HIGHER EDUCATION QUALITY AND CAPACITY
IMPROVEMENT PROJECT
AUDITED FINANCIAL STATEMENTS AND
INDEPENDENT AUDITORS’ REPORT
31 DECEMBER 2015
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Under the International Development Association (“IDA”) Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the IDA
PROJECT INFORMATION
PROJECT MANAGEMENT: H.E. Youk Ngoy - Project Director
IMPLEMENTING AGENCY: Ministry of Education, Youth and Sport
Department of Higher Education
PRINCIPAL BANKER: National Bank of Cambodia
AUDITORS: BDO (Cambodia) Limited
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Under the International Development Association (“IDA”) Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the IDA
CONTENTS / PAGEPROJECT MANAGEMENT’S REPORT / 1
INDEPENDENT AUDITORS’ REPORT / 2 - 3
STATEMENT OF FINANCIAL POSITION / 4
STATEMENT OF SOURCES OF FUNDS AND EXPENDITURES / 5
STATEMENT OF DESIGNATED ACCOUNTS / 6 - 7
NOTES TO THE FINANCIAL STATEMENTS / 8 - 31
1
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Under the International Development Association (“IDA”) Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the IDA
PROJECT MANAGEMENT’S REPORT
The Project Management hereby submits the report together with the audited financial statements of Higher Education Quality and Capacity Improvement Project (“the Project”), which comprise statement of financial position as at 31 December 2015, statement of sources of funds and expenditures and statement of designated accounts for the financial year ended 31 December 2015.
Responsibility of the Project Management in respect of the financial statements
The Project Management is responsible to ascertain that the financial statements of the Project for the financial year ended 31 December 2015 are prepared, in all material respects, in accordance with the basis of preparation and accounting policies set out in Note 2 to the financial statements. In preparing these financial statements, the Project Management is required to select suitable accounting policies and then apply them consistently.
The Project Management is responsible for ensuring that proper accounting records are kept which enable the financial statements to be prepared in compliance with the basis of preparation and accounting policies set out in Note 2 to the financial statements and in accordance with the terms of the financing agreement for Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the International Development Association (“IDA”). The Project Management is also responsible for safeguarding the assets of the Project and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Project Management assumes the responsibility to provide, and has provided, the auditors with all accounting records, supporting and other documents, minutes, and any other pertinent information and explanations, either orally or in writing, necessary for the audit.
Statement by the Project Management
In the opinion of the Project Management, the financial statements set out on pages 4 to 31 are prepared, in all material respects, in accordance with the basis of preparation and accounting policies set out in Note 2 to the financial statements and the related financing agreement.
On behalf of the Project Management,
______
H.E. Youk Ngoy
Project Director
Secretary of State
Ministry of Education, Youth and Sport
Phnom Penh, Cambodia
Date:
3
INDEPENDENT AUDITORS’ REPORT TO THE PROJECT MANAGEMENT OF
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Report on the Financial Statements
We have audited the accompanying financial statements of the Higher Education Quality and Capacity Improvement Project (“the Project”), which comprise statement of financial position as at 31 December 2015, statement of sources of funds and expenditures and statement of designated accounts for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 4 to 31.
Project Management’s Responsibility for the Financial Statements
The Project Management is responsible for the preparation of the financial statements in accordance with the basis of preparation and accounting policies set out in Note 2 to the financial statements, and for such internal control as the Project Management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with Cambodian International 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 depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Project’s preparation 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 effectiveness of the Project’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Project Management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
INDEPENDENT AUDITORS’ REPORT TO THE MANAGEMENT OF
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT (continued)
Report on the Financial Statements (continued)
Opinion
In our opinion, the financial statements of the Project for the financial year ended 31 December 2015 are prepared, in all material respects, in accordance with the basis of preparation and accounting policies set out in Note 2 to the financial statements.
Basis of Accounting
Without modifying our opinion, we draw attention to Note 2 to the financial statements, which describes the basis of preparation and accounting policies adopted by the Project. The financial statements are prepared to assist the Project to meet its financial reporting requirements. As a result, the financial statements may not be suitable for another purpose.
