federal micro and small enterprise development...

FEDERAL MICRO AND SMALL ENTERPRISE DEVELOPMENT

AGENCY - WOMEN ENTREPRENEURSHIP DEVELOPMENT

PROJECT GRANT NUMBER IDA CREDIT NO.5112 ET

REPORT AND ACCOUNT

07 JULY 2015

MENBERE LEUL & CO. Tel: 251-116-67-06-32/39

Chartered Certified Accountants (UK) Mobile: 251-911-23-04-61

Fax 251-116-67-03-88

P. 0. Box 297 Code 1250

E-mail: menbereleulfvahoo.com

Addis Ababa, Ethiopia

IR E 71f-ED

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MENBERE LEUL &. CO.

CHARTERED CERTIFIED ACCOUNTANT (UK)

AUDITORS' REPORT TO THE MANAGEMENT OF FEDERAL MICRO AND SMALLENTERPRISE DEVELOPMENT AGENCY - WOMEN ENTREPRENEURSHIPDEVELOPMENT PROJECT GRANT NUMBER IDA CREDIT NO.5112 ET

We have audited the accompanying financial statements of Federal Micro and Small Enterprise

Development Agency - Women Entrepreneurship Development Project Grant Number IDA

Credit No.5112 ET which comprises the balance sheet as at 07 July 2015, and the statement of

sources and uses of fund, and a summary of significant accounting policies and other

explanatory notes for the year then ended.

Managements' Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements

in accordance with International Financial Reporting Standards for Small and Medium-Sized

Entities (IFRS for SMEs). This responsibility includes: designing, implementing and

maintaining internal control relevant to the preparation and fair presentation of financial

statements that are free from material misstatement, whether due to fraud or error; selecting and

applying appropriate accounting policies; and making accounting estimates that are reasonable

in the circumstances.

Auditors'Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We

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 whether the financial statement is 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 the auditors'

judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity's preparation and fair presentation of the

financial statements 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

entity's internal control. An audit also includes evaluating the appropriateness of accounting

Tel. 251716-67-0632/39 Fax251-1-54-79 -25E-mail menbereleulvahoo. com P.O.Box 297 code 1250Mobile. 251-9-230461 Addis Ababa,

Ethiopia

policies used and the reasonableness of accounting estimates made by management, as well as

evaluating the overall presentation of financial statements.

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 gives a true and fair view of the financial position of

Federal Micro and Small Enterprise Development Agency - Women Entrepreneurship

Development Project Grant Number IDA Credit No.5112 ET, as at 07 July 2015, and its

financial performance for the year then ended in accordance with in accordance with

International Financial Reporting Standards for Small and Medium-Sized Entities (IFRS for

SMEs).

In addition, with respect to the statement of expenditure submitted during the year ended 7 July

2015, in our opinion

a. the statements , together with the procedures and internal controls involved in their

preparation, can be relied up on to support the relevant withdrawals,

b. adequate supporting documentation has been maintained to support claims to IDA for

reimbursement of expenditures incurred: and

c. Which expenditures are eligible for financing under IDA Credit No.5112 ET.

Addis Ababa MENE L31 December 2015 Chartere rfiyAccountants

And A q0 rized uditors

2

FEDERAL MICRO AND SMALL ENTERPRISE DEVELOPMENT AGENCY

WOMEN ENTREPRENEURSHIP DEVELOPMENT PROJECT

GRANT NUMBER IDA CREDIT NO.5112 ET

BALANCE SHEET

7 JULY 2015

Currency: Ethiopian Birr

Notes

CURRENT ASSETS 2014

Recivable 3 1,018,188.15 686,529.87

Cash at Bank 3,584,271.95 885,447.39

4,602,460.10 1,571,977.26

CURRENT LIABILITIES

Creditors and accruals 4 3,894,444.52 62,598.58

NET CURRENT ASSETS 708,015.58 1,509,378.68

REPRESENTED BY

Fund balance 5 708,015.58 1,509,378.68

3




STATEMENT OF SOURCE AND USES OF FUNDS

FOR THE YEAR ENDED 7 JULY 2015


Notes

SOURCES

IDA CREDIT 2014

SOE procedures B 19,874,428.93 14, 9 4 1,782.31

Gain on exchange rate 41,496.78 15,001.89

TRUST FUND 5,896,430.89 -

25,812,356.60 14,956,784.20

USES

Entrepreneurial Skills, Technology and ClusterDevelopment 7 22,612,951.55 12,130,129.87Project Management, Advocacy andOutreach, Moinitoring and Evaluation, andImpact Evaluation 8 4,000,768.15 4,911,399 25

EXCESS OF SOURCES OVER USES (801,363.10) (2,084,744.92)

4




NOTES TO THE ACCOUNTS


Currency: Ethiopian Birr1. ESTABLISHMENT

A financing agreement was signed on 12 June 2012 between the Federal Democratic Republic of

Ethiopia and the International Development Association (IDA) according to which SDR 32,200,000

(Thirty-two million two hundred thousand) is available in the form of credit to implement the activities

of the Women Entrepreneurship Development project, under Credit Agreement No. 5112-ET.

