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Financial Attest Audit Report on the Accounts of Disaster and Climate Resilience Improvement Project Implemented by Project Implementation Unit Provincial Disaster Management Authority, Punjab World Bank Loan: 5686-PK Financial Year 2018-19 Auditor General of Pakistan Islamabad Table of Contents Abbreviations and Ccronyms ................................ :............................................................. 1 Preface ............................................................................................... 2 PART-I ...................... .................................................................................................... 3 Project Overview ....... .......................................................................................................... 4 Auditor's Report to the Management .................................................................................. 5 Financial Statements ................................. ........................................................................... 6 PART-II ........................................................................................................................ 17 MANAGEMENT LETTER .............................................................................................. 18 EXECUTIVE SUMMARY ............................................................................................... 19 1. Introduction ........................................................................................................... 19 2. Audit Objectives ........................................................... ......................................... 20 3. Audit Scope And Methodology ............................................................................. 20 4. AUDIT FINDINGS AND RECOMMENDATIONS ............................................ 21 4.1 Procurement and Contract Management.. ...................................................... 21 4.2 Compliance with loan Covenant .................................................................... 25 4.3 Sustainability ................................. ................................................................. 25 4.4 Overall Assessment ........................................................................................ 25 5. CONCLUSION ..................................................................................................... 27 ACKNOWLEDGEMENT .................................. ............................................................... 28 ,, ABBREVIATIONS AND ACRONYMS AGP Auditor General of Pakistan DAC Departmental Accounts Committee DGPR Director General Public.Relation FERRP Flood Emergency Reconstruction and Resilience Project GoPb Government of Punjab IPSAS International Public Sector Accounting Standards ISSAI International Standards of Supreme Audit Institutions M&E Monitoring & Evaluation MHVRA Multi Hazard Vulnerability Risk Assessment NCB National Competitive Bidding NGO Non- Governmental Organization PAM Project Administrative Manual PDMA Provincial Disaster Management Authority PIU Project Implementation Unit PKR Pakistani Rupees PPRA Public Procurement Regulatory Authority US$ United States Dollars WB World Bank 1 PREFACE The Auditor General of Pakistan conducts audits subject to Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan 1973, read with Sections 8 and 12 of the Auditor General ' s (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001. The audit of the Disaster and Climate Resilience Improvement Project (DCRIP), implemented by Project Implementation Unit, Provincial Disaster Management Authority (PIU-PDMA) was carried out accordingly. The Directorate General Audit, Climate Change & Environment conducted audit of the Disaster and Climate Resilience Improvement Project (DCRIP) during September, 2019 for the financial year 2018-19 with a view to report significant findings to stakeholders. Audit examined the economy, efficiency and effectiveness aspects of the Disaster and Climate Resilience Improvement Project (DCRIP). In addition, Audit also assessed, on test check basis whether the management complied with applicable laws, rules, and regulations in managing the Project. The Audit Report indicates specific actions that, if taken, will help the management realize the objectives of the Disaster and Climate Resilience Improvement Project (DCRIP). The