Promoting Accountabliity of Pubik Resoures

AUDITOR GENERAL'S REPORT

On The Audit of the Public SectorModemization Project (PSMP)

For the Period June 2016 toJuly 2017

December, 2017

Yusador S. Gaye, CPA, CGMAAuditor General, R.L.

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Auditor Generals Report on the Public Sector Moderniation ProjectFinancial Statements For the period July 1, 2016 to June 30, 2017

Table of Contents

Report on the Audit of the PSMP Financial Statements........................-.-................................. 3

Statement of Receipt and Expenditure by Category ......................................................... ..... 5

Project Designated Account Statement...................................................................................... 6

Statement Of Fund Balance And Cash Status For The Year Ended June 30, 2017......................... 6

Statement of Comparison of Budget to Actual Amount............................................................... 7

NOTES TO FINANCIALSTATEMENTS ............................................................................... 9

1. Background and Information of the project..................................................................... 9

2. Use of Grant Proceeds....................................................................... ...... 9

3. Significant Accounting Policies .. 1..... ...................................... ................ -...... 10

4 . G ra nt.................................................. ................. ..................... ........................... 10

5. Improve Pay Management.............................................................................................11

6. Strengthening Payroll Management ............................................................................... 11

7. Improved Performance......................................................................................11

8. Improved/Project Management....................................................................................11

2 Ensuring Accountability of Public Resources

Auditor General'S Report on the Public Sector Modemizaton ProjectFinancial Statements For the period ended June 30, 2017

December 30, 2017

Dr. Puchu Leona BernardDirector GeneralCivil Service AgencyMonrovia, Liberia

RE: Report on the Audit of the PSMP Financial Statements

OpinionIn our opinion, the accompanying financial statements present fairly, in all material respects, theStatement of Receipts and Payments, Statement of Comparison of Budget and Actual Amounts anda summary of accounting policies and other explanatory notes for the fiscal period then ended inaccordance with International Public Sector Accounting Standards (IPSAS) Cash Basis ofAccounting.

We have audited the accompanying financial statements of Public Sector Modernization Project(PSMP) as at 3une 30, 2017, which comprise the Statement of Receipts and Payments, Statement ofComparison of Budget and Actual Amounts and a summary of accounting policies and otherexplanatory notes.

Basis for OpinionWe conducted our audit in accordance with International Standard of Supreme Audit Institutions(ISSAIs).Our responsibilities under those standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report. We are independentof the Public Sector Modernization Project (PSMP) and the Civil Service Agency (CSA) in accordancewith the International Ethics Standards Board for Accountants' Code of Ethics for ProfessionalAccountants (IESBA Code) together with the ethical requirements that are relevant to our audit ofthe financial statements and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the IESBA Code. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our opinion.

Responsibilities of PSMP Management for the financial statementsManagement is responsible for the preparation and fair presentation of the financial statements in

accordance with International Public Sector Accounting Standard Cash Basis (IPSAS), and for suchinternal control as management determines is necessary to enable the preparation of financialstatements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the ProjectManagement ability to continue as a going concern, disdosing, as applicable, matters related togoing concern and using the going concern basis of accounting unless management either intendsto liquidate the project or to cease operations, or has no realistic alternative but to do so.

3 Ensuring Accountability of Public Resources

Auditor General's Report on the PublIc Sector Modemizadon ProjectFinancial Statements For the penod ended June 30, 2017

Auditor's Responsibilities for the Audit of the Financial StatementsThe objectives of our audit are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due to fraud or error, and toissue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conductedin accordance with the International Standard of Supreme Audit Institutions (ISSAIs) will alwaysdetect a material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.

Yusador S. Gaye, CPA, CGMAAuditor General, R.L.

Monrovia, LiberiaDecember 2017

4 Ensuring Accountability of Public Resources

Auditor General's Report on the Public Sector ModemizaPon PrjectFinancial Statennts For the period ended June 30, 2017

Statement of Receipt and Expenditure by Category

Notes July 1, 2016 July 1, 2015June 30, June 30, 2016

2017

Receipts US$ US$

IDA(World Bank) Fund 4 1,878,588.00 1,828,374.00

Total Receipts 1,878,588.00 1,828,374.00

Less Payment:

Payment

Improve Pay management 5 148,369.00 76,029.20

Strengthened payroll Management 6 411,865.00 177,755.43

Improved Performance 7 420,340.00 253,179.42

Program/ project Management 8 921,147.00 854,453.26

Total payments 1,901721.00 1,361,417.31

Excess of payments over receipts over (23,133.00) 466,957.00

payment

Fund Balance as at beginning 466,957.00 -

Decrease/ Increase in cash

Cash at the end of the year 443,824.00 466,956.69

The notes on page 9 to 13 are integral part of these Project Financial report.

