Restricted The Republic of the Union of Myanmar Office of the Auditor General of the Union Letter No: Sa Has 5/.3011(221 /2018) Date : 24, September, 2018 To Union Minister Ministry of Construction Subject Matter: Submission of Audit Report Reference : According to letter number 6 /sub-division-4 /2018 (Si 0587) on 21.5.2018 1. According to the request with reference letter from Department of Highways, Ministry of Construction, the financial statement of Flood and Landslide Emergency Recovery Project (FLERP), which is being implemented with loan funded by World Bank for 2017-18 financial year have been audited. 2. The Audit Report and Management Letter were attached with this letter for further actions taking as necessary. Attached- (1) Audit report (10) pages (2) Management letter (8) pages (Signed) On Behalf of Union Auditor General (NaingThet Oo, Permanent Secretary) Copy to: Director General, Department of Highways, Ministry of Construction Office copy Float File Restricted Restricted The Republic of the Union of Myanmar Office of the Auditor General of the Union Audit Department Audit Report on Flood and Landslide Emergency Recovery project (FLERP) Funded by Loan from World Bank Implemented during the financial year 2017-2018 By Department of Highways Ministry of Construction Date - 24 , September , 2018 Restricted Restricted Contents No. Particular Paragraph Page From To From To 1 2 3 4 5 6 1 Introduction 1 - 1 - 2 Management's Responsibility for the Financial Statements 3 Auditor's Responsibility 3 4 1 2 4 Scope of Audit 5 - 2 - 4 Auditor's Opinion 6 - 2 - Restricted Restricted Audit Report on the Financial Statements for the year ended 31 March 2018 of Flood and Landslide Emergency Recovery Project (FLERP) funded by Loan from World Bank implemented by Department of Highways, Ministry of construction Introduction 1. The Financial Statement for the year ended 31 March 2018 of Flood and Landslide Emergency Recovery Project (FLERP) fRnded by Loan from World Bank implemented by Department of Highways, Ministry of Construction which are prepared in accordance with Govennent Accounting System (Cash Basis) were audited by Office of the Auditor General of Union in accordance with the Generally Accepted Auditing Standards (GAAS). Management's Responsibilities for Financial Statements 2. The Project's Management is responsible for preparing of financial statements which are in line with the Project Operation Manual, Financial Management Manual and Government Accounting System (Cash Basis) and it is also needed to prepare statement prescribed by World Bank.In addition, the project's management has responsibility to make sure that these financial statements are free from misstatements arising from fraud or errors which can lead to the wrong management decisions regarding to internal control. Auditor's Responsibilities 3. Our responsibility is to conduct audit on the financial statements in accordance with Generally Accepted Auditing Standards (GAAS) and those standards require us to comply with the code of ethics for auditors and.to give appropriate audit opinion as per audit findings after conducting audit with reasonable assurance whether material misstatement exists in financial statements. 