Report No: FIN-2019-23(E) 31 March 2019

CLIMATE CHANGE ADAPTATION PROJECT (CCAP)

FINANCIAL PERIOD FROM 01 JANUARY 2018 TO21 OCTOBER 2018

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TABLE OF CONTENTS

Auditor General's Report.........................................................................................

Financial Statement

Statement of Receipts and Payments.......................................................................................4

Notes to the financial statement................................................................................................5

AUDITOR GENERALS OFFICE

AUDITOR GENERAL'S REPORT

TO THE MINISTRY OF ENVIRONMENT AND ENERGY ON THE FINANCIALSTATEMENT OF CLIMATE CHANGE ADAPTATION PROJECT (CCAP)

Opinion

We have audited the accompanying financial statement; Statement of Receipts and Paymentsfor the period from 1 Jan 2018 to 21 October 2018 and notes to this statement, which includesa summary of significant accounting policies and other explanatory information set out in pages5 to 9, of Climate Change Adaptation Project financed by World Bank/InternationalDevelopment Association Grant Agreement (CCTF Grant No. TF019383) as of 17 July 2015.

In our opinion, the financial statement presents fairly, in all material respects, the cash receiptsand cash payments for the period 1 Jan 2018 to 21 October 2018 and cash balances as at theperiod then ended in accordance with International Public Sector Accounting Standard(IPSAS):Financial Reporting under the Cash Basis ofAccounting.

In addition, we can provide assurance that:

(a) The funds provided under the Financial Agreement have been utilised for the purposesfor which they were provided;

(b) The Special Account transactions and its balance as at 21 October 2018 have beenpresented truly and fairly on the financial statement, in accordance with theInternational Public Sector Accounting Standard: Financial Reporting under the Cash-Basis of Accounting, and the cash balance as at 21 October 2018 shown on theStatement of Receipts and Payments reflects the cash balance which is reconciled tothat of the Special Account;

(c) The Financial Monitoring Reports furnished to the World Bank could be fairly reliedupon to support the applications for withdrawals in accordance with the requirementsspecified in the Financing Agreement; and adequate supporting documentation havebeen maintained to support claims to the IDA, for reimbursement of expendituresincurred and which expenditures are eligible for financing under the FinancingAgreement; and

(d) The Procurement Guidelines of the World Bank have been complied with in theprocurement of goods and services under the project.

1s' Floor, Ghaazee Building, Ameeru Ahmed Magu, MaI6, Maldives. Tel: 1960) 3323939, Fax: -960) 3316430, e-mail: info@audit.gov. my

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Ourresponsibilities under those standards are further described in the Auditor's responsibilities forthe audit of the financial statements section of our report. We are independent of the Project inaccordance with the International Ethics Standards Board for Accountants' Code of Ethics forProfessional Accountants (IESBA Code), and we have fulfilled our other ethicalresponsibilities in accordance with the IESBA Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our opinion.

Responsibilities of management's and those charged with governance for the financialstatements

The Management is responsible for the preparation and fair presentation of this financial statement inaccordance with the International Public Sector Accounting Standard (IPSAS): Financial Reportingunder the Cash Basis of Accounting. This responsibility includes: designing, implementing andmaintaining internal controls relevant to the preparation and fair presentation of financial statement thatare free from material misstatement, whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that are reasonable in the circumstances.

Those charged with governance of the project is responsible for overseeing the Project's financialreporting process.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor's report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with ISAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintainprofessional scepticism throughout the audit. We also:

* Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detectinga material misstatement resulting from fraud is higher than for one resulting from error, as fraud mayinvolve collusion, forgery, intentional omissions, misrepresentations, or the override of internalcontrol.

* Obtain an understanding of internal control relevant to the audit in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Project's internal control.

* Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.

* Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions andr.4s ina manner that achieves fair presentation. ,,

1s Floor, Ghaazee Building, Ameeru Ahmed Magu, Male, Maldives. Tel: +(960) 3323939, Fax: -(960) 3316430, e-mail:f2

We communicate with those charged with governance of the project regarding, among other matters,the planned scope and timing of the audit and significant audit findings, including any significantdeficiencies in internal control that we identify during our audit.

