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Ministry of Labour and Sociai SecurityProgramme of Advancement Through Heaith and Education (PATH)Social Protection Project (SPP)3 2IBRDJGQJ Loan No. 3329-JMPeriod ending March 31, 2017

TABLE0OFCONTENTS

Audit Report on inancil Staternent i-5

Statement of Sources and Uses o Funds 6

Statemnent uf Cumulative investnents by Disbursement Category 7

Design ated Account Reconciliatiån Statement 8

Notes to the Financial Statemens9-16

Audit Report on Statement ofExpenditure1

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Key Audit Matte rs

Key audit msatters are those matters that, in fly professional judgrnent, were o f mOst significance in

the audit of the financial statemsents al the current period. These miatters werc addresseud in thecontext of the audit ef the finacial statements as a whole, and in forming miy opinion therecn, and 1do not rovide a separate opnion, er these rmatters. Thle following key mratters were broeght to theattention of m'aniagem'ent by way ci nmy Audit Completion Report da ted September 28, 201i7.

The Key.dit Matters a:e as follos:

Iv elee dA dvn_e_s

PATl H id no: takt steps to clear nonies advanced for the søpplsies el goods and serices irtim el; mnsner to ensu re that no nies are spe nt for its inxtendied purpose. This was demnonstratedby en-cleared' advances at Match 31? 2017 totaling JM$211.02 illion (US$1,996,883.64); withninety- two per cent outsanding in excess et 12 months. Although, we cported on tis issepreviously and tot Pr oject teams had commeitted to investigate and strengthen the controis over

thie earnance oftadvances; we saw noa euidence that this wa s døne.

2. _Neon-coinghanevitin_Tax_Gu_idelines esulting_in_sdlago_ver,atmnr;s

PATHe ers revealed that ninec officers were paid periodic gratuity anmountirg toapproximately JM$3.32 Millon (US$26,349.52). Homever, PATH did inot neduct the rcquisitePAYE, Edtucation T ax and National Hdousing Trest, from the periad:c gratuity paymnents.

Consequently, taxes anounting t $972,981.49 vore nt remitted to the Tax Admf initration alJamsaica.

Ma nagement's Responsiility for the finsancial Statemneits

Thie executing agency, the Ministry of Labour and Social Securty (MLSS), is responsible fr thi

preparation and fair oresentation el test ñnanial statements, in accordance ith InternathonalPublic Sectoi Accounting Standaeds (iPSAS) Cash Basis. This respønsibilty includes designing,

impeenting and mantaining internal controls, relevant to the ireparation ad fair p lesentatione inanrcial statermiens that art free form material misstatement, whether, due ra fraed nr error,

selecting and applying appeapriate accounting policies tht are reasonahle in the cr;cuemstances. TheMiinistry ofLbabour and SocialI Security is also recuired ta present audi ted financiai statemrents to the

íBRD.

The attached financi statemnets and sEppleentary financial information which art described

heireunder, mere su itted tø mS by the Project Execøtion Unt (PfEU) tø reflect the transacions ølthe Project hrm its inception en March 12, 2014 tø ther close øl the financ'i year at March 31, 2017.

Statensent 1 Statemcent øl Sources and Uses øl FundsStatement 2 Statemsent øl Genimultve Investmnents

Designated Accournt PeconciliationNotes tø the Pinancial StatementsStatemenot of Requests for Disbursernet.st

inpeprngte iani KQttee, management 00 lt spnible ior a'sesin theinityo

there a plans to iquidaRte th Agnc or to ceas oper'ation, ori ' hasK no' reaitic aterntive but to

