DEPARTMENT OF PUBLIC ACCOUNTS MINISTRY OF FINANCE DMD/IDF/TF010597/2013/ I S Date ( Suraj Pradhan Resource Management Person The World Bank Bhutan Office Thimphu. Sub: Fonvarding of Audit Report. Sir, Please find enclosed herewith two copies of Audit Report on the Accounts and Operation of the World Bank grant no. TFO 10597 "Preparation Sustainable Financing for Biodiversity Conservation and Natural Resources Management" Implemented by the Bhutan Trust Fund for Environmental Conservation, Thimphu for the period from 01/07/2012 to 30/06/2013 onward subm-ission to World Bank. Kindly acknowledge the receipt. Yo sincerely, (Lha L tay) Dy. Chief rograrm Officer THIMPHU: BHUTAN, Post Box No. 270, Phone: PABX 322604 /322641.1322951, Fax: 334994  Reporting en Economy, Efficiency B Effectiveness in the use of Public Resources AIN: ;-7 9j AUDIT REPORT ON THE ACCOUNTS AND OPERATIONS OF THE WORLD BANK GRANT NO. TF010597 "GRANT FOR PREPARATION SUSTAINABLE FINANCING FOR BIODIVERSITY CONSERVATION AND NATURAL RESOURCE MANAGEMENT", IMPLEMENTED BY THE BHUTAN TRUST FUND FOR ENVIRONMENTAL CONSERVATION, THIMPHU PERIOD: 01.07.2012 TO 30.06.2013 December 2013 -Ever individual musistrive to be priled And individuals in lositions ofr0sponSibility musyleven strive h.a rderm " -His 1Majevty the King Jigmie khesar- .Yamgre'l Wcgc huck P.O. Box: 191, Kawajangsa, Thimphu: Bhutan. Tel- 3221111/322833, Fax: 323491 Website: www,i.bhtanzaudit.gov.bt Email: infoQfabhutanaudit.jov%bt I ;ROYAL AUDIT AUTHORITY RA Bhutan Integrity Yfouse Reporting en Economy, Efficiency B Effectiveness in the use of Public Resources RAA/A D/BTFEC/TF-01/2013/3 %J Date: JYl2/2013 T Director General epartment of Public Accounts Ministry of Finance Thimphu Subject: Audit Report on the Accounts and Operations of the World Bank funded project "Grant for preparation Sustainable Financing for Biodiversity Conservation and Natural Resource Management" implemented by Bhutan Trust Fund for Environment Conservation, Thimphu Sir, Enclosed herewith please find three sets of the audited Financial Statements and auditors' report thereon in respect of the World Bank funded project "Grant for preparation Sustainable Financing for Biodiversity Conservation and Natural Resource Management" implemented by the Bhutan Trust Fund for Environmental Conservation (BTFEC), for the financial year ended 30.06.2013. The audit was conducted as required under the Audit Act of Bhutan 2006. Two sets of the audited financial statements and auditors' report may please be transmitted to the World Bank Headquarters, Washington D.C. Auditors' Report on the Financial Statements As may be noted from the Auditor's Report, the Project had generally maintained proper books of accounts, and the financial statements were in agreement with the accounting records. Accordingly, the RAA has issued unmodified (clean) report. The RAA acknowledges the kind co-operation and assistance extended to the audit team by the officials of the project, Bhutan Trust Fund for Environmental Conservation, Thimphu which facilitated the timely completion of the audit. Yours sincerely, Officiating Assistant Auditor General Every individual must strive to be principled. And individuals in positions of responsibility must even strive harder." -His MIajest the King Jigme Khesar Namgvel Wakgchuck P.O. Box: 191, Kawajangsa, Thimphu: Bhutan. Tel: 322111 /322833, Fax: 323491 Website: %ww.hutanatdit.aovbt, Email: info(.abhutanaudit.gov.bt and uchewangi-bhutanaudit.gov.bt Copy to: 1. The Secretary, Ministry of Finance, Tashichho Dzong, Thimphu 2. The Project Manager, "Grant for preparation Sustainable Financing for Biodiversity Conservation and Natural Resource Management", BTFEC, Thimphu 3. The Acting Chief Financial Officer, Bhutan Trust Fund for Environmental