Financial Attest Audit Report onthe accounts of Project Digital Jobs in Khyber Pakhtunkhwa Financed by World Bank, Grant No-TF-0A7171 Government of Khyber Pakhtunkhwa Information Technology Board For the Financial Year 2018-19 Auditor General of Pakistan Islamabad Scanned with CamScanner (1 い TABLE OF c0NTENTS Abbrcviations and Acrollyms ..,.................,,,..................,,...．・・・・，・・・・・・・・・・・・・・・・・・・・・・・・・．.....................,.. 1 Preface .,．…，. . . . .，。．,,.,,,. . . . . . . . . .. . . . . . . .,. . . . . . . . . . . . .,.,. . . . .,. . . . . . .. . . . . . . . . . . . . . . . ．…，・・・・・・・・・・・・・・．・・・・． . . . . . . . . . . . . . . . . . . . . . . . . . . 2 PART-1...............,......,..,...................................................................,..．・．.．・・．.．・．..........................3 Project Overview ......,...................,,............,,...................,..,..．・・・・・・・，・・・・・・，，・・・・・・・・・・・……→・・・・・・・・・・・……4 Auditor&s Report ..... ................... ... .. ...... .. ... ..............&. ... ............. ...... ... ．・・・・・・・・・，,，・，・・・・・・・・・・・・・・・・・・，……5 Financial Statements ................,.,...................,...... ..,,.... .. .,.... .,. .. ...,.. ... ... .,...．・・・・・・・・・，・・・・・・・・・・・・・，・……フ PART-11......．・．..................................................................................,..........................,.,..........13 Covering Letter to the Managemcnt ...,.,..,............,............,.................．・・．・，・・・・・・・・・・・・・・・・・・・・・・・・・……14 Executive summary . . . . .,. . . . .. . . .,. .,. .. . . . . . . ... . . . . . . . . .. ... .. .. . . . . . . . . . .. . . . . . . .,,. . . . . . .,. . . . . . . .,，・・・・・・・・・・■・・・・・・・・・，・，・・…15 Management Letter .. .....,............,...,..,...............,............ .. ....................... .. ... .，・・・・・・・・・・・・・・・・，・・・・……16 Introduction ............,..........,,...........,....................................,,.....,....,.......................................17 Audit objectives ............... ..................,.,,,.,....................................... ....,. .,,.．・・．．・・・・・・・・・・・・，・・，・・・……17 Audit scope and Methodology........,..............................．・．..．・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・……17 4. AUDIT FINDINGS AND RECOMM[ENDATIONS . .. .. . . . . . . . . . . .,. .. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 1 8 4.1 Organization and Management.......,..........,.......................,.,..........,,.,...................,........,. 18 4.2 Financial Management,.............,，・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・，・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・……19 4.3 construction and works,..,.,.............,..........．・・．....．・．・・・・・・，・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・，・・，・・・．，・・…20 4.4 AssetManagement.....．・・・・・・・，・・・・・・・・・，・，，・・・・・・・・・・・・・・・・・・・・・・，，・・，・・，・・・・・・・・・，・・・・・・・・・・・，・・・，，・・・・・・，・・・・・・・・・・，，・…20 ン4.5 Monitoring and Evaluation．…，，・・・・・・・・・・・・・・・・・・・・・・・．.．・・・・・・・・・・・・・・・，・・・・・・．........................................20 4.6 Compliance with grantノfoan Covenants．・・・・・・・・・・・・・・・・・・・・・・．............................,...,....,.,...........20 4.7 Environment.,......,............．・・・・・，,，・・・・・・・・・・・・・・・，・・，・・・，，・・・・・・，，・・・・・・・・・・，・・・・・・・・・・，・・・・・・，・・・・・・，・・・・・・・・・・・・・……20 】4.8 sustainability・・・・・・・・・・・，，・・・・・・・，・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・昌・・・・・・・・・・，・，・，，・・・・，・・・・・・・・・・・・，・・・・・・，・・・・・・・・・・……20 !5. overall Assessment .,..,.............. ........,.. ..... ......... ... .....,.. ....,.,.. ..... .,....... ..,. ... .. ..,.. .,..,. . .,. .. . 20 ―。，Conc,usi。n .....,.. ..... ...,.. ... .,.... .. ... ......... .. ..... .... .. ... ...... ..,..... .,,... ..,..,. .. ...,..... .. ... ... ...... ...... ..,2、 -AcKNOwLEDGEMENT&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&. .&&&&.&&&.&&&.&&&&&&&&&&.&&&&_&&&&&.