EXTERNAL AUDIT REPORT OF ODRP PROJECT OF BERHAMPUR MUNICIPAL CORPORATION FOR THE FINANCIAL YEAR 2017-18 Audit by B.N.MISRA & CO CHARTERED ACCOUNTANTS S-29 MAITRI VIHAR PHASE-lI BHUBANESWAR-751223 E-mail- bnmisraco@yahoo.co.in EXTERNAL AUDIT REOPRT& OBSERVATIONS 2017-18 We have conducted audit of books of account of ODRP, Berhampur for the financial year 2017-18 and also examined the annexed Balance Sheet as on 31t March, 2018 and Receipts and Payments Account and Income and Expenditure account for the Year ended on 31st March , 2018 of ODRP , BeMC, Berhampur , Dist.- Ganjam , Odisha-760002 attached to this report. In our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to audit observations attached to our report, give a true and fair view. Followings are our observations:- 1. Advance to Mukesh& Associates Rs 71,80,120 During the year 2014-15 , ODRP ,Berhampur had engaged Mukesh & Associates of Hyderabad for Project Management , Supervision and Quality control consultancy services for PIU based in Berhampur & PMU based in Bhubaneswar vide agreement no. ODRP-02-SBCC-CF-661122 dt. 05-01-2015. An advance amount of 10% on the contract amount i.e. Rs 71,80,120 has been paid to Mukesh & Associates on 16/03/2015. During the year 2015-16 ,the contract with Mukesh& Associates had been terminated due to non compliances of terms of the contract w.e.f 31/10/2015 vide letter no 555/ODRP dt 26/08/2015. The above advance amount is still outstanding for recovery from Mukesh & Associates as on 31/03/2018. The project office should take step to recover/adjust the above advance at earliest. It is observed that the Project Office has request several times to the Govt. to look after above matter. 2. Professional Tax Deducted on the salary of employee Rs 600 deducted from salary on 07/01/2015 during the year 2014-15 ,Rs 1,400 and Rs 1,200 deducted from salary on 08/06/15 and 10/06/15 on respectively during the year 2015-16 has not been deposited till 31" march 2018. 3. Tax Deducted at Sources a. It is observed that during the year under audit , TDS deducted by ODRP, Berhampur has been deposited by using TAN of BeMC i.e. vide TAN BBNBOOO73D, although the ODRP is having its own TAN i.e. BBNOO2093A. 4. VAT Payable Rs 6,400 During the sale of tender paper , the project had collected Rs 1,000 on 05/03/2015 , Rs 500 on 30/06/2015 ,Rs 1,000 on 06/08/2015 and Rs 1,000 on 12/04/2016 , Rs 1,900 on 20/07/2017 and Rs 1,000 on 21/10/2017 towards VAT. The same had not been deposited til at the end of the year i.e. as on 31/03/2018, 5. Other observations on various clause of Project Appraisal Documents (PAD) a. Staffing: As per clause no 14 under Financial Management Disbursement and procurement in annexue-2 Detailed Project Description in Project Appraisal Documents (PAD ) issued by the World Bank n connection to Odisha Disaster Recovery Project in the matter of Staffing "At BeMC the post of a dedicated finance manager, who will be responsible for maintaining clear and complete accounts thereof, needs to be sanctioned and hired/deputed." However it observed that a dedicated finance manager had not been appointed during the period of audit. The Chief Financial Officer of BeMC in addition to his own assignment has been in charge for maintaining clear and complete accounts. Steps should be taken to appoint such finance manager for this project work. Accounting (Maintenance of Books of Accounts ) As per clause no 15 r,-acial Management , Disbursement and procurement in annexue-2 Detailed Project Description in Project Appraisal Documents (PAD ea by the World Bank in connection to Odisha Disaster Recovery PoJect in the matter of accounting " BeMC needs to maintain separate oooks of accounts for this project." However the PIU is not maintaining the separate cash and bank book for : s project. The financial transactions of this project was maintained in 5eMC cash and bank book . .reps should be taken to maintain the books of account preferably in T accounting software as maintained by OSDMA which is adequate recording financial transactions and forgenerating reports for ncial disclosure requirements. Financial Reporting -As per clause no 19 under Financial Management Dioursement and procurement in annexue-2 Detailed Project Description in Project Appraisal Documents (PAD ) issued by the World sa- in connection to Odisha Disaster Recovery Project in the matter of ancial reporting ,BeMC will submit separate quarterly IUFR providing the financial progress against the project components, within 45 days from the end of each calendar quarter. IUFRs will be prepared on the basis of actual expenditure information received from the field divisions and actual expenditure incurred at the PIU and reconciled with the bank accounts. The form and content of the IFRs are under preparation and will be agreed with GoO during negotiations. It is observed that IUFR for the quarter for the financial year 2017-18 had been submitted to world bank by PIU , ODRP Berhampur in schedule time i.e. with in 45 days from the end of quarter. d. Banking arrangements: As per clause no 19 under Financial Management , Disbursement and procurement in annexue-2 Detailed Project Description in Project Appraisal Documents (PAD ) issued by the World Bank in connection to Odisha Disaster Recovery Project in the matter Banking arrangements of BeMC will also open a separate bank account to receive funds from H&UD as per thework plan requirements. observed that during the year 2017-18 a new bank account has been ...ed in State Bank of India . and Saving Bank account opened in Bank Baroda on 17/10/2014 is closed during the year audit i.e. on 12/2017 . HDFC account which was opened on 17/04/2105 is : nuing. ternal Controls and Internal Audit: As per clause no 19 under Financial nagement , Disbursement and procurement in annexue-2 Detailed _ Ject Description in Project Appraisal Documents (PAD ) issued by the O d Bank in connection to Odisha Disaster Recovery Project in the :ter Internal Controls and Internal Audit " Since funds will be nsferred to separate Bank accounts; reconciliation of bank book with cank statement will be an essential control mechanism in the z ect." -2k reconciliation of bank book with the bank statement has been :one upto 31s March,2017. Bank Reconciliation Statement as on 31.03.2017 is attached with report, Maintenance of other subsidiary Registers -d not maintained following subsidiary register for the financial year -18 for internal reference. Tax deduction Register i.e. TDS ,WCT and Service Tax. Fixed Assets Register Journal register Advance Register _5 should be taken to maintain following subsidiary Register to have better