THE WORLD BANK

COMMUNITY AND SOCIAL DEVELOPMENT PROJECT (CSDP)(FEDERAL MINISTRY OF FINANCE)

FINANCIAL STATEMENTSFOR THE PERIOD ENDED 3 1 ST DECEMBER, 2016

AUDITED BY

OFFICE OF THE AUDITOR-GENERAL FOR THE FEDERATIONPlot 273, Central Business District,

Abuja

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECT

FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016

TABLE OF CONTENTS

CONTENT PAGE

Corporate Information 1-2

Overview of Community and Social Development Project 3 -5

Report of the Auditors 6

Statement of Financial Position 7

Statement of Financial Performance 8

Statement of Cash Flow 9-10

Statement of Changes in Net Assets/ Funds 11

Notes to the Financial Statements 12-18

Memorandum Report

* Federal Project Support Unit 19* Joint States 20

COMMUNITY AND SOCIAL DEVELOPMENT PROJECT

FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2016

CORPORATE INFORMATION

MEMBERS OF THE FEDERAL PROJECT STEERING COMMITTEE

1. Permanent Secretary, Federal Ministry of Finance

2. Permanent Secretary, Ministry of Budget and Planning

3. Director General, National Bureau of Statistics

4. Permanent Secretary, Office of Secretary to Government of the Federation

5. Director General, National Orientation Agency

6. Permanent Secretary, Federal Ministry of Environment, Housing & Urban Dev.

7. Permanent Secretary, Federal Ministry of Woman Affairs

8. Permanent Secretary, Federal Ministry of Water Resources

9. Two representatives of Civil Society Organizations

10. Director, International Economic Relations of the Fed. Ministry of Finance

11. National Coordinator, Community and Social Development Project- Secretary

FEDERAL PROJECT SUPPORT UNIT MANAGEMENT TEAM

1. Dr. Abdulkarim A. Obaje - National Coordinator

2. Adebowale G. Fabowale - Head of Operations

3. Oduneye Adeniyi - Head, Monitoring Information Management

4. Maiyaki I.A. - Senior Project Accountant

5. Dahiru Abdulkarim - Procurement Specialist

6. Mrs Abiodun I. Ogunsanya - Project Internal Auditor

7. Modibo Mamza - Administrative Officer

COMMUNITY AND SOCIAL DEVELOPMENT PROJECTFINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2016PROJECT BANKERS

Central Bank of Nigeria

PROJECT SUPERVISING OFFICE

The PresidencyNational Social Safety-net Coordinating Office (NASSCO)

AUDITORS:Office of the Auditor-General for the FederationAudit HousePlot 273, Samuel Ademulegun StreetCentral Business DistrictP. M. B. 128, Garki, Abuja, Nigeria

COMMUNITY AND SOCIAL DEVELOPMENT PROJECTFINANCIAL STA 7EMENT FOR THE YEAR ENDED 31ST DECEMBER 2016

OVERVIEW OF COMMUNITY AND SOCIAL DEVELO(PMENVTr POECTFederal and State governments in Nigeria have embarked on different forms of povertyalleviation projects such as the construction and rehabilitation of roads, schools,hospitals and health centres, the provision of potable water and a host of others.However, the projects have not yielded the maximum desired results, largely becausethey were not properly focused and directed. Many of the supposed beneficiaries didnot benefit reasonably, neither did they have the feelings of ownership of the projects.Most projects also had low survival rate and lacked accountability. Even though poorCommunities have potentials to contribute to, identify, implement and sustain projects,they lack the required skills and funds. The Nigerian poor are the losers, since a large

majority of them have become poorer. The Community and Social Development Projectwas therefore created to address this gap following the merger of CommunityivbasedPoverty Reduction Project (CPRP) and Local Empowerment and EnvironmentalManagement Project (LEEMP).