&&&&&&&&-&22 SCanned With CsmSC8nner Abbreviations and Acronyms ADP Annual Development Program BPO Business Process outsourcing DAC Department,] Accounts Committee ECNEC Executive Committee of National Economic Council ESNMP Environmental and Social Management Plan GFR General Financial Rules GIC Global In-house Centers GIS Gender Inclusive Start UPS GoKP Government of Khyber Pakhtunkhwa GoP Government of Pakistan I NTOSAI International Organization of Supreme Audit Institutions ISSAI International Standards of Supreme Audit Institution IUFR Interim Unaudited Financial Reports KPDYS Khyber Pakhtunkhwa Digital Youth Summit KPITB; Khyber Pakhtunkhwa Information Technology Board MDTF Multi Donors Trust Fund P&D, Planning and Development PC-1 Planning Commission Proforma- I PITJ Project Implementation Unit PSDP Public Sector Development Program TA/DA Travelling Allowance / Daily Allowance TEVTA Technical Education and Vocational Training Authority YEP Youth Employment Program Scanned with CarnScanner PREFACE Tle .\uditor-General conducts audits subject to Article 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 Terns and Conditions of Service) Ordinance, 2001. The Financial Attest Audit of the "Digital Jobs in Khyber Pakhturnkhwa" funded by the World Bank for the Financial Year 2018-19 was carried out accordingly. The Directorate General Audit conducted audit of the "Digital Jobs in Khvber Pakhtunkhwa" funded by the World Bank for the Financial Year 2018-19 in August, 2019 with a view to reporting significant findings to stakeholders. Audit examined the economy, efficiency, and effectiveness aspects of the project. In addition, audit also assessed, on a test check basis, whether the management complied with the applicable laws, rules, and regulations in managing the project. The Audit Report indicates specific actions thaL if taken, will help the management realize the objectives of the project. The report was finalized in light of discussion with the Project Management. The PAO through Management Letter was also requested to convene DAC meeting, but DAC was not convened till finalization of this report. The Report consists of two parts. Part-I contains Auditor's Report (Audit Opinion) and Financial Statements. Part-Il contains Executive Summary, Management Letter and Audit Findings. The Report has been prepared for submission to the World Bank in terms of its grant agreement with the Government of Islamic Republic of Pakistan. Dated:/./ 12 /2019 (Asmatullah Shah) Peshawar Director General Audit Khvber Pakhtunkhwa Scanned with CamScanner PART-1 1. PROJECT OVERVIEW 2. AUDITOR'S REPORT 3. FINANCIAL STATEMENTS 3 Scanned with CamScanner PROJECT OVERVIEW N111c of the Project : Digital Jobs in Khyber Pakhtinkhwa Sponsoring Authority : World flank Exsecuting Authority Khyber Pnkhtunkhwa Information Technology Board Grant No : TF0A7171 PC-I Cost : USD 2.00 Million (KPR 280.00 Million) Date of Commencement 7' October 2018 Actual Date of Commencement ; 171' October 2018 Date of Completionl (as per PC-I) 30'11 June, 2020 Date of Administrative Approval 17"' October 2018 Date of Approval by PDWP : 2nd August 2018 Grant released during 2018-19 : USD 7476.00 (Rs.1.109 million) Expenditure during 2018-19 USD 28118 (Rs.4.355 million) Grant Released Status in 2018-19 Direct Payment (salaries) Rs.1.109 Million Outstanding Payment : Rs.3.246 Million Total : Rs.4.355 Million Progressive Expenditure up-to June 2019 Direct Payment (salaries) Rs.1.109 Million Outstanding Payment: Rs.3.246 Million Total : Rs.4.355 Million 4 Scanned with CamScanner SOFFICE OF "'l1E DIRECTOR (;ENERAL AUDIf DGA = 9211306 KHYBER PAKH1TUNKIIWA 1RX: = 211250-5 PES1IAWAR AUDITOR'S REPORT (AUDIT OPINION) Auditor's Report on the Financial Statements We have audited the accompanying Financial Statements of the Project "Digital Jobs in Khyber Pakhtunkhwa Grant No. TFOA7171, financed by the World Bank that comprises of Statement of Receipts and Payments, Statement of Comparison of Budget and Actual together with the notes forming part thereof for the year ended 30Lh June, 2019. Management Responsibility It is the responsibility of Project Management to establish and maintain a system of internal controls, and prepare and present the Statements of 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about 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, 2019 in accordance with Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standard. 