Public Disclosure Authorized Gansu Audit Report Public Disclosure Authorized 2018 12 GANSU AUDIT REPORT 2018 NO. 12 Project Name: Poverty Alleviation and Agriculture Development Demonstration Project in Poor Areas of China Loaned Public Disclosure Authorized by the World Bank 8509-CN Loan No.: 8509-CN Project Entity: Gansu Province Foreign Capital Poverty Alleviation Project Management Center Public Disclosure Authorized 2017 Accounting Year: 2017 Contents ......................................................................................... 1 .................................................................................... 3 ................................................................. 5 . Financial Statements and Notes to the Financial Statements ................ 5 ............................................................................... 5 i. Balance Sheet ..................................................................................... 5 ............................................................................... 7 ii. Summary of Sources and Uses of Funds by Project Component ..... 7 ............................................................. 10 iii. Statement of Implementation of Loan Agreement ......................... 10 ......................................................................... 11 iv. Special Account Statement ............................................................ 11 ..... 13 Notes to the Financial Statements ...................... 13 ................................................................... 19 III. Audit Findings and Recommendations ............................................... 27 2017 12 31 1 2017 12 31 5 11 2018 6 28 109 730000 86-931-8418421 86-931-4609333 2 To Gansu Province Foreign Capital Poverty Alleviation Project Management Center: We have audited the special purpose financial statements (from page 5 to page 18) of Poverty Alleviation and Agriculture Development Demonstration Project in Poor Areas of China Loaned by the World Bank , which comprise the Balance Sheet as of December 31, 2017, the Summary of Sources and Uses of Funds by Project Component, the Statement of Implementation of Loan Agreement and the Special Account Statement for the year then ended, and Notes to the Financial Statements. Project Entity and Gansu Provincial Finance Department's Responsibility for the Financial Statements The preparation of the Balance Sheet, the Summary of Sources and Uses of Funds by Project Component, the Statement of Implementation of Loan Agreement is the responsibility of your entity, while the preparation of the Special Account Statement is the responsibility of Gansu Provincial Finance Department, which includes: i. Preparing and fair presenting the accompanying financial statements in accordance with Chinese accounting standards and system, and the requirements of the project loan agreement; ii. Designing, implementing and maintaining necessary internal control to ensure that the financial statements are free from material misstatement, whether due to fraud or error. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Government 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 are 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 material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control 3 relevant to the entities statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the 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 financial statements. We believe that the audit evidence we have obtained is appropriate and sufficient to provide a basis for our audit opinion. Opinion In our opinion, the financial statements identified in the first paragraph present fairly, in all material respects, financial position of Poverty Alleviation and Agriculture Development Demonstration Project in Poor Areas of China Loaned by the World Bank as of December 31, 2017,its financial receipts and disbursements, the project implementation and the receipts and disbursements of the special account for the year then ended in accordance with Chinese accounting standards and system, and the requirements of the project loan agreement. Other Matter We also examined the withdrawal application from No.5 to No.11 and the attached documents submitted to the World Bank during the period. In our opinion, those documents comply with the project loan agreement and can serve as basis for loan withdrawal. hereinafter: Financial Statements and Notes to the Financial Statements, Audit Findings and Recommendations. Gansu June 28,2018 Address: NO. 109 Democracy East Road, Lanzhou Gansu, China Postcode:730000 Tel.: 86-0931-8418421 Fax: 86-0931-4609333 The English translation is for the convenience of report users; Please take the Chinese audit report as the only official version. 