To achieve this goal, the Project Development Objective is to support empowerment ofcommunities and Local Government Areas for sustainable increase access of poorpeople to improved social and, natural resources and infrastructure services.COMPONENETSc OF 1COMMUNITY AND SOCIAL DEVELOPMENT PROJECTThe Project has the following components:

i. Social Community Driven Investment (SCDI) - Community Empowermentii. Local Government Areas and State Agencies Capacity Buildingiii. Project Coordination and Support (Federal)

TYPES OF PROJECT SUPPORTED BY COMMUIrTTYv AND SOCIALDEVELOPMENT PROJECT

The Community and Social Development Project primarily finance CommunityDevelopment Projects which focus on projects initiated by communities, and for whichthey are expected to make at least 10% resource contributions (contributions which maybe in cash, kind, material or any combination thereof).

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The Community and Social Development Project is designed to support thedevelopment, appraisal, coordination, implementation, supervision and evaluation ofcommunity-based Plans and the provision of financial grants thereof for:i. Upgrading and construction of infrastructure in the education, health, electricity andwater sectors;

ii. Construction of rural feeder and access roads, bridges and multipurpose communityinfrastructure;

iii. Improved delivery of and access to social and economic services, including a one-time supply of drugs which can be administered as a revolving drug scheme and desksfor classroom;

iv. Improved natural resources management service;

v. Provision of safety net support.

PROJECT FUNDING

Following the closure of CSDP 1 which gulped USD 200 million, the FederalGovernment of Nigeria requested for additional financing from the World Bank.Though the overall project cost and fund flow over the implementation period of theCSDP Additional Financing life cycle of two years is estimated at USD176 million, theWorld Bank approved USD 140 million as IDA component effective August 17, 2015.The project has so far drawn down USD 20,625,327.05 as follows:

Federal Component: initial USD 1 million and USD 214,614.75 by replenishment

Joint-States Component: USD 19,410,712.31

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PARTICIPATINGI C-OMMUNITY DEVELOPMENT AGENCIES (STATES):1

The following are participants in the Community and Social Development Project:1. Abia State 2. Adamawa State 3. Akwa-Ibom State4. Bauchi State 5. Bayelsa State 6. Benue State7. Cross River State 8. Ebonyi State 9. Edo State10. Enugu State 11. Ekiti State 12. FCT- Abuja13. Gombe State 14. Imo State 15. Kogi State16. Kebbi State 17 .Katsina State 18. Kwara State19. Niger State 20. Nasarawa State 21. Ondo State22. Osun State 23. Oyo State 2 4 .Plateau State25. Taraba State 26. Yobe 27. Zamfara State

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OFFICE OF THE AUDITOR-GENERAL FOR THE FEDERATIONDEPARTMENT

HEADQUA_ __ .E% LAGOS OFFICE:Audit House, 5, Sir Mobolaji Bank Anthony Street,Plot 273, Samuel Ademulegun Street, P.M.B. 12503Central Business District, Lagos, NigeriaP.M.B. 128,Garki- Abuja, Nigeria Tel:+234(l) 2632335

Ref No ... Date ..............THE PRINCIPAL OFFICERS (MANAGEMENT),

REPORT OF THE INDEPENDENT AUDIT ON THE FINANCIAL STATEMENT OF THE

COMMUNITY AND SOCIAL DEVELOPMENT PROJECT (CSDP) (WORLD BANK ASSISTED)

We have audited the Financial Statements of the Community and Social Development Project(CSDP) (World Bank Assisted) for the year ended 3 1st December, 2016 as set out on pages 7 to

11 which have been prepared on the basis of the Accounting Policies set out in Note 1 on page12.

MANAGEMENT'S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Management of the Project is responsible for the preparation and fair presentation of theFinancial Statements in accordance with the International Public Sector Accounting Standards(IPSAS) accrual and also for instituting such internal controls as the Management determines it

necessary to enable the Financial Statements that are free from material misstatement.

