PROJECT FINANCIAL STATEMENTS - World Bank€¦ · Project financial statements for the year ended December 31, 2015 (all amounts in EUR, unless otherwise stated) 3. Project financial

Report on the Federation part of the

PROJECT FINANCIAL STATEMENTS

of the

REAL ESTATE REGISTRATION PROJECT

of the Ministry of Finance and Treasury of Bosnia and Herzegovina

financed by:

- IDA Credit No. 5188-BA

FOR THE YEAR ENDED DECEMBER 31, 2015

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REAL ESTATE REGISTRATION PROJECTof the Ministry of Finance and Treasury of Bosnia and Herzegovina

CONTENTS

1 Introduction 1

2 independent Auditor's Report 3

3 Project financial statements for the year 2015 5

4 Notes to the project financial statements 10

APPENDICES

A.1. Designated account statement - IDA Credit No, 5188-BA 12A.2 Petty cash statement - IDA Credit No. 5188-BA 13A.3 Local bank account statement - Municipalities contribution 14

B SoE Withdrawal Schedule of IDA Credit No. 5188-BA 15

C Reconciliation between World Bank's disbursement statements in XDR and IDA Credit accountin EUR according to the balance sheet; SoE Withdrawal Schedule of IDA Credit No. 5188-BA 16


1. Introduction

1.1 Description of the Project Development Objective

The development objectives of the Real Estate Registration Project is to support development of asustainable real estate registration system with harmonized land register and cadastre records inurban areas of both the Federation of Bosnia and Herzegovina ("FB&H") and Republika Srpska ("RS").Real estate registers (land registers and cadastres) provide base information layers for landadministration and for the establishment of a National Spatial Data Infrastructure. They are consideredharmonized when their contents are interlinked and verified. Sustainability is measured by the degreean institution generates revenue to match its costs, charges affordable fees, delivers quality services

without discrimination and within a reasonable time. A key driving force for the real estate registrationsystem will be the registration of real estate rights and mortgages, and the availability of reliable

information to facilitate investments, real estate taxation and spatial planning, and to enable socialmonitoring of real estate transactions.

The Project consists of the following components:

Component A: Real Estate Registration Data Development

Real estate registration data development will support land register and cadastre data harmonizationon land, buildings and rights based on the actual situation in the field. The objective is to establish up-to-date and interlinked land register and cadastre databases, or integrated databases of real estate

cadastre.

The project will encourage and support the registration of legal rights in the land register (in FB&H) or

the real estate cadastre (in the RS) using project produced data. The component will ensure equaltreatment of all citizens regardless of their gender, ethnicity or social status by accompanying technical

field work with raising public awareness, vulnerability mapping and social monitoring functions.

Component B: Real Estate Registration Infrastructure Development

Real estate registration infrastructure development will continue Land Registration Project work inimproving working conditions and infrastructure in the cadastre offices across the country and in those

few land registration offices in FB&H that were not targeted by LRP through: office renovations and

purchases; creation of digital archives; and provision of furniture and equipment. The office purchases

planned in RS have to be approved by the Land Committee of the World Bank. The objective is to

improve working conditions, which will help to improve the quality of customer services, the adherence

to service standards developed during LRP, and staff morale.

Access to basic surveying technologies will be provided to areas and offices that still rely on

conventional methodologies, and sustainability of the recently installed Global Navigation SatelliteSystems (GNSS) network will be assured, Information technology investments will lead to further

interlinking between real estate registers and other public datasets making the data accessible online

to a wide audience and in support of multiple uses. This will lead to the incremental provision ofelectronic online services and eventually to electronic conveyancing.


1. Introduction (continued)

1.1 Description of the Project Development Objective (continued)

Comgonent C: Policy and Institutional Development, and Project ManagementPolicy and institutional development, and project management will support policy and legaldevelopment in support of reaching the project development objective. The objective is to enhancesustainability of the real estate registration. The component will have a strong focus on institutionaldevelopment and capacity building, addressing the long term challenges of sustainability andgovernance of real estate registers and emphasizing financial sustainability, quality of service andclient orientation and social vulnerabilities.

