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All correspondences to be addressed to

Public Disclosure Authorized THE DIRECTOR ,

DEPARTMENT OF NATIONAL PARKS

AND WILDLIFE

2016 -06- 3 0 P.O Box 30131, MALAWI COUNTRY Lilongwe 3, OFFICE Malawi.

Tel: 265 (0)1 759831 Fax: 265 (0)1 759 832. E-mail: [email protected] Public Disclosure Authorized 30th June, 2016

The Country Manager

The World Bank Country Office- Malawi

Mulanje House, City Center

P.O. Box 30557

Lilongwe 3

Public Disclosure Authorized Attention: Mr.Trust Chimaliro

Dear Sir,

Malawi: Sustainable Management of Nyika Transfrontier Conservation Area Project P108879: TF 99857- SUBMISSION OF AUDITED FINANCIAL REPORT FOR FINANCIAL YEAR 2015

In accordance with the signed Trust Fund Grant Agreement and on behalf of t he above project I hereby submit signed copies of audited financial statements together with management letter.

Enclosed please find the same for your review and subsequent action.

Public Disclosure Authorized ~ B.K.Kumchedwa'

DIRECTOR: NATIONAL PARKS AND WILDLIFE .. WORL~BANK RECr::1VED ' 2016 -06- 3 0

Government of Malawi MALAWI COUNTRY Ministry of Natural Resources, Energy atr.H~IItl!~"'t-.:;;:O:.:.F..!.F..'.:IC~E----J Department of National Parks and Wildlife

Sustainable Management of The Nyika Transfrontier Conservation Area Project Global Environment Facility (GEF) Trust Fund Grant Number TF 099857- Malawi

Financial Statement For the year ended 31'1 December 2015

• Government of Malawi Ministry of Natural Resources, Energy and Mining Department of National Parks and Wildlife Sustainable Management of the Nyika Transfrontier Conservation Area Project Grant Number TF 099857- Malawi

FINANCIAL STATEMENT For the year ended 31'1 December 2015

CONTENTS

Description of the Project 3-5

Statement of Project management's responsibilities 6

Independent auditor's report 7

Statement of source and utilisation of funds 8

Notes to the financial statement 9-1 2

Special accounts statements 13-16

2 Government of Malawi Ministry of Natural Resources, Energy and Mining Department of National Parks and Wildlife Sustainable Management of the Nyika Transfrontier Conservation Area Project Grant Number TF 099857- Malawi

STATEMENT OF PROJECT MANAGEMENT'S RESPONSIBILITIES For the year ended 31'1 December 2015

The Trust Fund Grant Agreement (Article IV) requires the Project Management to prepare statements of source and utilisation of funds ("financial statement") for each financial period, which give a true and fair view of the project. In preparing such a statement, the Project Management is required to:

(a) Select suitable accounting policies and then apply them consistently; (b) Make judgements and estimates that are reasonable and prudent; and (c) State whether applicable accounting standards have been followed.

The Project Management is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Project and enable them to ensure that the financial statement comply with generally accepted accounting principles. They are also responsible for safeguarding the assets of the Project and hence for taking responsible steps for the prevention and detection of fraud and other irregularities.

The Project Management confirm that in their opinion:

(a) The financial statement present fairly, in all material respects the Project Sources and Utilisation of funds for the period then ended; and that (b) At the date of this statement there were reasonable grounds to believe that the Project will be able to pay its debts as and when they fall due; and (c) The financial statement is drawn up in accordance with applicable financial reporting framework.

This statement is made with the resolution of the Project Management on behalf of the recipient.

Signed on behalf of the Project at Lilongwe on ______,$..._ 0__./'---"C..._/______20 16.

Signature: ___Q.J< """"'=----'-· _,_. ______

Name: ester Kaphaizi Name: B.K. Kumchedwa Designation: Principal Secretary Designation: Director- National Parks and Natural Resources, Energy & Mining Wildlife

Signatu•e: ~ Signature: ______Name: George Nxumayo Name: Isaac Katopola Designation: Project Manager Designation: Director- Tourism

6 20160001

KPMG Telephone: (265) 01 773 855/01 773 371 Chartered Accountants and Business Advisors Fax: (265) 01 771 070 Nurses Council Building E-mail: [email protected] New Capital City Centre Website: www.kpmg.com/mw P.O . Box 30453 Lilongwe 3, Malawi

