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Ulaanbaatar 2016
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<(j/-CONFIDENCE-AUDIT
Auditing. Accounting. Training. Tax Consaltlng
Ulaanbaatar city, Chingeltci district., 3rd khoroo, Capital center, 10th floor# 1005
Phone 976-11-322431, Fax 976-70ll9100 E-mail: info@conlidenceaudilmn
2o'f6. OS'. 'IJ .H'! o "f /OS"'? ,J
INDEPENDENT AUDITORS' REPORT
r
To: The Management of Livestock and Agricultural
Marketing Project
We have audited the accompanying balance sheet of "Livestock and Agricultural Marketing" Project, pursuant to the Grant Agreement (Grant No. TF014820) entered between the International Development Association and Government of Mongolia dated 03 July 2013, as of 31 December 2015 and its statements of source and uses of funds, the statement of expenditures and the special account reconciliation statement for the year then ended.
The preparation and presentation of these financial statements are the responsibility of Project management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 overall financing statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, (A) the financial statements referred above and the disclosures to these financial statements present fairly, in all material respects, the financial position of the "Livestock and Agricultural Marketing" Project as of 31 December 2015 and the result of operation for the year then ended in accordance with IPSAS; (B) the Borrower has utilized all proceeds of the loan withdrawn from the International Development Association only for purposes of the project as agreed between the International Development Association and the Government of Mongolia in accordance with the Grant Agreement; and no proceeds of the loan have been utilized for other purposes; and (C) the Borrower was in compliance as at the date of the balance sheet of the year of audit with all financial covenants of the Grant Agreement.
In addition:
(a) (I) With respect to Statements of Expenditures, adequate supporting documentation has been maintained to support claims to the International Development Association for replenishments of expenditures incurred; and (2) which expenditures are eligible for financing under Grant Agreement No. TF014820.
(b) (1) The Imprest Account (page 6) give a true and fair view of the receipts collected and payments made during the year ending 31December2015; and (2) these receipts and payments support Imprest Account replenishments during the year.
~ 1~ ~ ~ ; KOH<I>H,ll.EHCE ~ -~ AY.a.HT XXK
! k/~r-e k~-1 L'tc >< TTA50l~.,.uU~§J•=,s2.__ ______ _
Ulaanbaatar, Mongolia YnAA>f.Goofidence-Audit" LLC
The Government of Mongolia The International Development Association
Grant No.TF014820
Livestock and Agricultural Marketing Project
BALANCE SHEET
As at December 31, 2015
Balance items
ASSETS Cash and cash equivalents Cash at bank:
Designated account Operating account /MNT/
Cashon hand Total cash and cash equivalents Advance Payments Cumulative project expenditures Category 1 Category 2 Foreign exchange loss Total cumulative project expenditures
TOTAL ASSETS
FUNDS IDA Grant Net interest earned
TOTAL FUNDS
Prepared by:
J.Sukhger Financial Management Specialist
Note
3
As at Dec 31, 2015 In US Dollars
87,955.51 18,680.90
295.53 106,931.94 12,274.67
2,234,011.12 1,053,453.56
176.43 3,287,641.10
3,406,847. 71
3,362,474.66 44,373.05
3,406,84 7. 71
Project Coordinator
As at Dec 31, 2014 In US Dollars
858,895.30 7,436.55
476.42 866,808.27
636,932.35
147.10 637,079.45
1,503,887. 71
1,482,998.81 20,888.90
1,503,887.71
The Government of Mongolia The International Development Association
Grant No.TF014820
Livestock and Agricultural Marketing Project
SOURCES AND USES OF FUNDS
For the year ended December 31, 2015
Current year Previous year US Dollars US Dollars
FUNDS IDA Grant 1,879,475.85 1,482,998.81 Net interest earned 23,484.15 20,888.90
TOTAL FUNDS 1,902,960.00 1,503,887. 71
USES OF FUNDS Advance payment 12,274.67 Category 1 1,597 ,078. 77 636,932.35 Category 2 1,053,453.56 Foreign exchange loss 29.33 147.10
TOT AL USES OF FUNDS 2,662,836.33 637,079.45
Surplus of funds over uses (759,876.33) 866,808.27
Prepared by:
r- W7'~A2~ J.SukhgerV Zl--- s.Vanchin
Financial Management Specialist Project Coordinator
I , ..o. Co .... -""'. u.e1 TJ;#" P•O- -~"f--
Total US Dollars
3,362,474.66 44,373.05
3,406,847.71
12,274.67 2,234,011.12 1,053,453.56
176.43 3,299,915. 78
106,931.94
~ (') 0 :I =-"II~
i ~ I ~ Iv'~ l Cl. = ~ ,.
