december 20, 2013- december 20, 2018 - world...

Project Financial Statements

GPSA Grant - Empowered Citizens EnhancingAccountability of the Education Reform and Quality of

Education in Moldova Project (Grant No. TF015859)

December 20, 2013- December 20, 2018

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GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Educationin Moldova Project (Grant No. TF01 5859)

For the period December 20, 2013 - December 20, 2018

CONTENTS PAGE

Independent Auditors' Report

Summary of Sources and Uses of Funds 2

Statement of Designated Account 3

Notes to the Special Purpose Project Financial Statements 4

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GrantThornton

Grant Thornton Audit S.R.L.69, Grigore Ureche str.Chisinau, MoldovaMD-2005

T +373 22 86 05 71F +373 22 24 74 64

Independent Auditor's Report

To: Management of the World Bank; and

Management of the "GSPA- Empowered citizens enhancing accountability of the education reform andquality education in Moldova" Project, represented by the Management of Expert-Grup ("Organization")

Opinion

We have audited the accompanying project special purpose financial information of "GSPA- Empoweredcitizens enhancing accountability of the education reform and quality education in Moldova" Project ("theProject"), financed by the World Bank through the Grant Agreement no TF15859 dated 16 December2013. The project special purpose financial information comprises the Statement of Special Account, theStatement of funds received and uses of funds for the period December 20, 2013 - December 20, 2018and a summary of significant accounting policies and other explanatory information,

in our opinion, the accompanying project special purpose financial information for the period December20, 2013 to December 20, 2018 has been prepared, in all material respects, in accordance with accountingpolicies described in Note 2 to the project special purpose financial information and the relevant points ofthe Grant Agreement.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilitiesunder those standards are further described in the Auditor's responsibility for the audit of the ProjectSpecial Purpose Financial Information section of our report. We are independent from the Organisationand from the Expert Grup in accordance with the International Ethics Standards Board for Accountants'Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that arerelevant to our audit of the project special purpose financial information in the Republic of Moldova, andwe have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBACode. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Emphasis of matter - Basis of accounting and restriction on distribution and use

We draw attention to the Note 2 to the project special purpose financial information which describes thebasis of accounting. This project special purpose financial information is prepared to assist themanagement of the Organization to meet the requirements of the Grant Agreement no TF15859 dated

GmitThornton AuditS.R.L. is a memben fm of Grant Thornton Irternatoina Ltd (Grant Thomton Inteonatione) References to granitthornton.nd'Grant Thomton ae to the brand under which the Grant Thornton memberiirms operat and refer to one or more membefrOmS, aztie context enq ber G irit T whio totn tepo n s d the membor tome note ttide po rone mth . S rvc m d tertond-dopendeonlyby memobertrms, wth are not responsible tor the services or ativties of one anothoer. CGrant Thomoton Ionoteah

do notproido services to cliento.

December 16, 2013 concluded with the World Bank. As a result, the project special purpose financialinformation may not be suitable for any other purpose.

Our report is intended solely for the information and use of management of the World Bank andmanagement of the ,GSPA- Empowered citizens enhancing accountability of the education reform andquality education in Moldova" Project and should not be distributed to or used by any other parties. Ouropinion is not modified in respect of this matter.

Responsibilities of Management and Those Charged with Governance for the Project SpecialPurpose Financial Information

Management is responsible for the preparation and fair presentation of this project special purposefinancial information in accordance with the accounting policies described in Note 2 to the project specialpurpose financial information and the relevant points of the Grant Agreement no TF15859 datedDecember 16, 2013 and for such internal control as management determines is necessary to enable thepreparation of the project special purpose financial information that are free from material misstatement,whether due to fraud or error.

In preparing the project special purpose financial information, management is responsible for assessingthe Project's ability to continue as a going concern, disclosing, as applicable, matters related to goingconcern and using the going concern basis of accounting unless management either intends to liquidatethe Project or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Project's financial reporting process.

Auditor's responsibility for the audit of the Project Special Purpose Financial Information

The objectives of our audit are to obtain reasonable assurance about whether the project special purposefinancial information as a whole is 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 conducted in accordance with ISAs will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and are considered material if,individually or in the aggregate, they could reasonably be expected to influence the economic decisionsof users taken on the basis of these project special purpose financial information.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professionalscepticism throughout the planning and performance of the audit. We also:

- Identify and assess the risks of material misstatement of the project special purpose financialinformation, whether due to fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for one resultingfrom error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity's internal control.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.

