Mookherjee Biswas & Pathak 5 & 6 Fancy Lane, Kolkata-700001 Crtered Accouats &Phone :2248 1733, 2231 8869, 2243 8542, 2242 1789 Chartered Accountants Fax : (033) 2248 0080 Website : www.mbpkol.corn E-mail : mbpkol@vsnl.net July 25, 2017 The Programme Director, Institutional Strengthening of Gram Panchayats (ISGP) Program-II & Special Secretary to The Government of West Bengal Millennium City IT Park, Tower - II, 3rd Floor (Unit D), DN - 62, Sector - V, Salt Lake City, Kolkata70009 1. Dear Sir, Management Letter Audit for the period 1st July 2016 to 31st March 2017 We have conducted the audit of the financial statements of Institutional Strengthening of Gram Panchayats (ISGP) Program-II (PPA No.-P47801N) as at 31st March 2017. We familiarized ourselves with program documents, the internal guidelines and circulars applicable during this period under review. We also reviewed the business of the program and evaluated the accounting systems and related controls of the program in order to plan and perform our audit. Our audit was conducted in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a 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 responsibility of the management, inter alia, includes the maintenance of adequate accounting records and internal controls for safeguarding of the assets of the organisation and for preventing and detecting fraud or other irregularities. In terms of "Standards on Auditing SA 265", Communicating deficiencies in internal control to those charged with governance and management" issued by the Institute of Chartered Accountants of India, the purpose of this letter is to communicate appropriately with those charged with governance and management deficiencies in internal control that we have identified during our audit and that in our professional judgment, are of sufficient importance and merit their respective attentions. AT- Our observations are as follows: rd A-cco' Page 1 of 4 Branches at: * Bhagalpur * Ranchi * Guwahati * Meerut * Indore * Bhubaneswar 1. Matters that might have a significant impact on the implementation of the program - Nil. 2. Opportunities for strengthening financial management records, systems and controls together with recommendations for improvement. a) Violation of order i) State Unit 01. Vehicles hiring agreement was not found for the following parties: a) Prabhat Khata b) Debabrata Bal c) Soma Mallik ii) District- Bankura It was observed that the district had entered into an agreement with the parties for hiring of vehicles and generators. However, the contract rate had not been mentioned in the agreement. b) Statutory deductions i) District: Howrah It was observed that there was a delay in sending Statutory Deduction report to PMU. JV.No. Amount Due Date for Actual date of Delay in Sending Sending Sending 03 5,078.00 22-08-2016 24-08-2016 2 Days It was observed that there was a delay in Fund Requisition Statement from DCU to PMU. CV. No. Amount Due Date Actual Date Delay in Sending 3 2,29,080.00 09-08-2016 12-08-2016 3 Days ii) District: Nadia It was observed that there was a delay in sending statutory deduction report to PMU. JV.N Amount Due date for Actual date of Delay in o SendipZ- Sendin Sending 17 30,393.00 22-, 26-7-2016 4 days Page 2 of 4 oc AC, O b) District: Medinipur (Purba) i) No Attendance register is maintained for the casual employees. Salary is being paid on the basis of the attendance sheet given by the employees itself at the end of the month. There is no such internal control over the particular matter. 5. Status of prior audit recommendations This is the first year of ISGP-II program. Therefore, there are no prior audit recommendations. The matters contained in this Management Letter are intended solely for the information of Program management, for such timely consideration and action as program management may deem appropriate. They have all been considered by us in formulating the audit opinion expressed on the program financial statements in our audit report dated 25th July, 2017 and they do not alter the opinion expressed in that audit report. We wish to take this opportunity to thank Program Management for the courtesies and cooperation extended to our team. Yours faithfully, For Mookherjee