AUDITOR'S REPORT Audit completion date: 14 .12.2017 The Senior Secretary. Local Govt. Division, Ministry of LGRD & Co-operatives, Bangladesh Secretariat, Dhaka. I. We have audited the accompanying Financial Statement of the "Second Local Governance Support Pro .ect (LGSP-II) " financed by IDA under Financing Agreement No. 5019-BD as on 30 June, 2017 and for the year then ended. The preparation of Financial Statement is the responsibility of the management. Our responsibility is to express an opinion on the Financial Statement based on our audit. II. We conducted our audit following International Standards of Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall Financial Statement presentation. We believe that our audit provides a reasonable basis for our opinion. III. The results of our audit disclosed the following materials aspects which affected the financial statement. a) Expenditure showed for unspent amounting to Tk.45,75,175 which amount was not actually expended during the year 2016-17. (Para-01). b) Expenditure showed amounting to Tk. 7,81,40,264/ but auditable records and documents were not produced to audit. (Para- 06) Resulted financial statement is misstated by Tk. 8,27,15,439 lakh (Tk.45,75,175 + Tk.7,81,40,264). III. In our opinion, except non-compliance of financial rules and regulations in subsequent observations along with the management letter following the Financial Statement gives a fair view in all material aspects of the financial position of "Second Local Governance Support Project ( LGSP-1) " as at 30 June. 2017 and the results of its operations and cash flows for the year then ended in accordance with the cash basis of accounting followed by the Government of Bangladesh. IV. Opinion: Qualified. Date: - (Mohammad Amimul Ehsan Kabir) Deputy Director For Director General Foreign-Aided project Audit Directorate Tel: 9361788 Second Local Governance Support Project (LGSP-II) Project Financial Statement As on 30 June, 2017 Taka in Lakh Cumulative Current Cumulative Prior Period Period Current Period Government of Bangladesh 1 181,435.03 211.10 181,646.13 Loan From Development Partner: 2 207,531.27 1,473.64 209,004.91 Cash Opening Balance - 4,221.76 - Foreign Exchange Conversion Gain/(Loss) 3 151.67 - 151.67 Total Resources 389,117.97 5,906.50 390,802.71 Expenditure 1. Basic Block Grant & Performance-based 361,706.59 (41.86) 361,664.73 Grant 31765(4.636,4. 2. Training, Workshop and Study Tour 5,963.83 986.20 6,950.03 3. Technical Know-how Fee and Pay of DF 3,320.25 1,044.21 4,364.46 4. Audit Fees and IEC 4,7R9 04 1 312 71 6 101 7 5. Salary & Allowances 317.09 207.38 524.47 6. Operating expenses 1,380.84 623.33 2,004.17 7. Furniture, Electrical goods etc 244.74 35.02 279.76 8. Vehicles 1,302.66 - 1,302.66 9. Photocopier, MIS, Computer etc 297.20 163.19 460.39 10 CDNAT 5,573.97 - 5,573.97 Total Expenditure 384,896.21 4,330.18 389,226.39 Cash Closing Balance CONTASA 4 2,777.71 1,148.70 1,148.70 DOSA 4 271.67 271.67 w 271.67 Operating Account (SBL, Ramna) for DOSA 4 137.61 155.95 155.95 Operating Account (SBL, LO) for DOSA 4 - - - Operating Account: DDLGs 4 1,026.84 - - Advance for Workshop (PMU) 7.93 Account Current: CD/VAT - . Total Cash Closing Balance 4,221.76 1,576.32 1,576.32 Total Expenditure and Cash 389,117.97 5906.50390,802.71 (Iqramul Haque) Additional Secretary Local Government Division SECOND LOCAL GOVERNANCE SUPPORT PROJECT (LGSP-II) NOTES TO THE FINANCIAL STATEMENT 30th June, 2017 1 GOVERNMENT OF BANGLADESH. Funds are allocat J by the Government of Bangladesh to cover GOB's share of of eligible project expenditure, as specified in the Development Project Proforma and in the Annual Development Programme for each of the project. Any allocated funds that ha\e not been expended by the end of a fiscal year lapse and must be returned to GOB. GOB contribution to the project since inception are as follows (In Lakh Taka). Inception to For the year Inception to 30th June, 2016 30th June, 2017 30th June, 2017 Disbursements by GOB 185.005.00 280.00 185,285.00 Less : Refunds to GOB 471.94 68.90 540.84 Less: Refunds to GOB (CD