SMALL AND PROMOTION SERVICES - World Bank · SMALL AND MICRO ENTERPRISE PROMOTION SERVICES ENTERPRISE REVITALIZATION AND EMPLOYMENT PILOT PROJECT IDA GRANT NO. (TF014977) Sana'a,

English Translation of the Original Arabic Text

SMALL AND MICRO ENTERPRISEPROMOTION SERVICES

ENTERPRISE REVITALIZATION ANDEMPLOYMENT PILOT PROJECT

IDA GRANT NO. (TF014977)Sana'a, Republic of Yemen

FINANCIAL STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2014

AND INDEPENDENT AUDITOR'S REPORT

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SMALL AND MICRO ENTERPRISEPROMOTION SERVICES

ENTERPRISE REVITALIZATION ANDEMPLOYMENT PILOT PROJECT

IDA GRANT NO. (TF014977)

Sana'a, Republic of Yemen

FINANCIAL STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2014

AND INDEPENDENT AUDITOR'S REPORT

TABLE OF CONTENTS

Pag~e

Independent Auditor's Report 1 -2

Statement of Sources and Uses of Funds 3

Notes to the Financial Statement 4-7

KPMG Yemen Mejanni & Co. Telephone +967 (1) 401 667/8 / 9Public Accountants Fax +967 (1) 206 130150 Zubairl St. Internet ; . v.kpmg.com,,,eP0 Box 3501Sana'a, Republic of Yemen


INDEPENDENT AUDITOR'S REPORT

TO THE EXECUTIVE DIRECTOR OF SMALL ANDMICRO ENTERPRISE PROMOTION SERVICES (SMEPS)ENTERPRISE REVITALIZATION AND EMPLOYMENTPILOT PROJECT IDA GRANT NO. (TF014977)Sana'a, Republic of Yemen

We have audited the accompanying statement of sources and uses of funds of the Small andMicro Enterprise Promotion Services (SMEPS) - Enterprise Revitalization and EmploymentPilot Project (IDA Grant No. TF014977) (the "Project") for the year ended December 31, 2014,and a summary of significant accounting policies and other explanatory information (together"the Financial Statement"). The Financial Statement has been prepared by management usingthe cash basis of accounting described in Note 2 to the Financial Statement.

Management's Responsibility for the Financial Statement

Management is responsible for the preparation and fair presentation of the Financial Statementin accordance with the cash basis of accounting described in Note 2 to the Financial Statement;this includes determining that the cash basis of accounting is an acceptable basis for thepreparation of the Financial Statement in the circumstances, and for such internal controls asmanagement determines is necessary to enable the preparation of the Financial Statement that isfree from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the Financial Statement based on our audit. Weconducted our audit in accordance with International Standards on Auditing. Those standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Financial Statement is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the Financial Statement. The procedures selected depend on the auditor'sjudgment, including the assessment of the risks of material misstatement of the FinancialStatement, whether due to fraud or error. In making those risk assessments, we considerinternal control relevant to the entity's preparation and fair presentation of the FinancialStatement in order to design audit procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the Project's internal control.An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates, if any, made by management, as well as evaluating theoverall presentation of the Financial Statement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.

KP[ i Yemen Mejanni & Co, a partnership established underYemeni , and amember firm of the KPrM1G net* ork Gf independent member firms affliated ithKPi tG International Cooperati ("KPI1G Intern einal"e), a Sc iFs entit,


Opinion

In our opinion, the accompanying Financial Statement presents fairly, in all material respects,the fund balance of the Small and Micro Enterprise Promotion Services - EnterpriseRevitalization and Employment Pilot Project (IDA Grant No. TF014977) as at December 31,2014 and the sources and uses of fund for the year then ended in accordance with the cash basisof accounting described in Note 2 to the Financial Statement.

Emphasis of Matter

Without modifying our opinion, we draw attention to Note 7 to the financial statement related tothe subsequent events taking place in the Republic of Yemen during the year 2015. Theseevents could affect the Project's statement of sources and uses of funds for the year 2014 ina manner not currently determinable.

Basis of Accounting

Without modifying our opinion, we draw attention to Note 2 to the Financial Statement, whichdescribes the basis of accounting. The Financial Statement is prepared to provide informationto the Small and Micro Enterprise Promotion Services - Enterprise Revitalization andEmployment Pilot Project (IDA Grant No. TF014977). As a result, the statement may not besuitable for another purpose.

