ARMENIAN SOCIAL INVESTMENT FUND III PROJECT

IDA Credit 4238-AM IDA Credit 4548-AM (Additional financing) IBRD Credit 7847-AM (Second additional financing) IDA Credit 5071-AM (Third additional financing) Public Disclosure Authorized

IMPLIMENTED BY ARMENIAN SOCIAL INVESTMENT FUND (renamed to: ARMENIAN TERRITORIAL DEVELOPMENT FUND)

Public Disclosure Authorized SPECIAL PURPOSE FINANCIAL STATEMENTS

AND

INDEPENDENT AUDITOR'S REPORT

For the period from 1 January 2015 to 31 July 2015 Public Disclosure Authorized Public Disclosure Authorized

YEREVAN September 2015 CONTENT

Page THE BOARD ...... 3 INDEPENDENT AUDITOR'S REPORT ...... 4 STATEMENT OF CASH RECEIPTS AND PAYMENTS ...... 6 STATEMENT OF USES OF FUNDS BY PROJECT ACTIVITY ...... 7 NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS ...... 8 ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE PROJECT AND DISBURSED BY THE WORLD BANK...... 25

,lrmienian Soc ial Invstment Fund III Proj'ect1 ProjetSpecialPlurpoME' FinancialStatements For the peniod./rom I Janiuamv 20/5 t31JulY 20/.5 THE BOARD

The Chairman Prime Minister of the Republic of

Members

Armen Yeritsyan Minister of Territorial Administration and Emergency Situations of the Republic of Armenia

Gagik Khachatryan Minister of Finance of the Republic of Armenia

Narek Sargsyan Minister of Urban Development of the Republic of Armenia

Artem Asatryan Minister of Labor and Social Affairs of the Republic of Armenia

Armen Ashotyan Minister of Education and Science of the Republic of Armenia

Karen Chshmarityan Minister of Economy of the Republic of Armenia

Executive Director of representation in Armenia of charitable Jirayr Markosyan organization "Aznavour pour l'Armenie"

Ara Vardanyan Executive Director of All-Armenian Fund

Levon Karaqashyan Representative of the NGO "Vardanants Azbetner" (Knights of Vardan), USA

Hovik Yeordekyan Head of AGBU Armenian Residence

Armenian So ial Investnw Fund III Project Project Special l1wrYse FinancialStatements For the period./rom I Januaiy 20/5 to 31 July 2015 "1UOU-UflFrll'S" U"1QI "SOS-AUDIT" LTD

INDEPENDENT AUDITOR'S REPORT N 82

On the specialpurpose financial statements of Armenian Social Investment Fund III Project for the periodfrom 1 January2015 to 31 July 2015

To the Management of the Armenian Territorial Development Fund (the ATDF) We have audited the accompanying special purpose financial statements of the "Armenian Social Investment Fund III" Project (the Project) financed by Financing Agreements IDA 4238-AM, IDA 4548-AM, IDA 5071-AM and IBRD 7847-AM, which comprise the statement of cash receipts and payments, the statement of uses of funds by project activity for the period from 1 January 2015 to 31 July 2015, and a summary of significant accounting policies and other explanatory notes.

Management's Responsibilityfor the FinancialStatements The ATDF management is responsible for the preparation and fair presentation of these special purpose financial statements in accordance with International Public Sector Accounting Standards: FinancialReporting Under the Cash Basis of Accounting (IPSAS- Cash Basis), issued by the International Public Sector Accounting Standards Board (IPSASB) within the International Federation of Accountants (IFAC), and Financial Management Manual for World Bank Financed Investment Operations, and for such internal control as management determines is necessary to enable the preparation of special purpose financial statements that are free from material misstatements, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these special purpose financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISAs) as issued by International Auditing and Assurance Standards Board (IAASB) within the IFAC. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the special purpose financial statements are free from material misstatement.

An audit involves performing procedures to obtain reasonable audit evidence about the amounts and disclosures in the special purpose financial statements. The procedures selected depend on the auditor's judgment including the assessment of the risk of material misstatement of the special purpose financial statements, whether due to fraud or error. In making those assessments, the auditor considers internal control relevant to the preparation and fair presentation of the special purpose 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 internal control.