AUDITORS' RESPONSIBILITYOur responsibility is to express an independent opinion on the Financial Statements based on our

audit. We conducted the audit of Community and Social Development Project (CSDP) in

accordance with the International Standards of Supreme audit Institutions (ISSAs) as

promulgated by the international Organisation of Supreme Audit Institutions (INTOSAI). These

standards require that we comply with ethical requirement, plan and perform the audit so as toobtain reasonable assurance about whether the Financial Statements free from materialmisstatements, whether caused by fraud or other irregularity or error.

The procedures selected for obtaining assurance and evidence to support audit opinion dependson the auditors' judgment, including assessment of the risk of material misstatement of the

Financial Statements. In making those risk assessment, we considered the internal Controlrelevant to Community and Social Development Project (CSDP) preparation and fair presentationof the Financial Statements. We also evaluated the appropriateness of the accounting policies

used and the reasonableness of accounting estimates made by Management, as well as 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.

OPINIONin our opinion, the Financial Statements, which are in agreement with the books of account,

present a true and fair view of the financial position of Community and Social DevelopmentProject (CSDP) (World Bank Assisted) as at 3 1st December, 2016, and of its performance of its

operations, changes in net assets, its cash flows for the year ended 3 1 't December, 2016 andhave been prepared in accordance with the International Public Sector Accounting Standards

(IPSAS) accrual, accounting principles generally accepted in Nigeria and in the manner required

by the World Bank. ad e

1. A.ADLYFor: Auditor-General for the Federation19 'h June, 2017

COMMUNITY AND SOCIAL DEVELOPMENT PROJECT (CSDP)

STATEMENT OF FINANCIAL POSITION AS AT 31ST DECEMBER 2016

NOTES 2016 2015N N

ASSETSCURRENT ASSETSCash at Bank 2 3,647,842,489 348,877,355Receivables and Prepayments 3 17,980,895 -Total Current Assets 3,665,823,384 348,877,355

NON-CURRENT ASSETSProperty, Plant and Equipment 4 1,717,122,846 1,566,967,482Others 5 13,666,622,297 13,326,161,452Total Non-Current Assets 15,383,745,143 14,893,128,934

Total Assets 19,049,568,527 15,242,006,289LIABILITIES & NET ASSETSCURRENT LIABILITIESPayables 6 4,881,551

Net Assets 19044,6869 1.242,006.289

NET ASSETS/FUNDSAccumulated Surplus/(Deficit) (15,491,767,905)) (14,771,301,447)Exchange Difference (29,108,317)IDA Credit (Loan) 7 23,885,904,953 20,407,121,106Government Contribution Account 8 10,679,658,245 9,606.186,630Total Liabilities & Net Assets/Fund 1 044,686.97 15.242,0062

National Coordinator... ... ... ..........

Senior Project Accountant... ... ... ...

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECT (CSDP)STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31ST DECEMBER 2016

Notes 2016 Period to 31st Dec.2015N N

Revenue 9 -

ExpenditureConsultancy Services, Training & Workshop 10 438,271,469 8,943,886,892Incremental Operating Costs 11 282,194,989 5,827,414,555

720,466,458 14,771,301,447

Surplus/(Deficit) (720,466,458) (14,771,301,447)

8 a

COMMUNITY AND SOCIAL DEVELOPMENT PROJECTSTATEMENT OF CASH FLOW FOR THE YEAR ENDED 31ST DECEMBER 2016

2016 2015

Cash Flow from Operating Activities

Surplus/(Deficit) for the year (720,466,458) (564,291,677)

Items not involving movement of Cash

Exchange Difference

Working Capital ChangesReceivables

Payables(17,980,895)Payables4,881,551

Net Cash Flow from operating activities (762,674,119) (564,291,677)

Cash Flow from Investing ActivitiesProperty, Plant and Equipment

(150,155,364) (10,372,263)

Other Non-Current assets (340,460,845)

(186,399,480)

Net Cash Flow from Investing Activities

(20,66, ) ( 564,291,677)

Cash Flow from Financing activitiesID A Loan3

, 7 , 8 84Government Contribution 3,7,8,41,073,471615 479,629,181Net Cash Flow from Financing Activities 4,552,255462