Training for the judiciary and land registration personnel on the new real estate legislation, regulationsand procedures will be systematized in RS and on other related subjects in both RS and FB&H. InFB&H, the LRP supported training and education program that target the land administrationemployees across the sector, i.e. in land registries, cadastre offices, planning authorities, etc., and thiswill continue. The program will ensure the continuity of the training through seminars and workshops inthe fields of law, management, ICT, cadastral science, physical planning, etc.

The component also includes necessary project management and monitoring support. An impactevaluation (IE) technique will be used to assess how citizens will benefit from the real estateregistration programs. The intention is not only to demonstrate the impacts but also to use theevaluation results for improving land registration services, and making urban planning and localproperty taxation more effective and sustainable.

1.2 Funding of the Project

1.2.1 IDA Credit No. 5188-BA

The State of Bosnia and Herzegovina ("B&H") is the borrower of the International DevelopmentAssociation (IDA) Credit No. 5188-BA, dated August 21, 2013 amounting XDR 22,700,000.

Under the terms of a Subsidiary Finance Agreement between B&H and FB&H, total funds amountingXDR 11,600,000 have been lent to FB&H.

Categories of items to be finance out of the proceeds of the Credit, the allocation of the amounts of theCredit to each category and the percentage of expenditures for items so to be financed in eachcategory originally are as follows:

Item Amount of the % of expenditurefinancing allocated to be financed

(in XDR)Goods, works, consultants' service, non-consultantsservices, training and operating costs for Part 1 of

(1) the Project 11.600,000 100%

TOTAL 11,600,000

IDA Credit No. 5188-BA became effective on September 23, 2013. Planned closing date is August 31,2018.

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Deloitte d.oo.Deloitte, Jadranska bb71000 SarajevoBosnia and Herzegovina

Tel: +387 (0)33 277 560Fax: +387 (0)33 277 561www.deloitte-comba

2. Independent Auditor's Report

To the State of Bosnia and Herzegovina,Ministry of Finance and TreasuryAttn. of Minister of Finance and Treasury HE. Mr. Vjekoslav Bevanda

Report on the project financial statements

We have audited the accompanying project financial statements of the Federation part of the RealEstate Registration Project (the "Project"), which comprise of Summary of sources and uses of funds,Balance Sheet, Designated account and petty cash statements, Statement of Credit withdrawals as ofand for the year ended December 31, 2015, and a summary of significant accounting policies andother explanatory notes for the year then ended, financed under IDA Credit agreement No. 5188-BA.These project financial statements have been prepared on the cash basis of accounting based onInternational Public Sector Accounting Standard ("IPSAS"), as described in Note 4.1.

Responsibility for the project financial statements

The State of Bosnia and Herzegovina, i.e. the management of the project implementation unit (the"Management") is responsible for the preparation and fair presentation of these project financialstatements on the cash basis of accounting based on IPSAS, as described in Note 4-1, and on"Guidelines: Annual Financial Reporting and Auditing for World Bank - Financed Activities" issued byFinancial Management Sector Board ("FMSB"), and for such internal control as Managementdetermines is necessary to enable the preparation of the project financial statements that are free frommaterial misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the project financial statements based on our audit. Weconducted our audit in accordance with the International Standards on Auditing and "Guidelines:Annual Financial Reporting and Auditing for World Bank - Financed Activities" issued by FMSB, ThoseStandards and Guidelines require that we plan and perform the audit to obtain reasonable assuranceabout whether the project financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thespecial purpose project financial statements. An audit also includes assessing of the accountingprinciples used and significant estimates made by management, as well as evaluating the overallstatement presentation.

We believe that our audit provides a reasonable basis for our opinion,

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited byguarantee, and its network of member firms, each of which is a legally separate and independent entity.Please see http:/www.deloltte.comlba for a detailed description of the legal structure of DeloitteTouche Tohmatsu Limited and its member firms.

Member of Deloitte Touche Tohmatsu Limited

Report on the project financial statements (continued)

Opinion

In our opinion, the accompanying project financial statements present fairly, in all material aspects, thefinancial position of the Project as of December 31, 2015 and of the funds received and disbursedduring the year then ended, in accordance with basis of accounting described in Note 4.1.