RpnnL 9npqwp PhqGbu UuwGuh Uunghwg4w6 UGrVwd 1R; p. bpL&w 0037, U.ShqpwjwG 38/55; 9bn.' (+37410) 20 11 51; Ibwpu' (+37410) 20 11 50; www.sosaudit.am; 4t-nuu' [email protected]

An Associate of the Crowe Horwath Business Alliance 38/55 A.Tigranyan, 0037 , RA; Tel.: (+37410) 20 11 51; Fax: (+37410) 20 11 50; www.sosaudit.am; E-mail: [email protected] "1UOUUIlflSS" U%Q "SOS-AUDIT" LTD

An audit also includes the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the special purpose financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion In our opinion,

1. the special purpose financial statements present fairly in all material respects cash receipts and payments of the Project for the period from 1 January 2015 to 31 July 2015 in accordance with IPSAS-Cash Basis;

2. funds have been used in all material respects in accordance with the conditions of the Credit Agreement 5071-AM (third additional financing) between the Republic of Armenia and International Development Association, and World Bank related guidelines, with due attention to economy and efficiency, and only for the purpose for which they were provided;

3. supporting documents, records and accounts have been maintained to support claims for reimbursement of expenditures incurred. Expenditures included in the withdrawal applications and reimbursed against are eligible for financing under the IDA Credit Agreement 5071-AM (third additional financing);

4. the Designated account used has been maintained in accordance with the provision of the IDA Credit Agreement 5071-AM (third additional financing), and World Bank related guidelines.

Emphasis ofmatters

Without qualifying our opinion we draw your attention to Note 13 of these special purpose financial statements which disclose that financing under IDA 4238-AM, IDA 4548-AM, IBRD 7847-AM and IDA 5071-AM Credit Agreements and the Project were completed as at reporting date.

"SOS-Audit" LLC 28 September 20 G ryan Gnel Khachatryan, FCCA or Auditor 4k~ rrCb

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91; p. bpUwG 0037, LLSbqpr / . +410 20 51; 5wpu' (+37410) 20 11 50; wwwsosaudit.am; t-04nuui' info@so audit.am

An-'Agg the Crowe Horwath Business Alliance 38/55 A.Tigranyan, 0037 Yerevan, RA; Tel.: (+37410) 20 11 51; Fax: (+37410) 20 11 50; www.sosaudit.am; E-mail: [email protected] ! ：方 ， ! -

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: NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMIENTS

Armenian Social Investment Fund 111 Project IDA Credits 4238-AM and4548-AM(additionalfinancing) IBRD Credit 7847-AM (second additionalfinancing) IDA Credit 5071-AM (thirdadditionalfinancing) For the periodfrom I January 2015 to 31 July 2015

1. General information

I. I. The Projectfinancing

According to the Agreement between the Republic of Armenia and the International Development Association (IDA) on I November 2006, IDA provided Credit 4238-AM in the amount of 16,900,000 SDR (Special Drawing Rights) to the Republic of Armenia. The credit was provided for implementation of Annenian Social Investment Fund III Project (hereinafter Project).

Additional financing agreement IDA Credit 4548-AM in the amount of 5,200,000 SDR was entered into between the Republic of Armenia and the International Development Association on 26 February 2009.

Second additional financing agreement, IBRD Credit 7847-AM, in the amount of 7,000,000 USD was entered into between the Republic of Annenia and the International Bank of Reconstruction and Development (IBRD) on 5 May 2010.

Third additional financing agreement IDA Credit 5071 -AM in the amount of 7,100,000 SDR was entered into between the Republic of Armenia and the International Development Association on 24 February 2012.

Closing date for the IDA Credit 4238-AM is set on 31 March 2012. Closing date for the IDA Credit 4548-AM is set on 30 June 2011. Closing date for the IBRD Credit 7847-AM is set on 31 October 2012. Closing date for the IDA Credit 5071-AM is set on 31 March 2015.

The Grace period for submitting the expenditures incurred before the Closing date is set four months after the Closing date.