4. During the audit, regarding to figures and disclosures in financial statements which are included statement of sources and uses of funds, statement of uses of funds by Component/Activities, statement of uses of funds by expenditure categories, statement on operations of Designated accounts and Notes to the financial statement, we obtained audit evidences by evaluating Restricted Restricted 2 errors and deficiencies and applying audit procedures based on auditor's assessment and judgment. In this regards, we have obtained sufficient and appropriate audit evidence in order to provide basic for audit opinion. Scope of Audit 5. We have audited financial statements ofFlood and Landslide Emergency Recovery Project (FLERP) for the year ended 31.3.2018, implemented by Department of Highways, Ministry of Construction funded by World Bank with supporting documents,voucher, statement of expenditures, summary of expenditure and photos record for procurementprocess. Opinion of the Auditor 6. In our opinion, the financial statements for the year ended 31 March 2018 of Flood and Landslide Emergency Recovery Project (FLERP) implemented by Department of Highways, Ministry of Construction under the loan no. (IDA- 5889 MM) have been prepared fairly in accordance with the Government Accounting System (Cash Basis). (Signed) KhineKhineAung Director General DepartmentofHighWays Ministry of Construction -The Rep---ic of he Union of Myonmar Flood and Landslides Emergeney Recovery Projecte(LERP) Loan No: 5889 -MM Department of Highways , Ministry of_Construction Statement of.Sources and Uses of Funds. Fo the period : lApil 2017 to 31 March 2018 --Year to date Cumulative to date (MMK) (MMK) iRe ceipts Funds Received from IDA Credit -DA -E -_MMK_A/C-685,734,700 709,434,700.001 -DA -2E-USD_AC 81,840,00.00 8]'0 .00 Direct Payments by IDA Cred t Total Re ceipts 767,574,700.00 791,274,700.00 Expenditure by Projeet Component Coiponent 1Cimate-Resilient National nfrastructu re Rehabilitation :Component 2: Resilient Rehabilitation of Rural Roads and livelihoods support Component 3: Erergency Recovery {Response_ Component 4:Project Managementand -M343,343,000.00 343,343,000.00 1Knowledge Support (MMK) Component 4: Project Managem e nt and 79,816,024.49 79,816,024 .49 Knowledge Support{USD).-- Total Payments 423,159,024.49 423,159,024.49 Excess/(deficit) receipts over payments 344,415,675.51 368,115,675.51 Opening funds balance Cash at Bank - IDA Credit 'DA -I F-MMK 23,700,000.00 DA - 2E -USD Total opening funds balance 23,700,000.00 Closing funds balance 368,115,675.51 368,115,675.51 Closing funds balance Represente d Cash at Bank - IDA Credit DA - 1E-MMK A/C -366,091,700.00 366,091,700.00 DA - 2E-USD A/C 2,023,975.51 2,023,975.51 Total __ 368,115,675.51 368,115,675.51 2 Department of High ways Ministry of Construction The Republic of the Union. of Myanmar ,Myanmar Flood and Landslide Emergency Recovery Project Loan No : 5889-MM 'Deparment of lghways Ministryof Constuction---- - Sate n s of Fu_nd by Componbenmit/ActIivitie s For theperiodfrom April2017to 3March2018 -. (in MMK) Budget Actual Varience Expenditure by component/Activities Cumulatve to CurrentYear Yearto date CurrentYear date Component 1: Climate -Rsilient National Roads - Reconstruction of damaged roads and bridges 6,428,987,000.00 - 6,428,987,000.00 - Silde Projection and slope stabilization--- -Drainage system - - .Road pavement/bridge improvement Traficesafety -c-c- Sub-Total 6,428,987,000.00 - - 6,428,987,000o Component 4:Project Management and Knowiedge - Consultants and non-consultants services 2,061,900,000.00 88,617,024,49 88,617.024,49 1,973,282,97.51 - Monitoringand Evaluaton - - -Projects_studies and reports --- Capacity Bulfing -Projects operations 570,515,000.00 334,542,000.00 334,542,000.00 235,973,000.00 Sub-Total 2,632,415,000.00 423,159,024.49 423,159,024.49 2,209,255,975.51 ITotal Expenditure 9,061,402,000.00 423,159,024.49 423,159,024.49 8,638,242,975.