Auditot <r'jspnsiltty for tee audait of the Fin'acial Statemtents

onductd my audit inacodac with te>uditing stan as issued'a by. ih Knerntiona

Organ zto of Supreme Aui3 intituton (ITOi Thos andards requirt hat idcmly with

eror andQ to issue anauior's report iha t includes ty opiion Reasonale astsurance is, a hig leeior assuance bt Sno a guarantee i tht n audit codutn ccrdace t I SSA<<IsK wll lay

the eono'n deison of< users tt 't- takenQon the basis tf these fianiltttatmet.>.i i

taofssionalt sceti ismthroughou te ' adttt tle'> ;>K't~ K 'QQtt S¾

tfraud K.Q or error, designian perforrn audit prcdue responsive ao Iltho isk, niotanaui

evidence ttn t)'t sufiiet and> appropria5ct to pr vdt ai o yo ii n h iko o eetn

mainolv collutQ'sion fortety, intional,t omissions,' misrepresett onsea, o te 'verridetof interna

aObtin an undesactanding of tira con IQtro reevn to f o the' it> order t desgn OI auit't procedurest hat'tt<Itar C appropit ' n C crumtaes bul ~tQ'cQ~ S ~liSnottfor the purpose of expressing an po 'n-the

Ev'alut thc app optiatenetsst Co fiaccountin poiie§s n t'heii o ttjtS ctreXasnabgleness~> of,t acoutIngestima'te otts ndt rated di 'psoure mad cy managment

cotios th t 'mayQ catignfcat diObit tttt oet's abiltyt] o con tfi'as ' gi ton'rn 'tif tconlet .t i a ' OKt >ra uncertity e st s - a ,m equire toda atet ninm au tr'rprto

myloiion.? t ~Qj, I f' luins1 tr base onk Qth audi.t tt evidencei obtaine up tothedhasts of my1 auitor

ireport'> &ower ftture evet's or' 'c oitn ta teaue the' Prjec toi ceas to.Q coninu asQ .ti a Qon

t , Evaluate tetJ vel> etation, )0 stuctur and icontnt o ta' fiac st 'ttateets includin' ethetsopasurs and> wheltnerv th fianctii'1 lstatements represent t tunderlying-' I transactn tnd e etsin ai mne. htpeet readfi w

4' 4

tiig of the0 audit and sinifit auit~ fndings , int n sgnificn deficiencies in terna

conro tat was idente cuin the aut

REOR ON'~< ADDtitsNA REQUIREMENT tOF tH E~ kOA AREEMENT NO829 M

Durin e- p<erod untder review, k exarnine -compl 9ianc by te < Prjc Execution Uni ofth

Exctingt Agency wuit he appicable las anrd rgulaton relate t the vProjt's t ~ fiaca ctivities

and<ol~ with tccuitig/fintancia/ management ttclause of' 'h Loan-'0 ' Agemn No 83219 M vTer

was< generattcompliance wt t fol (loin' vg articlest tt contie in <t - th Loan Areement:

Aticle i -etion 3(1 AticleV o îthe GeneaConitin

Aticle, il - Section 3.02: Scule - ojet' Excion

Section 4: <mlemen'tatin Arrangemets

Section i: Project Monitoring Reporting and Ealto

Section W-l: rourmt -i4<ti4<

separate andk cearly<~ detifiabite atccojiluns which entabled~ the tecording, muonitormxg and repot/in g of

A<uhave examned themn appnde DesigunatdAcutRcniito ttmn,rfetn h

mvement vv the Designated Bak Accout vfor thet- period ended March 31 207.T Desgtedtt'

Ban-k Acvo'unt No. 810096t" iaintained in Uniîted Stt Dollars in theam oft~ the MinisLbtryo

Fnnce/ro grame-'ktv t of Advancemet 'Trog Helh and, Eatio No.- 8329-jM My examition,4

wkas madie int accordanrce wi~thv the'i stars oft th intrnatonal Or;gtast ofti Su -p Auit

institutions (INTOSAf) and actcordingly iude such 'te ts of the accouting reords an ~ther2t'

pîrocedues t' kconsierAved necessary,'t

n my~ opnin the. Deiae AcutRoil&iato Statemen&t r eflects the totalamolunt advanceto the DeintdAcutatMro,21 s reconied to the outstandig (undocumented)amount~i advnce to th-con sa ac <6l * 30 1

i cofrmti IPSA Cash Basis~< and IBR-

hu dins

Au4trGeea mac

Date~

6Ministry of Labour and Social SecurityProgramrne of Advancement Through Health and Education (PATH)Social Protection Project (SPP) 2iBRD/GOJ Loan No. 3329-JMStatement of Sources and Uses of Funds -CombinedPeriod ending March 31, 2017

Cumulativae balansces for period endin.gApril 1 2016 to March 31 2017 March 31 2017 Curniative haanoces fr period ending March 31 2016

