.112, 282.94 is recorded as fees & charges and no separate account is maintained for bank charge as it is required by chart of accounts manual.

Recommendation. Bank service charge has to be opened and maintained .in line with chart of accounts.

Management Comment: Account Number 6256 is not limited to Bank service charge expenses. MoFEC/DRDIP chart of account states 6256 "Includes Miscellaneous expenses incurred in operati~ns, E~

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ample Includes Bank service charges, Co~~/.\1;°"· Legal fee, Agent fee and vehicle

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II. SOMALI REGION AND WOREDAS

1. The pension contribution for the year 2017 at Regional bureau and at Awbara & Kebrebayan woredas has not been settled so far.

Recommendation. Pension contribution payable shall always be settled timely.

Management Comment: Refer statement given on Point 3.3

2. Expense documents and fuel receipts with respect to Awbara & Kebrebayan woredas respectiveJy are not supported with "PAID" STAMP. Moreover, the fuel receipt at two woredas do not include plate no. of the vehicles.

Recommendation. All expense documents have to be cancelled with " paid stamp " and fuel receipts shall bear plate numbers.

Management Comment: We will provide support and training on such issues.

3. We noted that the project record was not maintained with Peachtree Accounting System by the two woredas. The accounting work was done manually and confined to processing of expense documents.

Recommendation. The finance report that has to be prepared by woredas should be done through Peachtree Software as per financial manual policy requirement.

Management Comment: Accepted: We will discuss with the regional DRDIP office accountant and alleviate such issues. ,.

4. Documents at two woredas I Awbara & Kebrebayan I are not kept in orderly manner to enhance

easy traceability.

Recommendation. Documentation system of woredas has to be improved so as to enhance easy

traceability.

Management Comment: We will discuss with the regional accountant and take action.

5. We also noted that the imprest system for petty cash fund was not established.

Recommendation. Imprest fund from which small amounts can be paid with cash and replenished has to be established.

Management Comment: We accept, we will discuss with the regional accounta.n.tand take action. ~-

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Ill. BENISHANGUL GUMUZ

REGIONAL BUREAU

1. Fixed asset register was not established.

Recommendation: Fixed assets purchased by the project fund should be documented with a fixed asset register which contains all relevant information of the fixed asset-from description up to location.

...~ Management Comment: As stated earlier that the project under auditing was almost in preparation and implementation Phase. However, we are working to compile fixed assets registration exhaustively

2. Pension contribution of Birr 19,430.1 O was not settled to the tax authorities on time.

Recommendation: As postponement of tax settlement to the government entails penalties, management has to ensure that all similar deduction ram employees should be timely paid over to the tax authorities.

Management Comment: yes, indeed we will follow -up and take necessary action on the problem.

a. BAMBASI WOREDA

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1. Birr 12,435.49 cash on hand balance reported on the balance sheet was not evidenced with management cash count certificate.

Recommendation: Year-end cash balance should be counted by management before reporting it as cash on hand.

Management Comment: It is accepted, we will give due attention.

2. Fixed asset register was not established.

Recommendation: Fixed assets purchased by the project fund should be documented with a fixed asset register which contains all relevant information of the fixed asset-from description up to location.

Management Comment: As stated earlier that the project under auditing was almost in preparation and implication Phase. However, we are working to COIJJl:!~"'®~s~sets registration exhaustively.

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b. MAO KOMO WEREDA

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Fixed asset register was not established.

Recommendation: Fixed assets purchased by the project fund should be documented with a fixed asset register which contains all relevant information of the fixed asset-from description up to location.

Management Comment: As stated earlier that the project is in audit almost during preparation and implementation phase and currently we are under preparation to compile fixed assets registration exhaustively

GAMBELA REGION

a. REGIONAL PROJECT UNIT

1. Birr 15,281. 77 cash on hand balance reported on the balance sheet was not evidenced with management cash count certificate.

Recommendation: Year-end cash balance should be counted by management before reporting it as cash on hand.

Management Comment: we will give due attention on such matters.

2. Fixed asset register was not established.

Recommendation: Fixed assets purchased by the project fund should be documented with a fixed asset register which contains all relevant information of the fixed asset-from description up to location.