- Conclude on the appropriateness of management's use of the going concern basis of accountingand, based on the audit evidence obtained, whether a material uncertainty exists related to eventsor conditions that may cast significant doubt on the Project's ability to continue as a going concern.If we conclude that a material uncertainty exists, we are required to draw attention in our auditor'sreport to the related disclosures in the project special purpose financial information or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However, future events or conditions may cause theproject to cease to continue as a going concern.

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- Evaluate the overall presentation, structure and content of the project special purpose financialinformation, including the disclosures, and whether the project special purpose financial informationrepresent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scopeand timing of the audit and significah!audit findings, including any significant deficiee i internal controlthat we identify during our audit.

a-kJIrT INOVI -&x4Grant Thornton Audit S.R.L.Ohisinau, Republic of Moldova15 March 2019

GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Educationin Moldova Project (Grant No. TF015859)


SUMMARY OF SOURCES AND USES OF FUNDS

December, 20Notes 2013 - December

20, 2018

Opening balance on designated account

Disbursements received during the period 626,000TOTAL SOURCES AVAILABLE 3 626,000Less: uses of funds1. Building an environment enabling sustainable socialaccountability in Moldova 124,8622. Applying Social Accountability Tools to empower local andregional stakeholders to increase policy accountability 97,459

3. Integrating Social Accountability activities with policy andbudget dialogue 138,0844. Knowledge and Learning 57,6515. Project Implementation, Supervision and Administration/Audit cost 264,597TOTAL USES 4 682,653

Closing Balance (56,653)

* The expenses for which funds were not yet received from the WB, were covered from own sources of Expert-Grup and will be reimbursed by the WB.

The financial statements and accompanying notes on pages 4 to 9 were signed and approved on behalfof the Project's management on March 15, 2019 by:

Ec ih4btor Financial Diredfor

Adrian Lupusor lulia Sirghi-Zolotco

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For the period December 20, 2013 -December 20, 2018

STATEMENT OF DESIGNATED ACCOUNT

20 December 2013 - 20December 2018

USDOpening balance -Add:Sources received from the World Bank 626,000Deduct:Project Expenditures (682,653)Closing balance (56,653)*

* The expenses for which funds were not yet received from the WB, were covered from own sources of Expert-Grup and will be reimbursed by the WB.

The financial statements and accompanying notes on pages 4 to 9 were signed and approved on behalfof the Project's management on March 15, 2019 by:

Egcutiveli-efor Financial Directbr

Adrian Lupusor lulia Sirghi-Zolotco

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1. GENERAL INFORMATION

About Expert-Grup

Expert-Grup is the organization responsible for project GPSA implementation.

Independent think tank Expert-Grup is a non-governmental and not-for-profit agency specialized ineconomic and policy research. Its core activity is economic analysis, forecast and policy research. TheNGO offers a wide range of analytical products and services helping the beneficiaries to take decisionssupporting the development path of Moldova.

NGO Expert-Grup was registered on July 15, 1998 and is operating since 2006.

Expert Grup has extensive experience of working with Moldova Soros Foundation, the East EuropeanFoundation, Konrad Adenauer Stiftung, Balkan Trust for Democracy, Black Sea Trust, Friedrich EbertStiftung, the UNDP Moldova, the UNICEF, the European Commission, the Council of Europe, the OpenSociety Foundation, the Swiss Agency for International Cooperation and the United KingdomDepartment for International Development.

GPSA PROJECT

The objective of the Project is to empower the Member Country's civil society to: (i) engage local,regional and national authorities in evidence-based policy and budget dialogue in the Member Country'seducation sector; and (ii) to promote an enabling environment for social accountability.

The Project includes the following specific objectives:

* Facilitate engagement of local stakeholders in approximately 100 schools using socialaccountability tools and promoting a dialogue on school budgets.

* Facilitate the flow of information from users of education services to local and nationalauthorities.

* Promote the use of three new social accountability tools as inputs into formal educationbudgetary processes.

* Inform the public about the impact of wider economic and financial conditions on theeducational sector and reforms (e.g., current situation, availability of budgetary resources,forecast).

* Support the Ministry of Education and other policy stakeholders in improving the quality of datato better support an evidence-based policymaking process.

The Project's direct beneficiaries are:

* An estimated sixty-five thousand students, parents, and staff in approximately 100 schools.* Five regional CSOs in the towns of Balti, Cahul, Ungheni, Hancesti, and Soroca. These

organizations will serve as links between the EXPERT-GRUP and local communities.* Local public authorities in the communities targeted by the Project (including about 80 mayors

and some 650 local councilors).* About 23 regional authorities (20 district-level, two municipal, and one autonomous region) that

will have access to the information produced by the Project.* The Ministry of Education due to more reliable and timely feedback on the status and impact of

its educational reforms.