Report consists of two parts. Part-I contains Auditor's Report (Audit Opinion) and Financial Statements. Part-II contains Executives Summary, Management Letter and Audit Findings. The Report has been prepared for submission to the World Bank in terms of loan agreement with Government of Pakistan. ~~ (Ahmar Ellahi) Director General December , 2019 Islamabad 2 II PART-I 1. PROJECT OVERVIEW 2. AUDITORS REPORT TO THE MANAGEMENT 3. FINANCIAL STATEMENTS 3 PROJECT OVERVIEW Name of project: Disaster and Climate Resilience Improvement Project (DCRIP) Sponsoring agency: World Bank Executing authority: Project Implementing Unit, Provincial Disaster Management Authority, Punjab (PIU-PDMA) WBLoanNo: 5686-Pak PC-I cost: Rs 1,089 million Date of commencement: July 30, 2015 Actual date of commencement: August 31 , 2015 Date of Approval by ECNEC: July 09, 2015 Original loan closing date: December 01, 2019 Progressive releases status of funds upto FY 2018-19: Rs 528.722 million Progressive loan utilization status upto FY 2018-19: Rs 346.828 million 4 AUDITOR'S REPORT TO THE MANAGEMENT Raja Khuram Shehzad Umar Project Director, Project Implementation Unit DCRIP (WB), 19-Aibak Block, New Garden Town, Lahore Auditor's Report on the Financial Statement of the DCRIP We have audited the accompanying financial statements of Disaster and Climate Resilience Improvement Project comprising Statements of Receipts and Payments, Statement of Comparison of Budget and actual expenditure together with the notes forming part thereof for the year ended June 30, 2019. Management Responsibility It is the responsibility of project management to establish and maintain a system of internal controls, and prepare and present the Statement of Cash, Receipts and Payments in conformity with the requirements of Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standard. Auditor's Responsibility The responsibility of the auditor is to express an opinion on the financial statements based on the audit conducted. We conducted our audit in accordance with the International Standards of Supreme Audit Institutions (ISSAis). These standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatements. The audit process includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. It also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion: a) The financial statements present fairly, in all material respects, the cash receipts and payments by the project for the year ended June 30, 2019 in accordance with Cash Basis IPSAS. b) The expenditure has been incurred for the purpose for which it was released. Emphasis of Matter Without qualifying my opinion, I draw your attention that executing agency utilized funds of Rs 346.828 million out of the total reieases of Rs 528.722 million against the PC-I cost of Rs. 1,089 million upto FY 2018-19 despite lapse of four years, which ~lted into poor financial progress . .- -?'.~~ (Ahmar Ellahi) Director General Directorate General Audit, Climate Change & Environment, Islamabad Dated: .12.2019 5 FINANCIAL STATEMENTS FOR THE YEAR ENDED ON JUNE 30, 2019 6 WB Loan MM-PK • D'·-- d ,..,_ • • 1n>1tr u .......att Rmlitllt't lmpro,·tmnll Projttt 1'roJtct lmpltmrnt.tloa Unit : Pro,iacbl Dlwtu Mamctmcnl Aa~ority (PIU-POMA) S111rmt111 o( Cult Rtcdpts ud Pa) mtat1 For lbt ytar tadtd 30 J11t ?019 F\' 2011-19 F\' 1011-11 (l'KR la mlllloai) (PKR la mDlloas) :Ktctlpt:11 Paymtat Rtcdptlf P1y111nt PaymtalJ I by P1,-.snt1 ~Ott I by Third Tlalrd Coatrolltd Coalroll Parties -· . Panlts byPIU Rtt-tlpts Go,'t111mffl1 Funch s . . . - WBFund$ 6 . - m11s 4.729 Total Rtttlpb . . Jl"-211 .t.n, Paymtals C'MIWorb 7 . . . . Equipcncnt ,t VdudC$ s 1J69 . 92.&57 . Consulting SCT\iccs • Project Mi11Ugcmcnt 9 S.364 . 26.652 4.729 • Clp;lcity Building . . . . lncrcmcntll Cost 10 7S.81S . 61.4114 . Total PaymtnlJ 11.5,11 . II0.97J .i.n, r ust/ (D«rmc) ill Cub lnc, C:ish at beginning oryc:ir 264.-1-12 . 121.197 . lnm.ue' (l>ccrcuc) in C1.1h 12 (S2.S4S) . 143.245 . Cub 11 md or year 111.89.t . . 2'-1.442 . 7 f'l'llll-lt t'\' lllMI (l't(lll11111!1... (l'Kll la lllllNsJ our,,-, N,tt •Artaal ..,... tUINlctl •Acl•al Wot Dtffff-.r 111141 TOliJII IJ69 . (IJ69} tUJ7 . ,,un, CClllllllliacSovlm • Projffl ,....,_ 5.3ft )IJJI • Capl(IIY lllaldtlt& . . s.J, TOl/ll C SJ6' . (SJ6'J 31.311 ()I lJI) laannmtalCost I 7SIIS 61.46' Sl,b Ti#IU () 7' IIS (7S SIS) 61 "" . (614M) Tel.al h,.an11 ~ 1',1.11t ('11.3221 115.ffl ,,._. (3'Utl) (A+BtC+D) ,~ !'4tC Call """ •A