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THE FEDERAL GOVERNMENT OF SOMALIA
INFORMATION AND COMMUNICATION TECHNOLOGY SUPPORT PROJECT
(P148588, TF017371)
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JULY TO 31 DECEMBER 2014
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 CONTENTS
STATEMENT OF PROJECT MANAGEMENT’S RESPONSIBILITIES ............................. 1
PROJECT INFORMATION AND PROGRESS REPORT ..................................................... 2
REPORT OF THE INDEPENDENT AUDITOR ....................................................................... 6
STATEMENT OF RECEIPTS AND PAYMENTS ................................................................... 8
STATEMENT OF FINANCIAL POSITION ....................................................................... 9
STATEMENT OF CASH FLOWS ................................................................................... 10
STATEMENT OF COMPARISON OF BUDGET AND ACTUALS AMOUNTS ......... 11
SOURCES AND USES OF FUNDS STATEMENT BY SUB - COMPONENTS (ACTIVITIES) .................................................................................................. 12
NOTES TO THE FINANCIAL STATEMENTS .............................................................. 13
ANNEX I: RECONCILIATION BETWEEN THE AMOUNTS RECEIVED BY THE PROJECT AND DISBURSED BY THE WORLD BANK – DESIGNATED ACCOUNT ................................................................................................................ 19
ANNEX II: SUMMARY OF DIRECT PAYMENTS ................................................................ 20
ANNEX III SUMMARY OF STATEMENTS OF EXPENDITURES (SOES) .................. 21
Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 STATEMENT OF PROJECT MANAGEMENT’S RESPONSIBILITIES The Project Management is responsible to ascertain that the financial statements of the Project for the year ended 31 December 2014 are prepared, in all material respects, in accordance with the basis of preparation and accounting policies set out in Note 3 to the financial statements. In preparing these financial statements, the Project Management is required to select suitable accounting policies and then apply them consistently in conformity with Cash Basis International Public Sector Accounting Standard (Cash Basis IPSAS) and the requirements of Financial and Accounting procedure of the State, 1961 as amended. The Project Management is responsible for ensuring that proper accounting records are kept which enable the financial statements to be prepared in compliance with the basis of preparation and accounting policies set out in Note 3 to the financial statements as well as in accordance with the terms of the financing agreement for the State and Peace Building Fund Grant Agreement Number TF017371 between the Federal Government of Somalia and the World Bank. The Project Management is also responsible for safeguarding the assets of the Project, and for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Project Management assumes the responsibility to provide, and has provided, the Auditor General with all accounting records, supporting and other documents, minutes, and any other pertinent information and explanations, either orally or in writing, necessary for the audit. Signed on behalf of the Project Management: The FGS Accountant General declined to sign the financial statements of the project since the project’s financial management and information systems were implemented outside the approved Federal Government of Somalia, Somalia Financial Management Information Systems and External Assistance Fiduciary Section. The financial statements subjected to audit are those provided by the Project Implementation Unit …………………………… Ahmed Yusuf Muumin, Accountant General
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 PROJECT INFORMATION AND PROGRESS REPORT 1.1 Key Project Information
Project Name: Information and Communication Technology Support Project
Project ID: P148588
IDA Credit/Grant No.: TF017371
Implementing Agency: Ministry of Posts and Telecommunications
Effectiveness Date: 30 May 2014
Closing Date: 31 July 2016
Credit/Grant Amount: US$ 800,000
Program Duration 1 year, 8 months
Remaining Period to Closing
1 year, 1 month
Disbursed Amount: US$ 240,815
1.2 Project Overview
Line Ministry of the project
The project is under the supervision of the Ministry of Posts and Telecommunications
Strategic goals of the project
The strategic goal of the project is “to contribute towards the process of developing a regulatory framework for the telecommunications sector and building an ICT infrastructure in Somalia
1.3 Registered office The entity is domiciled in Mogadishu, Somalia. The address of its registered office is Villa Somalia, Mogadishu, Somalia.
1.4 Banker The Project maintained and operated one Designated Account in Central Bank of Somalia within Treasury Single Account sub-account at the Central bank of Somalia.
1.5 Auditor The project is audited by the Auditor General in accordance with Article 10 of Somalia Law No. 34 of 14 – 4 – 1972, Law on the Magistrate of Accounts.
