G.V. ACHARYA & Co. CHARTERED ACCOUNTANTS Partners : G. Vamanacharya, B.Com , F.C.A., G.V. Shreesh Acharya, B.Com., F.C.A., DISA 310, 3rd Floor, 9/1, Commerce House, Cunningham Road, Bangalore - 560 052 : 22202065 / 22285903 e-mail : gvacharyaco@gmail.com web : www.cagvacharya com Ret: Date: To 27.12.2017 The Managing Director, Karnataka Urban Infrastructure Development & Finance Corporation #22,17th F F cross Old Madras Road, Indiranagar BANGALORE - 560 038 Sir, We have verified the accompanying financial statement viz., Annexures-A& B of the Karnataka Urban Water Supply Modernization Project (KUWSMP) financed under world Bank Loan No. 8601 IN which comprise the statement of Reconciliation of Claims to total Application of Funds for the year ended 2016-17(24th May,2016 to 31st March, 2017). This statement are the responsibility of the project's management. Our responsibility is to express an opinion on the accompanying financial statement based on our verification. We conducted our verification in accordance with the Auditing Standards promulgated by the ICAl. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. Our verification examines on a test basis evidence supporting the amounts and disclosures in the financial statement. 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 verification provides a reasonable basis for our opinion. In our opinion the statement attached present fairly, in all material respects. The applications of funds of Karnataka Urban Water Supply Modernization Project (KUWSMP) for the year ended 2016-17 in accordance with ICAI accounting standards. In addition to our opinion (a) with respect to IUFRs, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditure incurred and (b) except for ineligible expenditure of Rs.8,03,185 as detailed in the audit observation appended to this audit report expenditures are eligible for financing under the Loan/Credit agreement (Annexure 'A'). During the course of the verification, IUFRs and the connected documents were examined and these can be relied upon to support reimbursement under the Loan / Credit Agreement. End - Annexures A & B Regards, For G V Acharya & Co Chartered Accountants, G.Vamanacharya (Partner) Expenditure eligible for financing under the loan/credit agreement vide Loan No.8601 IN Annexure A Amt in Rs. SL. NO COMPONENT TOTAL DISALLOWED EXPENDITURE BY AUDIT Component 1: 1 Capital Investment Program Component 2: 2 Institution 2,49,000 2,49,000 Building Component 3: 3 TA for Sector Development Component 4: 4 Project 1,49,49,272 5,54,185 1,43,95,087 Management Total 1,51,98,272 8,03,185 1,43,95,087 Date: 27/12/2017 For G V Acharya & Co Place: Bangalore Chartered Accountants, G.Vamanacharya (Partner) Annexure B Reconciliation of claims with claimable expenditure vide Loan No.8601 IN (Amt in Rs.) Claims made Period of claims Expenditure Claimed Amount Claim No. 1 24/05/16 to 31/03/17 1,51,98,272 30,39,654 Claim No. Claim No. Total amount claimed (A) 1,51,98,272 30,39,654 Amount claimable as per 1,43,95,087 28,79,017 annexure A (B) Difference (A-B) 8,03,185 1,60,637 (Ineligible) Date: 27/12/2017 For G V Acharya & Co Place: Bangalore Chartered Accountants, G.Vamanacharya (Partner) CDcv ,""