mekong river commission lao pdr - world bank mekong river commission lao pdr )1g intcg1·ated water...

I Mekong River Commission Lao PDR

)1g Intcg1·ated Water Resources Management Pmj l (M-IWRM, IDA Grant No. H762)

Financial Statements and

Report of the Independent Auditors Period from 17 August 2012 to 31 December 20 l3

Member Finn of 1\PMG International

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Mekong River Commission Lao PDR Mekong Integrated Water Resources Management Project (M-IWRM) IDA Grant No. H762

Contents Page

Project information

Statement of management's responsibilities 2

Report of the independent auditors 3-4

Statement of cash receipts and payments 5

Statement of designated bank account 6

Comparison of budget and actual expenditure 7-9

Notes to the financial statements 10-16

Project Information

Project

Funding Agencies

Duration

Implementing Agency

Project Director

Registered Office

Auditors

Mekong Integrated Water Resources Management Project (M-1\VRM, IDA Grant No. 1-1762)

International Development Association ("IDA")

17 August 2012 31 March 2018

Mekong River Commission ("MRC")

Hans Guttman (Chief Executive Officer, MRC Secretariat)

Mekong River Commission Ortlce of the Chief Executive Officer 184 fa Ngoum Road, P.O.Box 610 I Vientiane Capital, Lao PDR Tel: (856-21) 263 263 Fax: (856-21) 263 264

KPMG Lao Co., Ltd.

Mekong River Commission Office of the Secretariat in Phnom Penh (OSP) 576 Notional Road, #2, Chak Angre Krom,

P.O. Box 623, Phnom Penh, Cambodia

Tel. (855-23)425 353.

Fax (855-23) 425 363

Statement of Management's Responsibilities

Office of the Secretarial in VIentiane (OSV), Office of the Chief Executive Officer 184 Fa Ngoum Rood,

P.O. Box 61 OJ, VIentiane, lao PDR

Tel> (856-21)263 263.

It is the responsibility of management to prepare financial statements for the period from 17 August 2012 to 31 December 2013, which give a true and fair view of the state of affairs of the Project as at the end of the period and of the surplus or deficit for that period. In preparing those financial statements, management is required to:

• Select suitable accounting policies and apply them consistently;

• Make judgments and estimates that are reasonable and prudent;

• Maintain financial records and prepare the financial statements in accordance with the policies and procedures of the Mekong Integrated Water Resources Management Project; and

• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Project will continue its operations.

Project Management is responsible for keeping proper accounting records, which disclose with reasonable accuracy, at any time, the financial position of the Project. Members of project management have a general responsibility for taking such steps as are reasonably available to them to safeguard the assets of the Project and to prevent and detect fraud and other irregularities.

Project Management confirms that the Project has complied with the above requirements in preparing the financial statements.

On behalf of the management

&:fr Hans Guttman Boun Xaiyarath Chief Executive Officer Chief, Finance and Administration Section

1 )l . u

2

KPMG Lao Co., Ltd

3''- 4th floor, 37 K.P. Tower

23 Singha Road

Ban Phonexay, Saysettha District

P.O. Box 6978 Vientiane Capital, Lao PDR

Report of the Independent AuditoJ'S

To: The Project Management, Mekong River Commission

Telephone + 856 (21) 454240-7 Fax + 856 (21) 900347 Email [email protected]

We have audited the accompanying financial statements of the Mekong Integrated Water Resources Management Project ("M-IWRM" or "the Project") for the period from 17 August 2012 to 31 December 2013, which comprise the statement of cash receipts and payments, the statement of the designated bank account and the comparison of budget and actual payments tor the period from 17 August 2012 to 31 December 2013, and notes, consisting of a summary of significant accounting policies and other explanatory information.

Jl1anageJuent',•; Re.\'}JOJJsibi/i(pfor tlte Financial Statemeubi

Project Management is responsible for the preparation of these financial statements in accordance with the Cash Basis International Public Sector Accounting Standard ("Financial Reporting under the Cash Basis ql Accounting~~), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement~ whether due to fraud or error.

Auditors' responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. \Vc conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements arc free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation of the financial statements in order to design audit procedures that arc appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financia I statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Project for the period !1-om 17 Angnst 2012 to 31 December 2013, and of its financial performance and for the period then ended in accordance with the Cash Basis International Public Sector Accounting Standard.