2
Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 1.6 Roles and Responsibilities The following are the key financial management staffs that were involved with the project activities during the year:
Name Role Position Contact Information
Ahmed Yusuf Mumin (siraaji)
Chief Accounting Officer
Accountant General [email protected]
Mohamed Ibrahim
Policy and bank account signatory
Minister for Posts and Telecommunications
Mohamed Abdi Ware
Project Implementation Unit
Project Manager [email protected]
Abdisalam Sharuf Hussein
Project Implementation Unit
Deputy Project Manager
3
Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 1.7 Project progress report (Highlights) Overall, the progress made so far towards achieving of the project development objective (strategic goal) appears satisfactory as elaborated in the sections that follow:
1.7.1 Component 1: - Enabling environment (US$ 1.2m): This component is Bank executed and financing was not disbursed through the Government systems. Further, these financial statements only provide for the financial activities executed by the Government 1.7.1.1 Sub-component 1.1: - Facilitating implementation of the 2014 Communications Law: Activities for the support of the Law conducted. Draft of the Law passed by the Council of Ministers, and read once by parliament 1.7.1.2 Sub-component 1.2: - Capacity building and support for an effective ICT regulatory agency: Communication Commission still to be formed, waiting for the passing of the Law. Capacity building activities conducted for the Ministry instead. 1.7.1.3 Sub-component 1.3: - Support for implementing an ICT licensing framework: Licensing framework study finalized 1.7.1.4 Sub-component 1.4: - Capacity-building and donor coordination: A number of capacity building and coordination activities conducted with donors, stakeholders, and Federal States 1.7.1.5 Sub-component 1.5: - Cost-benefit analysis of the contribution of telecoms to public finance: A landmark study on telecom finance and a workshop for stakeholders to validate this study were conducted in this period 1.7.2: Component 2: Efficiency and equity in access to connectivity (US$ 800,000) 1.7.2.1 Sub-component 2.1: Open access to international bandwidth: Repatriation of the .so domain name in progress 1.7.2.2 Sub-component 2.2: Installing communication rooms in key ministries and development partners: procurement of communications rooms in three key ministries, as a pilot, in progress 1.7.2.3 Sub-component 2.3: Establishing a Project Management Unit: Project Implementation Unit established. The final post in the PIU, a procurement specialist is in progress.
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 1.8 Funding summary The Project is for a duration of 1year, 8 months from 30 May 2014 to 31 July 2016 with an approved budget of US$ 800,0001 as highlighted in the table below: Source of funds Donor
Commitment
Amount received up to 31 December
2014
Undrawn balance up to 31 December
2014
(US$) (US$) (US$)
(A) (B) (A)-(B)
State and Peace Building Fund (SPF) – Government executed
800,000 240,8152 559,185
Total 800,000 240,815 559,185
1 The total project financing is US$ 2 million with US$ 800,000 being Government executed 2 Excluding direct payments by World Bank of US$ 80,940
5
Federal Government of Somalia Public Financial Management Capacity Strengthening Project (P146006, FT016181) For the year ended 31 December 2014 STATEMENT OF RECEIPTS AND PAYMENTS
Notes 31-Dec 2014 31-Dec 2013 US$ US$
RECEIPTS
State and Peace Building Fund Grant 4 240,815 -
Direct execution 5 80,940
Miscellaneous receipts 6 20
TOTAL RECEIPTS 321,775 -
PAYMENTS
Use of goods and services 7 163,156 -
Capital expenditure 8 13,400
Direct payments by World Bank 5 80,940
TOTAL PAYMENTS 257,496 -
Surplus for the year 64,279 -
Fund balance at beginning of the year - -
Fund balance at end of the year 64,279 - The accounting policies and notes set out on pages 12 to 23 form an integral part of these financial statements.
The FGS Accountant General declined to sign the financial statements of the project since the project’s financial management and information systems were implemented outside the approved Federal Government of Somalia, Somalia Financial Management Information Systems and External Assistance Fiduciary Section. The financial statements subjected to audit are those provided by the Project Implementation Unit
………………………………………. Ahmed Yusuf Muumin, Accountant General, Ministry of Finance
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Federal Government of Somalia Public Financial Management Capacity Strengthening Project (P146006, FT016181) For the year ended 31 December 2014 STATEMENT OF FINANCIAL POSITION
Notes 31-Dec 2014 31-Dec 2013
US$ US$
ASSETS
Cash and cash equivalents 9 6,079 -
Advances 10 58,200 -
TOTAL ASSETS 64,279 -
GRANT BALANCE
Grant balance 11 64,279 -
TOTAL GRANT BALANCE 64,279 - The accounting policies and notes set out on pages 12 to 23 form an integral part of these financial statements.