LZ The Project'sobjective

The objective of the Project is to support the Recipient's policy to raise the living standards of the poor and vulnerable groups through: (a) improving the quality and access, and increasing the coverage of community infrastructure and services in poor communities, and for the most vulnerable groups in response to critical emerging needs; and (b) promoting complementary institutional capacity building at the community and municipal level so as to improve the quality and sustainability of service delivery and municipal investments, increase accountability, and enhance greater stakeholder empowerment at the local level.

The Project consists of the following components: 1. Community investments, 2. Local level institutional strengthening, monitoring and evaluation, 3. Project Management, Monitoring and Evaluation.

,IrnienionSot ial Investment Fund III 1roieci Pr( ect,';Iwlal hirpow for the perio,ffroni 1.1anuary 20/ 5 to 31.1itli,201-5 1.3. Budget

As at 31 July 2015 updated budget of Project financing is 69,011,226 USD. Budget disclosure by expenditures category is presented in next page (in USD). For budget formation the following matters were taken into consideration:

(a) Credit IDA 4238-AM and IDA 4548-AM budgets in SDR were updated on 31 January 2011. (b) Budget USD equivalents for Credits IDA 4238-AM, IDA 4548-AM and IDA 5071- AM, with underling currency of SDR, are calculated based on cumulative funds received in USD plus, if any, USD equivalent of undisbursed funds in SDR as at reporting date. There were no undisbursed funds under Credits IDA 4238-AM, IDA 4548-AM, IDA 5071-AM and IBRD 7847-AM as at 31 July 2015. SDR/USD rate as at 31.07.2015 is set at 1.39470 (31.12.2014: 1.44881). (c) Budget of financing from Sponsors and Communities are equal to the amounts received as at reporting date.

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Armenian Social Investment Fund III Project is financed from the following sources: - International Development Association (IDA Credit 4238-AM), - International Development Association (IDA Credit 4548-AM (additional financing)), - International Bank of Reconstruction and Development (IBRD Credit 7847-AM, (second additional financing)), - International Development Association (IDA Credit 5071-AM (third additional financing)), - Government of the Republic of Armenia, - Government of the Republic of Armenia (additional financing), - Government of the Republic of Armenia (second additional financing), - Government of the Republic of Armenia (third additional financing), - Communities, - Sponsors.

Credit financing rates for expenditure categories of the Project are as follows:

IDA Credit IDA Credit IBRD Credit IDA Credit 4238-AM 4548-AM 7847-AM 5071-AM

Works 78% 78% - 78% Goods 78% 78% - 78% Consultant Services and training 78% 78% - 78% Operating Costs 50% - 50% 50% Works, Goods, Consultants' services and training 85%- 1

1.5. Project Implementation

The Project is implemented by the Armenian Social Investment Fund (the ASIF). The ASIF has been established by a Decree N 162 dated 11.04.2000 of the Government of the Republic of Armenia, the sole founder, as an autonomous non-profit agency to assist in the rehabilitation of small-scale infrastructure through community initiated and demand-based activities. In accordance with the Decrees N 1521-N dated 25 December 2014 and N 690-N dated 25 June 2015 of the Government of the Republic of Armenia, the ASIF is renamed to Armenian Territorial Development Fund (ATDF) and operates based on the new Charter since 4 August 2015. According to the new Charter the ATDF continues to implement similar projects financed by the WB including contributing to: * welfare development of population through improving quality and accessibly of social and economic infrastructure and public services, employment, investment activity, * Institutional and financial strengthening of regions of the Republic of Armenia.

The Board, chaired by the Prime-Minister of the Republic of Armenia, is a supreme governing body of the ATDF.

The ATDF registered address is: 31 Ulnetsu Street, Yerevan, 0037, Republic of Armenia.

Armenian Social Invesuneni Fund III Project Project Spcial Purpose Financial Starements for the periodfrom / Januay 20/5 to 31 Jull 2015 11 2. Summary of significant accounting policies

2.1 Preparation and presentation offinancial statements

The special purpose financial statements are prepared in accordance with the International Public Sector Accounting Standard: FinancialReporting Under the Cash Basis ofAccounting (IPSAS-Cash Basis), issued by the International Public Sector Accounting Standards Board (IPSASB) within the International Federation of Accountants (IFAC), and presented in accordance with Financial Management Manual for World Bank Financed Investment Operations (March 2010): RM 3 - Financial Reporting and Auditing.