Conservation 4. The Assistant Auditor General, PP & AARD, RAA, Thimphu 5. The Assistant Auditor General, Follow-up and Clearance Division, RAA, Thimphu 6. Office Copy, Good Governance Division, RAA, Thimphu 7. Guard file TITLE SHEET I. Title Audit Report on the accounts and operations of World Bank funded project "Grant for preparation Sustainable Financing for Biodiversity Conservation and Natural Resource Management" 2. Implementing Agency : Bhutan Trust Fund for Environmental Conservation, Thimphu 3. Project Manager Dr. Pema Choephyel, Director (CID No. 10709002672) 4. Drawing & Disbursement Officer : Dr. Pema Choephyel, Director (CID No. 10709002672) 5. Finance Personnel : (i) Singye Dorji, Chief Financial Officer (CID No. 11601002881) (ii) Yeshey Peldon, Asstt. Finance Officer (CID No. 11001001397) 6. Period of Audit : Period: 01.07.2012 to 30.06.2013 7. Schedule of Audit : Planned: 02.10.2013 to 06.10.2013 Field: 07.10.2013 to 24.10.2013 8. Intimation letter No : RAA/GGD (BTFEC) 2013/2547 dated 07.10.2013 9. Composition of Audit Team : 1. Dorji Wangmo, Audit Officer EID No. 200801146, Team Leader 2. Kelzang Namgyal, Auditor EID No. 200807031, Team member 10. Focal Person : Dorji Wangmo 11. Supervising Officer : Kelzang Namgyel, Assistant Auditor General (EID No.9610068) 12. Date of Audit Exit Conference : 18.11.2013 -22J2 Disclaimer Note The coverage of this report is based on the facts, figures and information made available and accessible to the team by the management of the project, Bhutan Trust Fund for Environmental Conservation. The opinion of the auditors shall only confine to the period covered and information made available till the time of issue of this report. This is also to certify that the auditors during the audit had neither yielded to any pressure, nor dispensed any favour or resorted to any unethical means that would be considered as violation of the Royal Audit Authority's Oath of Good Conduct, Ethics and Secrecy. TABLE OF CONTENT 1. AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF THE WORLD BANK FUNDED PROJECT "GRANT FOR PREPARATION SUSTAINABLE FINANCING FOR BIODIVERSITY CONSERVATION AND NATURAL RESOURCE MANAGEMENT", THIMPHU FOR THE PERIOD 1st JULY 2012 TO 3Oth JUNE 2013.................... ... ................ 3 2. Appendices: A. Profile B. Objectives ofAuditing C. Methods adoptedfor auditing F Acronyms BTFEC Bhutan Trust Fund for Environmental Conservation EID No Employee Identity Number FUCD Follow-up and Clearance Division GGD General Governance Division MoF Ministry of Finance PP & AARD Policy Planning & Annual Audit Report Division RAA Royal Audit Authority RGoB Royal Government of Bhutan AUDITORS' REPORT ON THE FINANCIAL STATEMENTS 2 [ AUDITORS' REPORT ON THE FINANCIAL STATEMENTS OF THE WORLD BANK FUNDED PROJECT "GRANT FOR PREPARATION SUSTAINABLE FINANCING FOR BIODIVERSITY CONSERVATION AND NATURAL RESOURCE MANAGEMENT", IMPLEMENTED BY THE BHUTAN TRUST FUND FOR ENVIRONMENTAL CONSERVATION, THIMPHU FOR THE FISCAL YEAR ENDED 30TH JUNE 2013 Introductory Paragraph The Royal Audit Authority (RAA) has audited the accompanying financial statements, [Statement of Sources and Uses of Fund] and the accompanying notes to the financial statements, set out on page [1] to page [5] of the World Bank Project "Grant for preparation Sustainable Financing for Biodiversity Conservation and Natural Resource Management", financed under World Bank Grant No. TF010597as of June 30, 2013 for the year then ended. The RAA's responsibility is to express an opinion on these financial statements based on its audit. Scope Paragraph The RAA conducted the audit in accordance with the RAA Auditing Standards, Generally Accepted Auditing Standards and World Bank Guidelines. Those Standards and/or World Bank Guidelines