INDEPENDENT AUDITOR'S REPORT TO THE MINISTRY OF TOURISM AND CULTURE DEPARTMENT OF NATIONAL PARKS AND WILDLIFE ON SUSTAINABLE MANAGEMENT OF THE NYIKA TRANSFRONTIER CONSERVATION AREA PROJECT We have audited the accompanying financial statement of Sustainable Management of the Nyika Transfrontier Conservation Area Project which comprise of the statement of source and utilisation of funds for the year ended 31 December 2015, and notes, comprising of significant accounting policies and other explanatory information as set out on page 8 to 16. Management's responsibility for the sources and utilisation of funds Management of the Project is responsible for the preparation and fair presentation of the financial statement in accordance with the accounting policies and the finance agreement of Sustainable Management of the Nyika Transfrontier Conservation Area Project, and for such internal control as management determines is necessary to enable the preparation of financial statement that is free from material misstatements, whether due to fraud or error.

Auditors' responsibility Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with International Standards on Auditing (lSA). These standards require that we comply with ethical requirements and plan and perform our audit to obtain reasonable assurance about whether the financial statement is free from material misstatements.

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

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

Opinion In our opinion, the financial statement presents fairly, in all material respects the source and utilisation of funds of Sustainable Management of the Nyika Trans frontier Conservation Area Project for the year ended 31 December 2015 in accordance with the modified cash receipts and disbursement basis of accounting described on page 7 and finance agreement terms and conditions.

Other matter Without modifying our opinion, we draw nttention to note I to the financial statement of the Nyika Trans frontier Conservation Area Project, which ctcs~ribes the basis of accounting. The financial statement is prepared to provide a financial report to the World Bank in line with project agreements. As a result, the financial statement may not be suitable for any other purposes. Cli{l?r§untants Lilongwe, Malawi

Date: --=3:...__o__ 'ft...._q ,_,Y.L...-'6____ 2016

7 Government of Malawi Ministry of Natural Resources, Energy and Mining Department of National Parks and Wildlife Sustainable Management of the Nyika Transfrontier Conservation Area Project Grant Number TF 099857- Malawi

STATEMENT OF SOURCES AND UTILISATION OF FUNDS For the year ended 31 December 2015

Cumulative to 31 December 2015 31 December 31 December 2015 2014

Notes US$ US$ US$ SOURCE OF FUNDS

Surplus brought forward 204,207 282,428 Receipts from the World Bank 2 256,958 583.155 2,023,681 461,165 865,583 2,023,681

UTILISATION OF FUNDS

Goods 4 710 83,166 501,579 Works 4 77,849 228,663 304,!!49 Consultants' services and 4 100,033 101,949 344,344 Training Operating costs 4 2032373 256,959 738,084 38L965 670,737 1,949,356

Foreign exchange (losses)/ gains (2tl36) 9,361 (16,261)

Total funds unutilised 582064 204,207 58,064

Represented by: Bank and ca!i h balances 6 582064 204,207 se,064 58,064 204,207 58,064

This financial statement was approved on 2 316 1 2016 by the Proj '!ct Steering Committee of the Sustainable Management of the Nyika Transfrontier Conservation Area Prcject <'.nd signed on their behalf by:

Signawce: 0~ Signature: ______I Kester Kaphaizi Isaac Katopola Principal Secretary- Natural Resources, Directo1·- Tourism Energy & Mining

The financial statement shoul d be read in conjunction with the notes on paees 9 to 16.

The independent auditor's report is on page 7. 8 Government of Malawi Ministry of Natural Resources, Energy and Mining Department of National Parks and Wildlife Sustainable Management of th e Nyika Tra nsfrontier Conservation Area Project Grant Number TF 099857- Malawi

NOTES TO THE FINANCIAL STATEMENT For the year ended 31" December 2015 l. SIGN IFIC ANT ACCOUNTING POLICIES

(a) Basis of preparation of the fin ancial statement

The fi nancial statement is prepared on a modified cash receipts and disbursement basis of accounting. The cash receipt and disbursement basis of accounting differs fr om accruals basis of accounting in that transactions and other events are not recogni zed when they occur but when cash or its equivalent is received or paid.

(b) Income

Income is recognized when the money is received from the World Bank (GEF) or Government. Bank interest and other income is included in the financial statement when received.