Lim Seng Siew
Partner
BDO (Cambodia) Limited
Certified Public Accountants
Phnom Penh, Cambodia
Date:
5
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Under the International Development Association (“IDA”) Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the IDA
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2015
Year ended 31 Dec 2015 / Year ended 31 Dec 2014IDA Grant / IDA Credit / IDA Grant / IDA Credit
Note / No.H607-KH / No.4796-KH / Total / No.H607-KH / No.4796-KH / Total
US$ / US$ / US$ / US$ / US$ / US$
ASSETS
Cash and bank balances / 3 / 713,685 / (111,970) / 601,715 / 869,694 / 1,062,376 / 1,932,070
Advances / 4 / - / 5,165 / 5,165 / - / - / -
TOTAL ASSETS / 713,685 / (106,805) / 606,880 / 869,694 / 1,062,376 / 1,932,070
fund balance / 713,685 / (106,805) / 606,880 / 869,694 / 1,062,376 / 1,932,070
The accompanying notes form an integral part of the financial statements.
5
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Under the International Development Association (“IDA”) Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the IDA
STATEMENT OF SOURCES OF FUNDS AND EXPENDITURES
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
Note / Year ended / Year ended / Cumulative to31 Dec 2015 / 31 Dec 2014 / 31 Dec 2015
US$ / US$ / US$
SOURCES OF FUNDS
IDA - Grant / 5.1 / 1,790,486 / 4,726,690 / 11,808,132
IDA - Credit / 5.2 / 1,736,417 / 2,148,682 / 7,648,925
3,526,903 / 6,875,372 / 19,457,057
EXPENDITURES BY CATEGORIES
Goods and works, consultancy services,
trainings and workshops and
incremental operating costs / 8 / 2,905,598 / 1,635,726 / 7,625,323
Fellowships / 9 / 1,236,143 / 1,538,112 / 4,405,094
Scholarships / 10 / 560,570 / 914,366 / 3,713,551
Development and innovation grants / 11 / 149,782 / 1,135,561 / 2,975,802
Priority operating costs / 12 / - / - / 130,407
4,852,093 / 5,223,765 / 18,850,177
(Deficit)/Excess of sources of funds
over expenditures / (1,325,190) / 1,651,607 / 606,880
Fund balance at beginning of financial year / 1,932,070 / 280,463 / -
Fund balance at end of financial year / 606,880 / 1,932,070 / 606,880
EXPENDITURES BY COMPONENTS / 14
Strengthening the capacity
of the higher education system / 2,920,840 / 2,240,719 / 8,260,641
Provision of competitive development
and innovation grants / 366,736 / 1,260,744 / 3,581,374
Provision of scholarships to disadvantaged students / 605,042 / 931,774 / 4,028,761
Project management and monitoring
and evaluation / 959,475 / 790,528 / 2,979,401
4,852,093 / 5,223,765 / 18,850,177
The accompanying notes form an integral part of the financial statements.