The special purpose project financial statements consist of:

- Statement of cash receipts and payments, - Statement of uses of funds by project activity, - Notes to the special purpose financial statements, including: o Summary of significant accounting policies, o Summary of summary reports and SOEs, o Statement of Designated account, o Statement of Financial Position, and o other explanatory notes

The principal accounting policies applied in the preparation of these special purpose financial statements are set out below. These policies have been consistently applied to all the periods presented.

2.2 Cash basis of accounting

Cash basis means a basis of accounting under which transactions and other events are recognized only when cash or its equivalent is received or paid. Financial statements prepared under the cash basis provide information about the sources of cash raised during the period, the purpose for which cash was used and the cash balances at the reporting date.

2.3 Reporting currency

The Project financial statements are presented in United States Dollars (USD).

2.4 Foreign currency transactions

Foreign currency is a currency other than the reporting currency of the Project.

Project accounts are maintained in USD and Armenian Drams (AMD). Transactions in foreign currencies are translated to presentation currency at exchange rates at the dates of the transactions. Settlement rate of foreign currency over functional currency established by the Central Bank of the Republic of Armenia (the CBA) is taken as the exchange rate. Transactions denominated in AMD are translated into USD as follows:

- Contributions of the Republic of Armenia expressed in AMD are presented in USD at the official exchange rate defined by the CBA at the date of transfer. - Payments to contractors and suppliers expressed in AMD are presented in USD at the exchange rates defined by the CBA at the date of payment. Armeniman Social Invesimeni FundIII Project Project Special Purpose FinancialSatements for the periodftam / Jaunay 2015 io 31 Juliy 20/5 / The exchange rate defined by the CBA as at 31 December 2014 is: USD 1 = 471.46 AMD.

The exchange rate defined by the CBA as at 31 July 2015 is: USD = 1478.65 AMD.

2.5 Budgeting

Annual budgets for funding and expenditures are based on approved budget (as updated) of the project agreement (Note 1.3.). Expenditure budget is created based on actual accumulated expenditures for the last period plus the updated procurement plans for the period. Financing budget per fund source is created based on actual accumulated expenditures for the last period per funding source plus the share of funding for the coming period budgeted expenditures.

2.6 Taxes

All applicable taxes are paid in accordance with tax regulations of the Republic of Armenia.

Armienion Social Investnent FundIII ProjectI Plroject Special Purpose FinancialStatements for the periodfrom / Januaiy20/5 io 31 Jully 20/5 1 3. SUMMARY OF SUMMARY REPORTS AND SOEs

IDA Credit 5071-AM (thirdadditionalfinancing) For the periodfrom 1 January 2015 to 31 July 2015 In USD

Expenditure category Application Value date Works, Goods, Consulting Operating Total number services and training costs 1 2 32 22-Jan-2015 193,456.20 35,350.54 228,806.74 33 11-Feb-2015 15,832.85 85.30 15,918.15 34 13-Mar-2015 120,632.44 - 120,632.44 35 18-Apr-2015 344,194.96 1,257.18 345,452.14 36 19-May-2015 50,635.99 5,619.36 56,255.35 37 12-Jun-2015 22,611.33 2,100.00 24,711.33 38 10-Jul-2015 26,221.72 - 26,221.72 39 30-Jul-2015 4,585.07 - 4,585.07 778,170.56 44,412.38 822,582.94

Armenian Social Invesinent Fund Ill Project PlrojectSveial Purpose FinanicialStatements for the periodftomt /January, -015 wo31 Jduliy 20/5 1 4. STATEMENT OF DESIGNATED ACCOUNT

Designated IDA Credit IDA credit IBRD Credit IDA Credit Account 4238-AM 4548-AM 7847-AM 5071-AM

Currency USD USD USD USD

Account number 900000907031 900000907056 900000907072 900000907015 Bank Central Treasury Location Meliq Adamyan Street 1, Yerevan, Republic of Armenia, 0010