479,629,181Cash and Cash EquivalentOpening Cash Balance

3,298,965,134 (281,434,239)348,877,355 630,311,594

Clnt Cash l c from--- FiacnAtvte

Oing Cash Balance3,647,842,489

348,877,355

9

Reconciliation of Cash and Cash EquivalentIDA Federal 160,504,563 792,930IDA Joint States 1,863,680,047 1,631,074Interest on IDA - FederalInterest on IDA - Joint StatesInterest on IDA - States 1,727,271 80,421Interest on GC - States 1,495,710 2,028,808Drawdown A/C IDA (Federal) 51,074,087 1,264,607Drawdown A/C IDA (Joint States) 351,404,819 17,541,507Federal Government Contribution A/C 674,819 23,359State Government Contribution A/C 1,204,376,163 323,964,593Miscellaneous Receipts 48,720Contributions A/C - Local GovernmentImprest Balance - FederalImprest Balance - State 12,856,291 108,180IDA Fund (Joint - States) A/C - 1,441,876Closing Cash Balance 3,647,842,489 348,877,355

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECTSTATEMENT OF CHANGES IN NETASSETSIUNDS FOR THE YEAR ENDED 31ST DECEMBER 2016

IDA Credit Surplus/(Deficit) Exchange Difference Total

As at January 20,407,121,106 (14,771,301,447) 5,635,819,659

Additions during

the year 3,478,783,847 (720,466,458) (29,108,317) 2,729,209,072Transfers/ Adjustments -

As at 31st December23 MAs885904,9 _491,767, .(29108317) 81365028g31

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECTNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2016

1. STATEMENT OF ACCOUNTING POLICIES

The following are the significant accounting policies adopted by the World Bank-assisted Community and Social Development Project in preparing its project's FinancialStatement:

i. Accounting Convention

The accounts are prepared under the historical cost convention

ii. Basis of Accounting

The IPSA Accrual basis is adopted in the preparation of the project's FinancialStatements

iii. Inventory

Inventories are valued at the lower of cost and net realizable value

iv. Receivables

Receivables are stated after making specific provision for debts considered doubtful ofrecovery.

v. Non-Current assets

Non-Current Assets are not depreciated

v. Foreign Currency

Transactions in foreign currencies are converted to Naira at the rates of exchange rulingat the date of each transaction. Balances in foreign currencies are translated to Naira atthe exchange rates ruling at the Balance Sheet date and gains or losses arising ontranslation are credited to or charged to reserve in the period which they arise.

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECTNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2016

2016 2015

2. Cash at Bank

IDA Federal 160,504,563 792,930

IDA Joint States 1,863,680,047 1,631,074

Interest on IDA - Federal

Interest on IDA - Joint States

Interest on IDA - States 1,727,271 80,421

Interest on GC - States 1,495,710 2,028,808

Drawdown A/C IDA (Federal) 51,074,087 1,264,607

Drawdown A/C IDA (Joint States) 351,404,819 17,541,507

Federal Government Contribution A/C 674,819 23,359

State Government Contribution A/C 1,204,376,163 323,964,593

Miscellaneous Receipts 48,720 -

Contribution A/C - Local Government

-Imprest Balance - State 12,856,291 108,180IDA Fund (joint - States) A/C - 1,441,876

6842,489 348,87,30The IDA Federal and IDA joint States are maintained in USD. Their balances were translated toNaira @ N3041$1

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECTNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2016

2016 2015

N N

3. Receivables and Prepayments(Cash Advances)

1,330,895Prepaid Rent 16,650,00017,980 ,895

____

During the year, FPSU paid rent of N22,200,000.00 for a period of two (2) years,beginning from June 2016 to June 2018. Out of this amount, N5,550,00000 relates to theyear ended 31st December 2016, while the balance of N16,650,00000 will be expensedover the tenancy period.