5 Scanned with CamScanner b) The expenditure of Rs. 4.355 million has been incurred in accordance with the requirements of legal agreements. Dated: Ic/ 12/2019 (Asmatullah Shah) Peshawar Director General Audit Khyber Pakhtunkhwa 6 Scanned with CamScanner FINANCIAL STATEMENTS PROJECT "DIGITAL JOBS IN KHYBER PAKIHTUNKIHWA" ASSISTED BY WORLD BANK FOR THE YEAR ENDED 30"' JUNE, 2019 Page No Statement of Cash Receipt and Payments g Statements of Comparison of Budget and Actual Amounts 9 Notes to the Financial Statement 10-12 7 Scanned with CamScanner IC.ITP;. JEFS N Kl/ ,tcL, PAKHTU:-hWA / T CA-11 RýCWPiT /.D PA UITS rOJEE IN VILLION s14.J y Payn4nt Contrnlld Ir) ProjTcc by Pr.4Z Ec,a'pjk41arc,3i 1.109 ¶_ _____ 1.109 fr02mrL1.:igfALppsth rerih Outsoujrcna: A:-ennTent (Payen'-matin Lzopartmnt) ,-- 1.669 'nocint- -:W.r. 1 ! -- 1.2 _____b PlUtai 01f ar;e s(D:re. t '.a'-at) 0.1 U 19A1--- IOn:emeUI ore--.ting r.u 0. 0.276 -- Sub Total 0.277 1.109 To1 py 3.245 1.109 ifcrme fuDeasE) in C.sI (3.246) Cah at Begirning of Year - Cash at End ot Year 9 (3.245) he acorpayirg notes frn m integral part of these fnrranial staements and are In be read .herw3th. Projecc Dirmr Co:·.u r igned Diital Jcbs in MP Audi Oizcr Khyber Pakhtinkhwa Intorriation Te -nooy i Offie fthe D.G Audi (KPTB) PeEhawar, Khyber Pakhtunkhwa Peshawar, Khyber Pakhtuiiwa Scanned with CamScanner DIGITAL JOBS IN KHYBER PAKHTUNKHVJA STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS FOR THE YEAR ENDED JUNE 30, 2019 Rupees In Million Notes 2018-19 2017.18 tedAmountActaAount Budgeted Amount Actual Amont Extemal Assistance TotAl-Recelpts 98.288 1.109 Cash Outflows: Component -1 - Digital Jobs through Outsourcing 6 88.178 1.689 Component -2 - Women Empowerment and Inclusion in the Digital Economy 7 5.190 1.280 Direct Payment I 5.11.109 1.109 Component -3 - Pmgram Management 8.2 3.811 0.277 - Sub Total 9 93.288 4.355 Total Payments93.28 4.355 Cash at End of Year (Net Cash Pow) 9 (3.245) A Counter Signed Project Director Audit Officer Khyber Pakhtunkhwa Information Office of the D.G Audit Technology Board (KPITB) Peshawar, Khyber Pakhtunkhwa Peshawar, Khyber Pakhtunkhwa Scanned with CamScanner ITAL JOBS IN KHYBER PAKHTUNKHWA NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30,2019 fity Financial Statements are lot Digital Jobs in Khyber Pakhtunkihwa Project, The linancial statements encompasses the reportingr entity ned In the Grant Agreement between the Islamic Republic of Pakistan and the World Bank, The Grant Agreement was signed on October 17, 1 initially for US$ 2,0 million . The project became effective from October 17, 2018 with the closing date of June 30, 2020. Project Development Objective is to: otrain women and underserved youth In digital skills through the Youth Employment Program To support women entrepreneurs by expanding the Durshal - Community Innovation Labs network o capitalize on the opportunities available in the outsourcing Industry and facilitate creation of digital jobs through the Business Process sourcing (BPO) industry e project is implemented through Khyber Pakhtunkhwa Information Technology Board (KPITB) nancing e inancing is made in the form of Credit based on Standard World Bank terms. The Financing Agreement No is Credit TFDA7171. tification by Project Management on Application of Funds q certified that funds have been appliedlexpenditure incurred for the purposes intended in the financing agreement. ounting Convention and Statement of Compliance ese Financial Statements have been prepared in accordance with Cash Basis International Public Sector Accounting Standards (IPSAS. nancial Reporting under the Cash Basis of Accounting. e accounting policies have been applied consistently throughout the period. Significant Accounting Policies Foreign Currency Transaction Cash receipts and payments arising from transactions in US $ are recorded in Pak Rupees by applying the US S amount the exchange rate between the Pak Rupee and US $ at the date of receipts and payments. Exchange differences arising at the settlement of these transactions are recognized in the Statement of