In USD IDA IDA Credit Credit IBRD Credit IDA credit 4238-AM 4548-AM 7847-AM 5071-AM Total 1. Opening balance as at 01.01.2015 - - - 630,538 630,538

2. Add: opening discrepancy* (8,735) (169) (70) 464 (8,510)

3. IDA advance/replenishment - - -

4. Less: Refund to IDA from DA -- - - -

5. Amount advanced to DA (8,735) (169) (70) 631,002 622,028

6. DA closing balance as at 31.07.2015 - - - 36,762 36,762

7. Add: Amount of eligible expenditures paid - - - 591,790 591,790

8. Less: interest earned (if credited to DA) - - - - -

9. Total advance accounted for - - - 628,552 628,552

10. Discrepancy (5)-(9) * (8,735) (169) (70) 2,450 (6,524)

Armenian Social Invevitnent FundIII Project Project Special Purpo FinancialStatements for the periodfron / January 2015 io 31 Jull 20/5 15 (*) Discrepancy consists of as follows: In USD

IDA IBRD Credit IDA credit Credit IDA credit 4238-AM 4548-AM 7847-AM 5071-AM Total (a) (a) (a) (b) Opening discrepancy Balance at cash desk - - - 114 114 Refund to IDA from current account (5,722) - - - (5,722) Transfer to interest account (c) 963 - - - 963 FX revaluation gain/(loss) (3,976) (169) (70) 350 (3,865) Total opening discrepancy (8,735) (169) (70) 464 (8,510)

Closing discrepancy Escrow account - - - 2,100 2,100 Refund to IDA from current account (5,722) - - - (5,722) Transfer to interest account (c) 963 - - - 963 FX revaluation gain/(loss) (3,976) (169) (70) 350 (3,865) Total closing discrepancy (8,735) (169) (70) 2,450 (6,524)

(a) As at 31.12.2013 financing under IDA 4238-AM, IDA 4548-AM and IBRD 7847-AM credit agreement were completed (Note 13). (b) Financing under IDA 5071-AM credit agreement is completed on 31 July 2015. (c) Current account balance in the amount of 963 USD that was generated from interest accrued has been transferred from IDA 4238-AM into IDA 5071-AM interest account on 08.01.2013.

Arnenian Social Investment Fund1 IProject ProjectSpecial Purpow FinancialStatements for the periodirom / January 2015 io 31 Jul 2015 5. STATEMENT OF FINANCIAL POSITION

The Statement of Financial Position discloses assets, liabilities and net assets of the Project as at reporting date. It is prepared in accrual basis that is transactions are recognized when they occur (and not only when cash is received or paid).

31.07.2015 31.12.2014 Note USD USD ASSETS Cash 6 205,342 1,048,512 Prepayments and receivables 7 7,451 44,866 Total assets 212,793 1,093,378 LIABILITIES

Payables 8 83,456 319,976

Total Liabilities 83,456 319,976 NET ASSETS

Cumulative income Funds 9 IDA 4238-AM 26,111,563 26,111,563 IDA 4548-AM-additional financing 7,988,525 7,988,525 IBRD 7847-AM -second additional financing 7,000,000 7,000,000 IDA 5071-AM-third additional financing 10,820,752 10,820,752 RA Government 6,548,417 6,548,417 RA Government- additional financing 1,335,722 1,335,722 RA Government -second additional financing 1,378,821 1,378,821 RA Government -third additional financing 3,211,469 3,211,469 Community contribution 4,358,321 4,358,321 Sponsors 505,240 505,240 69,258,830 69,258,830 Other income (Interest accrued) 11 63,079 61,891 69,321,909 69,320,721 I Cumulative expenses Project expenses 10 69,008,050 68,366,697 69,008,050 68,366,697

Foreign currency gain/(loss) 11 (184,522) (180,622) Total net assets 129,337 773,402

Armenian Social Invesinent FundIII Projeci Project Sp'cial Purpose Finaial Srcuments for the periodfi-oan IJanuay 20/5 to 31 Iuih 20/5 17 6. Cash

Account held Underlying 31.07.2015 31.12.2014 at Currency USD USD Designated account (IDA 507 1-AM)* Treasury USD 36,762 630,538 Escrow account (IDA 5071-AM)** Treasury USD 2,100 - Community contribution account ADB bank AMD 57,981 119,389 RA Government account Treasury AMD 38,763 238,045 Interest account ADB bank AMD 54,647 53,330 Community contribution account HSBC bank AMD 14,234 773 Sponsors contribution account ADB bank AMD 855 6,323 Cash on hand ATDF office AMD - 114 205,342 1,048,512 (*) Balance at Designated Account was refunded to WB on 10 Aug 2015. (** Escrow account is opened for financial audit payment.

