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Satyanishtha Bhawan, 15-A, Maharshi Dayanand Marg, Allahabad-21 1001 Ph. 0532-2420446, 2422128, Fax : 0532-2420446
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Office of the Principal Director of Audit (Central) Lucknow
Branch Office - Prayagraj
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_____          15-A, Dayanand Marg, Satyanishtha Bhawan, Prayagraj -211001
No, PDA(C)/CE/AC Cell/2019-20/ .3 J                   Date: 09 .07.2019
To
The Chairman,
U.P. Water Sector Restructuring Project Phase II,
Walmi Bhawan, Utaratia.
Lucknow- 226026.
Report on the Project's Financial Statements
We have audited the accompanying financial statements of the 'U.P. Water Sector
Restructuring Project Phase II" financed under World Bank Cr. No. 5298-IN. This
comprises the Statement of Sources and Applications of Funds and the Reconciliation of
claims to total Applications of Funds for the Financial Year 2018-19. These statements are
the responsibility of the Project's management. Our responsibility is to express an opinion
on the accompanying financial statements based on our audit.
We conducted our audit in accordance with the Auditing Standards promulgated by the
Comptroller and Auditor General of India. These Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement our audit examines; on the test basis, evidence
supporting the amount 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 the
audit provides a reasonable basis for our opinion.
In addition, in our opinion,
(a) With respect to Interim Financial report (IFR), adequate supporting
documentation has been maintained to support claims to the World Bank for
reimbursement of expenditure incurred and (b) except for ineligible expenditure
as detailed in the audit certificate to this audit report, expenditures are eligible for
financing Loan No. IDA Credit 5298-IN.
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During the course of audit, IFR and the connected documents were examined and
these can be relied upon to support reimbursement under the aforesaid Credit
Agreement.
SI. No.        Credit/Loan No.          Total expenditure ( In millions)
1          IDA Credit 5298- IN                 1773.373
This report is issued without prejudice to CAG's right to incorporate the observation in
the report of CAG of India for being laid before Parliament/State or UT Legislature.
We further report that:
1. The project Implementation Plan of World Bank envisaged annual action plan to
complete the project in stipulated time frame so that the intended benefit of the
project may be obtained timely.
The department prepared annual action plan to achieve the targets of the project
in 2018-19 for which budget provision for R 2807.900 million in grant 94 and 95
was made. Against the budget provision i 1888.506 million was allocated i.e.
67.25 per cent and out of that an expenditure of 2 1773.337 million could be
made i.e 93.90 per cent of budget allocation and 63.16 per cent of the budget
provision. In reply the department stated that the budget was released in fourth
quarter due to delay in revision in cost table and approval from the Cabinet of
Government of UP, thus, the budget could not be utilised by 31't March and
surrendered 3 115.665 million. This shows poor approach of the department in
execution of project resulting in slow pace of work year after year.
Apart from the above, the non-produced records related to the expenditure of
2 67.110 million incurred during the year 2017-18 were produced to audit and
verified in audit.
2. The department entered into an agreement with M/s Mechatronics Systems
Private Limited, Pune for Rs. 814.049 Iakh. As per the Agreement's Special
Condition and Clauses 3.5 of Schedule of Requirements, all DCPS and sensors shall
be of current models and supported for a minimum of 10 years after purchase. A
letter from the manufacturer assuring maintenance support for 10 years is
required and such letter must be signed by an officer of the manufacturing
company.
Scrutiny of records of the division Investigation and planning, Water Resources,
Basti revealed that 65 nos. of DCPs were supplied by the contractor to the division
at the rate of two lakh per DCPs. The Division paid 70 percent of K 10.300 million
i.e w 9.100 million to contractor. The records for the assurance for maintenance
support for 10 years from the manufacturer were not available with the division.
This shows that the department had not taken any assurance from Manufacturer
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15s per tho' agroollwilet (AmIso  IIII(I WaN~i 11(11 111111 1111t If.1 j11111J JW I  itj  h41#UIAi~
c    w.1ork as1xlo uddovs   a  totIlopaymmnlil6lor I3 IniIiianio  (   %)f
3. Wrouli~ DIVISi11, Loiwor Goop~~ (anlh0l, Alliwril l wtiltud l(I iiw.olotw,01,l
differet~ contractorsI hitJily/AuRovil, Ml I!i ooid hImmmiy, )016 i,~ fo   i4 01001
million, The work wa% slmt tod Novomnhmn, Ml!i ! with l1w. 41u,11,Ifilsi tl(
completion Jainuary, 201 7. It wils not1codu I hlot 11p to flf(.1, )O) o v:t&li ~/f/
cent work wis executed [rind tottil patymentl   WiJ90,390( milIllomi (10(,0b A) ws/f(
made. Out of 10 lots, only tWO lots have almost comploed hlf work, in resp"A.
of the remaining eight lots, the application for tipproval of tim  exenson lwd
been applied and approval from competent authority was panding. Thil shows
poor pace of work by the department,
4. Audit observed from the records of CE, Design Lucknow that the office incurred an
expenditure of 1 0.55 million towards purchase of 63 books related to Civil
Engineering, Mechanical Engineering, Water Resource and Food and Agriculture.