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4

Mekong Integrated Water Resources Management Project (M-IWRM)

Statement of cash receipts and payments

Period from 17 August 2012 to 31 December 2013

Receipts

Payments

Goods, Works, Incremental Operating costs, Training and Workshops

Consultants' Services

Advances Bank fee

Total payments

Excess of receipts over payments

Fund balance at the beginning of the period

Fund balance at the end of the period

Represented by

Cash at bank

17 August 2012 to

31 December 2013

Note USD

7 660,283

5 164,278

6 32,706

4 5,686

690

203,360

456,923

456,923

3 456,923

456,923

5


Statement of designated bank account Period from 17 August 2012 to 31 December 2013

17 August 2012 to

31 Decem bel' 2013

Note USD

Receipts

Payments

Excess of receipts over payments

Cash maintained in MRC pooling account

Fund balance at the beginning of the period

Cash at designated bani< account

7

3

3

The accompanying 110/es form an integral pari c?lthese jluancial statements.

660,283

(203,360)

456,923

( 122,800)

334,123

6


Comparison of budget and actual payments Period from 17 August 2012 to 31 December 2013

This tab\ - ·- ·-~-···~ ···- ~~- ~ ffunds b ' -~"' ~ .. -... ~ .. d detailed ~- .. ' ,,,_...,, ~ .......... -...... ~ ....... _ Proiect A . ID

·~· ..... ~· ~ ..... -~···-··· ("PAD") ' --··· -·-

I Actual Budget Variance Period Period Period

17 August 17 August I 7 August 2012to31 2012 to 31 2012 to 31 December Cumulative December Cumulative December Cumulative Cumulative

2013 to date 2013 to date 2013 to date to date Components (USD) (USD) (USD) (USD) (USD) (USD) (%)

I 1 A. Regional Support for Facilitating transboundary iWRM 1 dialo()"uc

I I. Inception suppott (for 4 proposals) 14.158 14.158 17.865 17.865 3.707 3.707 21 1 2. Fisheries (Lao-Cambodia) 17.776 17.776 27.000 27.000 9.224 9.224 34

I 3. Water Resources Management Sesan- I

7.803 I I Srepok (Cambodia-Vietnam) 7.803 18.000 I 18.000 10.197 10.197 57 4. Wetland Management (Lao- I Thailand) 22.110 22.110 28.384 1 28.384 6.274 6.274 27

5. Water Resources Management Delta Water Resources (Cambodia-Vietnam) - - 16.000 16.000 16.000 16.000 100

6. Un-programmed (new activity or additional funds to the existing one) 36.300 36.300 46.222 46.222 9.922 9.922 21

Sub-total 98.147 98.147 153,471 153.471 55.324 55,324 36

B. Impact and Risk Assessment to Reach Environmental Baseline I Objectives in a Selected Mekong River Sub-Area 1. Year 201 1: Development risk assessment approach and establishment environmental baseline 137 137 2.137 2.137 2.000 2.000 94

I i 2. Year 2012: Field work and country

2.000 I level assessments - - 2.000 2.000 i 2.000 100

d with th bud - -~·· -··· -~~-.-·· PAD

Remaining budget as at

Total 31 December budget 2013 (USD) (USD)

524.600 510.442

535.200 517.424

354.000 346.197

354.000 331.890

354.000 354.000

457.000 470.700

2,578,800 2,480,653

152.000 151.863

235.000 235.000

7


Comparison of budget and actual payments (continued) Period from 17 August 2012 to 31 December 2013

This tab! -.- . -~--.-~ ~··- ~-~--ffunds b

~· --··· -··-··· ~·· d detailed ~--· .... -~. ~~ ~-~ --- ... ~··- Proiect A . 10 ·-·~-· ~---···-···

("PAD") '--··· . -Actual Budoet Variance

Period Period Period I 17 August I 7 August 17 August 2012to31 2012 to 31 2012to31 I December Cumulative December Cumulative I December Cumulative Cumulative

2013 to date 2013 to date 2013 to date to date Components (USD) (USD) (USD) (USD) I (USD) (USDl (%)

3. Year2013:Jointriskassessment _I validation and mitigation measures - - - - - -

Sub-total 137 137 4,137 4,137 4,000 4,000 97

C. Preparation for develop ina the LMB Risk Modelino- I I 1. International Consultant - - - - I - - -

' - I 2. Data gaps generation/acquisition - - - I - -- I

3. Field visits and Workshops - - - - - I - -'

4. Development of data base and purchase of satellite photos - - - - - - -5. Contingency. operation cost - - - - - - -Sub-total - - - - - - -D. Support for Communication Outreach