VAT) 3,098.03 - 3,098.03 Total : 181,435.03 211.10 181,646.13 2 LOAN FROM DEVELOPMENT PARTNER The World Bank has provided funds to the project to cover its share of eligible project expenditure. These funds, which must be repaid to the World bank after conclusion of the project, have been drawn by the project in accordance with the withdrawal procedures (In Lakh Taka). Inception to For the year Inception to 30t1 June, 2016 301h June, 2017 30'h June, 2017 RPA (Report Based) Fiscal Transfer to Ps (DOSA) 186,420.23 - 186,420.23 Other Activities CONTASA) 21,111.04 1,500.00 22,611.04 Refunded as ineligible (directly io World Bank) - (26.36) (26.36) Total 207.531.27 1,473.64 209,004.91 3 OTHER RESOURCES. Other resources consists of the following Inception to For the year Inception to 30'h June, 2016 30th June, 2017 30th June, 2017 Project Revenues - - Exchange Gains ( Losses) 151.67 151.67 Total: 151.67 - 151.67 PFS FY 2016-17 Final.xlsx 4 LASH . Ihe ject maintains two special account namel%: DOSA Lnd CONTASA. The DOSA has been maintaining at I esh Bank for Union Parishad Grant (BBG and PBG) fund adanced by IDA and the CONTASA has been maintaining at commercial bank Lo deal with funds for remaining project activities other than BBG and PBG. In addition, the project has been operating bank account against DOSA in commercial bank. Year end cash balance were as follows In Lakh Taka). Inception to For the year Inception to 30th June, 2016 30th June, 2017 30 h June, 2017 CON 2,777.71 1,148.70 1,148.70 DOSA 271.67 271.67 271.67 Operating Account for DOSA (Sonali. Ramna Bri 137.61 155.95 155.95 Operating Account for DOSA (Sonali, Local Office)J Operating Account: DDLGs 1 026.84 Advance for Workshop, Study Tour etc (PMU) 7.93 Account Current: CDNAT Total 4,221.76 1,576.32 1,576.32 1 0 (lqramul Haque) Additional Secretary Local Government Division PFS FY 2016-17 Final.xlsx Auditor's Report on Special Account (DOSA for fiscal transfer) 1. We have audited the Special Account Statements of "Second Local Governance Support Project ( LGSP-II )" for the year ended 30th June, 2017 under the provision of IDA Financing Agreement No. 5019-BD dated 17th January, 2012. 2. Our audit was carried out following International Auditing Guidelines. Accordingly our audit included such review of systems of internal control, tests of accounting records and supporting documentation, verification of accounts balances and other auditing procedures that we considered necessary under the circumstances. 3. The accompanying Special Account Statement was prepared on the basis of cash deposits and withdrawals for the purpose of complying with the above financing Agreement. 4. In our opinion, reimbursements made by IDA are properly accounted for and withdrawals were made for the purpose of the project in accordance with the Financing Agreement. D ate.................... (Mohammad Amimul Ehsan Kabir) Deputy Director For Director General Foreign-Aided project Audit Directorate Tel: 9361788 Auditor's Report on Special Account (CONTASA for all the activities other than fiscal transfers) 1. We have audited the Special Account Statements of "Second Local Governance Support Project ( LGSP-II )" for the year ended 30th June, 2017 under the provision of IDA Financing Agreement No. 5019-BD dated 17th January, 2012. 2. Our audit was carried out following International Auditing Guidelines. Accordingly our audit included such review of systems of internal control, tests of accounting records and supporting documentation, verification of accounts balances and other auditing procedures that we considered necessary under the circumstances. 3. The accompanying Special Account Statement was prepared on the basis of cash deposits and withdrawals for the purpose of complying with the above Financing Agreement. 4. In our opinion, reimbursements made by IDA are properly accounted for and withdrawals were made for the purpose of the project in accordance with the Financing Agreement. Date . ......... (Mohammad Amimul Ehsan Kabir) Deputy Director For Director General Foreign-Aided project Audit Directorate Tel: 9361788