31st March 2019

Hassan Ziyath

Auditor General

1s Floor, Ghaazee Building, Ameeru Ahmed Magu, Male, Maldives. Tel: +(960) 3323939, Fax: (960) 3316430, e-mail: irf3

MINISTRY OF ENVIRONMENT AND ENERGYCLIMATE CHANGE ADAPTATION PROJECT (CCAP) 2018

STATEMENT OF RECEIPTS AND PAYMENTS

FOR THE PERIOD FROM 1 JANUARY 2018 TO 21 OCTOBER 2018

For the period For the period CumulativeNote 1 Jan 2018 to 1 Jan 2017 to To- Date

21 Oct 2018 31 Dec 2017

USD USD USD

Receipts

Disbursements from World Bank 3 1,028,805 2,114,551 4,223,424

Total Receipts 1,028,805 2,114,551 4,223,424

Payments

Wetlands Conservation 4 1,345,795 672,091 2,215,472

Coral Reef Monitoring 5 166,597 256,923 528,284

Solid Waste Management 6 169,966 434,699 640,279

Mainstreaming Climate Change into 7 44,311 78,301 174,419Island Development Planning

Project Management 8 150,797 138,982 421,294

Total Payments 1,877,466 1,580,996 3,979,748

Increase/(Decrease) in Cash (848,661) 533,555 243,676

Cash balance at the beginning of 966,840 433,285the period

Increase/(Decrease) in Cash (848,661) 533,555

Cash balance at the end of the 118,179 966,840period

The Statement of Receipts and Payments was approved by PMU on 28 March 2019.

Signed for and on behalf of the PMU:

Mr. Maumoon Khalid Mr. Ihmilth Rusheed(Project Manager) (Financial Management Specialist)

I he accounting policies and notes on pages 5 through 9 form an integral part of the Statement of Recei is

of Et] mentft andEnergy Green Building, Handhuvaree Higun, MA, Maldives Ted:+(960) 3018300, Fax: +(960) 3018301, e-mail: setnatl r beigov my4

MINISTRY OF ENVIRONMENT AND ENERGYCLIMATE CHANGE ADAPTATION PROJECT (CCAP) 2018

NOTES TO THE FINANCIAL STATEMENTS

1. PROJECT INFORMATION

Key Highlights

Project Title: Climate Change Adaptation Project (CCAP)

Start Date: 1 7th July 2015

Closing Date: 30th June 2018 (Financial Closing Date: 21 October 2018)

Project Duration: 03 years

Approved Budget: US$4.31 million (World Bank Financing: US$4.21)

Funded by: World Bank/International Development Association (IDA)

1.1 Objectives

The main aim of the Project is to provide the Republic of Maldives with the capacity to effectivelymanage environmental risks and threats to fragile coral reefs as well as marine habitats resultingfrom tourism development, increased solid waste disposal, fisheries and global climate change.Accordingly, this Project has two development objectives. The first Project DevelopmentObjective is that a solid waste management system is established and that inhabitants on targetedislands use solid waste management facilities, reducing the risks of contamination associated withaccumulated wastes and sea dumping. The second Project Development Objective is to buildhuman and technical capacity for environmental management so that the environmental dimensionis integrated in the planning process using information and expertise developed in the Project.

1.2 Project components

The project has been designed along with five main components that are expected to contribute to

delivering climate resilient island development in the project areas. The project design builds on

the lessons and experiences form projects implemented under CCTF-1

Component 1: Wetlands Conservation

This component aims to establish a Protected Wetland Area management system to protect the

wetlands and biodiversity in the Hithadhoo Protected Area (Eydhigali Kilhi and Koattey) of

Hithadhoo island, and Bandaara Kilhi and Dhandimagu Kilhi in Fuvahmulah island; support the

development of ecotourism and other sustainable activities that can contribute to the socio-

economic development of the local community; and establish a model for management of the

Protected Wetland Area. The component would finance the establishment of a protected wetland

ent system for Hithadhoo Island and Fuvahmulah Island, through: (a) the establish ent

0 ot d Area Management Units (PAMUs); (b) the implementation of zonation and

i4 regimes; (b) implementation of an environmental education and comni ic+>

ment and Energy, Green Building, Handhuvaree Higun, Male, Maldives. Tel:+(960) 3018300, Fax: +(960) 3018301, e-mail: secretariat@ gavm y

MINISTRY OF ENVIRONMENT AND ENERGYCLIMATE CHANGE ADAPTATION PROJECT (CCAP) 2018

program; (c) development of an eco-tourism facility and program; (d) support for local eco-friendlylivelihood activities; (e) support for development of a National Wetlands Management StrategyPlan; (g) development of a Project exit strategy and future sustainability options for protected areas;

and (h) carrying out of a feasibility study on the designation of Addu City and Fuvahmulah Islandas biosphere reserves or important bird areas.