Expenditure is recognised when paid. No provision is made for accrued expenses. Prepaid expenses and refunds are treated as receivables and debts respectively.

(d) Capital expenditure

Items of a capital nature are expensed at the time of acquisition.

(e) Foreign currencies

Transactions during the year in currencies other than the United States Dollar are converted to US Dollar at rates ruling at the transaction dates. Balances expressed in currencies other than the US Dollar at the year-end are translated into US Dollar at rates ruling then. The resulting differences from conversion and translation are charged or credited to the statement of source and utilization of funds in the period in which they arise.

9 Government of Malawi Ministry of Natural Resources, Energy and Mining Department of National Parks and Wildlife Sustainable Management of the Nyika Transfrontier Conservation Area Project Grant Number TF 099857- Malawi

NOTES TO THE FINANCIAL STATEMENT For the year ended 31 ' 1 December 2015

2. RECEIPTS FROM THE WORLD BANK/GLOBAL ENVIRONMENT FACILITY TRUST FUND (GEF)

Cumulative to Details 31 December 31 December 31 December 2015 2015 2014 US$ US$ US$ Initial advance from the World Bank 350,000 Direct Payments to suppliers by World Bank 241,438 Refund on Direct Payments to UNOPS (35,669) (35,669) Replenishments by the World Bank 256,958 618,824 1,467.912 Total 256.958 583.155 2.023.681

3. EXPENDITURE BY PROJECT COMPONENT

Cumulative to Dec 2015' USD USD USD

a Institutional Planning Framework 168,750 240,827 851,313 b Sustainable Financing 34,570 1,042 35,612 c Protected Areas Management 1. Nyika Block 11. Vwaza Block 178,645 428,868 1,062,431 subtotal 178,645 428,868 1,062,431

Total 381.965 670.737 1.949.356

10 Government of Malawi Ministry of Natural Resources, Energy and Mining Department of National Parks and Wildlife Sustainable Management of the Nyika Transfrontier Conservation Area Project Grant Number TF 099857- Malawi

NOTES TO THE FINANCIAL STATEMENT For the year ended 31'1 December 2015

4. EXPENDITURE BY DISBURSEMENT CATEGORIES AND EXPENDITURE TYPF,

DISBURSEMENT CATEGORY/EXPENDITURE Year Year Cumulative to Dec TYPE 2015 2014 2015 USD USD USD

a GOODS Vehicles 42,050 345,451 Field equipment 1,425 29,553 Office equipment 22,306 50,397 Other equipment 17,385 76,178 Sub total 83,166 501,579

b WORKS Linear infrastructure 303 44,381 56,532 Buildings 16,956 41,513 91,007 Other infrastructure 60,590 142,769 217,310 Sub total 77,849 228,663 364,849

c CONSULTANTS' SERVICES AND TRAINING Technical assistance 48,554 45,225 147,878 Training 11,498 32,560 97,954 Other consultants' services 39,981 24,164 99,012 Sub total 100,033 101,949 344,844

d OPERATING COSTS Support staff (174) 46 Equipment 0 & M 70,568 107,739 273,310 Workshops and meetings 787 11,585 20,340 Travel 64,10 l 58,938 221,438 Printing and stationery 10,634 16,346 38,423 Patrol expenditures 14,712 165,679 Other operating costs 57,283 47,813 738,084 Sub total 203,373 256,959 738,084

TOTAL 381.965 ~ L.2.42.35~

II •

Government of Malawi Ministry of Natural Resources, Energy and Mining Department of National Parks and Wildlife Sustainable Management of the Nyika Transfrontier Conservation Area Project Grant Number TF 099857- Malawi

NOTES TO THE FINANCIAL STATEMENT For the year ended 31" December 2015

5. FIXED ASSETS

As indicated under Note 1 (d) above, items of a capital nature are expensed at the time of acqui sition. A Register of fixed assets is held by Project Implementing Entity at the Department of National Parks and Wildlife (DNPW) Project Office in Mzuzu. This register is presented separately as an appendix to this financial statement.

6. BANK AND CASH BALANCES Net movement during the year 31 December 3 1 December ended 2015 2014 3 1 December 2015 US$

Project Designated account - United States Doll ars 5,652 205,709 (200,057) Project Holding account- Malawian Kwacha 53,501 12,746 40,755 Project Operating account - Malawian Kwacha (1,084) (3,084) 2,000 Project Imprest account- Malawian Kwacha (5) (5) Funds in transit (From USD project account) ( 11, 164) 11,164 Total 204,207 (146, 138)

7. REVENUE EXPENDITURE COMMITMENTS There were no revenue expenditure commitments at 3 1 December 2015 requiring disclosure.