5 Ensuring Accountobility of Public Resources

Auditor Genera's Report on the Public Sector Modemization Projectfinancial Statements For the period ended June 30, 2017

Project Designated Account Statement

Account Number 1502021698

Statement Of Fund Balance And Cash Status ForThe Year Ended June 30, 2017

Notes 2017 2016In United States Dollars

A. FUND BALANCE

Balance of Project Fund b/f 466,956.69 -

Add: Total Receipts during the period 1,878,588.00 1,828,374.00

Total fund available for operations 2,345,544.69 1,828,374.00

Less: Total payments during the period 1,901,721.00 1,361,417.31

Balance of project funds at the end of the year 443,824.69 466,956.69

B. CASH STATUS:Cash at bank 443,824.69 466,956,69

Total cash on hand and in bank 443,824.69 466,956.69

Difference between A and B -

The notes on page 9 to 13 are integral part of these Project Financial report.

6 Ensuring Accountability of Public Resources

Auditor Generals Report on the Public Sector Modernization ProjectFinancial Statements For the period ended June 30, 2017

Statement of Comparison of Budget to Actual Amount

Original Budget Final Budget Actual VarianceAmounts

US$ US$ US$ US$

Cash InflowsAuthorized 1,878,588.00 1,878,58800 1,901,721.30 23,133.30Allocations/ReceiptsTotal Receipts 1,878,588.00 1,878,588.00 1,901,721.30 23,133.30

Cash Outflows

Improve Pay Management 148,561.00 148,561.00 148,369.00 192.00

Strengthened payroll 424,478.57 424,478.57 411,865.51 12,613.06ManagementImproved Performance 438,677.05 438,677.05 420,340.03 18,337.02

Program/ project 1,601,740.00 1,601,740.00 921,146.76 680,593.24ManagementTotal Payments 2,613,456.62 2,613,456.62 1,901,721.30 711,735.32

Note: DLI payments of USD 680,000.00 cleared by the Bank to be paid to participating Ministries and

included in Component 4 budget was differed to the 2017/ 2018 fiscal year.

The notes on page 9 to 13 are integral part of these Project Financial report.

7 Ensuring Accountability of Public Resources

Auditor Generals Report on the Public Sector Modernization ProjectFinancial Statements For the penod ended June 30, 2017

STATEMENT OF FINANCIAL POSITION AS AT JUNE 30, 2017

In United State Dollars

AM-tl Notes 2017 2016

Cash and cash equivalent 443,824.00 466,957.00

Total Assets 443,824.00 466,957.00

Fund Balance

Grants 443,824.00 466,957.00

Accumulated 443,824.00 466,957.00

The notes on page 9 to 13 are integral part of these Project Financial report.

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Auditor General's Report on the Public Sector Modernization ProjectFinancial Statement5 For the period ended June 30, 2017

NOTES TO FINANCIAL STATEMENTS

1. Background and Information of the projectWith support from the International Development association AID-Us Agency For InternationalDevelopment (Usaid), SIDA-Swedish Intl. Dev. Cooperation Agency (Sida); the PSM-Project is toimprove pay and performance management in participating ministries, and strengthen payrollmanagement in the civil service in Liberia. The project has four components. The PSM Project wasapproved by the World Bank on February 10, 2014 and other Partners with a grant amount of USD10.71 Million. The aim of the project is:

I. Improved Pay ManagementII. Strengthened Payroll ManagementIII. Improved PerformanceIV. Program/Project Management

2. Use of Grant ProceedsThe table sets out the categories of items to be financed out of the grant proceeds, the allocation ofthe amounts of the grant to each category and the percentage of expenditures for items to befinanced in each category:

Category Amount of % ofgrant allocated expenditure

expressed in to beUS$ Million financed

Improved Pay Management 3,18 30

Strengthened Payroll Management 3.05 28

Improved Performance 3.38 32

Program/Project Management 1.10 10

TOTAL 10.71 100

All categories of expenditure shown in these financial statements are fully financed based onthe percentage below:

% of Expenditure

USAID 47

IDA 19

SIDA 34

Total 100

9 Ensuring Accountability of Pubic Resources

Auditor General's Report on the Public Sector Modernization ProjectFinancial Statements For the period ended June 30, 2017

3. Significant Accounting Policies

Basis of Accounting

The financial statement have been prepared been in accordance with the Cash basis InternationalPublic Sector Accounting Standards (IPSAS) and in the manner required by the project GrantAgreement as required by the World Bank's Operating Policcies and procedures and PFMU'sFinancial Management manual. This implies that all expenditures are expensed whether they arerevenue or capital in nature and income is recognized when funds are received from the WorldBank.