The FGS Accountant General declined to sign the financial statements of the project since the project’s financial management and information systems were implemented outside the approved Federal Government of Somalia, Somalia Financial Management Information Systems and External Assistance Fiduciary Section. The financial statements subjected to audit are those provided by the Project Implementation Unit
………………………..
Ahmed Yusuf Muumin, Accountant General, Ministry of Finance
9
Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 STATEMENT OF CASH FLOWS
Notes 31-Dec 2014 US$
31-Dec 2013 US$
Cash from operating activities
Reconciliation of surplus for the year to cash from operations:
Surplus for the year 64,279 -
Depreciation of fixed assets 13,400
Changes in advances (58,200) -
Depreciation of property, plant and equipments - -
Net cash from operating activities 19,480 -
Investment activities
Purchase of property plant and equipment (13,400)
Total cash flows from investment activities (13,400)
Net increase in cash and cash equivalents 6,079 -
Movements in cash and cash equivalents
At start of year - -
Net increase in cash and cash equivalent 6,079 -
At end of year 9 6,079 - The accounting policies and notes set out on pages 12 to 23 form an integral part of these financial statements
The FGS Accountant General declined to sign the financial statements of the project since the project’s financial management and information systems were implemented outside the approved Federal Government of Somalia, Somalia Financial Management Information Systems and External Assistance Fiduciary Section. The financial statements subjected to audit are those provided by the Project Implementation Unit
……………………………………….
Ahmed Yusuf Muumin Accountant General, Ministry of Finance.
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014
STATEMENT OF COMPARISON OF BUDGET AND ACTUALS AMOUNTS
NOTE FINAL BUDGET
US$
ACTUAL OUTTURN
US$
BUDGET VARIANCE
US$
PERCENTAGE VARIANCE %
RECEIPTS
Multilateral Sources 4 280,000 240,815 39,185 86%
Total Receipts 280,000 240,815 39,185 86%
Recurrent Expenses
Use of goods and services
7 265,000 163,155 101,845 62%
Total Recurrent Expenditure 265,000 163,155 101,845 62%
Capital Expenditure
Capital 8 15,000 13,400 1,600 89%
Total Capital Expenditure 15,000 13,400 1,600 89%
Total Expenditure 280,000 176,555 103,445 63%
Surplus 0 64,260 64,260
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 SOURCES AND USES OF FUNDS STATEMENT BY SUB - COMPONENTS (ACTIVITIES)
Sources of funds Year Ending December 2014
US $
Cumulative to Date
US $
State and Peace Building Fund (SPF) – World Bank 240,815 240,815
Other income 20 20
TOTAL SOURCES OF FUNDS (A) 240,835 240,835
Expenditure by sub-component (Activities)
Open access to international bandwidth 92,949 92,949
Installing communication rooms in key ministries and development partners
63,367 63,367
Establishing a Project Management Unit 16,500 16,500
Bank charges 3,741 3,741
Total expenditure by sub-component (B) 176,556 176,556
Closing cash balance
Fund source (A-B) 64,279 64,279
Total closing cash balance 64,279 64,279
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 NOTES TO THE FINANCIAL STATEMENTS 1. General Information The principal address of the reporting entity is as detailed below: Ministry of Finance Villa Somalia Mogadishu Somalia 2. Accounting policies These are the specific principles, bases, conventions, rules and practices adopted by the reporting entity in preparing and presenting the financial statements. The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all transactions unless otherwise stated. The following specific policies have been used (a) Basis of preparation These special purpose financial statements have been prepared in accordance with Cash Basis IPSAS Financial Reporting under The Cash Basis of Accounting issued by Public Sector Committee of the International Federation of Accountants (IFAC-PSC). They are presented in United States Dollar (US$). The measurement basis used is the historical cost basis except where otherwise stated in the accounting policies below. (b) Reporting entity The financial statements are for the Information and Communication Technology Support Project (P148588, TF017371) implemented by the Federal Government of Somalia (FGS) through The Ministry of Posts and Telecommunications. The transactions to be captured are only those that are controlled by the reporting entity and those controlled by third parties for and on behalf of the reporting entity. For purposes of these financial statements there were no third party transactions reported in respect of the project activities. (c) Reporting currency and translation of foreign currencies The functional and reporting currency is the United States Dollar (US$), which is accepted as legal tender in the Federal Government of Somalia. Items included in the financial statements are measured in the currency of the primary economic environment in which the entity operates. (d) Reporting Period The reporting period for these financial statements is the 2014 financial year of the Government, which runs from 1 January 2014 to 31 December 2014. (e) Payments by Third Parties During the year ended, the project did not benefit from any goods and services as reported to have been purchased on its behalf as a result of cash payments made by third parties during the year. (f) Direct payments Direct payments represent payments made by the World Bank directly to the third party suppliers on behalf of the project.