Component 2: Coral Reef Monitoring

This component aims to strengthen the Coral Reef Monitoring Framework for improved decisionmaking and management of coral reefs and related ecosystems. The component will involve private

sector stakeholders (such as tourist resorts, dive centers), as well as the planned PAMU in

Hithadhoo for coral reef monitoring. The component will finance the scaling up of the coral reef

monitoring system, through: (a) support for newly inducted and existing participating resorts and

dive centers, and the PAMU in Hithadhoo Island on field data collection and the use of theCoralDatabase; (b) enhancing the functionality and user-friendliness of the CoralDatabaseplatform; (c) development of policy notes and organization of exchange workshops to enable

strategic mainstreaming of the use of the National Coral Reef Monitoring Program; and (d)strategic and technical advisory support.

Component 3: Development of an island level integrated solid waste management

This component will help build the institutional capacity of Addu city and Gnaviyani/Fuvahmulah

atolls/island councils to plan an atoll/island level integrated solid waste management program to

minimize the environmental risks to marine and terrestrial assets. The component will finance the

provision of support for institutional capacity building for Addu City Council, Gnaviyani Atoll

Council, Fuvahmulah Island Council, and Hithadhoo Island Council in solid waste management

planning, by: (a) carrying out of a strategic options study on solid waste management; (b)

implementation of an atoll/island level composting program at island waste management centers

(IWMCs) in Addu Atoll and Gnaviyani Atoll; (c) capacity building for Island Councils, contractors,

and the utility company in Fuvahmulah Island and Addu City; and (d) conducting of

communications campaigns to encourage community participation in island solid waste

management.

Component 4: Mainstreaming Climate change into island development planning

This component aims to build awareness and strengthen local government capacity to address

climate change adaptation issues relevant to island development and support tertiary level

education in environmental management including climate change adaptation and mitigation. The

component will finance the provision of support for the mainstreaming of climate change into

island development planning, including through: (a) delivery of a training curriculum on climate

change to Atoll Council and Island Council representatives; and (b) provision of scholarships.

i vi oit and Energy, Green Building, Handhuvaree Higun, MaI , Maldives. Tel:+(960) 3018300, Fax: 4(960) 3018301, e-mail: secretariat

MINISTRY OF ENVIRONMENT AND ENERGY

CLIMATE CHANGE ADAPTATION PROJECT (CCAP) 2018

Component 5: Project Management

This component will support management functions for implementing the project, including

support for staff, monitoring, equipment, operating costs, etc. This will component will finance the

provision of support for Project implementation, management, and monitoring and evaluation.

Project Financing

The project will be implemented over a period of three and a half years from 2015 to 2018. Theproject will be financed by a grant of EUR 3.85 million (US$5.16 million equivalent) from the EUas well as residual resources from the first phase of the CCTF. The project cost of US$5.3 millionis the sum of EU's additional contribution of EUR 3.85 million and residual resources of

US$948,182 from the first phase of CCTF, after subtracting World Bank's agency fee for fund

administration, project management, and project preparation and implementation support. Table 1

below summarizes project cost by component.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The Statement of Receipts and Payments are prepared in accordance with the International Public

Sector Accounting Standard: Financial Reporting under the Cash Basis ofAccounting.

2.2 Recognition of Receipts and Payments

Receipts and payments are accounted for on cash basis. Receipts are recognised when the Maldives

Monetary Authority (MMA) receives the funds from World Bank to the bank account maintained

for the project with it. This account is maintained in United States Dollars (USD). Payments are

recognised at the time of outflow of cash either from the bank account, or from the cash account

maintained for cash payments.

2.3 Presentation Currency

The Statement of Receipts and Payments has been presented using the United States Dollars (USD).

And all the figures have been rounded to the nearest Dollar.

2.4 Foreign Currency Translation

Receipts and payments in currencies other than the reporting currency (USD) are converted at the

Mid- Exchange Rate (MMA's published exchange rate less 0.05) existing between the transaction

currency and USD at the time of the receipt/payment. Cash balances in currencies other than USD

as at the end of the reporting period are shown in the financial statement at the exchange rate that

was prevailing at the last day of the reporting period.

,A 4TotEnvuW -ent and Energy, Green Building, Handhuvaree Higun, Male, Maldives. Tel:+(960) 3018300, Fax: +(960) 3018301, e-mail: secretaral G)vTrn7

MINISTRY OF ENVIRONMENT AND ENERGYCLIMATE CHANGE ADAPTATION PROJECT (CCAP) 2018

2.5 Reporting Period

Financial statement is generally prepared for one year (calendar year). Period for which financialstatement is prepared are disclosed on the face of the financial statement.