require that the RAA plan and perform audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. The RAA believes that the audit provides a reasonable basis for its opinion. Opinion Paragraph In RAA's opinion, the Project financial statements present fairly in all material respects the Sources and Uses of Funds of "Grant for preparation Sustainable Financing for Biodiversity Conservation and Natural Resource Management" Project for the year ended June 30, 2013 in accordance with the Public Finance Act of Bhutan 2007 and the Financial Rules and Regulations July 2001. The RAA also reports that: (a) The funds provided under the Grant No. TF010597-BHU have been utilized for the purposes for which they were provided; (b) The Financial Management Reports submitted could be fairly relied upon to support the applications for withdrawals in accordance with the requirements specified in the Grant Agreement; 3 (c) With respect to Statement of Expenditure (SOEs) adequate supporting documents were maintained to support claims for reimbursements of expenditures incurred; and (d) All expenditures reported and claimed are eligible for financing under the Grant Agreement No. TF010597-BHU. Auditor Concurred and noted: A Gia /tdnrGD Dated:4 ACO 4 / (1巨 l � ( � � � � � � � � � � � � � � � � r � � � г � � � � l 견！· I l � � � � � � � � � � � � � � � � � � � � � �. � �: и_ � � w t-I c:) -I c) Ln Ln (.0 UD 0 ýD cq clý <7ý CD 0) 0) 0ý CY? q aý (D CD CD Lr) Ln ýt q* c:) :t OD Z ,i Ln o) CD kD 1,0 CD rli zý ýr- -j r q) q) aj 0 +1 CL c 9: c FU C N m M :3 o m (D CL Qj 4ý 0 ej 'M W m (u +ý ýL > b,0 w > m > (v r_il m :3 ØJ -c U Cr M 4 1 u m C 4-1 Page 1 Chief Finance 6Offit Bbititan Trust Fund for goa rs udtl nv itw n Ttan Tn rustoF Enuv'ronmentai Conser'vation ~j~ffC a oten I k - vl ýl ýl ý l- - ý 1- ý, - - ý 1 -- ý - 22-Mar-2013 000CH0013081024G CHEaUE DEPOSIT CHQ IS$ BY SINGYE 5,829.0C 433,9U]1C DORJI TO BTFEC SINKING FUND 01-My-2013 000CWA0131210104 CHEQUE WITHDRAWAL PAID 2THINLEY 163,350.oC ,C 270,631.1C WANGDI ID 111602000296 03-May-2013 0001445131230008 CHEQUE CLEARED 22,275.0c 0.0[ 248,356.IC 09-May-2013 000CHOD131290047 CHEDUE DEPOSIT CHQ ISS TO HOTEL 19,632.0C 0.0C 228,724.1C MIGMAR BY BTFEC- DONAR PROJECT 24-May-2013 0001445131440004 CHEQUE CLEARED BOB CHO o.DC 3,344A75,0C 3,573,199AC CLR.B#59546 - 27-May-2013 000TOFA131470027 TELEGRAPHIC TRANSFER TTTOBARRYA 711,235.04 0.0C 2,861,964.0E SPERGEL BY BTFEC -DONAR PROJECT FOR 512723.97@55.77,CH ARGE:NU1619.23 DT 28-May-2013 ODCHQD131480062 CHEQUE DEPOSIT CHQ ISS TO M/S. 425.050.2C 0.C 2,436,913E BHUTANTRUST FUND BY BTFEC. OONAR PROJECT 15-Jun-2013 D05CHCD131660007 CHEOUE DEPOSIT 4.313.0C .oe 2,432,600,8E 15-Jon-2013 000TOWA131660004 TELEGRAPHIC TRANSFER TT FOR 358,737..71 0.C2,073,863.1E ADMINISTRATIVE STAFF COLLEGE BY BTFEC-DONAR PRDJErT 27-Jun-2013 0001444131780003 CHEQUE CLEARED BOB-P-27/062013 271.652.15 o.aC 1,802.210,9 REGULAR 28-Jun.2013 000CWA0131790211 CHEOUE WITHDRAWAL 1NR PAIO TO 50.950.oC 0 .C 1,751.203.66 PASANG,ID 10707001351{DSA OP MR SINGYE JORJI & SONAM WANGMO) AS PER GNSL OFFT 61 AS PER LT#R&Af4 -12-13/555 i 7DT..276/2013 28-Jun-2013 000CWA0131790223 CHEQUEWITHDRAWAL INR PAID TO 50,950.OC 0OC 1.703,310 9E PASANG,ID 10707001351 (DSA OF MR SINGYE DORJJ & SONAM WANGMO) AS PER BNBL OFFT 61 AS PER LT#R&A/4 -12-131555 DTD.27/2013 Chie FinnceOffic r Bhutan Trust Fund for .Environmenta Conservation C 2n Trust Fund for E vironmentl C n a W/ r BHUTAN NATIONAL BANK - THIMPHU POST 00X NO 439 Ml8022761,32 FAX N023601 Account Statement Customer Name BTFEC-DONAR Account Number 0000066928016 Customner tD 000017912 Start Date 01-Jan-2013 End Date 30-Jun-2013 From Amount To Amount 05,-an-2013 000CHQD130050009 CHEQUE DEPOSIT CHO $ TO OTEL 9,864.0C 0.0c 765,170.31 M IGMAR BY BTFEC SINKING FUND 