Receipts and Payments Reporting Currency All amounts in the financial statements are in Pak Rupees. Revenue Recognition Revenue is recognized on the date of receipt of money by bank or clearance of cheque. Revenue is recognized on gross basis and any related costs are recorded separately Recognition of Expenditure Expenditure is recognized on the date when payment is made or cheque is issued. Financial year to which the payments pertain is determined by the date on which a cheque or payment advice is issued. Employee Terminal Benefits Service benefits of goverment deputations employees are accounted for in their respective departments while no service terminal benefits are Paid to the contractu employees. Project Director Counter Signed Digital Jobs in KP Audit Officer Khyber Pakhtunkhwa Information Technology Board Office of the D.G Audit (KPITB) Peshawar, Khyber Pakhtunkhwa Peshawar, Khyber Pakhtunkhwa Scanned with CamScanner 7,476.00 1,109,484 * M aler Sig the agreement as per the Disbursement Letter from the World Bank, External Assistance in the form of Advance payent to Desijnated Project Accoun; ,not proded However PKR 1.109 million were received through Direct Payment Method on Account of PIU Salaries from the donor which were dlrectty transferred to re Selyees personal bank accounts. For other expenditure Khyber Pakhtunkhwa information Technoloy Board used its own funds which were PKR 3 245 miion cr eresable basis. Te as been no instance of non compliance with the terms and conditions of the financing agreement between the World Bank and GOP which have resulted in cancelation O n graxt e n External Assistance Not Applicable Unrxawn Extemnal Assistance Not Applicable Aon nPkRpa U Amount in Pak Rupees Advertisement (Payment to Informilon Department) 2018-19 207-18 Paid to Information Department for the Advertisement of Durshal PKR.549,792 and PKR.75,490 MDTF P Adverisements * 6.1 625,282 Infonation Department for the Advertisement 6.2 66,600 paid to Information Department for the Advertisement 6.3 405,489 t to Directorate of Information for Durshal Advertisement 6.4 451,89 Payrnen 64517 2018-19 2017-18 incubates Stipeind. 7.0 1,280,000 incubates Stipend 1,280,000 2018-19 2017-18 PiU Stiff Salaries Canmunication Manager Salary 1 470,774 MonitoriN and Evaluation Officer Salary 8.1.2 307,742 Fonance and Accounts Officer Salary 8.1.3 1,109,484 - 2018-19 2017-18 Incremental operating cost 5,000 - Hon.paid to Committee members for shortlisting 5,000 Hon. paid to Committee members for shortlisting 5,000 - Hon. paid to Committee members for shortfisting 34,350- Payment made in respect of Meeting held for gender inclusive space in Durshal Peshawar 81,325 Payment for Shields and Panaflex Banners for Advertisements 5,000 Honorarium paid to Committee members for Interview of Communications Manager 5,000 Honorarium paid to Committee members for Interview of Communications Manager 5,000 Honorarium paid to Committee members for the Interview of Monitoring & Evaluaton Officer 10,000 Honoraium paid to Committee members for the Interview of Fin & Accounts officer 4,190 Adjustments of adv issued for IT Board Office Pesh 5,000 Honorarium paid to Committee Members for the interview of Monitoring & Evaluaflon Officer 900 Adjusments of adv issued for Ope Exp Pes1t Office 10,840 Reimbursement made to Umar Waqas Khattak for BPO 7,349 Adjustments of advance issued to IT Pesh Office 9,995 Renil carpet for one day for BPO Ready Spaces (Opening Ceremony) 5,280 TADA paid to Saad Javed for official visit 48,500 Vdeography of Different Event for BPO 11,680 Pa[d or official visits 1,000 Tax on Salades 11,680 Paid for Official Visit 2,960 Adjisnents of adv issued to IT Board Office Peshawar Scanned with CamScanner le Pay)ents riade by KPITTB i 5n f,unds paid from KPITB account to meet the expenditure of Dgtal Jnbs ;n kr 2017-1 0 Project Whi,ch is the outstanding liability of the project. 