ODISHA STATE DISASTER MANAGEMENT AUTHOR TY (A GOVERNMENT OF ODISHAAGENCY) OSDMA Letter No. r /OSDMA Dt.20.03.2020 From, Sri Rudra Narayan Acharaya Chief General Manager (F&A) To, Mr. Anup Karanth, TTL, ODRP, World Bank, 70, Lodi Estate New Delhi-110003 Sub-: Resubmission of External Audit Report for the F.Y 2018-19 in respect of ODRP. Ref-: Your Mail dt.04.03.2020 Sir, In inviting a reference to the subject cited above, I am to enclose herewith the Audit Report for the F.Y 2018-2019 in respect of ODRP re-issued by the External Audit M/s. SRB & Associates along with compliance for kind information & necessary action. Yours faithfully, Encl-: As above Chief Geperal Ma A) 9th Floor, Rajiv Bhawan, Unit-5, Bhubaneswar-751001, Phone: (0674) 2395398, 2395531, Fax: (0674) 2391871 E-mail: osdma@osdma.org, Website: www.osdma.org 5TH FLOOR, IDCO TOWER, JANAPATH, JAJPUR ROAD - 06726-220345 S B &Associates BHUBANESWAR -751 022, ODISHA NEWDELHI - 011-51601983 TEL: 0674 - 2541043, 2545880 CHARTERED ACCOUNTANTS FAX : 91- 674 - 2546414 KOLKATA - 033-30930975 Email:srbbbsr@rediffmail com SECUNDERABAD - 040-27510739 INDEPENDENT AUDITOR'S REPORT To The Members Orissa State Disaster Management Authority, BhUbaneswar. Report on the Audit of the Project Financial Statements (PFS) Opinion We have audited the accompanying special purpose financial statements of ODISHA DISASTER RECOVERY PROJECT(ODRP), financed by International Development Association under IDA Credit No.5378 - IN and implemented by OSDMA. These financial statements comprise of the Balance Sheet as at March 31, 2019, the Statement of Income & Expenditure for the year ended, Statement of Receipt & Payment for the year ended, and Notes to these Financial Statements including summary of significant accounting policies and other explanatory information (collectively referred to as "Project Financial Statements"). In our opinion, and to the best of our information and explanation given to us, the aforesaid special purpose Project Financial Statements give a true and fair view of the financial position of the Project as at March 31, 2019. Basis for Opinion We conducted our audit in accordance with the Standards on Auditing issued by Institute of Chartered Accountants of India (ICAI). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the project implementing agency in accordance with the ICAI's Code of Ethics for undertaking this assignment, and we have fulfilled our ethical responsibilities in accordance with ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. *9Bhubanlesl~arI CjS SHB ft Associates CHARTERED ACCOUNTANTS Emphasis of Matter We draw attention to Notes on Accounts to the Project Financial Statement describing the basis of accounting. The Project Financial Statement is prepared by the Project Implementing Agency to reflect the operations, resources and expenditures related to this project. As a result, these special purpose financial statements may not be suitable for another purpose. We emphasise the following: 1. Physical verification of Fixed Assets have not been carried out. 2. During our audit, difference of Rs. 10.19 Millions between IUFR and Audited Financial Statements was observed as per following details: - (Rs. In Millions) Particulars Amount as per Amount as per Difference Audited Financial IUFR Statements Other Receipts/Income 162.18 179.71 -17.53 Component 1 6340.28 6333.13 7.15 Component 4 239.49 239.3 0.19 Total -- -10.19 These differences may be reconciled. 3. The difference of Rs. 0.07 Million in other receipt between Audited Financial Statement and Project Financial Statement has been rectified during period under audit. 4. A sum of Rs.16,27,500.00 has been paid towards excess advance to beneficiaries which has not yet been recovered. 5. A sum of Rs.1,65,52,577.00 has been paid towards advance to other beneficiaries which has not been settled, this includes payment to ineligible beneficiaries. 6. The existing Internal Control System needs improvement in the cases of fixed assets and advances. Our opinion is not modified in respect of this matter. S B h Associates CHARTERED ACCOUNTANTS Responsibilities of Management and those charged with Governance for the Project Financial Statements The Management of the Project Implementing Agency is responsible for the preparation and fair presentation of the Project Financial Statements and for such internal control as management determines is necessary to enable the preparation of Project Financial Statements that are free from material misstatement, whether due to fraud or error. The Management and those charged with governance are responsible