RECE1PTS Notes Restad Restated

Source of Financing 4 GOJ World Bank TOTAL Go6 World Bank TOTAL Gi3 World Bank TOTALGovernment 24,236 234 72 24,36.234 8L, 1018,71018 81,018,71918 t6782,484 56,78484.46World Bank:Designated Account 2,788,87224 2,88872.24 - 5,480,698.08 5,480,0 2,61.825.84 2,91,825 84Direct Payment 328,662.00 328,662.00 1,150,317.00 1,!5031700 821,65.00 821,655.00Retroactive Finance 7.307,72005 730772005 7,307 720.05 7,307,720.05Reimbursement 3.21,531 09 3,241,531.99 16,736,43048 16,736,430,48 13,49489849 13,494, 898.49

Front-End Fee _ .100,000 00,000 _____ 00 .00 _10,000.00

Total Riecaipts (A) 5, 13 24,236,23472 6 ,66.23 30, 300.95 81,08j79ÅS 30,75,85 61 79382 _ 5,782484.4 24,416,099.38 86,198,583.84

LESS EXtPENDliTURtESComspoent i A5 - CashChild Assistance 152,047.28 152,047 28 515 ,48477 515.484,77 3 ,437.49 - 363,A37,49

Health 854,515.86 324 1.531.99 4096,047.85 5,193,189q69 9.996780.79 l5.189,970.50 1,338,673.83 6,755,248.80 11,093,92263Education 6,369,614.8:- 6369.614.87 24,650 037.87 12,53,960.16 37003,993.03 18280,18.04 12,353,960.1o 30,634.378.20Transoortation 213,140.92 - 213J140.97 639,942.21 6 39,942.21 426,80129 426,801.29Bonus for transition to 2,025,859.78 2,025,859,79 718,374.12 3.718,374. 1,692,51424 LI692,514.24

AdultAssistance t1 14,039,646.781 - 14039646.78 4284,432.53 43.24325 7_ 92447859 29,2478579

Sub Total PATH Grants 6, 10 _ 23, 54_ 2415319_9 26,96357.44 78.1,456.13 22350740.5 00,52197.08 _ 24660.68 ,09,086 7c,45u8964

NSTITUTIONAL 5STRENTHNiNGComponent 1B- 23637.26 2005,439,65 2 '8,076.95 L608,081.12 3 851 891 61 7,489,976.13 1 375,446,26 3,876,452.92 5,251,899.18Conponent 2-Steps to 250,84203 267,337.48 518179.51 1,12,249.78 69,77.9 ;,751,827.07 881 407.75 352,239,81 1,233,647ý56Conimonent 3- Pension 2,437.23 433,11809 455562 2 170.33 1.310,06955 1,331,239.88 18,73310 876,95056 895,683,66

Component 4 -SocialProtection Strategy _ 17,81 ) 84,66 7 65546 400858 172,070.85 212565 57897 19 87,704.78 145,601.97Sub Total Institutional 12 42 .90,26223 )P258367.44 280 589 78,1 30 0785599.81 25343 0 5193,348M 7526 32.37_

Front-End FE rom 1R_ _ _ - 000000 1000000 - 00.00 100,00.00Total Expanditures (8) 24,122,930,66 ~6038,794,22 30,854,724.88_ 80.803,0~4964 30 434,35125 Il2372906.89 5 680, 14 98 24402,5570 881826701_

1RECEPTS LESS EXPENDITURESNetChanginCash(A -13,304,06 327,272.01 440,576.07 215,6/354 340,814.36 156,487.90 102 169,48 1354235 11591 l83

ForeigntEchange (72.587,07) 245.62 (72,341.45) (89,873.53) 681.20 (89,192.33) (17,286.46) 435_58 ( 6,850 88)

BANK BALANCESOpening Cash Balances

esignated Account - 282.12 282.12 -Project Account 5508.02 13695 98778 3

Total Opening Balance 9 __ _83,02 1977.93 99060,95

Closing Cash Balancesesignated Account 198.65 198.65 198.65 198,65 2. 282.l2

Proect Account 2580001 341,2969 467096.92 2.800 34196.9 467,096,92 8'i0802 6958 98,778.83