Report on other requirements

In addition, with respect to the Statements of Expenditure, adequate supporting documentation hasbeen maintained to support claims to the World Bank for reimbursements of expenditures incurred;and all expenditures included in withdrawal applications and reimbursed against are eligible forfinancing under the Project.

Deloitte d.o.o.

Sead Bahtanovid, director and licensed auditor Mirza Bihorac, censed auditor

Vt Delouitb

Sarajevo, Bosnia and Herzegovina

May 6, 2016

4

REAL ESTATE REGISTRATION PROJECTof the Ministry of Finance and Treasury of Bosnia and HerzegovinaProject financial statements for the year ended December 31, 2015(all amounts in EUR, unless otherwise stated)

3. Project financial statements for the year 2015

3.1 Summary of sources and uses of funds under IDA Credit No. 5188-BA, Municipalities'contribution and Other income

Actual Cumulative Cumulative Cumulative CumulativeRef. 2015 2015 2014 budget variance

FINANCING

IDA Credit No. 5188-BA 3.1.1 982,942 3,445,571 2,462,629 13,156,720 9,711,149

Municipalities' contribution 3.1.2 161,982 277,709 115,727 277,709 -

Other income 3.1.3 59,204 61,419 2,215 - (61,419)

TOTAL FINANCING 3.2 1,204,128 3,784,699 2,580,571 13,434,429 9,649,730

PROJECT EXPENDITUREBy CategoryGoods, works, consultants'services, non-consultantservices training andoperating costs for Part 1 ofthe Project 1,542,686 2,163,472 620,786 13,434,429 11,270,957

TOTAL EXPENDITURE 3.2 1,542,686 2,163,472 620,786 13,434,429 11,270,957

PROJECT EXPENDITURE

By ComponentReal Estate RegistrationData Development 610,288 679,820 69,532 7,553,772 6,873,952Real Estate RegistrationInfrastructure Development 764,094 1,143,581 379,487 3,822,084 2,678,503Policy and InstitutionalDevelopment, and ProjectManagement 168,304 340,071 171,767 2,058,573 1,718,502

TOTAL EXPENDITURE 3.2 1,542,686 2,163,472 620,786 13,434,429 11,270,957

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3. Project financial statements for the year 2015 (continued)

3.1.1 Summary of sources and uses of funds under the IDA Credit agreement No. 5188-BA


FINANCING

IDA Credit No. 5188-BA 13,156,720Initial deposit - 2,000,000 2,000,000 -

SoE replenishments _ 982,942 1,445,571 462,629 - -

TOTAL FINANCING 3.1 982,942 3,445,571 2,462,629 13,156,720 9.711.149PROJECTEXPENDITURE

By Category

Goods, works,consultants' services,non-consultant servicestraining and operatingcosts for Part 1 of theProject 1,499,167 2,011,308 512,141 13,156,720 11,145412

TOTAL EXPENDITURE 3.2 1,499,167 2,011,308* 512,141 13,156,720 11.145.412

*Difference for EUR 22 between Cumulative 2015 in the table 3.1.1. (EUR 2,011,308) and Cumulative 2015in Appendix B (EUR 2,011,286) relates to the bank fees paid in 2015, which will be claimed through theapplication in 2016-

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REAL ESTATE REGISTRATION PROJECTof the Ministry of Finance and Treasury of Bosnia and HerzegovinaProject financial statements for the year ended December 31, 2015(all amounts in FUR, unless otherwise stated)


3.1.2 Summary of sources and uses of funds under Municipalities' contribution


FINANCINGMunicipalities'contribution 161,982 277,709 115,727 277,709 -

TOTAL FINANCING 3.1 161,982 277,709 115,727 277,709 -

PROJECTEXPENDITURE

By Category

Goods, works,consultants' services,non-consultant servicestraining and operatingcosts for Part 1 of theProject 43,519 152,164 108,645 277,709 125,545

TOTAL EXPENDITURE 3.2 43,519 152,164 108,645 277,709 125,545

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3.1.3 Summary of sources and uses of funds under Other income