Further, it was noticed that the aforesaid books for which the payments had been
made was not received, hence, the amount of w 0.55 million does not qualify for
reimbursement.
5. As per PIP of World Bank, the budget provision of R 172.150 million was made for
SWARA but only an amount K 66.475 million were incurred. Only 38.61 per cent of
the work as per Action Plan was executed. The slow progress was due to non-
appointment of experts in related fields, non- existence of AMC of Server, non-
inclusion of the provision of assessment of impact of climate change of water
resource of the state activity in expenditure finance committee and excessive
delay in work of Tahal Consultancies. This defies the very purpose of completion
of project in time.
6. It was observed that the WALMI being an autonomous body and having no DDO
code maintained a current account with the Allahabad Bank. At the end of the
financial year 2018-19, an amount of R 0.379 million was lying as balance in the
account. Thus, the amount of 2 0.379 million does not qualify for reimbursement.
7. Audit observed that the JDA, Cereal Crop, instead of deducting the GST @ 2 per
cent from the contracture's bills as per the Government order, it paid an amount
of E 0.793 million towards GST to M/s Rama Infotech Pvt. Ltd. Thus, the amount
of K 0.793 million does not qualify for reimbursement.
8. As per the financial management arrangement of World Bank Guideline, the
project is being implemented through the main stream state Treasury system and
CCL system. The project implementing locations are the PACT in Telibagh,
Lucknow and 115 no. other accounting location. Records keeping and accounting
shall be as per the provisions of UP Financial Hand Books and every
department/line agencies shall submit monthly financial accounts to AG as well as
to the PACT.
Audit observed that the Remote Sensing Application Centre, the line agency of
PACT was allocated ; 10.000 million in 2018-19. The Unit intimated PACT the
expenditure for the year K 10.000 million through BM 8. But the vouchers of
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expenditure of only 4 8.441 million were available with the unit and shown to
audit for the year 2018-19. The vouchers of expenditure of the remaining amount
of I 1.559 million was not produced to audit as per expenditure shown in BM 8.
Hence, the amount of W 1.559 million does not qualify for reimbursement.
9. It was observed that the CE Ramganga and CE Sarada Sahayak incurred an
expenditure of R 910.200 million which includes the expenditure of PIM during
the year 2018-19. Out of this the unit produced the records of only t 878.775
million which includes 15 units of PIM (Annexure-1) was verified in audit. The
remaining amount of 3 31.425 million related to PIM expenditure could not be
verified as no records were shown to audit. Hence, the amount of R 31.425 million
does not qualify for reimbursement.
10. In Kausambi District, the mobilization expenditure was incurred by SIRD with the
target to create 56 Water User Association (WUAs). Out of 56 only 34 WUAs were
formed, a short by 22 WUAs. This shows poor pace of work to achieve the
objective.
11. The Deputy Director Agriculture, Amethi, incurred an expenditure of W 10.880
million on account of UPSWARP. The cashbook for the related expenditure was
not completed. This shows poor maintenance of records by the unit.
12. As per Project Implementation Plan of UPSWERP para 10.8.5. it is proposed to
assign the quality control of civil works to the newly created quality control circles
and one division each in Ramganga, Sarda Sahayak and Betwa organization under
the direct control of respective Chief Engineers. Quality Control Division, Lucknow
and Quality Control Division, Kanpur incurred a sum of 11.320 million and 7 3.939
million respectively in the year 2018-19 in respect of manpower and other
expenditure like contingencies. It was observed in audit that the work related to
UPSWRP Phase 11 was not carried out during the year even after expenditure of
w 5.259 million. No any visit report to the work of UPSWRP or progress report was
generated by the above two divisions. Thus, the amount T 5.259 million does not
qualify for reimbursement.
Deputy DireTtor/Central Expenditure
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Annexure-I
PIM produced records
(Amount in million)
SI.No             Name                 Amount,
1.     Pratapgarh                            0.370
2      Raibareli                            1.432
3      Fatehpur                             2.754
4      Etawah                               1.200
5      Kanpur Nagar                         3.599
6      Etah                                 1.700
7      Fatehpur ID                         0.449
8      Shikohabad                          1.887
9      Etawah(Bhginipur)                   4.050
10     Auraiya                             1.235
11     Kanpur Dehat                        2.500
12     Jaunpur                             5.500
13     Kaushambi                           1.200
14     Kasganj                             1.493
15     LGCS, Mainpuri Division             1.775
Total       26.195
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