1. Disseminate the knowledge acquired bv the MRC to local stakeholders 14 14 3.000 3.000 2.986 2,986 100 2. Dissemination ofiWRM Implementation Status - - - - - - -

3. Analysis and Dissemination on the outcome for the extremely events - - - - - - -

d with tl bud ·- --··-··· --- --· PAD


Total 31 December budget 2013 CUSDl (US D)

173.000 173.000

560,000 559,863

369,800 369.800

35,000 35.000

35.000 35,000

200.000 200.000

10,000 10.000

649,800 649,800

463.500 463.486

198.000 198.000

125.000 125.000

8


Comparison of budget and actual payments (continued) Period from 17 August 2012 to 31 December 2013

This tab I ts tl - ··-- -----.- . ----·-- -··- ---- -ffunds b - -·· -·· --·· --· d detailed ---·. ·----- -- --- ---. he Proiect A . 10 - -----·- -------·-- ("PAD") ' ----- ---Actual Budget I Variance

Period Period Period 17 August I 7 August 17 August 2012 to 31 2012 to 31 2012 to 31 December Cumulative December Cumulative December Cumulative Cumulative

2013 to date 2013 to date 2013 to date to date Components (USD) (USD) (USD) (USD) (USD) (USD) (%)

4. Feedback opinions rrom local - I stakeholders to refine the MRC activities - - - - - -

5. Monitoring and Evaluation - - - - - - -Sub-total 14 14 3,000 3.000 2.986 2,986 100

I E. Pro_ject Coordination, Monitorino- and Technical Support

I. Project Coordination 19.845 19.845 25.000 25.000 5.155 5.155 21

2. Support for APL 12.603 12.603 29.110 29.110 16.507 16.507 57

Sub-total ' 32.448 32.448 54,110 1 54.110 21.662 21.662 40 I

F. PCMU establishment I '

I. Staff Cost 66.238 66.238 94.418 94.418 28.180 28.180 30

2. General contribution ( 11 %) - - 39.822 39.822 I 39.822 39.822 100

Sub-total 66.238 66,238 134.240 134,240 I 68.oo2 I 68,002 51

Total Project Expenditure 196,984 196,984 348,958 348.958 151.974 151,974 44

d with tl bud -- ------·- ---,....---PAD


Total 31 December budget 2013 (USD) (USD)

295.000 295,000

10,000 10,000

1,091,500 1,091,486

852.900 833.055

414.000 401.397

1,266,900 1,234,452

1.238,400 1,172,162

817,400 812.400

2,050,800 1,984,562

8,197,800 8,000,816

9

Melmng Integrated Water Resources Management Project (M-IWRM)

Notes to the financial statements Period from 17 August 2012 to 31 December 2013

Reconciliation between statement of designated bani' account and comparison of actual and budget payments

17 August 2012 to 31 December 2013

USD Actual Payments reported in comparison of actual and budget payments 196,984

5,686 690

Outstanding advances Bank fee Payments reported in statement of cash receipts and payments 203,360

Analysis of variances between actual and budget payments

Most activities were under spent during the period from 17 August 2012 to 31 December 2013.

The realistic revisions made to the budgeted disbursements based on the past experience and the

appropriate identification of project activities for the budget plan contributed to the negligible

variance. As agreed by the World Bank team during the 2nd supporting mission in September 2013,

iVI-1\VRM project have revised the largely budget for the year 2012-2013, started from September

2013.

A. Regional Support for facilitating trans-boundary IWHM dialogue

I. Inception support (fin· .J proposals) During the year of 2013, the Project Coordination and Management Unit ("PCMU")

was lacking of both Project Coordinator and Chief Technical Advisor ("CTA") who

were responsible for preparation for the Inception Reports. The international consultant

was recruited later to support inception report development. After the International

consultant and the Project Coordinator were on board on October 2013, the Inception

Reports development moved forward and completed the draft version in January 2014.

2. Fisheries (Lao-Cambodia)

The Transboudary Lao-Cambodia Project has not yet started it implementation due to the difficulty in agreed date and venue ti·om Cambodia National Mekong Committee ("CNMC") and Lao National Mekong Committee ("LNMC") for the workshop meeting to finalize its Project Document. The delay in finalization of the project document is contributed to the work for prepare projecl document. This status could be attributed to the incurrence of the Trainings, meeting and Workshops.

