lIIII MlursrRY oE ENvIRoNMENTAL AND N.lrunn

PnorEcrloN: EU N,lruru, 2000 INTEcRATIoN

I Pno.rEcr-1 Management Board's report as at 31 December 2015 together with

)e

Independent Auditor' s rePortIII-t

I

-t

IIIII-]

.-lI-j

I

-]

-]

_l

-]

-t

l-t

)

I

Contents

Independent Auditor's Report

Sources and Uses ofFunds

Bank Reconciliation Statement

U.ses of Funds by Project Activity

Summary of Summary Reports (SOEs)

Notes

Page

2

4

5

6

1

8

I Ministry of Environmental and Nature Protection - EU Natura 2000 Integration Project

-1_]

-1_1

-1_1

_1

_1

_1

_1

_l

ffiWWffiS*ildin* a bett"*rworkinqj worl<J

lndependent Auditor's Report

To the Management of the Ministry of Environmental and Nature Protection

We have audited the accompanying financial statements, which comprise Project Sources and Uses of

Funds, Bank Reconciliation Statement, Uses of Funds by Project Activity and Summary of Summary Reports

(SOEs) of the Ministry of Environmental and Nature Protection, EU Natura 2000 lntegration Project, as at

31 December 2075, and a summary of significant accounting policies and other explanatory information.

The financial statements have been prepared by Project lmplementation Unit (PlU) of the Ministry of

Environmentaland Nature Protection, EU Natura 2000 lntegration Project, based on the financial reporting

provisions specified in Annex A of the Contract for Consulting Services for the Annual Financial Audits of

the EU Natura 2000 lntegration Project No. MOC/CS/LCS/11/01 between Ministry of Environmental and

Nature Protection and Ernst&Young d.o.o. ("the Contract") and EU Natura 2000 lntegration Project Loan

no. IBRD 80210 HR Project Operational Manual from December 2013.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements in accordance with the

financial reporting provisions of Annex A of the Contract for Consulting Services for the Annual Financial

Audits of the EU Natura 2000 lntegration Project No. MOC/CS/LCS /77/OI between Ministry of

Environmental and Nature Protection and Ernst&Young d.o.o. ("the Contract") and EU Natura 2000

lntegration Project Loan no. IBRD 80210 HR Project Operational Manualfrom December 2013 and for such

internal control as management determines is necessary to enable the preparation of financial statements

that are f ree f rom material misstatement, whether due to f raud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted

our audit in accordance with lnternational Standards on Auditing. Those standards require that we comply

with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the

f inancial statements are f ree f rom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditor's judgment, including the assessment

of the risks of material misstatement of the financial statements, whether due to f raud or error. ln making

those risk assessments, the auditor considers internal control relevant to the entity's preparation of the

financial statements in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also

includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

estimates made by management, as well as evaluating 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.

i;r::i i'l*l-: J.*.:. ::!: ;i3*: : *Sa* =:a

=*=.::a!: :::::: aa f:::: .:-::*,1 : a:ti ::i

i:rl.::14:; *:--::=i:l*l: il3tl:].15411-ll. ai::a-rl::=:::

*tr'; *:: i Y,i-a i:r:.: 1l=:*=aa:::::t

I_]

_]

_]

_]

_1

1_1

_1

_1

_1

_]

_1

-t

ffiWtuffiflurildinq e lretterwofhlnq wsrl*

lndependent Auditor's Report (continued)

Opinion

ln our opinion, the financial statements of the Ministry of Environmental and Nature Protection, EU Natura

2OOO lntegration Project for the year ended 31 December 2075 are prepared, in all material respects, in

accordance with the financial reporting provisions of Annex A of the Contract for Consulting Services for

the Annual Financial Audits of the EU Natura 2OOO lntegration Project No. MOC/CS/LCS/11/01 between

Ministry of Environmental and Nature Protection and Ernst&Young d.o.o. ("the Contract") and EU Natura

2O0O lntegration Project Loan no. IBRD 80210 HR Project Operational Manualfrom December2013.

Basis of Accounting and Restriction on Distribution and Use

Without modifying our opinion, we draw attention to Note 2 to the financial statements, which describe the

basis of accounting. The financial statements are prepared to assist Ministry of Environmental and Natureprotection, EU Natura 2000 lntegration Project to comply with the financial reporting provisions of the

contract referred to above. As a result, the financial statements may not be suitable for another purpose.