90 3.245,896 for ISsUe ratements have been authorized for Issue by the respective competent aluthorillas of rmse financ"I Io each cOmpoent on June 30, 2019 G,nera teo founded off to the nearest rupee. Fr ligures have been rearranged where necessary for the purpose of compedson, Counter Signed Audit Officer 'Project Director Adi of fe Audit Digital Jobs in KP awar, Khber DG Aht Khyber Pakhtunkhwa Informatc p,shawar, Khyber Pakhtunkhwa Technology Board (KPITB) Peshawar. Khvber Pakhtunkhw2 Scanned with CamScanner PART-II COVERING LETTER TOTI IE MANAGEMENT EXECUTIVE SUMMARY MANAGEMENT LETTER 1. Introduction 2. Audit Objectives 3. Audit Scope and Methodology 4. AUDIT FINDINGS AND RECOMMENDATIONS 4.1 Organization and Management 4.2 Financial Management 4.3 Construction and Works 4.4 Asset Management 4.5 Monitoring and Evaluation 4.6 Compliance with Grant / Loan covenants 4.7 Environment 4.8 Sustainability 4.9 Overall Assessment 4.10 Relevance 4.10.1 Efficacy 4.10.2 Efficiency 4.10.3 Economy 4.10.4 Effectiveness 4.10.5 Compliance with rules 4.10.6 Performance Rating of the Project 4.10.7 Risk Rating of the Project 5. CONCLUSION ACKNOWLEDGEMENT 13 Scanned with CamScanner I)Il1lCTO'(R(CENVRIAI, AUDIT 4 ; W KIMVI1Ml( AIffU'NllWA Al"til1: (191-921 1.06 & FOX: 0J91-9222417 Dro)Ir*or Amill: 091-9222525 N Alild/Ad1n/llQ/Audi PIogr11m1/2019-20/94 Dated: 26 -08-2019 The Project Director, Digital Jobs in KPI1, PeshNwar. Subject: ANNUAL) AIBIT (W ACCOUNTS FOR THE FITNANCIAL YEAR 2018- 19 According to the Constitution of Islamic Republic of Pakistan Articles 168- 170 read with Ordinance 2001 Sections 8 to 12 of Auditor General of Pakistan, this office is mandated to conduct audit of your entity/ formation. The competent authority has been pleased to assign Annual Audit of accounts record of your office for the Financial Year 2018-19 to the Field Audit Team (FAT) comprising Mr. Iftikhar Aziz (AO) and Mutabar Shah (AAO) with effect from 26th August, 2019. A requisition of record for audit will be provided by the FAT before audit or upon arrival. The audit will cover all the financial matters pertaining to observance of Rules/ Regulations, cash management expenditure, receipts, stocks, budgetary controls and store accounts etc during the period. It is, therefore, requested to extend full co-operation to the visiting audit team in production of record/information as per requisition for audit with the direction to the staff concerned of your office to remain present during audit. Separate room for audit team, Typist, computer along with printer & stationery, photo copies facilities of required record, and necessary logistic support may be provided to the audit team. Your co-operation in the matter will highly be appreciated in the best interest of public and in discharge of the constitutional responsibility. (This issues with the approval of Director General Audit) Deputy Dire# it (FAP) 14 Scanned with CamScanner 너 - 1 l l - l - L 15 - SCanned With CamSCanner z75 tk- OFFICE OF THE DIRECTOR GENERAL AUDIT DGA = 9211306 Fax: 9222417 KHYBER PAKHTUNKHWA PBX: = 211250-54 PESHAWAR No.Audit/FAP/DAC/2018-19/935 Dated: 04/10/2019 To The Managing Director, KP IT Board, Peshawar. Subject: Management Letter on agounts of Pro ect Director "Digital Jobs in Khyber Pakhtunkhwa, fun for the Financial Year 2018-19 This office has recently completed audit of the Financial Statements of the Project "Digital Jobs in Khyber Pakhtunkhwa, funded by the World Bank" for the year ended 3 oth June 2019. While executing the audit, INTOSAI Auditing Standards as adopted by the Auditor General of Pakistan, were applied to express audit opinion on the Financial Statements of the Project. During audit, the focar, areas of internal controls and other operational spheres were examined and results thereon presented in the Appendix for consideration. The following observations were made: 0 Unjustified expenditure-Rs. 1.280 million 0 Slow pace of implementation of project activities The points contained in the appended report may please be looked into for remedial measures. Dated: 04/10/2019 Deputy Dire; or udit (FAP) Peshawar 16 Scanned with CarnScanner INTRODUICTION Thle Director (leneral Audit Khyber. Pnkhtlinkliwa "'Iducted audit of' tle l1rojco pni3l Th ect is being finnIIced by HS1isted by World The project actially commenced with effect from07111 October 2018 and will he C11leki in June 2020. The PC- cost. of the project is Rs,. 