Management Comment: As stated earlier that the project is in audit almost during preparation and implementation phase and currently we are under preparation to compile fixed assets registration exhaustively.

3. Most of fuel purchase during the year are without vehicle plate number and date.

Recommendation: The finance department has to ensure that fuel purchase receipts collected from fuel station should bear vehicle plate number and date as a formal control process.

Management Comment: We will provide support on how to receive formal source document.

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b. GAMBELA ZURIYA WOREDA

1. We did not obtain bank statement for the period ended 7 July 2017; bank reconciliation was not also correctly prepared.

Recommendation: Bank reconciliation should be prepared on the basis of bank statement obtained from the Bank. Reconciliations should also be checked as to their accuracy.

Management Comment: we accept, we will provide training.

2. The Project financial statement is maintained manually.

Recommendation: According to the financial manual the accounts are required to be maintained on the basis Peachtree Accounting System. Therefore, we urge the manual be adhered to.

Management Comment: we accept, we will work on it.

3. The following per diem payment for training is without attendance sheet.

Reference Amount Date PV 300553 4,368.00 21/03/2017

In addition, for the following Per Diem payment for awareness creation, the payment sheet and the attendance sheet do not match in terms of attendees and payees:

Reference Amount Date

PV 300571 3,900.00 25/03/2017 PV 300587 4,368.00 09/05/2017 PV 300552 12,012.00 22/09/2016

Recommendation: The above payments should be investigated.

Management Comment: It will be investigated as per the recommendation.

4. Fixed asset register was not established.

Recommendation: Fixed assets purchased by the project fund should be documented with a fixed asset register which contains all relevant information of the fixed asset-from description up to location.

Management Comment: As stated earlier that the project is in audit almost du~~on and implementation phase and currently we are under preparation to compile fiiett~~a-~f ~se. v;'~is tion exhaustively. j[I/ .,?:- ~~ . ~ \0

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c. . ITANG WOREDA

· 1. Purchase of fuel amounting Birr 2,000.00 and Birr 1,000.00 without legal receipt Ref. PV - 267670 date 22/4/17 PV-267675 date 23/4/17. On the other hand, the motor vehicle did not belong to the Project.

Recommendation: The receipts should be investigated.

Management Comment: We will provide support on how to receive formal source document. ,,.f

2. The following per diem payment for training is without attendance sheet.

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Reference Amount Date PV 267662 15,750.00 17/03/2017

Recommendation: Training payments should be supported with attendance sheet before payment is effected.

Management Comment; accepted.

TIGRAY ·

General observatipns

1. Fixed asset register was not established in the woreda we examined.

Recommendation: Fixed assets purchased by the project fund should be documented with a fixed asset register which contains all relevant information of the fixed asset-from description up to

location.

Management Comment: As stated earlier that the project is in audit almost during preparation and implementation phase and currently we are under preparation to compile fixed assets registration

exhaustively.

2. The Project financial statement is maintained manually.

Recommendation: According to the financial manual the accounts are required to be maintained on the basis Peachtree Accounting System. Therefore, we urge the manual be adhered to.

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3. AFAR

a. Observations General

We didn't obtain personal files of sample employees. As a result, we are not able to check personal files contain all important documents for both regional & woreda level.

Recommendation: Employees engaged must have proper personal files at both regional & woreda level.

Management Comment; It was expected that regional offices have Maintained proper personal files as Federal Project coordination office does. So we will look it again.

b. ASSAYITA WEREDA

1. We noted that financial reports submitted/prepared manually. Peachtree accounting soft were not used by Assayta woreda.

Recommendation: According to the financial manual the accounts are required to be maintained on the basis Peachtree Accounting System. Therefore, we urge the manual be adhered to

Management Comment: we accept, we will work on it

2. Financial manual stipulates that paid stamp should be prepared in the name of woreda or region as applicable. However, " paid stamp" has not been used by Assayta woreda.

Recommendation: Management has to prepare the stamp for the grant based expenditures as

control and identifying mechanism

Management Comment: We will provide support and training on such issues.