4 ( ) i. Balance Sheet of Project BALANCE SHEET 2017 12 31 As of December 31,2017 Project Name: Poverty Alleviation and Agriculture Development Demonstration Project in Poor Areas of China Loaned by the World Bank Entity Name: Gansu Province Foreign Capital Poverty Alleviation Project Management Center Currency Unit: RMB Yuan Application of Fund Line No Beginning Balance Ending Balance (Total Project Expenditures) 1 17,164,147.20 85,862,371.45 1. ( Fixed Assets Transferred) 2 2. (Construction Expenditures to Be Disposed) 3 3. (Investments Transferred-out) 4 4. (Construction in Progress) 5 17,164,147.20 85,862,371.45 (Investment Loan Receivable ) 6 7 Including: World Bank Investment Loan Receivable (Appropriate of Investment Loan) 8 9 Including: Appropriate of World Bank Investment Loan (Equipment) 10 ( Including: Equipment Losses in Suspense) 11 (Total Cash and Bank) 12 51,569,937.53 45,034,715.38 1. (Cash in Bank) 13 51,562,315.55 45,024,209.70 1. (Including: Special Account) 14 17,159,886.04 8,523,280.53 2. (Cash on Hand) 15 7,621.98 10,505.68 (Total Prepaid and Receivable) 16 3,366,888.95 : 17 Including: World Bank Loan Interest Receivable 18 World Bank Loan Commitment Fee Receivable 19 World Bank Loan Service-Fee Receivable ( Marketable Securities) 20 (Total Fixed Asset ) 21 (Original Value of Fixed Assets) 22 (Less: Accumulated Depreciation) 23 (Net Value of Fixed Asset ) 24 (Fixed Asset Pending Disposal) 25 (Fixed Asset Losses in Suspense) 26 (Total Application of Fund) 27 68,734,084.73 134,263,975.78 5 ( ) BALANCE SHEET (continued) 2017 12 31 As of December 31,2017 Project Name: Poverty Alleviation and Agriculture Development Demonstration Project in Poor Areas of China Loaned by the World Bank Entity Name: Gansu Province Foreign Capital Poverty Alleviation Project Management Center Currency Unit: RMB Yuan Beginning Line No Ending Balance Sources of Fund Balance (Total Project Appropriation Funds) 28 15,486,600.00 58,874,322.10 29 Project Capital and Capital Surplus ( Including: Grants) 30 ( Total Project Loan ) 31 42,662,550.00 49,389,332.24 1. (Total Project Investment Loan) 32 42,662,550.00 49,389,332.24 (1) (World Bank Loan) 33 42,662,550.00 49,389,332.24 (Including): (IDA) 34 (IBID) 35 42,662,550.00 49,389,332.24 (Technical Cooperation) 36 (Co-Financing) 37 (2) ( Domestic Loan) 38 2. (Other Loan) 39 (Appropriated Investment Loan) 40 (Including: World Bank Loan ) 41 ( Bond Fund) 42 ( Construction Expenditures to Be Offset) 43 (Total Payable) 44 10,577,336.85 25,985,167.04 : 45 Including: World Bank Loan Interest Payable 46 World Bank Loan Commitment Fee Payable 47 World Bank Loan Service Fee Payable (Other Payables) 48 (Appropriation of Fund ) 49 (Retained Earnings) 50 7,597.88 15,154.39 (Total Sources of Fund ) 51 68,734,084.73 134,263,975.78 6 ( ) ii. Summary of Sources and Uses of Funds by Project Component ( ) SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT 2017 12 31 (For the period ended December 31, 2017 Project Name: Poverty Alleviation and Agriculture Development Demonstration Project in Poor Areas of China Loaned by the World Bank Entity Name: Gansu Province Foreign Capital Poverty Alleviation Project Management Center Currency Unit: RMB Yuan Current Period Cumulative Current Project Component Current Period % Cumulative % Current Period Budget Period Actual Life of PAD Cumulative Actual Completed Completed (Total Sources of Funds) 81,500,764.80 50,114,504.34 61% 720,000,000.00 108,263,654.34 15% International Financing 48,785,964.80 6,726,782.24 14% 360,000,200.00 49,389,332.24 14% 1.IBRD 48,785,964.80 6,726,782.24 14% 360,000,200.00 49,389,332.24 14% 2.IDA Counterpart Financing( ) Note 1 32,714,800.00 43,387,722.10 133% 359,999,800.00 58,874,322.10 16% 1. Financial poverty relief funds 31,434,800.00 38,043,695.51 121% 251,718,200.00 51,755,695.51 21% 2. Work relief funds 1,280,000.00 4,164,026.59 325% 88,321,500.00 5,814,702.59 7% 3. Local fiscal funds 1,180,000.00 0% 19,960,100.00 1,303,924.00 7% 4. Self-Fund 7 ( ) SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT 2017