Total Closing Balance 9 v125,80001 341,495,56 _467295 7 8e01 341,956 46729557 85,083.02 3 977.93 99,060,95

The miaca ttret eeapoe o su y anag»rnent on Septernber 26, 201/ and signed on its behalf by'

Permane'nt Secretary Chief Technical Oirector Financial Manager

Ministry of Labour and Social SecurityProgramme of Advancementt Through Health and Education (PATH-)Social Protectioni Project (SPP) 2lBRD/GOJ Loan No. 8329-JMPeriod ending March 31, 2017Statement of Curnulative lnvestments by Disbursement Category

Expressed in USD3

1April ,2016 April 1, 2016-to balances tor 1Curnulative balance balne oo niancesiforto March 31,* March 31, period ending forperod ending period ending period ending

Categories 2017 2017 March 3, 2017 March31 2017 March 31,21 ac 1March 2012016

1LS 15$ - - 15$US$ u SS uS4

(1) Conditional Cash Transfer payments;(a) under Parti (a) of the Project 23,654,82545 3,241,531.99 78,001,456.13 22,350,740 95 54,346,63068 1 109,20896

12) Goods, consulting services, Trainingand Operating Costs under Parts 1 (b),2(a), 2(c), 2 (d), 2 (e), 3 and 4 of theProject 468,10.21 2,790,26223 7,98 33, ,48430 5 u193,348.0

E m BRD 100 00000 100,000

Total122 22 0 3034,35 56,80,11498 40250

8Ministry of Labour and Social SecurityProgrammne of Advancement Through Health and Education (PA TH)Social Protection Project (SPP)IBRD/GOJ Loan No. 83299jMPeriod ending March 31L 2017Designated Acout Reconciliation StatementExpress inUS

ParticularsUS$ (TOTAL1 Total Advanced By World Bank (Or Co-financier) 5,480,698.082 Less: Eligible Ependiture For The Current Year Endedl Mareh 31

2017 Documented By World Bank

(1,701,301.10)Less: Cumulative Eligible Ependiture For ThLe Prior Periods EndedMarch 31 2016 Doeumented By World Bank (2,194,175.15)

3 Prosent Outstanding Anmout Advaneed To The Designated Aeeount(i -2) 1585,22.83

4 Balanee Of Usd Designated Aeeount Per Bank ReeoneiliationStatenment As At Year Bnd Mareh 31 2017 198 65Balanee Of Project Acceount Per Bank Reeoneiliation Statenment Ar AtYear Bnd Mareh 31 2017 341,296.91

5 Plus: Bligible Expenditure For The Current Year Doeumented AfterThe Year Bud 1,244,407.47

6 Pius: Total Amount Withdrawn And Not Yet Claimed

Reason: _____

7 PIus: Amouts Clied In Previous Applieations Not Yet CreditedAt Dato Of Bank StatemnentsSubtotal Of Pre'vious Applications Not Yet Credited

8 Less: Iterest Earned

9 Total Advance Aceounted For (No. 4 Through No. 9) 1,585,903.03

10 DIFBRENCE (3 - 9) (681.20)

11 Explanation Of Any Différenee Shown In Line 10

Difference Represent Foreign BEhange Galn On Bank Aeeount

9Minstr of Lbour and Social SecurityProgramime of Advancement Through Healthi and Education (PATH)Social Pretectien Preject (SPP) 2IBRDJGOJ Lean Ne. 8329-JMPeried ending March 31, 2017Notes to the F iania StatenentsEpressed In USD

1. flVERV2IEW

The Gavernment at Jamaina (GOJ) reneived an additionaE hoan at US$4.0 Million from theInternational Bank tor Renonstruntion and Develop ment (lBRD) in March 2014. The ebientiveet the loan is to support the GOJ in turther strengthening Jarnaina's sonial protectiensysterns. The obiectives at this loan are unnhanged fram th origial oan #t 7555 -JM.