Biswas & Patha i Chartered Accountants rOLKAT (N.K. Chakrabarti) Partner Page 4 of 4 Mookherjee Biswas & Pathak Chartered Accountants INDEPENDENT AUDITORS' REPORT To The Programme Director, ISGPP-II & Special Secretary to The Government of West Bengal 1. Report on the Financial Statements We have audited the accompanying Balance Sheet of Institutional Strengthening of Gram Panchayats (ISGP) Program II, West Bengal as at March 31, 2017, the Income and Expenditure Account and Receipts and Payments Account for the period (July 2016 to March 2017) ended on that date (collectively referred to as the "financial statements") financed under World Bank Loan No. PPA No.-P47801N 2. Program Management's Responsibility for the Financial Statements The Program Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position and financial performance of the Program. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. 3. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Program Management's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by Program Management's, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 4. Opinion In our opinion and to the best of our information and according to the explanations given to us, the financial statements give a true and fair view in conformity with the accounting principles generally accepted in India: 5 & 6 Fancy Lane, Kolkata-700001 Phone 2248 1733, 2243 8542, 2242 1789, Fax : (033) 2248 0080, Website : www.mbpkol.com, E-mail : mbpkol@vsnl.net Mookherjee Biswas & Pathak i) in the case of Balance Sheet, of the state of affairs of the Program as at March 31, 2017 and, ii) in the case of Income and Expenditure Account, of the excess of Income over Expenditure for the period ended on that date; and iii) in the case of Receipts and Payments Accounts, of the Receipts and Payments of the Program for the period ended on that date 5. We further state that, a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. b) In our opinion, proper books of account as required have been kept by the Program so far as it appears from our examination of those books. c) The Balance Sheet, Receipts & Payments Account and the Income & Expenditure Account, dealt with by this Report are in agreement with the books of account. d) With respect to Interim Unaudited Financial Reports (IUFRs) adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred; and e) These expenditures are eligible for financing under the PPA No.-P47801N f) The IUFRs submitted and procedure and internal controls involved in their preparation can be relied upon to support the withdrawals. For Mookherjee Biswas & Pathak Chartered Accountants Firm Registration No 301138E (N. K Chakrabarti) Partner Membership No 300783 Place: Kolkata Date: 25t' July, 2017 INSTITUTIONAL STRENGTHENING OF GRAM PANCHAYATS PROGRAM -II WEST BENGAL PPA No.-P47801N Balance Sheet as at 31st March 2017 Sources of Funds Schedules As at 31st March 2017 Amount (Rs.) Amount (Rs.) Capital Funds A 8.84.742.77 Restricted Funds B (3,44,38,643.73) Current Liabilities Duties & Taxes H 16,14,955.00 Loan from ISGP Project 1 9,17,25,794.00 9.33,40,749.00 Total 5,97,86,848.04 Application of Funds Schedules As at 31st March 2017 Amount (Rs.) Amount (Rs.) Fixed Assets C 8,84,742.77 Current Assets, Loans & Advances Current Assets - Savings Bank (ISGPP-11) 5.43,73,912.50 Savings Bank (DPRDOs) 1,47,573.00 Savings Bank (STARPARD) 18,41.735.00 Cash in hand (ISGPP II) 424.00 Cash in hand (District Co- ordination Unit) G.1 11,677.00 Savings Bank (District Co- ordination Units) G.2 1.46,200.77 5.65.21.522.27 Loans & Advances Advance to Staff D 39,000.00 Security Deposits F 17,27.872.00 Advance to others E 6,13,711.00 23,80,583.00 Total 5,97,86,848.04 Significant Accounting Policies Notes to Accounts For and on behalf of Mookherjee Biswas & Pathak Chartered Accountants Firm Registration No: 301138E gr Ac 0' (N K Chakrabarti) 7 Partner Finance ana er Programme Director Membership No. 300783 Place: Kolkata !BiSGPP WBSRDA Date : 25th July,2017 INSTITUTIONAL STRENGTHENING OF GRAM PANCHAYATS PROGRAM -1l WEST BENGAL PPA No.