11-Jan-2013 0001444130110009 CHEQUE CLEARED 7,880.0 0.0( 757,290.3C 25-Jan-2013 001CHOD130250010 CHEOUE DEPOSIT CHQ ISSUEO TO THE 3.359.2C 0.ec 703,931,IC ORCHID HOTEL BY BTFEC SINKNG FUND 29-Jan-2013 000CWA0130290036 CHEQUÉ ITHORAWAL pad to passangalc# 1,200.0C 0 702,731.1 500000185720 29-an-2013 000CWA0130290068 CHEQUEWTHDRAWAL CASH PAID TO 246,979.OC 0.0c 455,752.1K RINZMN 30-Jan-2013 0001444130300004 CHEQUE CLEARED 27,0480 0,0c 428.704.1C 01-Feb-2013 0001444130320005 CH8QUE CLEARED 552.DC 0.0c 428,152.1C Chief Finanice Offi r Bhutan Trust Fund for Evir u tal Conservation Environmen Bhutan Trust Fund tr Environmental Consero'util Monday, 21 October 2013 13:44:38 Bhutan Time Subject: Re: GEF grant to Bhutan BTFEC Project -- Submission of IUFR 1 to 3 for quarter ending March and June 2013 Date: Tuesday, 15 October 2013 22:01:59 Bhutan Time From: Mdado@worldbank.org To: Singye Dorji CC: jshine@worldbank.org, Savinay Gover, Spilapitiya@worldbank.org Dear Singye, We reviewed the IUFRs for the quarters ending March 31, 2013 and June 30, 2013 that you sent to the Bank and we find them acceptable. Please note that since the entire Grant amount has been disbursed, the attached IUFRs will be used to document expenditures against the advances already provided. The next IUFR for the quarter ending September 30, 2013 should be submitted by November 14, 2013. Based on our review, we are pleased to convey our no-objection for the following amounts: L[ BTN Amount to be documented against March IUFR 280,142.00 Amount to be documented against June IUFR 1,847,065.95 When the claims are submitted to the Loan Department in Chennai, please be sure to enclose e ached IUFRs and the DA Bank statements. Thank you very much. Officer Bhutan Trust Fund for Regards, rust Fund for En'vironmental Conservation Marinela iW Environmental Conservation Singye Dorji --1O/15/2013 07:14:06 AM---Dear Marinela, With incorporation of the comments provided by Mr. Joseph Shine, please find From Singye Dorji To Cc "Spilapitiya@worldbank.org" , "jshine@woridbank-org", Savinay Gover Dat,, 10/15/201307:14AM Subject Re: GEF grant to Bhutan BTFEC Project -- Submission of IUFR 1 to 3 for quarter ending March and June 2013 Dear Marinela, With incorporation of the comments provided by Mr. Joseph Shine, please find attached IUFR 1-3 for quarter ending March and June 2013. In the meantime, as discussed with Mr. Shine, we would seek permission to incur expenses beyond actual contract period and the justifications are as stated below: 1. National Consultant, Mr. Thinley Wangdi, Contract amount Nu.1,020,900: Although contract validity expired on 20 August 2012, payment of Nu. 801,139 was paid from the BTFEC's normal account as there were some delays in receiving money from the World Bank. The amount was later reimbursed during the quarter of Jan-Mar'13 and charged to the PPG account accordingly. Furthermore, the consultant's report needed some inputs from the World Bank it took sometime for the consultant to work on comments and suggestion provided by the Bank, thereby delaying the final payment. As such final payment was made during the quarter of Apr-Jun'13. In this regard, we would like to request for extension of contract period till end of June 2013. Page 1 of 2 2. International Consultant, Dr. Barry Spergal, Contract Amount $27,030: Likewise, Dr. Barry's contract period expired on 30 April 2013 and a draft bylaw was submitted within the contract period but the management board of BTFEC could not meet for review until May 2013. Second instalment made paid on acceptance of the draft by the board. However, the board decided that the draft bylaw be reviewed by national legal expert, which was carried out in June 2013. Since no major changes were brought by the legal expert, the