The hoan is to suport the Government of Jamaica in strengthening its Social ProtentionSvsterns by:

l mpraving the ettentiveness of the PATH to taster investment by poer farnilies inhuman napital accumulation;

• mrproving the etfentiveness and scale-up et the Steps-to-Woark programrne bydeveloping a structured systern for assisting warking age members at the PATH eligiblehouseholds to seek and retain ernpoyment;

•Supporting irnpiementaten and aperationalization of the publin senter pensian reform;and

•Operatianal suppart ta the implementation at a sanial pratentien strategy.

The Ministry et Labour and Sanial Security (MLSS) is the implementing agency.However, the Ministry at Finance and the Publin Service (MOFPS) and the Planning instituteet Jiamaica (P10J) will alsa execute aspects at the prajent. The hoan with its multi-senter approanh is geared towards Sanial Pratentien.

The project consists etf t flowing objectves

Part 1iproving the Effectvenes of theA H

• rvidngPATHGrants; and

i« Srngthening and improving te administrative systems ter deliverv at tbe PATHincluding scaling up nase rnanagement, monitoring and evaluatian; and irnplementingantivities ta enable PATH benefiniaries to graduate trern the pragrammre throughpravision at consu tant servines, geods, triing and aperating costs required for thatpurpose.

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Winistry of Labour ond Social SecurityProgrammne of Adancemxent Through H ealth & Educotion (PA T HSocial Protection Proj et (SPP) 2IBRD/GOj Loon No. 8329-9MNotes to the Financ2i StatemiertsPeriod eniding March 31, 2017Expressed in USD

The project consisttsof the followinig ohjectives: (cont d)

Part 4 Operational Support to th e inplernentation of a Social Protenction SMttey (cont'd)

o Strengtbeningtbhe capacty ofAgencies inolved in mrplementtinu of tbe Project; alltbrough provision of consulting servces, trainsing and goods required for that purpose.

åJMNAEMN REORT

The Prrmme of Advancernent Through Health and Educator (PATH) subrnits theAnnuali Report for the year ernded March 31, 2017.

AUDITING( OF THE PROJECT

The Auditor General's Department currently audits tbc Proiect,

A\uditor Genera's Department,40 Knutsford Boulevard,Kingston 5Jamraica

2. The Budget

The amount, whih was prosvided for in the budget, represents the total loan amoIut.

3. Sumrnary of Accounting Policies

i) Basis of Preparation

The Project. Accounting Unit (PAU) uses the international Public Sector AccountingStandards (iPSAS) casbhbasis of accounting to account for the project's transactions.Under this basis, income is recognized when funds are received ratber than wbenrequested and expenmses are recognized wben paymient is made rather than whenobligations are incurred.

12Ministry ofiLabour and Social SecurityProgram me ofjAdvancement Throug Hp Ieaith & Education (PS A THSocial Protection Project (SP) 2IRRD/GOJ Loan No. 5329-JMNotes to the Financial StatenmentsPeriod ending March 31, 2017Expressed in USD

31. Sumrnmary of Accounting Policies (cntd

) Basis of Preparo (conit'd)

Since the main objectv of these firnncal staternents is to disciose the so rce anuses of fornds, it cs not necessary to pr esent nformatior adjusted for infation.

1I) Recording of Transactionis

Tirnsactions are recorded in local crrency. However, transactions are coinvertedl to USdlar for preparation of the financial statements. Receipts and payrnents in local

currencyare transiated into US dollars, by applying the Bank of Jamaica daily averageexchange rate.

l) Fluctuation rate and fee:

Al1 fees and eharges for un-isborsed koan fords, as weil as losses due to ex'changerate fluctuations are not considered eligible project costs and are absorbed by theGovernment of Jamaica at the end of the dibusernent period of theo pioject

iv) Equipment and other fixed assets

Equipment and other fixed assets procured with pioject resources are recorded attheir acqoisition cost at the date of porchase. Depreciation is not charged on theseassets and as such, no depreciation charge is reflected in these financial staternents.

