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Financial Management and Analysis of Projects : 5. Reporting and Auditing : 5.3. Financial Reporting
5.3.2. Content and Timing of Financial Reporting5.3.2.1. ADB recognizes that many project financial statements, particularly those prepared for nonrevenue-earning projects, are of a "special purpose nature". Consequently, ADB requires that financial information submitted by nonrevenue-earning entities adhere to an appropriately designed format acceptable to ADB.5.3.2.2. The following fundamental principles should apply to all interim and annual financial statements on projects issued by a borrower: (i) disclosure of full accountability for all funds of the borrower, other donors and lenders, and ADB; (ii) compliance with loan covenants and ADB requirements for project management; (iii) adequate disclosure of all material information; and (iv) a true and fair view, or a fair presentation in all material respects, of the financial performance and status of the project (and where applicable, of the EA/PIU). 5.3.2.3. In addition, the following fundamental principles apply to annual financial statements only: (i) a clear statement on the accounting policies and accounting standards adopted; and (ii) the results of an independent review of the financial accounts and financial management systems by an auditor acceptable to ADB. 5.3.2.4. Interim and annual financial statements relating to each project should be presented in the English language and show sufficient information to identify separately the transactions relating to the reporting year and the cumulative transactions from the date of start-up (PAI 5.10 refers). This applies particularly to those expense and revenue categories contained in the loan agreement and/or RRP and revisions thereto. The reporting year includes a part-year from the start-up date to the end of that fiscal year, and a part-year from the start of the fiscal year in which a project is closed, to the date of closure (PAI 5.10 refers). "Date of start-up" means the date of the first financial transaction that is the subject of the Project Cost Table and/or the project operating costs and revenue forecasts referred to in the RRP. Therefore the date of start-up could include the date when costs that were approved for retroactive financing were incurred (e.g., design costs or mobilization expenses) (PAI 5.10 refers). 5.3.2.5. In a case where there are no financial transactions in the first fiscal year (or part thereof), if an Imprest Account has been established with ADB funds, this transaction must be reported in the annual financial statements, even where there have been no withdrawals therefrom (PAI 5.10 refers). In the event that a PIU or EA was established and local counterpart funds were expended (e.g., on salaries and wages) but no project implementation occurred, the first year's annual financial statements should be provided to ADB showing the operating costs of the PIU/EA (PAI 5.10 refers). 5.3.2.6. Audited annual financial statements of nonrevenue-earning EAs are required in the English language for each fiscal year of project development and implementation, including the year of final commissioning of the project. Interim and annual statements may combine financial transactions of a project with those of the EA, where the agency is established solely for purposes of developing the project. 5.3.2.7. Where an EA is responsible for implementing defined subprojects (with or without engaging PIUs for subproject implementation) separate financial statements should be provided for each defined component together with a consolidated financial statement for the complete project. Where an EA is responsible for developing more than one project, common or joint project financial transactions of the agency may be apportioned and allocated to each project on a basis defined in the Notes to the Financial Statements. For projects where multiple EAs are required to submit separate APA/CFS, compliance details will be recorded separately in PPRs indicating separate status of compliance and ratings which will be the basis for calculating the overall APA/CFS rating/compliance of the project (PAI 5.10 refers). 5.3.2.8. For a revenue-earning project, ADB requires English language presentations of audited annual financial statements of the project and of the borrower or project EA for the period of the loan. Along with the audit report which expresses the audit opinion following the audit of the annual financial statements, ADB also requires a Management Letter, by agency if more than one EA, from the auditors. The reports on the project may be incorporated within EA financial statements provided that the statements explicitly describe the financial status and performance of the project for the fiscal year, the previous fiscal year, and from start up. Interim financial reporting should follow the format of the annual financial statements but should cease on completion of ADB disbursements. 5.3.2.9. Borrowers are required to provide interim and audited annual financial statements in accordance with a timetable agreed with ADB. Interim financial statements are normally required at intervals of 3, 4 or 6 months of each fiscal year.
5.3.2.10.
Where audited financial statements
are to be first submitted to a government legislature, (with the
risk thereby of substantially delaying the transmission of the audited
financial statements to ADB), a draft thereof, certified by the
chief financial officer and the auditor, should be submitted to
ADB within the required reporting timetable, with subsequent confirmation
after they have been ratified by the legislature.
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