Our report is intended solely for Ministry of Environmental and Nature Protection, EU Natura 2000

lntegration Project and The World Bank and should not be distributed to or used by parties other than the

Ministry of Environmentaland Nature Protection, EU Natura 2000 lntegration Project orThe World Bank.

/, dA o// SlavenDurokovid

Member of the Board and certified auditor

Ernst & Young d.o.o., Zagreb

Zagreb,22 April2Ot6

i0.)'d!

.1:

Cd!o0(,)

C\

!2zf,tr.,l

I

oI

4()!

cd

Z

coEo!

!!o

s

o-

c)EObo

fd

C)

tJ-

.o

a)

io(!J

()a

I0)

L-(

!boo+,

lrl

6lGL+)

z)r--1

-I

-F)I()

Lljl

oL+)

Zrn-ri\./trxGL

c)

= aEbY-t:q,EEtr!?(,) = 6c<r-A

-1-Fl--

= o"a>ra,'a C) rn- a?1I+r-)vr-t-N- x15C-ivLHEcs

d=\r!-

?qHiJ qJ r-a Q)-.- a)Fi=tr

=l \, !iAAH

I-t

1I!!!II,1

!I

af)

6l

9!acotr4=

J

fin-do.

=X

F-

od

€t--.1

t--c.i€t00a-rnf.r

\o \oF- t--

+++.+++

rAelNr-to

atoo.lqq

+c1

CIGI

lna.)intt)t(f

al

c]

o\cl

elao

ornpRct9OEEqlio

<.6l

r-

-)!tal

F-

t-- f-

t-- t--

66

t+alfr)

6 l,aco

(.)

a]

\o6l

a-l

o\

ar

Qvr

!61[nL

..1 tr

Nnt--

c]co

N$

F-

ail€

o F-. tr-

om6 F- t--oo oonnoo&

d!*r,o6t-.

al

al

al(\

alrnalal

.1

.+dt\o\otr-

s".1

F.

ln=A6talo

<o- rt)

&vl<.

{a.lo,

6rA

(.)

salo\

r; r;

al c!F-- t--

caoalar)

t

al

caoo+

tr-

6coiOdl,na-

alntr-\oal

cltf,

F.

N€

..)frn

ENFl-

r-.1oo.f€t--

a-("1

6+6-r-rn..i

.1 .1@oot- t-r

+

Ot,-

ala{alo\

cl

(\O

ca

ail

clo\

6t

&++al_-i

€rn!+

alo\

-tdt4 t

OL [rJ

A€ .=d6F saY i

=a 9'- /16VI

f+-ato.

ro

\a-.oo

ooc!

t..FT€!+ac-l

od od++

F-- a-

O

\oi:'-V)c.)

t'r6ra

t-O€6l

al

<.

aAF-*alalra*

t--

od+oa{d}

rraa\l6F.V)aa

9O€o

^D

ebObo '6,CO

o

o

ox

4)

Fr

-,9CO

oLu'--!:?ic=LE.iE

O):ZzN:i9!rjF

o

F

4)

F

ooCOcg<

D

a-Ga0a.-O0o

U

c)

ot

li

I

o'a9

P

o(g!boo€

o.l

,I(!

Z=LI]

I

o.25=()O^^*@() -(l)6EZC)-bo9cru

F .::

-d

?

!Ucd-H

t@

-:Ygav)

qU6,)O

Ec0€()'a!r

.E

rboa)

!.=v:<a\ 9VO.=

^t\J6ILE-

Allt(€ z-'-\rr' tr'l.F-r G

-, 2\AtYL=a0dq)3+r4-t

-Cf-d\JC

oov aIJ OJ

NO-9.bv +/<-

(F=I Oel

-!^,- 6:-'bV ^9'z sJo--

- -r,rrl U

- y<

. O+I co' '; r'l-t=to 5-5.--tr+, 96a, Lo6V

V.FA

-€ (!-\J -c,.a ! : I.

A E:(.) 3Rl- ()L

- <q_.!