V) Exchange Rate for the period

The requests for reirnborsernents subrnitted to the Bank in Jarnaican Dollars wereconverted at the iates of exchange applied by the bank for those reirnbursements. Theratos of exchange applied, ranged between JMD 125.11 and JMD 127.83 to USD 1O.0Contributions received from GO1 were converted by applying the BOJ daily averageexchange rate for the day of receipt. The rates of exchange applied, ranged betweenJMD 122.30 and JMD 128.69 to USD 1O.0

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Mnstry ofjLabour nd Socil SecurityProgramme ofjAdvancement Through Health; & Educatin (PA TRHSocial Protection Project (SPP) 2JBRD/GOJ Lan Ro. 8329-JMNotes to the Fin ancial StatemrentsPeriod ending March 31, 2017Expressed in UJSD

6. PATH Grants

The GOJ and 1BRD investd US$100.352 Mi'lion in the payme~nt of Grants :o Childrn andAduts.Ths represents 90% of total expendituren

. Institutional Strongthening Recurring Cost

This represents adrninistrative cost for operation of the Project under parts IB, 2, 3 and 4 o

the Project; 10 %- of totai cost was utilised un~der tis category.

8.Front - Ed Fee

This represents the fee charged by the IBRD in the arnount of 0.25% of the loanarnount.

9. Cashi and cash euivaientsTis srepresents the cash balances brought forward i n hnDsignated Bank Account, ProjetAdministrative Bank Account for Glovernrnent of Jarnaica resoures and Worid Bank. Also,the balance brought forward for the not freimgn exchange rate gain/ (1oss) on trnsactionsdur;ng Ihe period.

Analysis of cash at thend of el INperiodAccountNumnber 2017 (US$) 2016 USS

Designated Accont -World Bank 8<0096 198.65 282.12Project Accont -World Bank 231 102 260 341,296.91 13,695.1Project Account -00O 231 102 77/9 125,800.01 85,083.02

467,295.57 99,060.95

10. Chiid Assistance Transfer

US$57.068 Million was invested in the transfer of Grants to Children. The Govenrneont nfJarnaca contributed US$34.717 Millon (61%) while INe World Bank contributodUS$22.351 Million (39%).

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16Ministry af Labour and Social SecurityPrograrnme of Advancernent Through Health & Educationi (P ATWHSocial Protection Project (SPP) 2JBRD/GOJ Loan No. 8329-JMNos to the Financial StatermentsPeriod ending March 31, 2017Expressed in USD

14. Budigetedi amount versus actcu expenditure.

Thi reflects expendilture to dae in cornpari~son to the ap pro ved bud get fort te Ward Bankand Governrnent of Jarnaica

The percentiages of the budgeted coan utzeid by each cornponent to date are as folows:

[PATHGRANTS 80% bT[~NTITTINALSTENGTHENING PATH _I- __

35% i

~SOCIAL PROTECTION 30%_--FRONT END FEE _-____ _ 100%

40 KNUTSFORD 6( BOULEVARD

P.O. BOX 455iNGSTON10

ud Education (PAT H

n 'b L O l i '0 ½iedu n 0~ ci m ~ i~ t 25 ' x.am i nd th e follo w m gb s tt m e t or0

vireY. o1 tø. e« «' IBR S during tJinania year unde i review:« i«upr fapetoso

iur~ I 23 Ž,v,ity.y - 8 6 1 2 2 n 07

-" t««ut3CIt 'tSdvance 757 50 17

Advace'1 745,000 (00

- + 8«<, 00 000 00

2,788,872 «24I9.1 i oto ~ -. .,366200

- 0 - -r -i &'m ot._m 3 21 31 99 13 40 ,000«00

-- ad -al 62359,066 23 415,40 2«000 00

Th examHination wa~ s aone m. aczordanc e-a yi aCcepted Iaudiin istanar.tds and procures'

i tiÉ 9( «Cx o«b & d '1 31 l ii Clir and elio.ibiltyN of expendiures, certific ti and

1yten and.. ~ « w. ,Å . It t e«acou ta « re or s t s t .c•uC nie m - g ir o u. 0« o I Xv 15¾ i tO

oc t rl ment pro ø. t tcbres « 11 for ood Cndser is,tt fiCgoC uprig ou et<n ue te ui

procedurest 1¾ 041 as31onidre necessaryl, in the Ci circumstanee Æs «ItltVti 1 icitm o.'it O

in IC' tpInin theø01110) i statememsof iC epn ir an the« annexe submli3 t tenspotlfteltgehrwt h

irter al controi proedre usdihi rprto cnb eiduo osppr h plctos½

advnc i frigt h eurmnso h nAreet

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