FINANCINGTender documentationsold - IDA Credit account 253 474 221 - (474)

Tender documentationsold - Municipalitiesaccount 2,458 4,452 1,994 - (4,452)

VAT returns 56,493 56,493 - - (56,493)

TOTAL FINANCING 3.1 59,204 61,419 2,215 - (61,419)PROJECTEXPENDITUREBy Category - -

TOTAL EXPENDITURE 3.2 -

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REAL ESTATE REGISTRATION PROJECTof the Ministry of Finance and Treasury of Bosnia and HerzegovinaProject financial statements for the year ended December 31, 2015(all amounts in EUR, unless othenise stated)


3.2 Balance sheet as of December 31, 2015 showing accumulated funds of the Project andbank balances concerning World Bank Funding

December 31, December 31,Ref. 2015 2014

ASSETS

Project expenditure under IDA Credit No. 5188-BA 31.1 2,011,308 512,141

Project expenditure under Municipalities' contribution 3.1.2 152,164 108,645

2,163,472 620,786

Designated account - IDA Credit No. 5188-BA A.1 1,434,493 1,950,565

Petty cash statement - IDA Credit No. 5188-BA A.2 244 144

Local bank account - Municipalities' contribution A.3 186,490 9,076

1,621,226 1,959,786

Total assets 3,784,699 2,580,571

LIABILITIES

IDA Credit No. 5188-BA C 3,445,571 2,462,629

Municipalities' contribution 3.1.2 277,709 115,727

Other income 3.1.3 61,419 2,215

Total liabilities 3,784,699 2,580,571

Signed aA authorised by/

Nedlad Pagalid Atifa Halilovid

Head of the PIU Financial Manager

Sarajevo, May 6, 2016

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4. Notes to the project financial statements

4.1 Basis of preparation and accounting records

These project financial statements have been prepared in accordance with the International PublicSector Accounting Standard: "Financial Reporting under the Cash Basis of Accounting" issued by thePublic Sector Committee of the International Federation of Accountants, and incorporate theaccounting policies below, which have been consistently followed in all material respects and complywith the "Guidelines: Annual Financial Reporting and Auditing for World Bank - Financed Activities",issued by the Financial Management Sector Board.

4.2 Accounting policies

The Project's fiscal year is January 1 to December 31 for the recording of all transactions.

Cash basis of accounting

All receipts and expenses under IDA Credit are recorded on actual receipt and payment basis ofaccounting as per approved categories.

Project expenditure is stated at original cost on the Balance sheet

Direct payments

Direct payments concern the amounts paid directly from the IDA Credit account of the World Bank.

Statement of Expenditure (SoE)

Statements of Expenditure are used to state the expenditure under IDA Credit during a certain period.These statements are sent to the World Banks' disbursement department who authorises the paymentof the expenditure through the Designated account.

Currency conversions

The reporting currency is Euro (EUR). Sources and use of funds (payments to suppliers andcontractors) in currencies other than EUR have been converted to EUR using the currency rate at themoment of the transaction.

Bank balances, recorded on the balance sheet at year-end, have been converted at year-end rate.

Designated account

This is the total amount of the withdrawals from the IDA Credit accounts for the Project. IDA Creditaccount is in XDR,

Interest on Designated account

Interest earned on the Designated account belongs to the Borrower.

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4. Notes to the project financial statements (continued)

4.2 Accounting policies (continued)

Other income

Other income includes VAT returns and tender documentation sold.