-1 3 Department of Highways Ministry of Construction The Republic of the Union of Mynmar Myanmar Flood andLandslide Emergency Recovery Project loan No: 5889--MM Department of Highways,MinistryofConstructo io I Statement of Uses of Funds by Expenditure Categories For the period from L4.2017 to 31.3.2018 (in MMK) Budget Actual Varience Expenditure Categories Cumulative to Current Year Yeår to date date Current Year (1) Go-s 503,987,000.00 - 503,987,000.00 (2) Work -,å50o000 '5,925,000,000.00 - 25 ___ 595000,000.000-- S200000 (3) ConsultingServices '(5) Tranin -5 1týn rý <6) Operating Costs - - - Sub- Total 6,428,987,000.00 - - 6,428,987,000.00 Cnponent4: 499,415,000.00 263,442,000.00 263,442,000.00 235,973,000.00 2 Wor 71,00 .00 71,100,000.00 71,100,000.00 3)Consulting e rvices 061s90,000.00 88,617,024.49 88,617,024.49 1,973,282,975.51 (4) Non-ConsultingServices - - (5) Tralning---- (6) OperatingCosts Sub- Total 2,632,415,000.00 423,159,024.49 423,159,024.49 2,209,255,975.51 Total Expenditure 9,061,402,000.00 423,159,024.49 423,159,024.49 8,638,242,975.51 4 . Department of Highwqys Ministry of Construction The Republic of the Union of Myanmar rFlood and Landslide Emergency Recove Projec(FLERP e 1 Department of HighwaE inisty ofConstruction Statement on operations of Designated Account Bank Name: Myanmar Economir, Bank Accounts No.: EDD 600016 .Period: December 2017 to March 2018 J.Currency: USD Date . Cheque No . Purpose/Remarks Receipts Payments Balance 22(12201 7 - Fund receed from WB . 9,94000 59,940.00 2 2 i 402]NSYINK-312017- Salary Payment Fees to MrMustafa 241112018 2018/2311/2018 (Intemational Road and Bridge Engineer) . 12,285.00 47,655.00 from November'17 to December17 Income Tax Charges of International 24/1/2018- 403/NSYINK-312017-18/23/1/201 a Procurement Specialist anid Road and 653.72 47,001.28 Bridges Engineer Salary Payment Fees to Mr Jean 24/1/2018 401/NSYINK-3/17-18/23.1.17 (Intemational Procurement Specialist) 13,210.16 33,791.10 from August'17 to November'l7) Per Diem Payment Fees to Mr Mustafa 8/7018 414INSY/NK-32017-18111212018 (Intemational Road and Bridge Lngineer) 2,040.00 31,751.10 from Noember17 to December17 Per Diem Payment Fees to Mr Jean 212/2018 4181NSYNK-3117-1816.2.18 (Intemational Procurement Specialist) 2,380.00 29,371.10 from August'17 to November'17) Salary Payment to Mr Mustafa 22/2/2018 441/NSYINK-3/17-18122/2/18 (international Road and Bridge 4,840,87 24,530.23 Engineerfor January 2018 Salary Payment to Mr Jean (Intemational 28/2/2018 4561NSY/NK-3/17-18/281212018 Procurement Speciaist)for December '17 8,105.49 16,424.74 and January'18 Income Tax Charges of International 2812/2018 454/CSYINi-3/17-18/28.2,201s Procurement Specialist and Road and 302.54 16,122.20 . Bridges Engineer . Salary Payment to Mr Mustafa 15/03/2018 485/NSYINK-3/17-18/14/3/2018 (International Road and Bridge 6,291.50 9,830.70 Englneer)for February-2018 23103/2018 497(NSYINK-3/17-18122,3.18 - Income Tax Charges of Mr Mustafa 122.5 9,708.20 (international Road and Bridges Engineer) 26(0312018 510/NSYINK-3/2017-18128.3.18 Income Tax Charges of Mr Joan 9,508.70 (International Procurement Specialist) 199.50 Salary Payment to Mr Jean (Intemational 2B[0312018 5071NSYINK-312017-18128.3.201 Procurement Specialist) ror Febluary 9,183,00 325.70 ___________2018 TotaL 59,940.00 59,614.30 325.70 5 Department of-Highways Ministry of Construction The Republic of the Union of Myanmar / Flood and Landslide Emergency Recovery Project (FLERP) Department of Highways, Ministry of Construction Statement on operations of Designated Account Bank Name: Myanimar Economic Bank- Accounts No-- O012365 ' ro:March 2017 to March 2018, ., iurrehicy: -__M Date Cheque No Purposo/Romarks Receipts Payments Balance 3110312017 Fund received from WB 23,700,000.00 - 23,700,000.00 31/03/2017 