:xt-eg ;Q9...8OF1 m FoE +, ! u=r trx ii 'Jcq 9 r g:G Et !$:: b E;r- hv U Xr-qJ *) c, f<-UOA ;+

-!v/ - ti ^=! =ra

EJIJ \7 !H. .--.!e(O=

7.-l 9

- ii: =FErlYCg=

tn 9t\ !d;t5u9

- :IJ G =1v o = do.r>, () t 8,9t-J € .,'*ii-r- .98A\-/-!d.-i-!!-tr r E Y{}.i)^.Y!-

i Lv :' - F.,l>CAd :-E

lllI-l

J

:

II:

I!I!

F

!q

-\oOOFOAqFodoo€$t\oodiatr)

tr-

clF-00a.l

c.l

$

tr'?oat6F-rAtf,

cl9aqE

^Etsl-l

?.)

a{€

J

q)C)

drq)

cn

Q

oo

ca

N

NN

cq@

$

t--

N

oi

co\o$

c'lcl\oc'l

c'lt

\OOO;qt--qqooooot00$F:+U)eo ca. --:

-OtorJ;.d..OOtl \Oa\o$\o F-h-$F

NrOO+ooo-OOF- t-

\o ooal vlO, cO00o-

*r)=Crr:l'\rOO+-;oo?oo

al a]qt-

r6OO.o (n,

-ioooo.+tr-acaFSl.n c.)eao

o\(.I

\c)a{?a)

o\N

\0ela.)

rO$N

\c)F-

6tdr-alo\a

rd

0

in

t.l

.l€

J

2r1 [O

=X

o[n9RdoOE!qOO!o

* (..1

Lat L

a-l tr

€,ainE:dclo

€lorn-€c{

=z

()

oo/!

IA!^9

-.-o!HL^i!z !.;

a I C)-Y

C)-x(,J<.aro

b0.E

oq9-^

!!

Uvgo'oCEOU

L-vd=EcEo 9 -e,u<^!qhn tr .. .iC I';s e h dQ)R=-=

A:a1!!e9

{)c)

b0

a

Q

l-!oil ^* )FEi-rFlo8!e '=A--Ot!d=x

=)H^Ets =tra E

A)

6$!a{

9r

=X

tr-c9\oocodtr)\o

oi

6rarONta

el

r)$

o,dc.l t--oo c.l

o\v€tl

?a

C.l oO C\\ 9qN $(.lca NOcO O\ cOr)-CO

t-\ -

al(-)

F.

ia\o

rOF-00clNro$

ra

(.l *I

J4 r-l

.)9lo99&l!tv=Pl

J

fi |f,,

q),.l qt

=A

aba{ trau 9o

=lnealral L

dtr>.o

tA

* lt)tn=o6lalo

E-4O*-)

rn

GIL7'j ta;e5:ie{trfo

t-- +nnoo aa

O\ ra)

clc\

o\

t-$\0.f,

.I

-\nn-t\o.Nca@

-cooo cooo c.]

l,ot*-&elF-

* 0909'a) l'- -ot $o\F- OoO$ c\-o. v) co

f--

\oiarn\ocool

alal\oiarArn$aot

F-i5a!

-:

F-t-\ot\inra

co caq09ca tr--(\rr v)oo$Oa-c.)

a$lf)&?a

v1 <) tt-

t-- O\ Otr- O\ O,ca O\ r)

-<.s

elin\o\oo\t-t

toa(.l

o\

O-Omooo"aaF-ca

rO

6..lF.rn

nc1r)scl \of\-O\ tr-\o \oc\

ao\66(a?o

ca \o o\

\o oi o<it-- O\ V)F- c-l \Ot-- cO V^tvlCOr)

N

a.IFTcla

ro

o\

alinalN

r-Xot -i\o-

vF--(.Ira

\ot

v) co

\o v)F- \O

at-

ra

N!tr'rAratAI

t-- \O9 i\qN co a.loo rr)alA V}V}cat*N ca<-

v$\oal

€€iaq(ot-

lr)so9nF-o.. r)oo \o

o\6laa$raeil

Sc-r; o.tr- \O

ci-t-- .a

|')$t-'scl

co <-

o =\^'€

alF'F-rno\t-$

Nclo\

at

C)

:SJO-

0rta.€-La-Ll :ldL;iX.>4 i!-09C)zy E9A

vbD a- El

_q-;"1lr-lZ-Fi

oo

'to.:

q.l -!l

>,:- oa a,'E65?N9=.-

L-eOAr>.=*

=Lqz>=6Xc,<).=zboq -

-Q-'"1E(\C\al

Cg

F

qaoQbob!: c.:

EO- U

=od - O.ll s 'UO-r.: c/ Y9ii=''ci()A=A-VL .-ua) O = !:(, € 1,"J +L';A6 ;W

=9 €€E ? 6szz6 .= ts-J_c()u= i: Ybl: - q

--LN.'ll*l .a l:.i (a

-b0roo -

oxHa()'a

F

tl

I

-,\I

-J

-l

)

o'e!o.

o(€rb0C)

o.l

!