The Project's indirect beneficiaries are:

* Students, parents, and staff at schools not directly targeted by the Project, but who can studyits results and make better informed decisions in their schools (e.g. Knowledge and Learningcomponent).

* Populations in communities targeted by the Project that will gain from efficiencies of improvedlocal education and better educated young people.

* The Ministry of Finance which will have additional information on how effectively educationpublic funds are spent at the local level.

* International donor programs supporting the education sector in Moldova.

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GPSA Grant - Empowered Citizens Enhancing accountability of the Education Reform and Quality of Educationin Moldova Project (Grant No. TF0 15859)


II. PROJECT DESCRIPTION

A. Project ComponentsThe Project consists of the following components:

Component 1: Building an Environment Enabling Sustainable Social Accountability in Moldova

Strengthening the capacity of the Recipient to create partnerships and tools for social accountability inthe Member Country's education sector, including, inter alia:

(a) Assessment of the training needs of CSOs working in the Member's Country's education sectorand selected in a manner acceptable to the World Bank.

(b) Carrying out of periodic open data readiness assessment of the Member Country's educationsector.

(c) Establishment of a network comprised of regional and local focal points, including, inter alia:defining the criteria for school selection, preparing the terms of reference and the developmentof training materials.

(d) Development of mechanisms and tools for citizen and CSOs' oversight of the Member Country'seducation sector, in particular in relation to school policy and budget reforms.

(e) Carrying out of training activities for relevant stakeholders in the use of the mechanism andtools developed under Component 1 (e) of the Project.

Component 2: Applying Social Accountability Tools to Empower Local and RegionalStakeholders to Increase Policy Accountability

Empowering local and regional stakeholders of the Member country's educational sector to increasepolicy accountability, including, inter alia:

(a) Organization and implementation of meetings to discuss the planned budgets of schoolsselected in a manner acceptable to the World Bank.

(b) Preparation of education stakeholder report cards, adjusted to the Member Country's context.(c) Collection of data and digitalization of results for the education stakeholders report cards,

prepared under Component 2(a).(d) Development of a website to facilitate evidence-based policy and budget dialogue and

exchange of information at the local, regional and national level.

Component 3: Integrating Social Accountability with Policy and Budget Dialogue

Promoting the use of social accountability tools within the Member Country's Ministry of Education andrelevant local and regional authorities inform education policy planning and execution, including, interalia:

(a) Carrying out of annual independent education budget analyses for the education sector in amanner acceptable to the World Bank.

(b) Carrying out of independent monitoring activities to engage and inform relevant stakeholdersabout policy changes in the Member Country's education sector.

(c) Carrying out of workshops for relevant stakeholders to discuss the education mid-termexpenditures framework, prepared by the Member's Country Ministry of Finance.

(d) Preparation of policy papers, including the carrying out of quantitative analyses of theeducational policy issues.

Component 4: Knowledge and Learning

Preparation and dissemination of learning products on social accountability mechanisms, taking intoaccount lessons learned from Project implementation, including inter alia: (i) guidance notes; and (ii)case studies.

B. Project Financing

The financing instrument elected for this Project is a Recipient Executed Trust Fund (RETF) Grant. Thesource of financing for this Grant is the Global Partnership for Social Accountability (GPSA), housedwithin the World Bank. As per World Bank Trust Fund guidelines, given that this Trust Fund is smallerthan US$5 million and larger than U$500,000 this Project is subject to World Bank procedures relatedto Project preparation and supervision of Small RETF Grants.

The total Project costs is estimated to be US$696,955 to be financed completely by the GPSA

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grant. Additionally, the World Bank will commit an annual Project supervision budget in the amountof US$20,000.

Project costs Total GPSA Grant WB %GPSAproject Financing Financing Financing

cost (US$) - last (US$)(US$) approved

Component 1. Building an environment enabling 232,313 129,417 0 100sustainable social accountability in Moldova

Component 2. Applying Social Accountability Tools 184,880 97,982 0 100to empower local and regional stakeholders toincrease policy accountability

Component 3. Integrating Social Accountability with 226,545 139,685 0 100policy and budget dialogue

Component 4. Knowledge and Learning 53,217 57,823 0 100

Component 5. Project implementation,Supervision, 0 272,058 0 0Administration/Audit costs

World Bank Supervision* 100,000 0 100,000 0

Total Project Cost 796,955 696,955 100,000 87.5

* Annual World Bank project supervision budget of US$20,000 from December 20, 2013 until December20, 2018.