for overseeing the implementing agency's financial reporting process. Auditor's Responsibilities for the Audit of the Project Financial Statements Our objectives are to obtain reasonable assurance about whether the Project Financial Statements are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Standards of Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Standard of Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the Project Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. (R- cl/S SRBh&Associates CHARTERED ACCOUNTANTS * Evaluate the overall presentation, structure and content of the Project Financial Statements, including the disclosures and whether these financial statements present the Project's operations and underlying transactions and events in a manner that achieves fair presentation in accordance with the financial reporting provisions. * Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. * Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Report on Other Legal and Regulatory Requirements Further to our opinion on the Project Financial Statements, we further report that: * We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; * In our opinion, proper books of accounts have been kept by the implementing agency for Project purposes so far as appears from our examination of those books; * The Project Financial Statements dealt with by this report is in agreement with the books of accounts; * The Project funds were utilized for the purposes for which they were provided; * Expenditures, including assets created under the Project, shown in the PFS are eligible for financing under the Project Financing Agreements; * Interim Financial Reports (IFR) slbmitted by the Project management can be relied upon to support applications for withdrawal of the Loan, and adequate supporting documentation has been maintained to support these claims; SH & Associates CHARTERED ACCOUNTANTS * Procurement has been carried out in line with the agreed procedures; and * The Project has an ad'equate internal financial control system and such controls were operating effectively as at March 31, 2019 and the Project complies with the provisions of the Financing Agreement and Project Agreement dated November 11, 2013, in all material aspects. For SRB & Associates Chartered Accountants F. R.No:3100 9E VC CA B. MOHA Partier * M.No:056264 .0Pd UDIN - 20056264AAAABE8768 Place: Bhubaneswar Date: 19.03.2020 5TH FLOOR, IDCO TOWER, JANAPATH, JAJPUR ROAD - 06726-220345 S Associ8tes BHUBANESWAR-751022, ODISHA NEWDELHI - 011-51601983 TEL: 0674 - 2541043, 2545880 CHARTERED ACCOUNTANTS FAX : 91- 674 - 2546414 KOLKATA - 033-30930975 Email:srbbbsr@rediffmail com SECUNDERABAD - 040-27510739 Letter No.143/ Date:19.03.2020 To Shri Rudra Narayan Acharya Chief General Manager (F & A), ODISHA STATE DISASTER MANAGEMENT AUTHORITY Bhubaneswar. Sub: Submission of Audit Report for the Financial Year 2018 - 19 in respect of ODRP. Dear Sir, In inviting a reference to the subject cited above we are submitting below necessary compliance against the observations of the World Bank. 1) Details of Physical Verification carried out as part of audit procedure for verifying expenditure under such component 1.1. Housing Reconstruction Compliance: No physical verification has been carried out for expenditure under Component 1.1 Housing Reconstruction. 2) Opinion on the existing internal controls. As required by the auditing standards issued by ICAI, kindly report on the reliance placed on the work of the internal auditor or alternate process followed. The internal auditor have been highlighting material weaknesses, how have that impacted the audit opinion expressed. .5 & - BB 6 Associates CHARTERED ACCOUNTANTS Compliance: While carrying out auditing, due reliance has been placed on the observations of the Internal Auditor. The weaknesses as reported by them are discussed with the management for resolution and in the unresolved areas, the same is reported. The existing system of Internal Control needs improvement in relation to Fixed Assets and Advances. 3) The report issued by the auditors needs to observe the guidelines prescribed by The Institute of Chartered Accountants of India that made changes to the Standards on Auditing 700 - 706. Compliance Audit Report as per the guidelines is being provided separately. It is requested to replace the audit report dated 4th December 2019 with the new one and return it to us. Should you require arty further clarification we may please be contacted. Thanking you Yours faithfully, For SRB & Associates Chartered Accountants o SBhubaneswar B. Mohanty l Partner