M. hdi MejAssociated Ac "

Sana'a, June 22

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En2lish Translation of the Ori2inal Arabic Text

SMALL AND MICRO ENTERPRISE PROMOTION SERVICESENTERPRISE REVITALIZATION AND EMPLOYMENT PILOT PROJECTIDA GRANT NO. (TF014977)Sana'a, Republic of Yemen

STATEMENT OF SOURCES AND USES OF FUNDSFOR THE YEAR ENDED DECEMBER 31,2014

For the periodfrom June 19, Accumulated2013 to Dec. up to Dec. 31,

2014 31, 2013 2014

Note USD USD USDSources of Funds

IDA Contribution 3 1,250,855 353,350 1,604,205Other income 60,000 - 60,000Total Sources of Funds 1,310,855 353,350 1,664,205

Uses of Funds

Consultancy services ( 184,355) ( 37,436) ( 221,791)Training ( 77,190) - ( 77,190)Event and activities ( 27,240) ( 15,815) ( 43,055)Cash grant ( 974,813) - ( 974,813)Management costs 4 ( 201,813) ( 121,837) ( 323,650)Total Uses of Funds 5 ( 1,465,411) ( 175,088) ( 1,640,499)

(deficit) Surplus for the year / period ( 154,556) 178,262 23,706Retranslation of foreign currencies 8 6 14Fund balance at the beginning of the year /

period 178,268 - -

Fund balance at end of the year / period 23.720 178 8 23,'Z20

Represented in:Cash in banks 6 20,760 175,855 20,760Accounts receivable - employees' advances 2,960 2,413 2,960

Fund balance at end of the year /period 23.720 178.268 23,720

The attached notes on pages 4 to 7 are an integral part of this financial statement.

Independent auditor's report is set out on pages 1 and 2.

Wesam Qaid Sal Al- ashiExecutive Director Finan e Admin Manager

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NOTES TO THE FINANCIAL STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2014

1. BACKGROUND INFORMATION

- Small and Micro Enterprise Promotion Services (SMEPS) was registered in accordancewith the provisions of Law No. 10 of 1997 concerning the Social Fund for Developmentand in accordance with the national strategy to develop small and micro enterprise, whichwas approved by the Council of Ministers on January 17, 2005 and according to thedecree of the Fund Executive Manager of the year 2005 for the foundation of the SMEPS.

- SMEPS objectives are to participate in the following:

1. Support the initiatives of business development services in order to enhance thediversity and growth of enterprises' business in markets or projects in a sustainableform through the following:

a. Generate higher revenue for the establishments sector.

b. Introduction of new production lines to enable enterprises achieve bettercompetition capabilities and benefit from available resources.

2. Support the providers of "business development services" and establishment oftheir capabilities to enhance the enterprises level of product and service.

3. Develop and enhance the market of the providers of "business developmentservices" based on sustainable bases using local or international experts.

4. Support the owners of enterprises in all sectors in order to establish a wide networkof business development services in the Republic of Yemen.

5. Broaden the application base of business development services in order to coverthe demands and requirements of the enterprises' business nature.

- SMEPS implements the following to achieve its objectives:

1 Facilitate the non-financial services for enterprises, such as marketing,consultations, training, information transmission, etc.

2 Contribute in the establishment of participants organizations' capabilities, e.g.institutes and centers of technical training and consultations (with private or publicsectors) to provide the enterprises with distinct and purposeful services.

3 Perform studies of the economic sectors (such as fishing, health, tourism, industry,etc.) in order to find out the business capabilities for developing the relatedenterprises and possibilities of introducing a value-added concept for those sectorsbased on demands and market potentials.

4 Manage and facilitate the activity of business development by providing non-financial services for enterprises through their participants who provide businessdevelopment services, including the institutes of training, consultants, experts, andprivate sector.

- SMEPS received a grant from IDA of USD 3,720,000 according to the agreement signedon June 19, 2013 to finance Enterprise Revitalization and Employment Pilot Project. Theobjective of the project is to improve individual employability of college and universitygraduates and to improve the business capabilities of enterprises participating in theproject.

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NOTES TO THE FINANCIAL STATEMENT (CONTINUED)FOR THE YEAR ENDED DECEMBER 31, 2014

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis ofpreparation offinancial statement

- The statement of sources and uses of funds (the financial statement) is preparedaccording to the cash basis of accounting to record the transactions. On this basis,sources of funds are recognized when received and disbursements are recognizedwhen paid.

- The statement of sources and uses of funds (the financial statement) represents onlythe statement of utilization of the grants received from the InternationalDevelopment Association (IDA) Grant No. TF014977 and excludes all othertransactions, sources and uses of the SMEPS.

- The financial statement was approved by the SMEPS management onJune 24, 2015.

2.2 Functional and presentation currency

The financial statement is prepared and presented in US Dollars in accordance with thedonor's agreement.