-P4780IN Income & Expenditure Account for the period ended on 31st March 2017 For the period ended 31st March 2017 Income Schedule (July'16 to March'17) Amount (Rs.) Amount (Rs.) Grant In Aid from World Bank Fund Utilised during the period 18,15.72,127.73 Interest from Bank Interest on Savings Bank 21,13,484.00 Total (1) 18,36,85,611.73 For the period ended 31st March 2017 Expenditures Schedule (July'16 to March'17) Amount (Rs.) Amount (Rs.) Consultancy Services Project Management Consultancy 594734000 Support Baseline Survey & Annual Performane 3.30,91.516.00 Assessment of GPs Statewide IEC Campaign IT Systems Management GIS Based Monitoring System 24.03,500.00 Internal Audit External Audit HR Agency for Mentoring Support 4.14,42.356.00 Project Management Support 2 Project Management Support 2.1 13,92,45,028.96 Goods and Eqiupment 2.2 8,84,742.77 14,01,29,771.73 Total (2) 18,15,72,127.73 Excess of Income over Expenditure( q ; e rred 21,13,484.00 Significant Accounting Policie Notes to AccountsXC AT fCLKTA For and on behalf of Mookherjee Biswas & Pathak Chartered Accountants Acco' Firm Registration No: 301138E (N K Chakrabarti) Partner Financ Mana er Programme Director Membership No. 300783 Place :Kolkata SP , WBSR0 Date :25th July, 2017 INSTITUTIONAL STRENGTHENING OF GRAM PANCHAYATS PROGRAM -II WEST BENGAL PPA No.-P4780IN Receipts & Payment Account for the period ended 31st March, 2017 For the period ended 31st March, 2017 Receipts Schedule (July'16 to March' 17) Amount (Rs.) Amount (Rs.) Grant in Aid Received Govt. of West Bengal 14,50,20,000.00 14,50,20.000.00 Loan from ISGP Project 1 9,17,25,794.00 Interest from Bank Interest on Savings Bank ISGPP Cell 19,97.462.00 STARPARD 89,877.00 Districts 26,145.00 21,13,484.00 Closing Balances of Duties & Taxes 16,14.955.00 Total 24,04,74,233.00 For and on behalf of . Mookherjee Biswas & Pat Chartered Accountants Firm Registration No: 301 (1' K Chakrabarti) A Partner Finance ana r Programme Director Membership No. 300783 Place : Kolkata Date : 25th July, 2017 INSTITUTIONAL STRENGTHENING OF GRAM PANCHAYATS PROGRAM -11 WEST BENGAL PPA No.-P4780IN For the period ended 31st March, 2017 Payments Schedule (July'16 to March' 17) Amount (Rs.) Amount (Rs.) Consultancy Services 1 Project Management Consultancy Support 59,47,340.00 Baseline Survey & Annual Performance Assessment of GPs 3,30,91,516.00 Statewide IEC Campaign IT Systems Management GIS Based Monitoring System 24,03,500.00 Internal Audit External Audit HR Agency for Mentoring Support 414,42,356.00 Project Management Support 2 Project Management Support 2.1 13.92,45,028.96 Goods and Eqiupment 2.2 8,84,742.77 14,01.29,771.73 18,15,72,127.73 Closing Balances of Advance to Staff D 39.000.00 Closing Balances of Advances to Others E 6,13.711.00 Closing Balances of Security Deposits F 17,27.872.00 Closing Balances Savings Bank (ISGPP-1I) 5,43,73.912.50 Savings Bank (DPRDOs) 1,47,573.00 Savings Bank (STARPARD) 18,41,735.00 Cash in hand (ISGPP II) 424.00 Cash in hand (District Co-ordination Units) G.1 11,677.00 Savings Bank (District Co-ordination Units) G.2 1,46,200.77 5.65.21,522.27 Total _ 24,04,74,233.00 Significant Accounting Policies an F w Accounts For and on behalf of Mookherjee Biswas & Pathak Chartered Accountants Fp Registration No: 301138 / . *K Chakrabarti)4 Partner Finance anager Programme Director Membership No. 300783 r Place : Kolkata Date : 25th July,2017 INSTITUTIONAL STRENGTHENING OF GRAM PANCHAYATS PROGRAM -II WEST BENGAL PPA No.-P4780IN Schedules to the Balance Sheet Amount (Rs.) Schedule Particulars As at 31st March 2017 A Capital Funds Opening Balances as per Balance Sheet . Add:- Addition During the Period 8,84,742.77 8,84,742.77 Less:- Deduction during the Period 8,84,742.77 Amount (Rs.) Schedule Particulars A at 31st March 2017 B Restricted Funds Prowect Opening Balances as per Balance Sheet Add:- Fund Received during the Period 14,50,20,000.00 Add:- Excess of Income Over Expenditure (Interest & 21,13,484.00 Misecellaneous Income) 14,71,33,484.00 Less:- Fund utilised during the Period 18,15,72,12773 (3,44,38,643.73) Grand total (3,44,38,643.73) Amount (Rs.) Schedule Particulars As at 31st March 2017 D Loans & Advances ISGPP Cell:- Permanent Advance Malay Sarkar 8,000.00 Biswajit Karmakar 8,000.00 Sourav Kumar Chandra 12,000.00 Jagadish Singh 2,000.00 Parbir Barai 9,000.00 Total 39,000.00 Schedule Particulars As at 31st March 2017 E Advance to Others TATA AIG 6,13,711.00 6,13,711.00 '~1Accca%' INSTITUTIONAL STRENGTHENING OF GRAM PANCHAVATS PROGRAM -ll WEST BENGAL PPA No.