Bank Charges - 50.00 23,699,950.00 27/06/2018 G 846678 ymentC Oice Construction 10,095,935.00 13,604,015.00 Cost for Chin State 27/06/2018 G 846676 PaymentCto Office Construction 13,130,015.00 474,000.00 30/06/2018 G 846677 Tax Payment to Office 267,960.00 ?06,040 00 Construction Cost for Chin State.2690000604 0 30/06/2018 G 846679 Tax Payment to Office 206,040.00 Construction Cost for Chin-State 29112J2018 Fund received from WB 59,503,600.00 - 59,503,600.00 Payment for the salary of National 19/01/2(18 G 848680 FM Accountant from October'17 to 5,174,988.00 54,328,612.00 December17 22/01/2018 G 846682 Payment to Office Construction 23,552,382.00 30,776,230.00 Cost for Rakhine State 22/01/2018 A 846684- Payment to Office Construction 10,747,617.00 20,028,613.00 Cost foir Rakhine State 31/01/2018 G 846685 Tax for the office construction cost 219,340.00 19,809,273.00 of the Rak hine State Tax for the office construction cost 480,661.00 19,328,612.00 31/0/201 G84683of the Rakthinib State Income Tax of National FM 31/01/2018 G 846681 Accountant for 3 months 105,612.00 19,223,000.00 - (Oct,NovDc'2017) 21/02/2018 G 846686 Payment Salary to National FM 1,724,996.00 17,498,004.00 Accountant for January'2018 26102/2018 G 846687 income Tax of National FM 35,204.00 17,462,800.00 Accountant for January 2018 2210312018 Fund received from WB 362,802,400.00 380,265,200.00 28103/2018 G 846688 Flooring Charges for the office of 1,474,900.00 378,790,300.00 * ~~~Ottera District _______ . 846689 Tax for Flooring Charges of Ottara 30,100.00 378,760,200.00 29/032018 G8 District 29/03/2018 G 846690 Payment to National FM 1,724,996.00 377,035,204.00 accountant salary for February 29/03/2018 G 846691 Tax ofaNatioal FM accountant for. 35,204.00 377,000,000.00 February 2.018 29/03/2018 G 846692 Payment for Office Furniture Cost 13,940,010.00 363,059,990.00 30/03/2018 G 846693 Tax for Office Furniture Cost (90%) 284,490.00 362,775,500.00 28/03/2018 G 846694 Payment for Office Equipment 8,528,400.00 354,247,100.00 Cost (90%) 29/03/2018 G 846695 Office Equipment Cost 165,600.00 354,081,500.00 30/03/2018 G 846696 Double Cabs Cost (90%) 184,693,714.00 169,387,786.00 30/03/2018 G 846697 Tax for Double Cabs (90%) 3,586,286.00 165,801,500.00 *6 *. Department of Highways Ministry of Construction The Republic of the Union of Myanmar 29/03/2018 G 846698 Office Equipment Cost 23,845,971.00 141,955,529.00 29/03/2018 G 846699 Office Equipment Cost 483,02900 141,492,500.00 29103/2018 G 846700 Office Equipment Cost 2,649,552.00 138,842,948.00 29/0312018 C052601 Oilide Equipment Cost 51,448.00 138,791,500.00 29/03/2018 C052602 Tax for Office Equipment Cost 947,600.00 137,843,900.00 30/03/2018 C052603 Office Equipment Cost . 18,400.00 137,825,500.00 29/03/2018 0052604 Office Furniture Cost (10%) 1,563,942,00 136,261,558,00 29/03/2018 C052605 Tax for Office Frniture (10%) 16,558.00 136,245,000.00 30/03/2018 C052606 Double Cabs Cost (10%) 20,521,524.00 115,723,476.00 30/03/2018 C052607 Tax for Double Cabs (10%) 398,476.00 115,325,000.00 29/03/2018 C052608 Qfice Constructioi cost for Ottara 4,519,736.00 110,805,264.00 District 30/63/2C18 O0052609 Tax for Constrution for Ottara 75,264.00 110,730,000.00 30/03/2018 District . . 29/03/2018 C052610 Office Construction cost for chin- 6,237,671.00 104,492,329.00 state Tax for office construction for chin . 62,329.00 104,430,000.00 30/03/2018 state . Air Con Cost for Ottara Thiri 1,733,342.00 102,696,658.00 30/03/2018 0 District Office 30/03/2018 C052613 Tax For Air Con Cost _ 33,658,00 102,663,000.00 30103/2018 IFund received from WB 263,428,700.00 . 366,091,700.00 Total 709,434,700.00 343,343,000.004 366,091,700.00 7