2. ACCOUNTING POLICIES

Basis of accounting

The Project Financial Statements are special purpose financial statements that have been prepared inaccordance with consistently applied accounting standards acceptable to the GPSA and the WorldBank, in a manner adequate to reflect the operations, resources and expenditure related to the Project.

NGO Expert-Grup applies the National Accounting Standards to ensure comparability of financial data andreports for local reporting purposes based on Accounting Law Number 1 13-XVI of April 27, 2007. The NGO'saccounting system (books and records) provides the basis for the preparation of the special purpose financialstatements of the Project and the financial statements of the Expert-Grup as an entity and is established torecord all transactions in respect of the Project.

The cash basis of accounting was used in the preparation of these Project Financial Statements since therecording of cash receipts and payments is the primary interest. Under the cash basis system income (orexpenditure) is recognized when cash is received (or paid) irrespective of when goods or services arereceived. The amounts are expressed in USD and prepared for the period December 20, 2013- December20, 2018.

Taxes

Expert-Grup is exempted from VAT based on the Agreement between the Government of the Republicof Moldova and the World Bank.

Expert-Grup is liable for withholding Social Security and Medical Insurance Tax associated with

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contracts with individuals.

Financial management and procurement

Financial management and procurement process include the expenditure incurred by Expert-Grup inconnection with the preparation of tenders' documentation, the publication of the announcements in thenational press, the reception of bids, the announcement of the final selection to bidders, the preparationand negotiation of contracts with the selected firms and all contracts related to the satisfactory deliveryof the equipment in Moldova, including salaries of the Expert-Grup staff, as such costs are agreed bythe WB.

Designated Account

The Designated account is the account through which the drawdowns are made. All payments foreligible expenses are made from this Designated Account.

Foreign currency translation

The accompanying financial statements are presented in USD which is the presentation currencyrequired by the WB. Transactions denominated in Moldovan Lei (MDL) recorded by Expert-Grup arerecorded at the exchange rate of National Bank of Moldova at the date of incurring expenses.

3. PROJECT FINANCING

During the Project period the following funds tranches have been made from the World Bank.

Date Amount, USD

World Bank disbursement on 07.03.2014 208,887







Total received by Expert-Grup 625,209

Commission on international transfers 791

Total disbursed by the World Bank

626,000

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4. ACTIVITY FOR THE REPORTING PERIOD COMPARED TO THE AGREED BUDGETFOR THE REPORTING PERIOD

Below is a presentation of Project expenses for the reporting period compared to the budget

Expenses Final Budget Variance Completionof Budget

1. Building an environmentenabling sustainable socialaccountability in Moldova

Consulting services 110,231 110,961 730 99.3%Dissemination Cost 5,240 5,250 10 99.8%Training / Capacity Building 6,702 10,806 4,104 62.0%Others 2,689 2,400 (289) 112.0%

124,862 129,417 4,555

2. Applying Social AccountabilityTools to empower local andregional stakeholders to increasepolicy accountability

Consulting services 89,407 89,635 228 99.7%Dissemination Cost 7,690 7,927 237 97.0%Training / Capacity Building 362 420 58 86.2%Others -_- - -

97,459 97,982 523

3. Integrating Social Accountabilityactivities with policy and budgetdialogue

Consulting services 124,976 126,336 1,360 98.9%Dissemination Cost 1,114 1,000 (114) 111.4%Training / Capacity Building 11,994 12,349 355 97.1%

138,084 139,685 1,601

4. Knowledge and Learning

Consulting services 49,233 49,700 467 99.1%Training / Capacity Building 8,418 8,123 (295) 103.6%

57,651 57,823 172

5. Project Implementation,Supervision and Administration/Audit cost

Consulting services 192,270 197,258 4,988 97.5%Others 72,327 74,800 2,473 96.7%

264,597 272,058 7,461

TOTAL USES 682,653 696,965 14,312 97.9%

5. Subsequent events

Based on the agreement signed with the WB, the Expert Grup will receive the subsequent reimbursementfor the expenses incurred for the month of December 2018 which were financed by the Expert Grup ownfunds, total amount to be reimbursed equal USD 56,653. Additionally, direct payment from WB is to be madeto the auditor in amount of USD 3,500.

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