-P47801N Schedules to the Balance Sheet Amount (Rs.) Schedule Particulars ss at 31st March 2017 F Security Deposits Bharat Sanchar Nigam Limited:- ISGPP-ll 21,453.00 21,453.00 West Bengal State Electricity Distribution Company Limited 1,591.00 Java Watek Industries(Dakshin Dinajpur) 250.00 Bharti Airtel 500.00 Advance to WBSEDCL-Burdwan 2,078.00 Sonodyne Television Co. Ltd.(Electricity) 3,50.000.00 Sonodyne Television Co. Ltd.(Maintenance) 2,18,064.00 Sonodyne Television Co. Ltd.(Rent) 11,33,936.00 17,27,872.00 Amount (Rs.) Schedule Cash and Bank Balances of District Co-ordination Units As at 31st March 2017 G G.1 Cash in Hand Purba Medinipur 2.135.00 Nadia 2,386.00 Dakshin Dinajpur 766.00 Burdwan 65.00 Bankura 808.00 Paschim Medinipur 2,467.00 Howrah 2,223.00 Cooch-Behar 360.00 Birbhum 467.00 11,677.00 G.2 Cash at Bank Purba Medinipur 61,873.00 Nadia 14,713.00 Dakshin Dinajpur 10,889.00 Burdwan 19,928.00 Bankura 8,730.54 Paschim Medinipur 5,488.23 Howrah 10,874.00 Cooch-Behar 3,076.00 Birbhum 10,629.00 1,46,200.77 Total (G.1 to G.2) 1,57,877.77 Amount (Rs.) Schedule Duties & Taxes As at 31st March 2017 H Duties & Taxes Professional Tax 200.00 Income Tax deducted at Sources 16.14,723.00 Sal fax deducted at Sources 32.00 __e_____16,14,955.00 !I., CLAToA~ INSTITUTIONAL STRENGTHENING OF GRAM PANCHAYATS PROGRAM -II WEST BENGAL PPA No.-P4780IN Schedules to the Receipts and Payments Account and Income & Expenditure Account Amount (Rs.) Schedule Particulars For the period ended 31st March 2017 I Consultancy Services Consultancy for DLI 37.90.515.00 Consulting fees for APA 3,30,91,516.00 GIS Based Monetoring 24,03.50000 Project Management Consultancy Services (POM) 21,56,825.00 Total 4,14,42,356.00 Schedule Particulars For the period ended 31st March 2017 2 Project Management Support 2.1 Project Management Cost Consultancy for GRM 1.95,500.00 Godown Rent 1.25,424.00 Information Education & Communication 32,16,961.00 Interest on TDS 18,105.00 Renewal of Software 36,800.00 Security Audit 74,750.00 SMS for GRM 10,350.00 Stamp Duty & Registration Fees for Office Rent 8.30,011.00 Subscriptions 13,770.00 Tally Synchronisation Charges 48.300.00 Vulnerability Assessment of HP Server 10.059.00 Consultancy Fees 42.239.00 Annual Maintenance Charges 7.13.345 00 Employers Contribution Towards EPF 28.51.695,00 GPMS Helpline Charges 91.992.00 Hiring Charges ofSofware Developers 2.59.035 00 LAN Maintenance Charges 85,148.00 Office Decoration 7,59,015.00 Overhead Cost ofGPMS 23,25,285.00 Participation Fees 2.97,000,00 Per Dien Allowances .36,920 00 Pest Control Charges 13,800.00 Remuneration 5,90.03.877,00 Server Rent 2,17,35000 Advertisement 41,85.576 00 Books & Periodicals 14,837.00 Car Expenses 4,679.00 Carriage 2.500.00 Cleaning 34,324 00 Incentives 8 1,600 00 Tonner Cartridge 5.03.757.50 Communication Charges 25,630.00 Conveyance & Travelling 14,I3.64900 Cost of Accommodation 5,09.79200 Cost of Food 1,38127.00 Electricity 3.43.722.00 GRM Workshop 2.07,461 00 Internet Usage Charges 6.29.26000 Meeting & Workshop 1.34,15.734,00 Miscellaneous Expenses 4,19.069,00 Office Maintenance 3.81,23700 Office Refreshments 3,35,84700 Office Rent 25,58,794.00 Postage 3,52,.16 1 00 Printing 4,75,194.00 Project Branding 8.69,706.00 Puja Branding 13,25,000.00 Remuneration to Support Staff 19,61.641 .00 Staff Welfare 2.21,389 00 Stationeries 2.99,208.00 Telephone Charges 2.39.118,46 Training 77.33,051 .00 Vehicle Charges 1.51,53174.00 Total (A) 12,51,11,968.96 eF cco KOLKATA INSTITUTIONAL STRENGTHENING OF GRAM PANCHAYATS PROGRAM -II WEST BENGAL PPA No.