The project is implemented through Ministry of Urban Development and construction (MoUD &C)

National project Management Team(NPMT) is established with in the Federal Micro and Small

Enterprise Development Agency(FeMSEDA) under the MoUD & C. MoUD &C,FeMSEDA, NPMT,

Development Bank of Ethiopia(DBE) and other sub-national administration selected for the execution

of the project are implementing project activities.

The objective of the project is to increase the eaming and employment of Micro and small enterprises(MSEs)

fully or partly owned by female entrepreneurs in the targeted cities.

2. ACCOUNTING POLICIES

The principal accounting policies adopted by the project, are as stated bellow:

a. Basis of preparation

These financial statements have been prepared in compliance with International Financial Reporting

Standards for SMES.

b. Currency

Transactions in foreign currency are converted to Birr at the exchange rate ruling at the date of

the transactions. Cash balances maintained in foreign currency is converted to Birr at the exchange rate

ruling at the date of the balance sheet date.

c. Basis of accounting

Modified cash basis of accounting is used in recognition of source and qses Of fun>d

d. Fixed assets

Fixed assets are treated as project expenditure at the time of purchase yithut applying the rule of

depreciation.

5







3. ADVANCE TO REGIONS 2014

Advance to Addis Ababa CoMSEDA 708,854.12 563,034,40

Advance to Mekelle CoFED 117,908.86 -

Advance to Adama CoFED 100,076.99 72,846.23

Advance to Dire Dawa CoMSEDA 68,684.72 -

Advance to Bahir Dar CoFED 15,419.52 25,687.65

Advance to Hawassa CoFED 7,243.94 24,961.59

1,018,188.15 686,529.87

4. CREDITORS AND ACCRUALS

Income tax 71,651.10 47,347.50

Sundry creditors - 10,935.64

Value added tax 1,291,265.07 3,577.51

Withholding tax 2,531,528.35 737.93

3,894,444.52 62,598.58

5. FUND BALANCE

Opening balance 1,509,378.68 3,594.123.60

Add: Current year transfer (801,363.10) (2,084.744.92)

708,015.58 1,509,378.68

6





FOR THE YEAR ENDED7 JULY 2015

Currency: Ethiopian Birr6. SOE PROCEDURE 2014

Withdrawal application 16,022,453.74 7,460,167.13

Direct payment by world bank 3,851,975.19 7,481,615.18

19,874,428.93 14,941,782.31

7. ENTREPRENEURIAL SKILLS,TECHNOLOGY AND CLUSTER DEVELOPMENT

Contractual Professional Service 16,019,138.87 -Training 1,815,320.80 36,155.00Stationary and office supplies 1,544,982.98 604,312.80Salary and related benefits 830,680.00 90,000.00

Purchase of equipment and furniture's 634,468.23 4,553,590.40Fuel and lubricant 611,718.44 136,332.35

Repair and maintenance 347,036.30 1,616,367.41Perdiem 200,305.22 181,318.80

Communication 175,111.60 900.00Rent 139,169.04 6,900.00Publication 67,591.20 148,451.60Transportation 67,341.00 71,189.45Insurance 46,888.99Entertainment 46,142.43 65,697.99Service charge 44,259.70 54,676,27Loading and Unloading 14,200.50

Advertising 8,596.25 15,29895Purchase of motor cycles and spare parts - 4,548,938.85

22,612,951.55 12,130,129.87

7






Currency: Ethiopian Birr8. PROJECT MANAGEMENT,ADVOCACY AND OUTREACH,MOINITORING AND EVALUATION,

AND IMPACT EVALUATION

2014

Salaries and related benefits 1,276,154.30 804,264.71

Contracted professional services 772,728.00 312,707.00

Publication 432,080.66 225,025.29

Travel and perdiem 346,394.00 60,553,60Fuel and lubricants 198,612.05 90,000.00

Repair and maintenance 188,285.40 72 037.24Stationary and office supplies 184,161.14 77,612.48Communication 140,163.76 4,414.63

Training 103,512.03

Transportation 100,347.18 14,564.02

Advertising 88,260.48 244,243.85

Service charge 43,663.08 24,787 17Purchase of plant, machinery and office equipment 34,028.01 75,561,71Insurance 31,762.93 24,359.50

Rent 30,000.00 9,700.00

Purchase of motor vehicle 19,791.50 2.703,88253

Entertainment 9,864.51 166,961.02

Miscellaneous 959.12 724.50

4,000,768.15 4,911,399.25

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INTERNAL CONTROL MEMORANDUM

07 JULY 2015

MENBERE LEUL & CO. Tel: 251-116-67-06-32/39

Chartered Certified Accountants (UK) Mobile: 251-911-23-04-61

Fax 251-116-67-03-88

P. 0. Box 297 Code 1250

E-mail: [email protected]


MENBERE LEUL & CO.