280.00 million. 2. A)DIT OBJECTIVES 2.1 Teic major objectives of tihe audit were lo:- Attest the Project's Financial Statements, Report on compliance with relevant laws, policies and procedures, iii. Report on the overall Mallagemient of the project, 3. AUDIT SCOPE AND METHODOLOGY 3.1 Audit Scope The audit scope included the examination of documents, record, accounts, etc. of the Project for the Financial Year 2018-19. 3.2 Audit Methodology Audit methodology was devised as per the folHowing terms of reference: a) Eligibility of expenditure incurred Expenditure was reviewed to check that funds were expended for authorized purposes only in line with the provisions of PC-I and Contract Agreement. c) Amount expended was incorporated in the Project Account supported by documents and records. Expenditure trail was reviewed and with the help of supporting vouchers traced to accounting record and the financial statements. d) Assessing effectiveness of monitoring and evaluation mechanism Project internal controls were assessed and test checked for effectiveness. e) Maintenance of books of accounts Audit examined the quality and completeness of books of accounts. 17 Scanned with CamScanner 4. AUDIT FINDINGS AND RECOMMENDATIONS 4.1 Organization and Management The program is being executed by the Government Khyber Pakhtunkhwa Information Technology Board. The World Bank agreed to provide the funds and the execution has been entrusted to the Khyber Pakhtunkhwa Information Technology Board. 4.1.1 Unjustified expenditure-Rs. 1.280 million According to the para-1 1 of the GFR (Vol-1), head of the Department is responsible for observance of all relevant financial rules and regulations both by his own office and by subordinate disbursing officers. In Digital Jobs in Khyber Pakhtunkhwa Project, during financial year 2018-19, it was observed that a sum of Rs. 1.280 million was paid to the incubates of the two GIS startups on the recommendation of manager, IM Durshal for the ongoing Durshal Program of the KPIT Board however, the expenditure was charged to the un-operational project under report. The audit termed the expenditure as unjustified on the following grounds. i. The said program (Durshal) is being funded by the KPITB for which an agreement was signed with the Institute of Management Sciences Hayattabad in July 2018, much prior to the commencement of the project and now the charging of expenditure to the Project "Digital Jobs in Khyber Pakhtunkhwa" is beyond understanding because the payment pertains to the ongoing program (Durshal) of the KPITB and not to the project Digital Jobs in KP. ii. The contract was executed with the KPIT Board as evident from the documentary evidences and not with the project Digital Jobs in Khyber Pakhtunkhwa, so the expenditure should also be borne by the relevant project instead of charging to the Project Digital Jobs in Khyber Pakhtunkhwa. The lapse occurred due to weak internal control. When pointed out in August 2019, it was stated by the management of the project that detailed reply would be furnished before DAC. Audit recommends that the charging of expenditure of Durshal Program from the funds of the Digital Jobs in KP needs justification. 18 Scanned with CamScanner 2 low pIce of implementation of project activity According to the Revised PC-1 (Page- 11) provisions, the implementation period of the proict is 18 months. The commencement date of the project is 17.10.201 8, completion date 0.06.2020 and estimated cost is Rs. 280 millions, In digital jobs in Khyber Pakhtunkhwa Project, during Financial year 2018-19, it was Observed that the implementation pace of the project activitics was very much slow as evident from,, the following progress. i, Fourteen (14) employees were required to be hired for the project activities including Project Manager but till the date of audit i.c; 30.08.2019, only three employees were hired in March 2019. ii. No fund was released to the Project by the World Bank due to non opening of the Assignment/Designated Bank Account till the date of audit i-e 31-08-2019 