-P47801N Schedules to the Receipts and Payments Account and Income & Expenditure Account Amount (Rs.) Schedule Particulars For the period ended 31st March 2017 2.1 Project Management Cost contd.... Operating Cost (STARPARD) Electricity Charges 1.66.569.00 Photocopy Charges 4,324.00 Remuneration 1.27,71,553.00 Medical insurance premium for employees 2,45,023.00 Telephone & Communication 13.913.00 Water Tax 3.984.00 Vehicle Hire Charges 52.401.00 Accommodation Cost 68,200,00 Admin Charges for P.F 81,994,00 ECR Making Fees for P.F 2,000.00 Fees for P.F. Code 6,000.00 Provident Fund (Employers Cont) 7,14.600.00 Train Fare 2,499.00 Total (B) 1,41,33,060.00 Total Project Management Cost (A+B) 13,92,45,028.96 2.2 Goods & Equipment Computers & Accessories 2.47,492.00 Office Equipment 4,15,084.77 Softwares 2.22.166 00 Furniture & Fixture 8,84,742.77 C A 19d Acc INSTITUTIONAL STRENGTHENING OF GRAM PANCHAYATS PROGRAM -II WEST BENGAL Schedules to the Balance Sheet Schedule- C Amount (Rs.) Particulars Opening Balanes Addition During the Period Closing Balances ISGP Project Computer & Accessories - 2.47.492.00 247,492.00 Furniture & Fixture Camera . Data Card EPABX Fax Machines - Office Equipments - 4.15,084.77 4.15.084.77 Software 2,22,166.00 2.22.166.00 TV Set . Total - 8,84,742.77 8,84,742.77 STARPARD Computer & Accessories - Furniture & Fixture - Total - Grand Total 8,84,742.77 8,84,742.77 -e ILKA - ciA/O- Institutional Strengthening of Gram Panchayats (ISGP) Program II, West Bengal Schedule- I Significant Accounting Policies and Notes to Accounts 1. Overview of the project Institutional Strengthening of Gram Panchayats (ISGP) Program II is implemented under West Bengal State Rural Development Agency (WBSRDA) registered under West Bengal Societies Registration Act, 1961. Government of West Bengal, with support from Gol and financial assistance from the World Bank, has designed and launched the second phase of ISGPP (ISGPP-ll) in FY 2016-17. The Program Development Objective (PDO) is to strengthen the institutional and financial capacities of Gram Panchayats (GPs) across the State. The ISGPP-ll is financed under World Bank PPA No.-P47801N. It covers the implementing units at State and districts. The financial statement for the Program has been prepared for the period July 01 to 31st March, 2017. The Program has been implemented in nine districts during the aforesaid period. The Program has received Rs 14.50 crores from World Bank during the period for implementation of the program. 2. Basis of Preparation of Financial Statements The Financial Statements have been maintained on double entry system adopting cash basis of accounting. Financial Statements are prepared in accordance with the Generally Accepted Accounting Principles including Accounting Standards followed in India to the extent applicable. Preparation of the financial statements are in conformity with the Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of financial statements and reported amount of revenues and expenses for the year. Estimates are based on assumptions that management believes are reasonable under the circumstances. 3. Fixed Assets and Depreciation Fixed Assets acquired have been valued at cost including all direct costs i.e., purchase price, transportation expenses, installation charges and other expenditure incurred for bringing the fixed assets in working condition, including expenditure incurred prior to its first use. Memorandum records are maintained to exercise physical control over the assets. No depreciation has been charged on the fixed assets in the financial statements. * OLKATA 4. Revenue Recognition * AI Institutional Strengthening of Gram Panchayats (ISGP) Program II, West Bengal Fund received from State Government has been recognized as income to the extent of the revenue expenditure made during the year and the unutilized balance is shown as a part of the Restricted Fund. For expenditure incurred on Fixed Assets, a corresponding amount has been transferred to the Capital Fund. Interest earned on bank deposits during the project period is treated as project fund and accounted on receipt. 5. Valuation of Stocks Materials and office supplies acquired for the program are charged as expenditure at the time of payment. Memorandum Stock Register is maintained to control over the store item. 6. Loan has been taken from ISGPP-1 of Rs.9,17,25,794/- for the purpose of the Program preparation. 7. Since it is program preparation phase, no comparable figures of previous year are available. For Mookherjee Biswas & PathA Chartered Accountants KCLKATA Firm Registration Number 301\tk (N. K. Chakrabarti) Partner Finance an ger Programme Membership No: 300783 Director Place: Kolkata Date:25th July,2017