PROJECT FINANCIAL STATEMENTS TECHNICAL ASSISTANCE …documents.worldbank.org/curated/en/... ·...

Report on the Republika Srpska part of the

PROJECT FINANCIAL STATEMENTS

of the

TECHNICAL ASSISTANCE FOR IMPROVING INVESTMENTCLIMATE AND INSTITUTIONAL STRENGTHENING PROJECT

of the Ministry of Finance and Treasury of Bosnia and Herzegovina

financed by:

- Swedish Grant TF 011205

FOR THE YEAR ENDED DECEMBER 31, 2015

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TECHNICAL ASSISTANCE FOR IMPROVING INVESTMENT CLIMATE ANDINSTITUTIONAL STRENGTHENING PROJECTof the Ministry of Finance and Treasury of Bosnia and Herzegovina

CONTENTS

1 Introduction 1

2 Independent Auditor's Report 3

3 Project financial statements for the year 2015 5

4 Notes to the project financial statements 7

APPENDICES

A Designated account statement - Swedish Grant TF 011205 8

B SoE Withdrawal Schedule of Swedish Grant TF 011205 for the year ended December 31, 2015 9

C Reconciliation between World Bank's disbursement statements in USD and Swedish Grant TF011205 account in USD according to the balance sheet as of December 31, 2015; SoEWithdrawal Schedule of Swedish Grant TF 011205 10


1. Introduction

1.1 Objectives of the Project

The main objective of the Technical Assistance for Improving Investment Climate and InstitutionalStrengthening Project (the "Project") is to improve the investment climate of and reduce the costs ofrisk of conducting business in Bosnia and Herzegovina through improving its inspection system.

1.2 Components and activities of the Project

The components and the activities for which the grant has been approved are as follows:

Component 1: Establishment of the Interoperability Information System (IIS) to enableelectronic data exchange between relevant institutions, respecting principles of data ownershipin accordance with authority levels in BIH, including:

(i) Establishing an information system that is accessible to all relevant institutions;

(ii) Designing and implementing an information system in alignment with EU interoperabilityframework standards;

(ili) Enabling the exchange of a variety of data, including data about inspection surveillance,data about business registration and other data between relevant institutions in alignmentwith positive regulations and agreements about data exchange;

(iv) Engaging an international resident advisor for overall design and implementation of the IISsystem.

Component 2: Inspection Reform by upgrading quality infrastructure and working withinspection bodies on the following and related activities

(i) Establishing a risk-management system for inspection to ensure information-sharing and EUapproach to risk-based inspection;

(ii) Creating inspection checklists aligned with EU practices;

(iii) Building institutional capacity at the Entity level with inspection, including technical trainingof inspection on new EU standards, study tours to EU to learn about best practices;

(iv) Assisting in creating modern internal controls, market surveillance and food and safetyinspections on the entity level, including any relevant inspection laws;

(v) Assisting in management and organizational changes of Entity inspectorate and improvinglegal infrastructure related to inspection laws;

(vi) Assisting in establishment of cantonal inspectorate in the Central Bosnia Canton,

Component 3: Redesigning and Streamlining procedures for business and exit

(i) Eliminating unnecessary pre- registration requirements and documentation;

(ii) Upgrading technical capacity of registration courts to comply with existing laws;

(iii) Harmonizing laws at the Entity level to the extent possible;

(iv) Streamlining of post-registration requirements.

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1. Introduction (continued)

1.2 Components and activities of the Project (continued)

Component 4: Project Implementation

(i) Project management support;

(ii) Capacity building in procurement, project implementation and financial management withinInspectorates.

1.3 Financing of the Project

1.3.1 Swedish Grant No. TF 011205

The State of Bosnia and Herzegovina ("the State') is the recipient of trust funds made available by bythe Swedish Intemational Development Cooperation Agency ("SIDA") TF 011205 BOS in amount USD3,750,000

The International Bank for Reconstruction and Development/International Development Association("World Bank") is acting as Administrator of grant funds.

Under the terms of a Subsidiary Finance Agreement between the State and Republika Srpska ("RS),funds of USD 1,500,000 have been lent to RS.

Item Amount of the % of expenditure toGrant allocated be financed

(in USD)(2) Goods, consultants services, training, audit

cost, and incremental operating expensesunder Part II of the Project 1,500,000 100%

Subtotal 1,500,000

Swedish Grant TF 011205 became effective on July 11, 2013. Planned closing date is December 31,2017.