Number of WA
Application type Claimed date
The Government of Mongolia The International Development Association
Grant No.Tf014820
Livestock and Agricultural Marketing Project
STATEMENT OF EXPENDITURES (Withdrawals)
For the year ended December 31, 2015
Amount claimed in US dollars Credited date
Advance I Category I I Category2 I Beginning balance I ,000,000.00 636,932.35 -WAS WA6 WA7 WA8
WA9 WA IO WA It WA 12
WA 13 Total
Replenishment 26-Mar-15 16-Apr-15 Replenishment 17-May-15 29-May-15 Replenishment 22-Jun-15 IO-Jul-15 Replenishment 17-Jul-15 27-Jul-15
Replenishment 8-Sep-15 29-Sep-15 Replenishment 23-0ct-15 5-Nov-15 Replenishment 17-Dec-15 30-Dec-15 Replenishment 21-Dec-15 Sub total Amount withrawn but not claimed
Prepared by:
~~~ J.Sukhgerel/ 0
Financial Management Specialist
d
- - -- 184,502.35 -- 148,188.96 -- 64,612.34 -- 149,554.83 741,249.50 - 50,310.69 4,812.54
- 220,464.17 161,846.94
- 550,585.46 16,331.56 1,000,000.00 2,005,151.14 924,240.54
- 228,859.96 129,213.02 1,000,000.00 2,234,011.12 1,053,453.56
Amount credited
Total in US dollars Differences
1,636,932.35 1,482,998.8 l 153,933.54
- 153,933.54 (153,933.54) 184,502.35 184,502.35 148,188.96 148,188.96 64,612.34 64,612.34
890,804.33 890,804.33 55, 123.23 55,123.23
382,3 I I.I I 382,31 I.I I 566,917.02 - 566,917.02
3,929,391.68 3,362,474.66 566,917.02 358,072.98 - 358,072.98
4,287 ,464.68 3,362,474.66 924,990.01
The Government of Mongolia The International Development Association
Grant No. TFO 14820
Livestock and Agricultural Marketing Project
SPECIAL ACCOUNT RECONCILIATION STATEMENT Account number 104900057230, with State bank
As at December 31, 2015
1 Total advanced by IDA 2 Less: Total amount recovered by IDA 3 Equal present outstanding amount advanced to the special account
4 Balance of special account per attached bank statement as of date 2015/12/31
5 Total amount withdrawn and not yet claimed /WA 13/
6 Amount climed but not yet credited at date of bank statement /WA 12/
7 Interest earned
8 Bank charge
9 Total advance accounted for 10 Difference between total appearing on lines 3 and 9
Explanation of any difference between total appearing on lines 3 and 9 All items should be indicated on the bank statement Operation account As at December 31, 2015 Cash on hand Advance Payments Currency difference
Prepared by:
J.S:!i,~r-Financial Management Specialist Project coordinator
~ Conftdence Audit LLC . 6
Page "_ ........
In US dollars l ,000,000.00
1,000,000.00
87,955.51
358,072.98
566,917.02
(44,373.05)
968,572.47 31,427.53
18,680.90 295.53
12,274.67 176.43
31,427.53
The Government of Mongolia The International Development Association
Grant No.TF014820
Livestock and Agricultural Marketing Project
NOTES TO THE PROJECT FINANCIAL STATEMENTS
For the year ended December 31, 2015
1. Project background
The objective of the Project is to improve rural livelihoods and food security in selected Aimags and Soums through investments in enhanced productivity, market access and diversification in livestock-based production systems.
The Project, which is proposed to be aligned with the "Soum Program", consists of the following parts:
Part 1. Linking Herders to Markets
(a) Meat and fiber Market Development
(i) Improving efficiencies along the value chains of selected livestock products, namely; meat, cashmere, and wool, through the creation and enhancement of productive partnerships between producer groups such as herders and farmers, and buyers and/or processors of their product, through provision of technical assistance and training to participants in such value chains.
(ii) Carrying out of an outreach campaign aimed at promoting Project activities to targeted groups of herders, farmers and other participants along selected value chains of meat and fiber products.
(iii) Provision of technical assistance and training, including provision of extension services and assistance with the development of business plans, to herder groups, in order to support them to add value to, and market, their products;
(iv) Provision of Matching Grants to herder groups for investments aimed at enhancing meat and fiber production and marketing, including improved collection, handling, cleaning, sorting, packaging and storage.
(b) Dairy Market Development
(i) Provision of technical assistance and training, including provision of extension services and development of business plans, to small scale herder groups to assist them to market their products to daily plants or for local consumption.
(ii) Provision of Matching Grants to small scale herder groups for investments in pilot milk collection schemes and small-scale daily processing plants.
(c) Pilot Horticulture Production
(i) Provision of Micro Grants to low-income female headed households, unemployed persons, and small scale herders to enable them to diversify their sources of household nutrition and income through investments in horticulture production and processing.