13
Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) (g) Receipts
Receipts represent cash received by the Information and Communication Technology Support Project (P148588, TF017371) during the financial year and comprise: External Assistance through both cash disbursements and direct payments. The cash disbursements have been recognized as revenue and included in the financial statements when payments are made from the project Designated Account (DA) which was operated as a holding account to the main Treasury Single Account (TSA). The closing balance on the DA was also included as revenue receipts from the World Bank. The direct payments are recorded and recognized as receipts when the associated payments are duly authorized and submitted to the World Bank for payment. (h) Expenditure Expenditure represents outlays of cash made by the project or other agencies for and on behalf of the project. The expenses comprise both of recurrent and capital expenditure and in general they are included in the financial statements when cash is paid out. (i) Capital items/Non-current assets Capital items or Non-current assets principally comprises, motor vehicle, computer equipments, furniture, fittings and equipments and any other capital assets controlled by the project. Under the government’s cash basis of accounting, capital items have been fully expensed in the year of purchase. However, these assets are recorded in the Fixed Asset Registers at historical cost as a memorandum record with effect from 1 January 2014. (j) Comparative figures for previous year The project became effective and commenced operations during the year, and therefore there are no comparative figures for the prior year. (k) Foreign currency transactions Foreign currency transactions denominated in foreign currencies would be converted into United States Dollars (US$) at the exchange rate ruling on the date of the transaction; realized gains and losses resulting from these transactions would be recognized in the Statement of Receipts and Payments. Monetary assets and liabilities denominated in foreign currency at the year-end would be translated at the closing rate of exchange with the resulting exchange gains/ (losses) dealt with through the Statement of Receipts and Payments. However, for purposes of this accounting policy, there was no foreign currency transactions translated at the reporting date. (l) Cash and cash equivalents For the purposes of the statement of cash flows, cash and cash equivalents comprise of deposits held at call with Central Bank of Somalia. (m) Employee benefits Employee benefits include salaries, allowances and other related employment costs and these are recognized in the financial statements only when actual payments are made. There were no employee benefits paid under the project during the year ended.
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) (n) Project closing date According to the Grant Agreement the closing date of the Project is 31 July 2016.
(o) Authorisation date The FGS Accountant General declined to sign the financial statements of the project since the project’s financial management and information systems were implemented outside the approved FGS SFMIS and EAFS. The Financial statements in the project’s report are those unaudited and not signed financial statements provided by project’s PIU
(p) Exchange rates All monetary amounts in the financial statements are expressed in United States Dollars (US$). The estimated US$ closing rates for major currencies were:
Actual 31 Dec
2014 US$
Actual 31 Dec
2013 US$
Somali Shilling 20,265 20,149
Great Britain Pound 0.641584 0.6034
Euro 0.825748 0.7259
3. State and Peace Building Fund Grant Fund received The grants received from World Bank under the State and Peace Building Fund are not repayable in future. The amounts in the Statement of Receipts and Payments are only recognized when received by and are under the control of the FGS and attributed to the project. The amount of external assistance received for the project in 2014 is as detailed below:
31Dec 2014 31Dec 2013
US$ US$ Multilateral Sources State and Peace Building Fund (SPF) – World Bank 240,815 - Total Grant Received 240,815 -
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) 4. Direct execution by World Bank
31Dec 2014 31Dec 2013
US$ US$ Multilateral Sources State and Peace Building Fund (SPF) – World Bank Direct Payments
80,940 -