2.6 Comparatives

In addition to the figures for the financial period from 1 Jan 2018 to 21 October 2018, the financial statementshows the figures for the period financial year ended 31 December 2017 as well as Cumulative to-date.

3. Funds Received

For the period For the period CumulativeIJan2018to21 1Jan2017to31 to-date

Oct 2018 Dec 2017USD USD USD

Disbursements (Receipts) from World Bank 1,015,381 2,114,551 4,210,000GST Refunds from the Government of

Madie 13,424 - 13,424MaldivesTotal 1,028,805 2,114,551 4,223,424

4. Wetlands Conservation

For the period For the period Cumulative1Jan2018to21 1Jan2017to31 to-date

Oct 2018 Dec 2017

USD USD USD

CBWMP Implementation at Fuvahmulah 581,884 253,974 874,105CBWMP Implementation at Hithadhoo 684,099 268,319 1,084,340Wetlands Coordinator (full-time) 14,945 28,491 70,853International Implementation Support and 8,378 21,150 29,528Construction Supervision ConsultOperational Costs 40,949 57,821 98,770Civil Engineer 9,675 26,049 35,724Assistant Civil Engineer 5,865 16,287 22,152Total 1,345,795 672,091 2,215,472

5. Coral Reef monitoring

For the period For the period Cumulative1Jan2018to21 1Jan2017to31 to-date

Oct 2018 Dec 2017

USD USD USD

Improvements to functionality and

lied support for Coral

Database

1n Envirot"enit and Energy, Green Building Handhuvaree Higun, Male, Maldives, Tel:+{960) 3018300, Fax: +(960) 3018301, e-mail: secretaria! h t nargtm8

MINISTRY OF ENVIRONMENT AND ENERGY

CLIMATE CHANGE ADAPTATION PROJECT (CCAP) 2018

Monitoring equipment and markers for new - 70,965 77,495resortsTraining Consultancy 83,329 - 83,329International Technical and Strategic 47357 45,847 151,561AdvisorCoral Reef Monitoring Coordinator (full- 10,785 21,633 55,657time)IT Consultant for Coral Database 5,144 - 5,144Operational costs 10,562 15,675 26,237Total 166,597 256,923 528,284

6. Solid Waste Management

For the period For the period Cumulative1Jan2018to21 1Jan2017to31 to-date

Oct 2018 Dec 2017

USD USD USD

Strategic Options Study 55,984 130,629 186,613Upgrading of existing WMC in 5,582 110,861 116,443Hulhumeedhoo, Addu CityUpgrading of existing WMC in Fuvahmulah - 128,198 128,198Waste management/composting equipment 15,600 15,600Training of utility company and council staffon waste collection, segregation, user fee 587 - 587system, residual waste management andisland waste management planningComposting/waste management training 88,400 88,400Community awareness raising to encourage - 1,953 3,885community participation in island SWMSolid Waste Management Coordinator 10,785 28,160 72,628Operational costs 8,629 19,297 27,926Total 169,966 434,698 640,279

7. Mainstreaming Climate Change into Island Development Planning

For the period For the period Cumulative1Jan2018to21 1Jan2017to31 to-date

Oct 2018 Dec 2017

USD USD USD

Orientation Course for Atoll and IslandConcl 29,602 1 8,669 56,003Councils

Integration into planning and Orientation - 22,755 22,755ModulesSponsorship of students for BEM Course 14,709 36,877 95,661

Total 44,311 78,301 174,419

MINISTRY OF ENVIRONMENT AND ENERGYCLIMATE CHANGE ADAPTATION PROJECT (CCAP) 2018

8. Project Management

For the period For the period Cumulative1 Jan 2018 to 21 1 Jan 2017 to 31 to-date

Oct 2018 Dec 2017

USD USD USD

Project Manager 26,079 44,568 115,513Financial Management Officer - 9,931Procurement Office 14,174 26,863 66,887Communication Officer 11,527 20,836 44,113Community Mobilization Assistant - 8,417 8,417Internal Audit 3,359 - 3,359FM Assistant 7,855 10,917 18,772Evaluation & Exit Strategy 40,996 - 40,996Operational Expense 46,807 27,381 113,306Total 150,797 138,982 421,294

9. Payments Pending

As at 30"' June 2018 a payment of USD 5,818.75 for Upgrading Web Enabled Coral Database Project has

been retained as a follow-up guarantee and support for any valid defects/bugs.

10. Government Expenditure in relation to this project

The government has spent a total of USD 153,797 for the project over the project period from 17th July 2015

to 21" October 2018, for GST and other administrative expenses. Further USD 5,818.75 will be paid from

government budget.

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