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Deloitte d.D.O.Jadranska bbDeloitte 71000 SarajevoBosnia and Herzegovina

Tel: +387 (0)33 277 560Fax: +387 (0)33 277 561www.deloitte.com/ba

2. Independent Auditor's Report

To the State of Bosnia and Herzegovina,Ministry of Finance and Treasury

Attn. of Minister of Finance and Treasury H E. Mr. Vjekoslav Bevanda

Report on the project financial statements

We have audited the accompanying project financial statements of the Republika Srpska part of theTechnical Assistance for Improving Investment Climate and Institutional Strengthening Project (the"Project"), which comprise of Summary of sources and uses of funds, Balance Sheet, Designatedaccount statement, Statement of Credit withdrawals as of and for the year ended December 31, 2015and a summary of significant accounting policies and other explanatory notes for the year then ended,financed under Swedish Grant TF 011205. These project financial statements have been prepared onthe cash basis of accounting based on International Public Sector Accounting Standard ("IPSAS"), asdescribed in Note 4.1.

Responsibility for the project financial statements

The State of Bosnia and Herzegovina, i.e. the management of the project implementation unit (the"Management") is responsible for the preparation and fair presentation of these project financialstatements on the cash basis of accounting based on IPSAS, as described in Note 4.1, and on"Guidelines: Annual Financial Reporting and Auditing for World Bank - Financed Activities" issued byFinancial Management Sector Board ("FMSB"), and for such internal control as Managementdetermines is necessary to enable the preparation of the project financial statements that are free frommaterial misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the project financial statements based on our audit. Weconducted our audit in accordance with the International Standards on Auditing and "Guidelines:Annual Financial Reporting and Auditing for World Bank - Financed Activities" issued by FMSB. ThoseStandards and Guidelines require that we plan and perform the audit to obtain reasonable assuranceabout whether the project financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thespecial purpose project financial statements. An audit also includes assessing of the accountingprinciples used and significant estimates made by management, as well as evaluating the overallstatement presentation.

We believe that our audit provides a reasonable basis for our opinion.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited byguarantee, and its network of memberfirMs, each of which is a legally separate and independent entity.Please see http./www deloitte,com/ba for a detailed description of the legal structure of DeloitteTouche Tohmatsu Limited and its member firms.

Member of Deloitte Touche Tohmatsu Limited

Report on the project financial statements (continued)

Opinion

In our opinion, the accompanying project financial statements present fairly, in all material aspects, thefinancial position of the Project as of December 31, 2015, and of the funds received and disbursedduring the year then ended, in accordance with basis of accounting described in Note 4.1.

Report on other requirements

In addition, with respect to the Statements of Expenditure, adequate supporting documentation hasbeen maintained to support claims to the World Bank for reimbursements of expenditures incurred;and all expenditures included in withdrawal applications and reimbursed against are eligible forfinancing under the Project.

Deloitte d.o.o.

Sead ahtan id, director and licensed auditor Mirza Bihorac, licensed auditor

Sarajevo, Bosnia and Herzegovina

May 6, 2016

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TECHNICAL ASSISTANCE FOR IMPROVING INVESTMENT CLIMATE ANDINSTITUTIONAL STRENGTHENING PROJECTof the Ministry of Finance and Treasury of Bosnia and HerzegovinaProject financial statements for the year ended December 31, 2015(all amounts in USD, unless otherwise stated)

3. Project financial statements for the year 2015

3.1 Summary of sources and uses of funds under Swedish Grant TF 011205

Actual Cumulative Cumulative Cumulative CumulativeRef. 2015 2015 2014 budget variance

FINANCINGSwedish Grant 0 11205 1,500,000Initial deposit - 350,000 350,000SoE replenishments 237,347 379,665 142,318

TOTAL FINANCING 3.2 237,347 729,665 492,318 1,500,000 770,335

PROJECT EXPENDITUREBy Category

Goods, consultants services,training, audit cost, and incrementaloperating expenses under Part II ofthe Project 330,414 509689 179,275 1,500,000 990,311

TOTAL EXPENDITURE 3.2 3301414 509,689 179,275 1,500,000 990,311

PROJECT EXPENDITUREBy ComponentEstablishment of the InteroperabilityInformation System (IIS) 122,511 122,717 206 769,800 647,083Inspection reform by upgradingquality infrastructure with inspectionbodies 182,248 294,769 112,521 609,120 314,351Redesigning and streamliningprocedure for business entry andexit - 20,859 20,859 22,000 1,141