(ii) Provision of technical assistance and training, including provision of extension services and assistance with development of business plans, to small-scale horticulture producers in order to improve their productivity.
Part 2. Raislne Livestock Productivity and Quality
(a) Promoting Animal Health
Promoting animal health and productivity by strengthening of disease free zones and provision of veterinary services, including;
(i) Carrying out programs to control foot and mouth disease and brucellosis including (A) acquisition of animal handling equipment, veterinary supplies and equipment, and cold chain and laboratory equipment; and (B) establishment of animal health inspection posts and buffer-zone check points.
(ii) Provision of grassroots veterinary services and herd health management services.
(iii) Provision of training to veterinarians and other animal health professionals and paraprofessionals, in other to enhance their capacity to carry out the activities under this part 2 of the Project.
(b) Animal breeding and Genetic Improvement
Supporting genetic improvement and enhanced breeding management through investments in sheep and goats, dairy cattle and beef cattle, including:
(i) Establishment, and/ or rehabilitation, and equipping of breeding stations; (ii) Provision of training to Soum livestock officers, artificial insemination
technicians, herders and daily farmers; (iii) Establishment of nucleus herds in order to create a source of genetically
improved animals; (iv) Strengthening of artificial insemination capacity at the soum level through
acquisition of equipment and supplies; and (v) Provision of genetically improved animals for purchase by herders.
(c) Anhnal nutrition
Improving livestock productivity through improved nutrition, including: (i) Provision of Matching Grants to herder groups for investments in livestock feed
production and processing and feeding programs; and (ii) Carrying out of participatory on-farm research for demonstration purposes to
enable producers at large to better understand the relationship between nutrition, productivity and profitability.
Part 3. Project Management
Provision of technical assistance and training to support Project implementation and coordination.
The following table specifies the categories of Eligible Expenditures that may be financed out of the proceeds of the Grant ("Category"), the allocations of the amounts of the Grant to each Category, and the percentage of expenditures to be financed for Eligible Expenditures in each Category;
Amount of the Grant Percentage of Category Allocated Expenditures to be
(expressed in USD) Financed (inclusive of Taxes)
(l)Goods, works, non-consulting services, and 6,610,000 consultants' services, 100% Training and Incremental Operating Costs
(2) Sub-grants 3,520,000 100% of amounts disbursed
Unallocated 870,000 TOTAL AMOUNT 11,000,000
2. Summary of significant accounting policies
a) Statement of compliance
The financial monitoring reports comprise the balance sheet, a summary of source and uses of funds, the statement of expenditure and the special account statement. These financial
monitoring reports have been prepared in accordance with Financial Monitoring Reports for
World Bankjinanced Projects: Guidelines for Borrowers.
b) Basis of preparation
The financial monitoring reports are prepared in accordance with International Public Sector Accounting Standards (IPSASs) issued by the International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants and cash receipts and disbursement basis of accounting has been applied. On this basis, receipts are recognized when received or direct payment to creditors are made rather than when income is earned and disbursements are recognized when paid rather than when expenses are incurred.
c) Basis of measurement
The financial monitoring reports are presented in U.S.Dollar ('USD'). Cash balances denominated in currencies other than USD are translated into USD at year end rates of exchange stated by the Bank of Mongolia. Transactions denominated in currencies other than USD are translated at rates at the dates of the transaction stated by the depository bank. Any gains and losses are reflected in the statement of sources and uses of funds.
d) Basis of presentation
The accounts balances in the Financial Monitoring Reports as December 31, 2015 have been presented on December 31, 2014.
e) Designated account
In according to the Disbursement Letter, the project opened the Designated Account which is one segregated account for the grant financing at the State Bank acceptable to the World bank. The ceiling of the designated account became US$1,000.000 in according to the disbursement letter issued by the Association on July 3, 2013.
3. Category 1
The project has separately accounted Category l by following types of expenditures.
Goods Works Consulting service Non Consultant services Training expenses Operating costs Total
4. Cumulative project expenditures
Category
( 1) Goods, works, non consulting services, and consultants' services, Training and Incremental Operating cost (2) Sub-grants Unallocated Total amount
Amount of the grant Allocated (expressed in
USO)
6,610,000.00
3,520,000.00 870,000.00
11,000,000.00
C .b ~ Confldenc. Audit LLC T:{Jd- P1ge _!£ .. "
31-Dec-lS 846,642.64
6,384.62 864,055.01 184,305.04 135,738.84 196,884.97
2,234,011.12
Disbursed
2,234,011.12
1,053,453.56
-3,287 ,464.68
31-Dec-14 137,277.34
6,384.62 269,284.43 57,669.33 50,984.91
115,331.71 636,932.35
Undisbursed
4,375,988.88
2,466,546.44 870,000.00
7,712,535.32