COzftr.l

I

o

()

r()

:z(s'=

()

.!

trlq-

z.\o

.2

orOt-le

lo

IOlo0t(€l-]G

t;loILtdl.=ItLt-l.ol'.t-oILlcOItol6lrIO

lo

Iu1

IlcJlo)lrr

!,,trtrIlFlIT

J v.i+)-tt LvlrrlboJ \l,+,F--l rrr

lAtv-J _

\JN

ItdJl--*)-LVlzJ )

r--1

-ttIJtr

Av.dTlcJlo)J: A\Jli

-) OrItJL

--+)-tGJ VPs

: )oL.ft\

-lCEXr,I =;-Bubv:- +r€tr;r q)

t9-r 6) €) UI s'=nJ

=il.vt-!-l 'F 6gJ 5 -R-

'q,,-f):L-IA-ciJ ;E 7Le-g: A a

0 v--l 'E B EJ '5 A PZDri

J

I

ff Ministry of Environmental and Nature Protection - EU Natura

2000 Integration ProjectSummary of Summary RePorts (SOEs)

1 From I January 2015 to 31 December 2015

WorldBank

withdrawalapplication

Approvaldate

Summary

Sheet

/SOE1

TypeAmount

documentedAmount paid to

Designated Account

Loan 80210 HR, amounts in EUR

l83l -Mar-

2015

I prior review 468.228.031,034,318.33

2 SOE 566,150.30

l9 1 7-Jun-20 1 5I prior review 306.66s.37

720,095.6s2 SOE 413,430.28

2025-Sep-

2015

prior review 102,202.831,085,873.07

2 SOE 383,670.24

2109-Nov-

2015

prior review 23.505.43560,106.21

2 SOE 536,600.84

2215-Dec-

2015

prior review 366,538.51913,957.44

2 SOE 541.4t8.93

23 2016'prior review 162,857.37

673.09',7.092 SOE st0,239.72

Totals (EUR) 4,987,507,85 4,987,507.85

I Summary SOE sheets consist of individual expenditures by category as the basis for withdrawals.

2 Designated account opening balance as of I January 2015 amounted to EUR 1,357,848.37. Total amount paid

to Designated account for the period from I January 2015 till 3l December 2015 amounts to EUR 4,314,410.76.

Designited account balance as of 3l December 2015 amounted to EUR 1,326,902.91 after payment of EUR

4,345,356.22 of Eligible expenditures from the Designated Account.

3

Stela Ladarevii, Finance management specialist

iThis withdrawal will be processed in year 2016. Stated amount represents only sum spent in year 2075 after

withdrawal No.22. This amount (673,091 .09 eur) will be validated through withdrawal No.23 together with other

expenses that occurred in year 2016.

7 Ministry of Environmental and Nature Protection EU Natura 2000 Integration Project

_t

lIlI1

11

I1

l1I1

IILt

Expenditure related to six applications in 2015 and20l6 (tmtil the date of audit report) 4,987,507.85

Expenditure related 1o2014 as stated in WB Application no. 18 -642.151.63

Expenditure related to 201 5 as stated in wB Applications no. 1 8, 19,20, 21 ,22 and 23 4,345,356.22

3u-

:,

T

I-l

Ministry of Environmental and Nature Protection - EU Natura2000 Integration ProjectNotes to Financial StatementsFrom 1 January 2015 to 31 December 2015

L. General

The Republic of Croatia has received a loan from the International Bank for Reconstruction and

Development (IBRD) to implement the Croatia EU Natura 2000 Integration Project (NIP). The project

is implemented by the Ministry of Environmental and Nature Protection of the Republic of Croatia.

The World Bank Project Preparation Advance (PPA) was approved to the Republic of Croatia in the

amount not exceeding USD 500,000. The Croatian Government signed the PPA Agreement on March

5,2009. Refinancing date forthe PPA and staftof the five yearproject(loan financing) was 19 May

2011.