Project Implementation 25,655 71,344 45,689 99,080 27,736

TOTAL EXPENDITURE 3.2 330,414 509,689 179,275 1,500,000 990,311

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3. Project financial statements for the year 2015 (continued)

3.2 Balance sheet as of December 31, 2015 showing accumulated funds of the Projectand bank balances concerning World Bank Funding

December 31, December 31,Ref. 2015 2014

ASSETS

Project expenditure under Swedish Grant TF011205 3.1. 509,689 179,275

509,689 179,275

Designated account - Swedish Grant TF 011205 A 219,976 313,043

219,976 313,043

Total assets 729,665 492,318

LIABILITIES

Swedi rant TF 011205 C 729,665 492,318

otal liabilities 729,685 492,318

e

d~

ed and authorised y:

Pre ag Tomid Dejan CudidP1 Director Project Coordinator

Banja Luka, ay 6, 2016

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4. Notes to the project financial statements

4.1 Basis of preparation and accounting records

These project financial statements have been prepared in accordance with the International PublicSector Accounting Standard: "Financial Reporting under the Cash Basis of Accounting" issued by thePublic Sector Committee of the International Federation of Accountants, and incorporate theaccounting policies below, which have been consistently followed in all material respects and complywith the "Guidelines: Annual Financial Reporting and Auditing for World Bank - Financed Activities",issued by the Financial Management Sector BoardAccounting policies

The Project's fiscal year is January 1 to December 31 for the recording of all transactions.

Cash basis of accounting

All receipts and expenses under Swedish Grant are recorded on actual receipt and payment basis ofaccounting as per approved categories.

Project expenditure is stated at original cost on the Balance sheet

Direct payments

Direct payments concern the amounts paid directly from the Grant account of the World Bank.

Statement of Expenditure (SoE)

Statements of Expenditure are used to state the expenditure under Swedish Grant during a certainperiod. These statements are sent to the World Banks' disbursement department who authorises thepayment of the expenditure through the Designated account.

Currency conversions

The reporting currency is USD. Sources and use of funds (payments to suppliers and contractors) incurrencies other than USD have been converted to USD using the currency rate at the moment of thetransaction.

Bank balances, recorded on the balance sheet at year-end, have been converted at year-end rate.

Designated account

This is the total amount of the withdrawals from the Grant account for the Project. Swedish Grantaccount is in USD.

Interest on Designated account

Interest earned on the Designated account belongs to the Borrower.

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APPENDIX A DESIGNATED ACCOUNT STATEMENT

Account owned by: Ministry of Finance and Treasury of Bosnia and Herzegovina

Account No.: 5672410000397466

Depository Bank: Sberbank a.d. Banja Luka

Address: Jevrejska ulica br. 71, Banja Luka

Related Credit: Swedish Grant TF 011205

Currency: USD

Ref. USD

Opening balance January 1, 2015 3.2 __313,043

Add:World Bank replenishments B 237,347

237,347

Deduct:

Payments to suppliers - Expenditure under Swedish Grant 330,414

330,414

Ending balance December 31, 2015 3.2 219,976

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APPENDIX B SoE Withdrawal Schedule of Swedish Grant TF 011205 for the year endedDecember 31, 2015

Goods, consultantsservices, training, audit

cost, and incrementaloperating expenses

Initial under Part II of the Total Totaldeposit Project application replenished

Previous years 350,000 179,275 179,275 492,318

Application 3* 106,152 106,152 93,109Application 4 144,238 144,238 144,238Application 5** - 80,024 80,024 -

Total SoE applications 330,414 330,414 237,347

Total 2015 - 330,414 330,414 237,347

Cumulative 2015 350,000 509,689 509,689 729,665

* Application No- 3 was replenished in 2015, but expenses were made in 2014 (USD 36,957) and in2015 (USD106, 152),

Application No 5 was replenished in 2016, but expenses were made in 2015.

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APPENDIX C Reconciliation between World Bank's disbursement statements in USDand Swedish Grant TF 011205 account in USD according to the balancesheet as of December 31, 2015; SoE Withdrawal Schedule of SwedishGrant TF 011205

Changes inSwedish Grant

(in USD)

Original amount 1,500 000

Disbursed in previous years 492,318

Withdrawal 3 93,109Withdrawal 4 144,238

Total disbursed in 2015 237,347

Cumulative disbursements 729,665

Calculated undisbursed balance as of December 31, 2015 770,335

Undisbursed balance as per World Bank Summary for December 2015 770,335

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