3. /Vater Resources Mmwgement Sesan-Srepok (Cambodia· Vietnam) The Transboudary Cambodia-Vietnam Project was not able to start implementation due to the dirtlculty in agreed date and venue from CNiviC and LNMC for the workshop meeting to finalize its Project Document During the year 2013, the project commenced few activities which contributed to the work for the Project Document preparation.

10



A. Regional Support for facilitating trans-boundary IWRt\1 dialogue (continue)

4. Wetland Management (Lao- Thailand)

The Project Document was finalized and approved by Thailand National Mekong Committee ("TNMC') and LNMC in late November 20 I. However, the expenses in project was not started due to the fact that the Working groups were not familiar with the World Bank Procurement and the MRC financial management and hesitate to start spending their budget.

5. Water Resources Management Delta Water Resources (Cambodia- Vietnam)

The Mekong-delta Trans-boundary Project between Cambodia-Vietnam was not able to

start implementation due to the difficulty in agreed date and venue from CNI'viC and

LNMC for the workshop meeting to tlnalize its Project Document.

6. Tonie Sap and Songkh/a Commw1ication Un-pmgrammed (new aclivityladditimw/

.flmds to the existing one)

The Project was launched since October 2013, but the delay in implementation by

Countries caused low expenditure for the project.

B. Impact and Risk Assessment to Reach Environmental Baseline Objectives in a Selected Melwng River Sub-Area

1. Year 2011: De\'elopmenl risk assessment approach and establishment environmental

baseline

During year 20 II, the project concept was prepared. Therefore, there was no significant

payment under this item. In addition, there was delay to start funding the project from

the World Bank.

2. Year 2012: Field work and countiJ' level assessments

In year 2012, the Bank agreed to start funding to the project. In this period, most of time

was spent for recruitment process.

3. Year 2013: Joint risk assessment validation a11d mitigalirm measw·es

Concept and approach of the project was revised. Terms of Reference (TOR) for

consultants was revised and re-developed.

C. Prepamtion for developing the LMB Risk Modelling

I. Jntemational Consultant

No budget was allocated for this period

2. Data gaps genera/ion/acquisition


3. Field visits and Workshops


.J. Development of' data base aJI(/ pw·clwse '?f'satellite photos


5. Conlingellq'. operatio11 cost


II



D. Support for Communication Outreach

1. Disseminate the knowledge acquired by the MRC to local stakeholders During the year of 2013, most of the times is used for recruiting consultants and prepare

the project documents. So, the full project activities are not yet implemented.

2. Dissemination of ITVRM Implementation Status No budget was allocated for this period

3. .Ana~vsis ami Di: .. ·semination on the outcome for the exlreme~v even Is No budget was allocated for this period

4. Feedback opiniousfi'omlocal stakeholders to r~jine the MRC activities No budget was allocated for this period

5. Monitoring and Evaluation No budget was allocated for this period

E. Project Coordination, Monitoring and Technical Support

1. Proiect Coordination The main reasons for the under spending amounts due to delayed recruitment of rm

international consultant with an estimated fee and the project start to pay ror this

consultant in October 2013 and some delayed trainings) workshops and meeting related

to this assignments.

2. Support.fbr Adaptable Programmatic Loan

The reason for the under spending in this sub-component was the non-incurrence of the payment to the equipment~ individual consultants and consultancy finn, as their final assignments are already tinishcd during the year 2013. In addition, the Adaptable Programmatic Loan was delay for approval for VietNam.

3. PCMU establishment

I. Stqfi'Cost

The under spending was mainly due to the postponement or CTA and the delay recruitment of Project Financial Onicer: as he start work at the end or June 2013.

2. General contribution (II%)

The Management Fees II% was budgeted USDI8,890 and it not yet be paid until the

end of December 2013. And the cumulative amount or this payment will be deducted in

the year 2014.

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1. Principal activities

The Mekong River Commission (MRC) was established by the 1995 Agreement on Co-operation for the Sustainable Development of the Mekong River Basin, between the governments of Cambodia, Laos, Thailand and Viet Nam. In accordance with this Agreement, the mission of the MRC is: "To promote and coordinate sustainable management and development of water and related resources for the couutries' mutual benefit and the people's well-being by implementing strategic programmes and activities and providing scientific information and policy advice."

The Mekong Integrated Water Resources Management Project (M-1\VRI'viP) is one of the MRC's programmes with financial support from AusAID (fl·om 2009 to 2014) and the World Bank (2012-2018). The overall objective of the M-IWRMP is to improve the enabling framework and capacity for Integrated Water Resources fvlanagement (1\VRM) in the Lower Mekong Basin (LMB) Countries and strengthen the role of MRC as the facilitator of significant water resources development, guided by 1\VRM principles.