7. Prepayments and receivables 31 July 2015 31 Dec 2014 USD USD Prepayments on Works 43,711 Receivables on Works (Note 13.3.b) 7,451 775 Prepayments on Incremental Operating Costs - 380 7,451 44,866 8. Payables 31 July 2015 31 Dec 2014 USD USD On Works (Retentions) (Note 13.3.c) 83,456 258,085 On Interest accrued - 61,891 83,456 319,976 Retentions of 5% are held from the completed service invoice for up to one year as guaranty for the quality of the work.

Armtenian Social Invesunent Fund III Proqject P'roject Special Purpow iinancia Srcemztnents for the periodfrom I January 10/5 to 31 Juiy 20/5 9. Funds

Funding including PPF is as follows:

Cumulative as at 31.07.2015 Cumulative as at 31.12.2014 Funding PPF for PPF for ASIF III ASIF III Total ASIF III ASIF III Total USD USD USD USD USD USD IDA 4238-AM 24,711,159 1,400,404 26,111,563 24,711,159 1,400,404 26,111,563 IDA 4548-AM- additional financing 7,988,525 - 7,988,525 7,988,525 - 7,988,525 IBRD 7847-AM- second additional financing 7,000,000 - 7,000,000 7,000,000 - 7,000,000 IDA 5071-AM- third additional financing 10,820,752 - 10,820,752 10,820,752 10,820,752 Government of RA 6,230,802 317,615 6,548,417 6,230,802 317,615 6,548,417 Government of RA- additional financing 1,335,722 - 1,335,722 1,335,72 - 1,335,722 Government of RA- second additional financing 1,378,821 - 1,378,821 1,378,821 1,378,821 Government of RA- third additional financing 3,211,469 - 3,211,469 3,211,469 3,211,469 Community Contributions 4,167,169 191,152 4,358,321 4,167,169 191,152 4,358,321 SponsorsContributions 505,240 - 505,240 505,240 - 505,240 Total Funds 67,349,659 11,909,171 69,258,830 67,349,659 1,909,171 69,258,830

Arnnian Social Invesitnent Fund Ill Project ProJectSpecial Purpose FinancialStatements for the periodfron / .Januay 2015 to 31 J1ul 2015 /9 a -:,11 カ 1 【 -

- ;！씸 ， l - 〕 〕 螂 } 邊 l 11. Adjustments USD

Currency revaluation loss (177,979 31.12.2014(174,040) Exchange loss 6,543 (6,582) Interest n31.07.2015 accrued in bank accounts 63,079 Other 61,891 - - (380) Total (121,443) (119,111)

12. Project budget management

Cumulative as at 31.07.2015 Budget Implementation Uses of Funds USD USD % 1. Works 44,035,686 44,820,892 2. Goods 98% 6,769,652 6,198,265 i09% 3. Consultants' services and training 3,393,130 3,394,843 100% 4. Operating costs 5,174,424 5,113,708 101% 5. Refunding of PPF 1,628,21 1,768,959 92% 6. Works, Goods, Consultants' services and training ABRD 7847-AM 7,913,440 7,697,059 103% 7. Front-end fee 17,500 17,500 1000/ Total 68,932,01 69,011,226 100%0

13. Funds and Project closing

13.1. EDA 4238-AM, EDA 4548-AM (additional flnancing), and IBRD 7847-AM (second additional financing)

The financing under the IDA 4238-AM (Closing date: 31.03.2012), IDA 4548-AM (Closing date: 30.06.2011), and IBRD 7847-AM (Closing date 31.10.2012) credits were completed in previous periods. Regarding to those credits: a) No financing were received during the reporting period; b) No expenditures were incurred during the reporting period; c) No withdrawal applications were submitted during the reporting period; d) There are no cash balances as at 31.07.2015; e) There are no receivable or payable amounts to contractors outstanding as at 31.07.2015; f) We are not aware about any pending or existing litigations against them.