2.3 Foreign currency transaction

SMEPS maintains its books of account in US Dollars, which is the Project's functionalcurrency. Transactions in currencies other than US Dollars are translated into US Dollarsusing the exchange rate prevailing on the transaction date. At year end, balances ofmonetary accounts (cash and accounts receivables) denominated in currencies other thanUS Dollars are translated at the rates prevailing at that date. The differences arising arereported in the statement of sources and uses of funds.

The unrealized profit and loss arising from changes in foreign currency exchange rate arenot presented as cash receipts or payments, but the effect of changes in exchange rate oncash held in foreign currency is reported in the statement of sources and uses of funds tosettle the cash at the beginning and end of the period and present the amount separatelyfrom cash receipts and payments including differences, if any.

2.4 Property and equipment

Property and equipment are expensed on the purchasing date and when sold it isrecognized as sources.

2.5 Bank's interest

Interests on banks are recognized on the date of receipt.

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English Translation of the Ori2inal Arabic Text



3 IDA CONTRIBUTION

According to the agreement signed between the International Development Association (IDA)and the SMEPS on June 19, 2013, IDA agreed to grant the SMEPS an amount of USD3,720,000 to finance Enterprise Revitalization and Employment Pilot Project.

During the year ended December 31, 2014, SMEPS received the following amounts:

Application No. Date of receipt USDClaim no. 2 3/1/2014 4,795Claim no. 3 26/2/2014 111,066Claim no. 4 29/4/2014 158,277Claim no. 5 4/8/2014 232,914Claim no. 6 8/9/2014 278,413Claim no. 7 - 1 29/10/2014 231,259Claim no. 7 - 2 2/12/2014 234,131Total for the year ended December 31, 2014 1,250,855Total for the period from June 19, 2013 to

December 31, 2013 353,350Accumulated up to December 31, 2014 1.604.205

4. MANAGEMENT COSTS

Period fromJune 19, 2013 Accumulated

to up to Dec. 31,2014 Dec. 31, 2013 2014USD USD USD

Wages, salaries and related costs 53,869 34,254 88,123Property and equipment 43,891 12,369 56,260Rent 19,200 9,600 28,800Communication 17,616 4,635 22,251Travel expenses 12,992 5,324 18,316Other management expenses 12,715 5,343 18,058Fuel 12,204 6,125 18,329Marketing and promotions 8,219 30,516 38,735Stationery 5,623 2,300 7,923Repairs and maintenance 3,996 1,998 5,994Security 3,996 1,998 5,994Water and electricity 2,796 1,398 4,194Insurance 2,400 1,200 3,600Transportation 1,249 499 1,748Telephone, mail and internet 607 267 874Advertisement 321 3,741 4,062Translation 80 270 350Bank charges 39 - 39

201,813 121.837 323.650

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English Translation of the Ori2inal Arabic Text



5 USES OF FUNDS

The table below shows the total uses of funds according to the main components of the projectwhich were approved according to the agreement.

Property,Equipment and

Youth ManagementTraining SME Grant Costs Total

USD USD USD USD

Consultancy services 78,866 82,572 22,917 184,355Training 60,361 - 16,829 77,190Event and activities - 27,240 - 27,240Cash grant 84,076 890,737 - 974,813Management costs (Note 4) - - 201,813 201,813

Total for the year ended Dec. 31,2014 223,303 1,000,549 241,559 1,465,411

Total for the period from June 19,2013 to Dec 31, 2013 23.218 15.652 136,218 175,088

Accumulated up to Dec. 31, 2014 246.521 1.016.201 37147 0499

6 CASH IN BANK

December 31,2014 2013USD USD

Current account - USD 16,621 175,482Current account - YER 4,139 373

20,760 175,855

7 Subsequent events

Lately, the Republic of Yemen suffered from political, security and economic crises, whichstarting from March 2015 resulted in a decline of the country's business and economicactivities. As a precautionary measure, the IDA suspended all missions to Yemen from January23, 2015. Based on the IDA letter to the Minister of Planning and International Cooperation inYemen dated March 11, 2015, the right of the Republic of Yemen to make further withdrawalsout of the proceeds of any IDA credit, or IDA grant , or any grant administered under any TrustFund is suspended from 12:01 am, Washington DC time of March 11, 2015.

The final resolution and the effects of the above events are difficult to predict due to theevents' continuation at the date of issuing the financial statement for the year 2014.

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Documents

SMALL AND PROMOTION SERVICES - World Bank · SMALL AND MICRO ENTERPRISE PROMOTION SERVICES ENTERPRISE REVITALIZATION AND EMPLOYMENT PILOT PROJECT IDA GRANT NO. (TF014977) Sana'a,