31 December 2015

Federal Micro and Small Enterprise Development Agency

Women Entrepreneurship Development Project Number Ida Credit No.5112 ET

Addis Ababa

Dear Sirs,

Accounts, 07 July 2015

During our audit for the year ended 07 July 2015, we have examined certain aspects of your

Project's system of internal control and attach here to a memorandum containing

recommendations on possible ways in which the system could be improved to overcome

weaknesses in internal control which came to our notice during our examination, together

with other comments and observations.

It must be appreciated that the matters referred to this memorandum came to our notice during

the conduct of our normal audit procedures which are designed primarily with a view to the

expression of our opinion on the accounts of the Project. Therefore, our comments cannot be

expected to include all possible improvements in internal control and to disclose all

defalcations and other irregularities which a more extensive special examination mightdevelop and reveal.

We are frequently in a position to offer constructive suggestions for improvements in

accounting and control procedures but our work in these areas is not designed for the purpose

of expressing an opinion on the effectiveness of the various control systems and, accordingly,

will not extend into all areas in which improvements may be warranted. Additionally, in as

much as our examinations do not include a 100% detailed audit of transactions, they would

not necessarily disclose defalcations or irregularities should any exit.

We have discussed the contents of the memorandum with management.

We are grateful to allmeibisofthe project for the courtesy and assistance rendered to our

representatives during the conduct o our audit.

Yours faithft iy,

Mecee Leul and Co.Chartered Certified Accountants (UK)

LTeT 251-776-67-062/J9 dr251-176-67T03-88 f'a7.BxdaA.m d6.f=297 CA 7250 0 ldd& 0 4ha

fabil&. 251.9-230467 fthpL

1. Under-utilization of planned activitiesThe following activities which are included in the action plan under the following budgetheadings have been underutilized during the year.

COMPONENT BUDGET ACTUAL VARIANCEProgram Management 7,393,250.51 4,000,768.07 3,392,482.44Capacity Building 45,991,272.01 22,612,951.63 23,378,320.38

Effect

Delay in execution of planned activities not only affects timely delivery of the planned outcomebut also affects the project budget because of rising costs.

Recommendation

We recommend management to follow timely implementation of planned activity.

Management response

This is due to the dalliance: - of TEVT Training consultancy to perform as per the schedule,Procurement of OSS's & TVET Colleges office equipment and furniture, Addis Ababa CityMSE's office maintenance and Transtec's TOT dalliance delays the utilization of its budget andthe whole training activities. Therefore we have accepted the auditor's recommendation.

2




DESIGNATED ACCOUNTS

07 JULY 2015

MENBERE LEUL & CO. Tel: 251-116-67-06-32/39Chartered Certified Accountants (UK) Mobile: 251-911-23-04-61

Fax 251-116-67-03-88

P. O. Box 297 Code 1250

E-mail: menbereleuvahoo.com


MENBERE LEUL & CO.


AUDITORS' REPORT TO THE MANAGEMENT OF FEDERAL MICRO AND

SMALL ENTERPRISE DEVELOPMENT AGENCY - WOMEN ENTERPENERSHIP

DEVELOPMENT PROJECT GRANT NUMBER IDA CREDIT NO.5112 ET

We have audited the accompanying special accounts of Federal Micro and Small Enterprise

Development Agency - Women Entrepreneurship Development Project Grant Number IDA

Credit No.5112 ET for the year ended 7 July 2015.

Managements' Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial

statements in accordance with International Financial Reporting Standards for Small and

Medium-Sized Entities (IFRS for SMEs). This responsibility includes: designing,

implementing and maintaining internal control relevant to the preparation and fair presentation

of financial statements that are free from material misstatement, whether due to fraud or error;

selecting and applying appropriate accounting policies; and making accounting estimates that

are reasonable in the circumstances.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We 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 whether the financial statement is 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 the auditors'

judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity's preparation and fair presentation of the

financial statements 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

entity's internal control. An audit also includes evaluating the appropriateness of accounting

eL 257-1716-67-06-2/J9 dax 251-176-67-03"88 f-mad [email protected] d'.O8ox 297 pda 1250 fdde Lbaba,

dloAd. 257-9-230461

policies used and the reasonableness of accounting estimates made by management, as well as

evaluating the overall presentation of financial statements.

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 special accounts give a true and fair view of the financial position of Federal

Micro and Small Enterprise Development Agency - Women Entrepreneurship Development

Project Grant Number IDA Credit No.5112 ET as at 7 July 2015 and the movement for the year

then ended in accordance with International Financial Reporting Standards for Small and

Medium Sized Entities (IFRS for SMEs).

Addis Ababa MENBERE LEUL> C0,31 December 2015 Charteiqgqified Accountants

A hAutharited Aiditors

2




STATEMENT OF DESIGNATED ACCOUNT


For the year ended 7 JULY 2015

Account number 026151/013941/00

Depository bank National Bank of Ethiopia

Address: Addis Ababa, Ethiopia

Related grant IDA Credit 5112-ET

Currency USD

Balances as at 08 July 2014

Add;-World bank replenishment 795,177.12

Amount transferred from world bank during the period -

Other deposit -

795,177.12

795,177.12

Less: Expenditure during the period -

Transferred to Birr account 795,177.12

795,177.12

Balance as at 7 July 2015 -

3

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