and all the expenditure are being paid from KPIT Board account on reimbursable basis. i. Out of the total estimated cost of Rs. 280 million, Rs. 4.355 million only were expended till 30.06.2019. iv. No progress towards the achievement of the core project objectives was made i.e; as per PC-I (2.1) the training of 3000 women will be carried out in different digital skills, creation of jobs through BPO (Business Process Outsourcing) and to train women and underserved youth in digital skills through YEP (Youth Employment Program). Audit held that the achievement of the core objectives and targets of the project within the stipulated time period with such slow pace would be impossible to achieve. The matter is brought to the notice for justification and corrective measures. The lapse occurred due to weak internal controls. When pointed out in August 2019, it was stated by the Management of the Project that detailed reply will be furnished before DAC. Audit recommends that the project completion be ensured within the stipulated time period. 4.2 Financial Management Fund was not released from the Donor to the Government of Khyber Pakhtunkhwa. 19 Scanned with CamScanner 43 Construction and NNlY1ks Not applicable 44 Asset Managemlent No assets have been procured. Physical verification of project assets has not been carried out as required under Para 159 of GFR Vol-1. 45 Mllonitoring and Evaluation (M&E) Monitoring and Evaluation system of the project activity is the integral part of the project management but in this particular case. No ill fledge activity have been started due to non transfer of funds. 4.6 Compliance with grant / loan covenants As nominal amount has been spent so far, from own resources of the Khyber Pakhtunkhwa Information Technology Board, no deviation from the loan agreement can be incorporated in the audit findings. 4.7 Environment The Project has no negative environmental impacts. 4.8 Sustainability After completion of the project, it will not only facilitate the Government departments in expanding their digitalization process but will always help absorb the local digitally skilled talent pool within the province. Hence, the project is sustainable. 5. Overall Assessment This project will create numerous digital jobs through the use of Information Technology. The project has recently been started that is 17-10-2018 and regular training of youth & funds will be initiated from 12-2019. 5.1 Relevance The project is in line with Government Sector policies. 5.2 Efficacy Achievement of physical outcome, financial performance would be analyzed during the next financial year after its full fledged performance. 5.3 Efficiency Internal controls should be strengthened to achieve the project objectives within the approved budget and time. 20 Scanned with CamScanner Economy The tinds should be released in accordance with the PC-1 to avoid cost overrun and abuonial delay. Effectiveness The project is likely to achieve its objectives etectively, 5.6 Compliance with rules The Financial Rules & Regulations of Government were not violated. 5,7 Performance Rating of the Project The performance rating of the project is moderate. _.8 Risk Rating of the Project The risk rating of the project is medium. 6. CONCLUSION As nominal amount have been spent so far, from the own resources of the Khyber Pakhtunkhwa Information Technology Board. No deviation from the loan agreement can be incorporated in the audit findings. 6.1 Key issued for the future: i. Issues that could limit/hamper project/progran's performance and achievement of intended objectives were: a. The Program should be implemented efficiently to avoid cost and time overrun. b. DAC meeting should be arranged on the audit observations. c. Funds released should be utilized as per PC-I. ii. Lessons identified: Funds should be released in line with the approved PC-I. 21 Scanned with CamScanner ACKNOWLEDGEMENT We wish to express our appreciation to the management and staff of the Project ,,figital Jobs in Khyber Pakhtunkhwa" for the assistance and cooperation extended to the audit team during this assignment. 22 Scanned with CamScanner