The body in charge of implementing the Project preparation was the Ministry of Culture, Nature

Protection Directorate where the Project Preparation Unit (PPU) was set up, and consisted of a

coordinator, procurement specialist and financial management specialist. The PPU was managed by

the PPA Manager who was also the Director of Nature Protection Directorate. The PPU became the

Project Implementation Unit (PIU) upon ratification of the Loan on 1 8 May 20 I 1 . As of 22 December

2011, according to Decision of the Government of Republic of Croatia, EU Natura 2000 Integration

Project became an integral part of the Ministry of Environmental and Nature Protection.

Republic of Croatia signed a Loan agreement with the international Bank for reconstruction and

Development on 22 February 201 1. The Loan amount is EUR 20.8 million. The Project consists of the

following parts: Ecological Network lnvestments, Ecological Network Data Systems and Ecological

Network Capacity Building. As at December 31, 2015, PIU and support staff consisted of the

following Consultants: coordinator, procurement specialist, financial management specialist, civil

engineer/safeguard coordinator, EU projects and training specialist, economist and monitoring &evaluation specialist and project assistant.

NIP overall project objective is to support Park and County Public Institutions to implement Natura

2000 objectives in investment programs; strengthen capacity for EU-compliant reporting and

biodiversity monitoring; and introduce programs that involve a wider group of stakeholders in Natura

2000 network management.

2. Accounting policies

Financial repoffs which comprise of Sources and Uses of Funds, Bank Reconciliation Statement, Uses

of Funds by Project Activity and Summary of Summary Reports (SOEs) are prepared on the cash

receipts and disbursements basis of accounting as prescribed in the EU Natura 2000 Integration

Project Loan no. IBRD 80210 HR Project Operational Manual from December 2013. Project financing

is recognized as a source ofProject funds when the cash is received. Project expenditure is recognized

as a use of Project funds when payment is made, irrespective of when goods or services are accrued.

8 Ministry of Environmental and Nature Protection - EU Natura 2000 lntegration Projecl

REPUBLIKA HRVATSKAMI NISTARSTVO ZASTITE OKOLISA

IPRIRODE10000 Zagreb, Radnicka cesta 80

Tel: 01 I 3717 111 fax: 01 / 4866 100

EU NATURA 2OOO INTEGRATION PROJECT

CLASS: 612-07 I ll-49 10154

REF.NO: 517-16-13

Zagreb,22 April2016Ernst & Young d.o.o.

Radniika cesta 50,10000 Zagreb

This representation letter is provided in connection with your audit of the financialreports of the World Bank project of Ministry of Environmental and Nature Protection,

EU Natura 2000 Integration Project (the Ministry) for the year ended 31 December

2015. We recognize that obtaining representations from us concerning the information

contained in this letter is a significant procedure in enabling you to form an opinion as

to whether financial repofts comprising Project Sources and Uses of Funds, Bank

Reconciliation Statement, Summary of Summary Reports or SOEs and Uses of Fund

by Project Activity (together "financial reports") are prepared in all material aspects, in

accordance with the financial reporting provisions of the Advance Agreement for the

Preparation of the Proposed Nature Protection Investment Project dated 5 March 2009 and Loan

Agreement for EU Natura 2000 Integration Project dated February 22,2011 between Republic

of Croatia and The World Bank ("the Contracts") and in accordance with the provision ofSection 5.09 of the "International Bank for Reconstruction and Development General

Conditions for Loans".

We understand that the purpose of your audit of our financial reporls is to express an opinion

thereon and that your audit was conducted in accordance with lnternational Standards on

Auditing, which involves an examination of the accounting system, internal control and related

data to the extent you considered necessary in the circumstances, and is not designed to identify

- nor necessarily be expected to disclose - fraud, shortages, errors and other irregularities,

should any exist.

Accordingly, we make the following representations, which are true to the best of our

knowledge and belief:

A. Financial Reports and Financial Records

1. We acknowledge, as members of management of the Ministry, our responsibility forthe fair presentation of the financial reports. We believe the financial reports

comprising Project Sources and Uses of funds, Bank Reconciliation Statement,

J.