Total World Bank direct payments 80,940 - World Bank direct payments represents direct salary costs for the Project Manager paid directly by the Bank into the Project Manager’s personal bank account
5. Miscellaneous receipts The Miscellaneous amount of US$ 20 represents account opening balance for the Designated Bank account of the project maintained at Central Bank of Somalia
6. Use of goods and services The following expenditure detailed below have been included under the use of goods and services:
31 Dec 2014 31 Dec
2013 US$ US$
Open access to International bandwidth 79,549 - Communication rooms in key ministries 63,367 - Project Management Unit 16,500 - Finance Costs/Bank Commissions 3,740 - Total use of goods and services 163,156 -
7. Capital expenditure – Noncurrent assets (fixed or physical assets)
31 Dec 2014 31 Dec
2013 US$ US$
Capital items 13,400 - Total Capital expenditure expensed 13,400 - All property, plant and equipment (fixed assets) purchased during the year are expressed during the year of purchase
8. Cash and cash equivalents Cash comprise of demand deposits. Demand deposits consists of year-end project bank balance held at Central Bank of Somalia (CBS) and the project bank account is part of Treasury Single Account (TSA) as detailed in the below:
16
Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014
31 Dec 2014 31 Dec 2013
US$ US$ Project Designated Account No.1020 6,079 - Total cash and cash equivalents 6,079 - 9. Advances
The advance of US$ 58,200 relates to Work Plan activities under the budget being executed by World Bank which were paid by the project on behalf of World Bank
10. Accumulated Funds The accumulated surplus as at the yearend is as detailed below: 31 Dec 2014
US$ 31 Dec 2013
US$ At beginning of the year - -
Surplus for the year 64,279 -
At end of the year 64,279 -
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014
Federal Government of Somalia
Information and Communication Technology Support Project (P148588, TF017371) Designated Account (DA) Statement
Depository Bank: Central Bank of Somalia Account Number: 1020
As at December 31, 2014 and for the period from May 30, 2014 to December 31, 2014
In Currency USD USD Opening balances as at 30 May 2014
-
Add:
World Bank advances into the DA during the period
240,815
Interest earned (if credited into DA)
-
Subtotal
240,815 Less:
Amount of eligible expenditures paid during the period 176,556
Refund to World Bank from the DA during the period -
Payments made by project on behalf of World Bank 58,200
Service charges (if debited into DA)
-
Subtotal
234,756 Closing balance as at December 31, 2014
6,079
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 ANNEX I: RECONCILIATION BETWEEN THE AMOUNTS RECEIVED BY THE PROJECT AND DISBURSED BY THE WORLD BANK – DESIGNATED ACCOUNT INFORMATION AND COMMUNICATION TECHNOLOGY SUPPORT PROJECT (P148588, TF017371)
FOR THE YEAR ENDED 31 DECEMBER 2014
Category Withdrawal Application
No.
Amount received by the
project
Amount disbursed by the
World Bank
Variance
US$ US$ US$ Goods, Non-Consulting Services, Consultants' Services, Training and Operating Costs
1 50,000.00 50,000.00 -
2 48,061.50 48,061.50 - 3 47,267.40 47,267.40 - 4 48,339.51 48,339.51 - 5 47,146.60 47,146.60 -
Total 240,815.01 240,815.01 -
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Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 ANNEX II: SUMMARY OF DIRECT PAYMENTS INFORMATION AND COMMUNICATION TECHNOLOGY SUPPORT PROJECT (P148588, TF017371)
FOR THE YEAR ENDED 31 DECEMBER 2014
Category Withdrawal
Application No. Amount disbursed by the World Bank
US$ Project Implementation Unit – Project Manager
1 23,560
2 9,500 3 10,260 4 9,880 5 11,400 6 16,340
Total
80,940
20
Federal Government of Somalia Information and Communication Technology Support Project (P148588, TF017371) For the period from 1 July to 31 December 2014 ANNEX III SUMMARY OF STATEMENTS OF EXPENDITURES (SoEs) Application Withdrawal
No. Withdrawal reference Amount of SoEs US$
Comments
1 app-with-01/2014
47,300.00
2 app-with-02/2014
- Missing Application for Withdrawal form3
3 app-with-03/2014
47,267.40
4 app-with-04/2014
48,339.51
5 app-with-05/2014
47,146.00
Total (excluding the missing Application for Withdrawal)
190,052.91
3 The PIU did not provide Application for Withdrawal form together with Statement of Expenditures. We have raised this in the project’s management letter
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