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECTNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2016

2016 2015

5. Other Non-Current Assets

Opening Balance 13,326,161,452 13,139,761,972Additions during the year:

Physical Infrastructure 185,814,173 89,009,526Social Infrastructure 120,277,296 82,260,563

Other Infrastructure 15,347,658 12,647,787

Environmental & Natural Res. Mgt. 16,147,636 2,061,844Safety Net Support 2,874,083 419,760

13,666 622,297 13.326161,452

6. Payables

PAYE 760,625

Withholding Tax 2,696,968

VAT 1,423,958

4,8 81.551 ___

7. IDA Credit Loan Account

As at 15t January 20,407,121,106 20,407,121,106Additional Fund during the year 3,478,783,847

As at 31st December 2,804,953 20-407-12-106

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NOTES COMMUNITY AND SOCIAL DEVELOPMENT PROJECTNOTES TO THE FINANC]AL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2016

2016 2015

8. Government Contribution

Opening Balance 9,606,186,630 9,126,557,449

Contributions during the year:

Federal Government 18,806,114 -

State Government Contribution 969,382,801 479,629,181

Interest on DA -State 2,216,970

Interest on GC - State 1,401,110

Miscellaneous Receipts/Contribution - Federal

Miscellaneous Receipts/Contribution - Joint State 81,664,620

10.67 5 -- 6--,186.§30

9. Revenue

No Revenue was generated in this period .

10. Consultancy Services, Training & Workshop

Consultants Services 271,865,758 354,421,509

Trainings 88,009,585 3,499,701

Workshops, Conferences & Seminars 78,396.127 1,968,200

R8,271,467 359.8,410

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECTNOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER 2016

2016 2015

11. Incremental Operating Costs

Staff Incentives 101,806,654 69,302,786Travel Expenses 50,852,532 23,346,682Equipment Rentals & Maintenance 29,334,891 27,590,937Office Rentals & Maintenance 36,890,914 5,003,753Utilities & Communication Expenses 9,493,480 12,863,691Other Ancillary Expenses 77,466,518 66,294,418

29884 204,40 1267

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECT

SPECIAL ACCOUNT RECONCILIATION AS AT 31Sr DECEMBER 2016

IDA CREDIT NO: 54070 - UNI

ACCOUNT NO: 25000115033

ACCOUNT NAME: FEDERAL PROJECT SUPPORT UNIT (FPSU) - FEDERAL

BANK: ACCESS BANK UK LTD.

S/NO US DOLLAR

1. Initial Amount advanced by IDA 1,000,000.002. Additional Advance by IDA3. Interest Earned4. IDA advance during the period (17/8/15 - 31/12/16) in

form of replenishment 214,614.755. Return to IDA from SA 2

6. Present outstanding amount to the SA as at 31/12/16 1214614.757. SA closing balance as at 31/12/16 as per Bank ReconciliationStatement carried to the next period 533,237.75

8. Add:Amount of eligible expenditure paid and documented in SOES 681,377.00Amount of eligible expenditures paid and documented in SOESunder processing

Total Advance accounted for ----------1.214,614.75

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COMMUNITY AND SOCIAL DEVELOPMENT PROJECT

SPECIAL ACCOUNT RECONCILIATION AS AT 31Sr DECEMBER 2016

IDA CREDIT NO: 54070 - UNI

ACCOUNT NO: 25000115034

ACCOUNT NAME: FEDERAL PROJECT SUPPORT UNIT (FPSU) - JOINT STATESBANK: ACCESS BANK UK LTD.

S/NOUS DOLLAR

1. Initial Amount advanced by the IDA2. Additional Advance by the IDA3. Interest Earned4. IDA advance during the period (17/8/15 - 31/12/16) in

form of replenishment5. Return to IDA from SA6. Present outstanding amount to the SA as at 31/12/16 19,410,712.307. SA closing balance as at 31/12/16 as per Bank Reconciliation

Statement carried to the next period 6,221,015.308. Add:

Amount of eligible expenditure paid and documented in SOES 13,189,697.00Amount of eligible expenditures paid and documented in SOESunder processing

Total Advance accounted for

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