The M-1\VRMP consists of 3 components: Regional, Transbouudary and National. The project has beeu funded by AusAID with a grant of AUS$ 7 million in support of the regional component. From August 2012, the World Bank funding more than U$ 8 million come on line after the effectiveness of the financial agreement between the \VB/IDA and the MRCS.

The objective of the Project is to establish key examples of IWRM practices in the LMB at the regional, national and sub-national levels, thus contributing to more sustainable river basin development in the LMB.

The project constitutes the first phase of the Program aud consists of the following parts, the Recipient acknowledging and confirming that the Association shall not provide any financial or technical support under the Project lor the Processing of a Dam in the mainstream Mekong:

The main activities of the Project in the period nre set out in the comparison of budget and actual expcuditure.

2. Summary of significant accounting policies

The following signillcant accounting policies have been adopted by the Project in the preparation of these financial statements:

(a) Basis of financial statements preparation

The financial statements, which are expressed in United States Dollars ("LJSD"), have been prepared in accordance with the Cash Basis International Public Sector Accounting Standard ("Financial Reporting under the Cash Basis of Accounting"). The accounting policies have been applied consistently throughout the period.

(Ll) Cash

Cash comprises cash on hand and balances with banks.

13



2. Summary of significant accounting policies (continue)

(c) Foreign exchange

The Project maintains its accounting records in USD in accordance with the l'vlRC accounting system for all transactions. All cash is held in USD. Transactions in currencies other than USD during the period have been translated into USD at the MRC operational rates of exchange on the date of the transactions. All exchange differences arc recorded in the statement of income and expenditure.

(d) Accounting reporting period

The financial accounting year starts on I January and ends on 3 I December.

(c) Comparison of budget and actual payments

The approved budget is developed on the same accounting basis (cash basis), the same classification basis and for the same period as for the financial statements. The budget docs not include the outstanding advances; the comparison of budget and actual payments includes a reconciliation with the statement of cash receipts and payments.

(I) Authorization date

The financial statements were authorized for publication on 3 !\•larch 2014.

(g) Income recognition

Fund receipt from Development Partner (World Bank) is recognised as income when cash is credited to the project's designated bank account. flank interest is recognised when credited to the project's bank account nnd recorded in the following month. Income and revenue are recognised upon cash receipts.

(h) Expenditure recognition

Expenditure is recognised when paid except for: staff health and life insurance premiums, personal telephone costs charged to staff which are recognised on an accrual basis; and advance to National iVIckong Committees, projects and employees, which are recognised when cleared.

(i) Management and administration fees

tv1anagcment and administration fCcs are calculated at a percentage of II o/o of the project expenditure and arc recognised as revenue under the Operating Expenses Budget fund (OEB) and as expense under the World Bank-funded project. These are used to cover the expenses of the MRC Secretariat in rending technical and administrative services to the projects. The management and administration fcc for the audit period has not been charged yet and will be carried over to the next period.

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3. Cash on hand and cash at bank

Cash at bank Designated bank account: Public bank

Other bank accounts (MRC pooling account)

4. Advances

Trnining Workshop Advance Education Grant Advance to Staff

17 August 2012 to

31 December 2013

USD

334,123

122,800

456,923

17 August 2012 to

31 Decem bcr 2013

USD 4,471

_____ -'.21 ,215

5,686

5. Goods, Works, Incremental Operating costs, Training and 'Vori<Shops

Staff Cost Un-programmed activity Wetland Management (Lao- Thailand) Fisheries (Lao-Cambodia) Inception support Support for Adaptable Programmatic Loan ("APL") \Vater Resources l'vlanagement (Cambodia- Vietnam) Project Coordination Development risk assessment approach Disseminate the knowledge acquired by the MRC to local stakeholders

6. Consultants' Services

Staff Cost Project Coordination

17 August 2012 to

31 December 2013

USD

46,332 36,300 22,110 17,776 14,158 12,603 7,803 7,045

137 14

164,278

17 August 2012 to

31 December 2013

USD

19,906 12,80Q_

32,706

15



7. Receipts

Fund received from IDA-World bank Interest Income

8. Corresponding figures

17 August 2012 to

31 December 2013

usn 652,941

7,342

660,283

There are no corresponding figures as this is the tlrst set of financial statements prepared by the Project since it started operations.

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