8. CAPITAL COMMITMENTS There were no capital commitments at 31 December 2015 requiring disclosure in this financial statement.

9. CURRENCY This financial statement is prepared in United States Dollars (US $) as required in the terms of agreement.

lO.POST YEAR END EVENTS There has not arisen after the end of the financial year any item, transaction or event of a material and unusual nature likely, in the opinion of the Project Management, to affect substantially the operations of the Project, the results of those operations or the state of affairs of the Project in subsequent financial year.

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NOTES TO THE FINANCIAL STATEMENT For the year ended 31 December 2015

BANK RECONCILIATION STATEMENT- Kwacha Holding Account .. AS AT 31 DECEMBER 2015

~ MK • Opening Cashbook balance as at 01-Jan-15 5,508,081.02 Add; Receipts for the period January 2015 - Transfer from Dollar account 90,176,658.20 April 2015 - Transfer from Dollar account 43,079,730.00 July 20 15 - Transfer from Dollar account 78,224,129.00 August 2015 - Transfer from Dollar account 119,853.00 December 201 5 -Transfer from Dollar account 2,407,361.00

214,007,731.20

Subtotal 217,108,451.22 Less; Expenditure during the period (18319911148.00) Closing Cashbook balance as at 31 -Dec-15 35,524,664.22 Adjustments to the cash book Add; Bank Interest 35,524,664.22 Less; Bank charges Adjusted Cashbook balance as at 31-Dec-15 35,524,664.22 Less; Transfer fro m Dollar account not yet credited {2A07136t.OO) Balance as per Bank Statement as at 31 -Dec-15 33,1171303.22

Note The bank balance in Malawi Kwacha has been converted to the US Dollar at K664 per I US Dollar .

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NOTES TO THE FINANCIAL STATEMENT For the year ended 31 December 2015

BANK RECONCILIATION STATEMENT- Kwacha Operating Account AS AT 31 DECEMBER 2015

MK MK Opening Cashbook balance as at 01-Jan-15 (1,332,694.81) Add; Receipts for the period January 2015 -Transfer from holding account 114,000.00 February 2015- Transfer from holding account 26,740,388.59 March 2015- Transfer from holding account 14,651,887.23 April 2015- Transfer from holding account 34,360,738.57 May 20 15- Transfer from holding account 19,000,894.83 June 2015- Transfer from holding account 12,444,926.66 July 2015- Transfer from holding account 7,749,740.05 August 2015- Transfer from holding account 12,760,375.71 September 2015- Transfer from holding account 15,537,105.03 October 2015- Transfer from holding account 6,520,904.41 November 2015- Transfer from holding account 12,881,046.28 • December 2015- Transfer from holding account 1124502868.31 17 422122875.67 Subtotal 172,880,180.86 Less; Expenditure during the period (17325142958.81} Closing Cashbook balance as at 31-Dec-15 (634,777.95) Adjustments to the cash book Add; Bank Interest (634,777.95) Less; Bank charges (842871.29} Adjusted Cashbook balance as at 31-Dec-15 (719,649.24) Add; Unpresented cheques 1882441.74 Balance as per Bank Statement as at 31-Dec-15 53C207.50

Note The bank balance in Malawi Kwacha has been converted to the US Dollar at K 664 (US$ C084} per I US Dollar.

"' 15 • f

NOTES TO THE FINANCIAL STATEMENT For the year ended 31 December 2015

BANK RECONCILIATION STATEMENT- Kwacha lmprest Account .. AS AT 31 DECEMBER 2015

Opening Cashbook balance as at 01-Jan-15 (2,002.43) Add; Receipts for the period Subtotal Less; Expenditure during the period Closing Cashbook balance as at 31-Dec-15 Adjustments to the cash book Add; Bank Interest

Less; Bank charges Adjusted Cashbook balance as at 31-Dec-15 (2,002.43) Add; Unpresented cheques Balance as per Bank Statement as at 31-Dec-15 (2,002.43)

Note The bank balance in Malawi Kwacha has been converted to the US Dollar at 664 per I ) US Dollar.

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