Reporting currency

Financial reports have been presented in United states Dollars Transactions denominated in othercurrencies are translated into United Stated Dollars and recorded at the rate of exchange ruling atthe date of transactions. Balances denominated in other currencies are translated into United StatesDollars at the rate of exchange prevailing on the reporting date.

4. GrantGrant from PSMP is held in a deferred income account when received and rae only recognized inthe project's income statement when utilized.

Grant Receipt 30 June 30 JuneIn United States Dollars 2017 2016

PSMP/MFDP/001-IDA 53590 - 600,000.00PSMP/MFDP/003-IDA 53590 - 728,374.00

PSMP/MFDP/005-IDA 53590 - 500,000.00PSMP/MFDP/006-IDA 53590 94,000.00 -

PSMP/MFDP/001-TF A1263 1,784,588.001,878,588.00 1,828,374.00

10 Ensuring Accountability of Public Resources

Auditor General's Report on the Public Sector Modernization ProjectFinancial Statements For the period ended-June 30, 2017

NOTES TO THE FINANCIAL STATEMENT(Continued)

In United States Dollars

Note 1-Jul-16 1-Jul-15

30-Jun-17 30-Jun-16

5. Improve Pay ManagementDevelop CS Pay Strategy 27,111.00 -

Civil Servants mapped-grades 30,878.00 11,199.00Training-Grading Job Evaluation & Class 90,000.00 49,444.00

CS aware of pay reforms - 2,000.00

Strengthening Pension Unit 380.00 13,386.00

TOTAL 148,369.00 76,029.00

6. Strengthening Payroll Management 6CSA & MAC HR Office Employees 4,226.00 75585HRMIS-Biometrics Decentralization 85,794.00 72419

Produce Biometric ID cards 313,463.00 29752IT Infrastructure Upgrade & Supp 8,382.00 -

TOTAL 411,865.00 177,756.00

7. Improved Performance 7Org design model & methodology 167,712.00 8,625.00Org diagnoses carried out MACs 3,500.00 18,093.00

Reversal org structure 10 MACs-GC 68,077.00 33,023.00

Armed mandate & function of MACs 126,716.00 19,885.00Heads of Department & Divisions Training 32,390.00 135,694.00

Perf Management Training rolled out in MAC 21,945.00 37,859.00TOTAL 420,340.00 253,179.00

8. Improved/Project Management 8Workshop/Retreat/Forum 43,596.00 10,299.00General Operations 486,305.00 438,861.00program Implementation Support 12,893.00 171,276.00Office-Capacity Support - 17,100.00

Tech Support to Implementation agencies/LIPA - 34,000.00

Consultancy 378,353.00 182,917.00

TOTAL 921,147.00 854,453.00

Ensuring Accountability of Public Resources

Auditor Generals Report on the Public Sector Modernization ProjectFinancial Statements For the penod ended June 30, 2017

9. Cash paidImprove Pay Management 148,369.00 76,029.00Strengthening Payroll 411,865.00 177,756.00ManagementImproved Performance 420,340.00 253,179.00Improved/Project Management 921,147.00 854,453.00

Total Payment 1,901,721.00 1,361,417.00

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Auditor General' Report on the Public Sector Modemizatyon ProjectFinancial Statements For the period ended June 30, 2017

NOTES TO FINANCIAL STATEMENT (continued)PROJECT DESIGNATED ACCOUNT STATEMENT

Account Number 1502021698

Account Type Current Account

Depository Bank Central Bank of Liberia

Address Ashmun StreetMonrovia, Liberia

Related Grant Agreement Grant No. IDA 53590

Currency In United States Dollar

In UnitedStates Dollar

2017 2016June June

Total Grant Received 1,878,588.00 1,828,374.00

Total grant income reported 1,878,588.00 1,828,374.00

Amount spent 1,901721.00 1,361,417.31

Balance as at July 1 466,957.00 -

Balance as at June 30 443,824.00 466,957.00

13 Ensuring Accountability of Public Resources