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APPENDIX A.1 DESIGNATED ACCOUNT STATEMENT

Account owned by: Ministry of Finance and Treasury of Bosnia and Herzegovina

Account No.: 105050810

Depository Bank: NLB Banka d.d. Tuzla

Address: Martala Tita br, 34 Tuz1a

Related Credit: IDA Credit No. 5188-BA

Currency: EUR

Ref. EUR

Opening balance January 1, 2015 3.2 1,950,565

Add:World Bank replenishments B 982,942Tender documentation sold 153

983,095

Deduct:Payments to suppliers - Expenditure under IDA Credit 1,495,845Transfer to Petty cash - IDA Credit A2 3,322

1,499,167

Ending balance December 31, 2015 3.2 1,434,493

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REAL ESTATE REGISTRATION PROJECTof the Ministry of Finance and Treasury of Bosnia and HerzegovinaProject financial statements for the year ended December 31, 2015(all amounts in gUR, unless otherwise stated)

APPENDIX A.2 PETTY CASH STATEMENT

Address: PIU - FGU, Sarajevo

Related Credit: IDA Credit No. 5188-BA

Currency: BAM

Ref. BAM EUR

Opening balance January 1, 2015 3.2 282 144

Add:

Transfers from Local bank account - IDA Credit A.1 6,497 3,322Tender documentation sold 196 100

6,693 3,422

Deduct:Payments to suppliers - Expenditure under IDA Credit 6,497 3,322

6,497 3,322

Ending balance December 31, 2015 3.2 478 244

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APPENDIX A.3 LOCAL BANK ACCOUNT STATEMENT

Account owned by: PlU - FGU Sarajevo

Account No.: 1320102014103979

Depository Bank: NLB Banka d,d. Tuzla

Address: Mar6ala Tita br. 34 Tuzla

Related Credit: Municipalities' contribution

Currency: BAM

Ref. BAM EUR

Opening balance January 1, 2015 3.2 17,751 9,076

Add:

Contribution from Municipalities in FB&H 316,809 161,982

VAT returns 110,491 56,493

Tender documentation sold 4,807 2,458

432,107 220,933

Deduct:

Payments to suppliers - Expenditure under Municipalities 85,116 43,519

85,116 43,519

Ending balance December 31, 2015 3.2 364,742 186,490

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APPENDIX B SoE Withdrawal Schedule of IDA Credit No. 5188-BA

Goods, works,consultants'

services, non-consultant services

training andInitial operating costs for Total Total

deposit Part 1 of the Project application replenished

Previous years 2,000,000 512,144 512,144 2,462,629

Application 5* - - 49,514

Application 6 - 321,858 321,858 321,858Application 7 - 611,570 611,570 611,570

Application 8** - 332,657 332,657 -Application 9** - 233,057 233_057 -

Total SoE applications - 1,499,142 1,499,142 982,942

Total 2015 - 1,499,142 1,499,142 982,942

Cumulative 2015 2,000,000 2,011,286 *** 2,011,286 3,445,571

* Application No. 5 was replenished in 2015, but expenses were made in 2014.

Applications No. 8 and No. 9 were replenished in 2016, but expenses were made in 2015.

Difference for EUR 22 between Cumulative 2015 in the table 3.1.1. (EUR 2,011,308) andCumulative 2015 in Appendix B (EUR 2,011,286) relates to the bank fees paid in 2015, which willbe claimed through the application in 2016.

Applications No- 3, 4 and 5 were replenished in 2015, but expenses were made in 2014,

*Applications No.8 and 9 were replenished in 2016, but expenses were made in 2015

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APPENDIX C Reconciliation between World Bank's Disbursement Statements In XDRand IDA Credit account in EUR according to the balance sheet;SoE Withdrawal Schedule of IDA Credit No. 5188-BA

Changes in Exchange Changes inIDA Credit rate used IDA Credit

(in XDR) (in EUR)

Original amount 11,600,000 1.134200 13,156,720

Disbursed in previous years 2,154,155 2,462,629

Withdrawal 5 39,738 1,246011 49,514Withdrawal 6 254,652 1.263913 321,858Withdrawal 7 489,702 1.248862 611,570

Total disbursed in 2015 784,092 982,942

Cumulative disbursements 2,938.247 3,445,571

Calculated undisbursed balanceas of December 31, 2015 8,661,753 9,711,149

Undisbursed balance as per WorldBank Summary for December 2015 8,661,753 1.26831 10,985,789

Potential exchange rate gain 1,274,640

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Documents

PROJECT FINANCIAL STATEMENTS - World Bank€¦ · Project financial statements for the year ended December 31, 2015 (all amounts in EUR, unless otherwise stated) 3. Project financial