7
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Under the International Development Association (“IDA”) Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the IDA
STATEMENT OF DESIGNATED ACCOUNTS - IDA - GRANT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
Note / Year ended / Year ended / Cumulative to31 Dec 2015 / 31 Dec 2014 / 31 Dec 2015
US$ / US$ / US$
SOURCES OF FUNDS
Unused funds from previous year / 869,694 / (268,957) / -
Funds received during the year / 5.1 / 1,790,486 / 4,726,690 / 11,808,132
2,660,180 / 4,457,733 / 11,808,132
EXPENDITURES BY CATEGORIES
Fellowships / 9 / 1,236,143 / 1,538,112 / 4,405,094
Scholarships / 10 / 560,570 / 914,366 / 3,713,551
Development and innovation grants / 11 / 149,782 / 1,135,561 / 2,975,802
1,946,495 / 3,588,039 / 11,094,447
Excess of sources of funds
over expenditures / 713,685 / 869,694 / 713,685
REPRESENTED BY:
Cash and bank balances / 3 / 713,685 / 869,694 / 713,685
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Under the International Development Association (“IDA”) Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the IDA
STATEMENT OF DESIGNATED ACCOUNTS - IDA - CREDIT
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
Note / Year ended / Year ended / Cumulative to31 Dec 2015 / 31 Dec 2014 / 31 Dec 2015
US$ / US$ / US$
SOURCES OF FUNDS
Unused funds from previous year / 1,062,376 / 549,420 / -
Funds received during the year / 5.2 / 1,736,417 / 2,148,682 / 7,648,925
2,798,793 / 2,698,102 / 7,648,925
EXPENDITURES BY CATEGORIES
Goods and works, consultancy services, trainings and workshops and
incremental operating costs
8 / 2,905,598 / 1,635,726 / 7,625,323
Priority operating costs / 12 / - / - / 130,407
2,905,598 / 1,635,726 / 7,755,730
(Deficit)/Excess of fund over expenditures / (106,805) / 1,062,376 / (106,805)
REPRESENTED BY:
Cash and bank balances / 3 / (111,970) / 1,062,376 / (111,970)
Advances / 4 / 5,165 / - / 5,165
(106,805) / 1,062,376 / (106,805)
The accompanying notes form an integral part of the financial statements.
20
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Under the International Development Association (“IDA”) Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the IDA
NOTES TO THE FINANCIAL STATEMENTS
1. PROJECT INFORMATION
On 7 September 2010, the Kingdom of Cambodia represented by the Ministry of Economy and Finance (“MEF”) and the International Development Association (“IDA”) signed a Financing Agreement - Credit Number 4796-KH and Grant No. H607-KH - to finance the Higher Education Capacity and Improvement Project (“the Project”).
The Project became effective on 30 December 2010 and has a closing date of 30 September 2017, with total funding of Special Drawing Rights (“SDR”) 15,700,000 comprising:
· Credit No. 4796-KH will finance SDR7,850,000
· Grant No. H607-KH will fund SDR7,850,000
The service charge payable on the withdrawn credit balance will be 0.75% per annum.
The Credit funds will be repaid between 2021 and 2050, with two payments made each year, on 1 February to 1 August. The payment amounts will be as follows:
· 1 February 2021 to 1 August 2030 - 1% of principal for each payment
· 1 February 2031 to 1 August 2050 - 2% of principal for each payment
The objectives of the Project are:
· To improve the quality of teaching, management and research in project-supported entities;
· To pilot the targeting of disadvantaged students for enhanced retention.
The Project consists of the following components:
Component 1: Strengthening the Capacity of the Higher Education System
Supports the improvement of the overall development, management and governance of higher education sub-sector by:
· Strengthening the institutional capacity of Ministry of Education, Youth and Sports (“MoEYS”) and elected Higher Education Institute (“HEI”);
· Strengthening the Accreditation Committee of Cambodia’s institutional capacity and the HEI accreditation process; and
· Enhancing the overall coordination of the higher education system through provision of trainings and workshops, fellowships, technical advisory services, small works to upgrade existing facilities and other material support.
HIGHER EDUCATION QUALITY AND CAPACITY IMPROVEMENT PROJECT
Under the International Development Association (“IDA”) Credit Number 4796-KH and Grant Number H607-KH between the Royal Government of Cambodia and the IDA
1. PROJECT INFORMATION (continued)
Component 2: Provision of Competitive Development and Innovation Grants
Supports MoEYS in the provision of Sub-grants to private and public HEIs for:
· Research proposals to improve the quality of teaching and learning in HEIs; and
· Research proposals that deal with solutions to local development problems.
Component 3: Provision of Scholarships to Disadvantaged Students
Provides technical and advisory services and other material support to MoEYS to:
· Develop and implement a Special Priority Scholarship Program, including tuition and stipends;
· Develop and implement an awareness campaign on said scholarship program;