13.2. EDA 5071-AM (third additional flnancing)

The financing under the IDA 5071 -AM (Closing date: 31.03.2015) was completed as at 31.07.2015, four months after the Closing date (the Grace period, and/or Reporting date). As at the date of signing these special purpose financial statements: a) No expenditures related funded by the IDA 5071-AM were incurred after the Closing date; the payments made during the Grace period related to expenditures incurred before the Closing date; b) No withdrawals from IDA Credit 5071 -AM account were made after Reporting date; ,IrinenianSocialInvestment Fund If/ Proie,i Pr(yect Sjx?cial Purpose FinancialStatenwnt for the periodfront 1.lanuaty 20/ i io31 JuIr 2015 c) No expenditures related to the Project were submitted to the WB after the Reporting date; d) There were no uncovered prepayments or payables to contractors relating to IDA Credit 5071-AM outstanding as at the Reporting date, except for final audit service in for which escrow account is opened (Note 6); e) The outstanding cash balance relating to IDA Credit 5071-AM as at Reporting date in the amount of USD 36,762.01 was transferred to WB on 10 Aug 2015 (Note 6); f) We are not aware about any pending or existing litigations against the IDA Credit 5071-AM.

13.3. Project completion

The Project was completed as at 31 July 2015 (the Reporting date). As at the date of signing these special purpose financial statements: a) No expenditures related to the Project were incurred after the reporting date; b) There were no uncovered prepayments outstanding to contractors related to the Project as at the Reporting date; Receivables outstanding as at reporting date had no IDA financing related part and relate to refundable amounts on Civil work defects (Note 7); c) Payables outstanding on retentions as at reporting date had no IDA financing related part (Note 8): d) Cash balances outstanding as at reporting date relates to following (Note 6): i. Designated account balance refunded to WB on 10.08.2015; ii. Escrow account to be paid for final audit service; iii. Balances at "Community contribution account" and "RA Government account" will be used to pay obligations on retentions; iv. the residual amount at bank balances and at interest account have no IDA financing related part and will be directed to implement charter objectives of the ATDF at the discretion of ATDF Board; e) We are not aware about any pending or existing litigations against the Project.

Armenian Social Investment Fund III Project Prjetct Special Purpose FinancialStatements for the periodfrom / .anuary 20/5 to 31 Iily 20/5 24 ANNEX 1. RECONCILIATION BETWEEN THE AMOUNTS SUBMITTED BY THE PROJECT AND DISBURSED BY THE WORLD BANK

Armenian Social Investment Fund III Project IDA Credit 5071-AM (thirdadditionalfinancing) Forthe periodfrom 1 January2015 to 31 July 2015 In USD

Expenditure Category Appl. ASIF WB Difference Advances (Recovery) 32 (228,806.74) 33 (15,918.15) 34 (120,632.44) 35 (345,452.14) 36 (56,255.35) 37 (24,711.33) 38 (26,221.72) 39 (4,585.07) (822,582.94) 1. Works, Goods, Consulting services, 32 193,456.20 193,456.20 - including training 33 15,832.85 15,832.85 - 34 120,632.44 120,632.44 - 35 344,194.96 344,194.96 - 36 50,635.99 50,635.99 - 37 22,611.33 22,611.33 - 38 26,221.72 26,221.72 - 39 4,585.07 4,585.07 - 778,170.56 778,170.56 2. Operational costs 32 35,350.54 35,350.54 - 33 85.30 85.30 - 34 . 35 1,257.18 1,257.18 - 36 5,619.36 5,619.36 - 37 2,100.00 2,100.00 - 38 - .

39 - 44,412.38 44,412.38 Total 822,582.94 I

Arenian Social Investment FundIII Project Project Special Purpose Financial Statements for the period from / .knary 2015 to 31 Juli 2015 25