final payment was made during the month of July 2013. Therefore. we would like to request for extension of contract period till end of quarter ending 30 September 2013. In addition to above mentioned two extensions, we would like to seek your clearance on the attached IUFR 1-3 for the quarter ending March and June 2013 as we have been informed that the Designated Account has been inactive for past six months. With best regards, Singye (See attached file: IUFR Jan-Marl3.xisx)(See attached file: 1UFR_April-June2013.xlsx) (See attached file: Special Account Jan- June 2013.pdf)(See attached file: designated account Jon-June 2013.pdf) Page 2 of 2 ANNEXES 7 s me.-«e eewawa G--- -- -'s e Appendix A. Profile 1. PROJECT DESCRIPTION Project Title Grant for preparation Sustainable Financing for Biodiversity Conservation and Natural Resource Management Project Identification # P127490 Project Amount $130,000 Project Duration 21 March 2012 to 20 March 2013 (Extended til/120 March 2014) Grant Signing Date 21 March 2012 Project Manager . Dr. Pema Choephyel, Director, BTFEC. 2. OBJECTIVE The objective of the Grant is to assist the Bhutan Trust Fund for Environmental Conservation (BTFEC) in the preparation of the sustainable Financing for Biodiversity conservation and Natural Resources Management Project in Bhutan with final objective of improving the operation effectiveness and sustainability of the BTPEC. 3. ACTIVITIES AND BUDGET The activities under the grant includes: Proposed Project Preparation Activities Expenditure Type ant 1. Establishment of interdisciplinary working group; preparation of detailed TORs for project design, identification Travel! B v of roles of responsibilities of local entities, and provision of Workshopsth,000 project preparation oversight and guidance 2. Assessment of existing grant making, approval and monitoring system, governance, and financial management of Consultancy BTFEC and design of activities aimed at improving the Services! 75,000 operational effectiveness of BTFEC, grant oversight and Workshops monitoring 3. Design of Social and environmental framework, risk Consultancy assessment, social assessment, etc. Services! 18,750 Workshops Stakeholder consultation on project design opportunities for Consultancy improved participation in protected area management,500 ecotourism, land management, rangeland management, Serics!1,50 participatory monitoring and evaluation, etc.Workshops 5, Baseline studies of key natural resource threats and status Consultancy Services/ 18,750 Workshops Total Project Preparatory Financing 1f3o0,r0C00 I5 Appendix B. Objectives of Auditing The objective of the audit is to ascertain and report: i. To determine that the financial statements correctly reflect the financial operations in accordance with the financial rules and budgetary norms. ii. Whether the project has complied with laws, policies, rules and regulations of the government and the Operational Manual of the BTFEC. iii. To determine whether the project has been managing and utilizing its financial resources economically and efficiently. iv. To determine whether the desired results or benefits established by the project are being achieved; and Appendix C. Audit Methodology: (i) Reviewing internal controls in place in the system; (ii) Inspection and examination of the records, documents and statements; (iii) Checking the compliance of applicable rules and regulations that are in force; (iv) Seeking relevant information from knowledgeable person inside and outside the organization; (v) Checking and confirming the arithmetical accuracy of the accounting records; (vi) Computation and analysis of relevant data; and (vii) Conducting the physical verification of assets and stores. 6 r r_p-sa fla pan p-n *e-s * , Pa . ~ -~-, k~+<-