Summary of Summary Reports or SOEs and Uses of Fund by Project Activity are

prepared in all material aspects, in accordance with the financial reporting provisions

of the Contracts and in accordance with the provision of Section 5.09 of the.,International Bank for Reconstruction and Development General Conditions for

Loans".

The significant accounting policies adopted in the preparation of the financial reports

are appropriately described in the financial reports.

Each element of the financial repofts is properly classified, described and disclosed

in accordance with the Contracts and in accordance with the provision of Section

5.09 of the "lnternational Bank for Reconstruction and Development General

Conditions for Loans".

As members of management of the Ministry, we believe that the Ministry has a

system of internal controls adequate to permit the preparation of accurate financial

reports in accordance with the Contracts and in accordance with the provision of

Section 5.09 ofthe "lnternational Bank for Reconstruction and Development General

Conditions for Loans".

There are no unadjusted audit differences identified during the current audit and

pertaining to the latest period presented which should be reported to you.

The payments out of the Designated Account have been made in accordance with the

conditions of the relevant (loan/financing) agreements. There were no ineligible

expenditures.

The Designated Account has been maintained in accordance with the provisions of

the Contracts and in accordance with the provision of Section 5.09 of the,,International Bank for Reconstruction and Development General Conditions for

Loans". This also comprises interest earned from balances'

Expenditures are supported by relevant and reliable evidence. All supporting

documents and records with respect to the statement of expenditure submitted as the

basis for withdrawal applications have been made available.

The audited statement of expenditures can be relied upon to support the related

withdrawal requests. Clear linkage should exist between the statement ofexpenditures, the withdrawal requests presented to World Bank and accounting

records.

-t.

10. Goods and services financed have been procured in accordance with the relevant

(loan/fi nancin g) agreement.

B. Fraud

l. We acknowledge that we are responsible for the design, implementation and

maintenance of internal controls to prevent and detect fraud.

2.

4.

5.

6.

8.

9.

we have disclosed to you the results of our assessment of the risk that the financial

reports may be materially misstated as a result of fraud'

we have no knowledge of any fraud or suspected fraud involving management or

other employees who huu" u significant role in the Ministry's intemal controls over

financial reporting. In addition, we have no knowledge of any fraud or suspected

fraud involving other employees in which the fraud could have a material effect on

thefinancialreports.Wehavenoknowledgeofanyallegationsoffinancialimproprieties, including fraud or suspected fraud, (regardless of the source or form

and including without iimitation, any allegations by "whistleblowers") which could

result in a misstatement of the financial reports or otherwise affect the financial

reporting of the MinistrY.

C. Compliance with Laws and Regulations

1. we have disclosed to you all known actual or suspected noncompliance with laws and

t."goiu,ion. whose efflcts should be considered when preparing the financial reports'

There has been no noncompliance with requirements of regulatory authorities that

could have a material effect on the financial reports in the event of noncompliance'

3. We ,are not aware of any litigation in connection with Project against the Ministry

initiated Uy ott1". parties o1" iny litigation initiated by the Ministry towards other

parties.

D. Information Provided and completeness of Information and Transactions

1. We have Provided You with:

o Access to all information of which we are aware that is relevant to the preparation

of the flnancial reports such as records, documentation and other matters

o Additional infbrmation that you have requested from us for the purpose of the

audit and

o Unrestricted access to persons within the entity from whom you determined it

necessary to obtain audit evidence'

All transactions have been recorded in the accounting records and are reflected in the

financial reports.

we have disclosed to you, and the Ministry has complied-with, all aspects of

contractual agreements that could have a material effect on the financial reports in the

event of non-compliance, including all covenants, conditions or other requirements of

all outstanding debt.

2.

--) .

2.

2.

J.

H. Changes in accounting Policies

There were no significant changes in accounting policies with respect to Advance Agreement

forthe preparation of the Proposed Nature Protection Investment Project dated 5 March 2009

and Loan Agreement for EU Natura 2000 Integration Project dated Februaty 22,2011 between

Republic of Croatia and The World Bank ("the Contracts") and in accordance with the provision

of Section 5.09 of the "Intemational Bank for Reconstruction and Development General

Conditions for Loans".

Very truly yours,

3tr-Stela Ladarevii, Financial specialist

f,,#{o*"4h;&)ffi87,^ ]idkuffiH

stant Minister.ironmental and Nature Protection

Igor Kreitmeyer,