Chartered Accountants Notes to Accounts Forming Part of Balance Sheet as on March 31, 2019 1) Opening Balance of Grant was Rs. 3, 17, 56,877. Further Rs.16, 48, 32,000 was received in FY 2018-19 as Grant in aid. The total expenditure reported for the project was Rs. 6,98,53,066 which includes the advances received of Rs. 4,80,00,000 and Rs. 8,33,727 for fixed assets. 2) Interim Unaudited Financial Report -IUFR for the project has been submitted half -yearly for the period ending September 30, 2018 and March 31, 2019. An expenditure amounting to Rs. 557.07 lakhs has been claimed as reimbursement, there is a shortage of claim by Rs. 1.75 Lakhs. 3) As per the provision of The Income Tax Act 1961, under section 194C, deductor required to deduct TDS at the rate of 2% on payment made to person other than individual / HUF, but management has deducted 1% TDS on payment made to the Combined Tours & Travels. 4) As per CBDT Notification 23/2017, TDS shall not be deducted on GST component of invoice. So, it can be said that TDS should not be deducted on the tax element of the transaction. However, it has been noticed that management is in the process of deducting TDS on the tax element of the every transaction made during the year. 5) As per the accounting standard- 10 Property Plant and Equipment, deprecation should be charged on the Fixed Assets, but during the current year management has not charged deprecation on the Fixed Assets. 6) During the course of audit we had gone through the Internal Audit Report, some of the observation raised by the Internal Auditor are cleared by the management and same has been verified by us like: * Payment made to unknown parties, during the audit we had verified the bills along with their supporting. * Cheque Issue Register was maintained properly and the same was verified by us during our Audit. For N. C. Mittal & Co. Chartered Accountants FRN: 000237N Nohar Chand Mittal (Chartered Accountant) MRN: 014213 Date: 23/01/2020 Place: New Delhi 4 Head Office: Behl House, 13, Daryaganj, New Delhi,110002 Phone: +91-93151-01923, +91-96504-35454 Fax: +91-011-23275021, 23241613 Email: Firm's Website: Resource Website: www.auditfirm.net Offices at: Faridabad, Bangalore, Bikaner, Chennai, Dhanbad, Ernakulam, Guwahati, Hyderabad, Raipur, Rajkot, West Bengal, Ranchi, Shimla, Kolkata UKHSDP PROJECT-5948 IN Reconciliation of Claims to Total Applications of Funds Ann 2 (Rs. in Lakhs) Particulars Schedules Current Year Previous Project Year to date Bank Funds claimed (A) 1 557.07 66.76 623.83 Withdrawal claims for ' half year as per 468.49 29.40 497.89 IUFR Withdrawal claims for 2nd half year as per 88.58 37.36 125.94 IUFR Total Bank funds claimed 557.07 66.76 623.83 Total expenditure made during the year (B) Expenditure as per books of acount 698.53 77,56 776.09 Less: Ineligible expenditure (C) II Expenditures not claimed (D) III Total eligible expenditure claimed 698.53 77.56 776.09 (E)=(B)-(C)-(D) World Bank Share @ 80% of (E)=(F) 558.82 62.04 620.86 Excess/ Shortage of claims over (1.75) 4.72 expenditure (A)-(F) Finhuj 'aliiptroller Project Director Notes: 1. Total expenditure made during the year (B above) must be the same as the Total Project Expenditure (A) shown on the Statement of Sources and Applications of Funds. 2. Expenditures not claimed (D above) may reflect timing differences for eligible expenditures incurred during the year but claimed after the year end. For N. C. MITTAL & CO. C Aoatnt Annexure 1 UKHSDP PROJTECT-5948 IN Sources and used of Funds (Amount in Rs. Lakhs) Expendit Non claimab Eligible Reimbu Reimbu Particulars le Expendit rsement rsable ure % amount FOR the FOR year the year (3) = (1) - Sources 1 2 (2) 4 5=3x4 Opening Bank Balance as on 01.04.2018 316.72 316.72 80% Add: Amount received during the year 1,648.32 1,648.32 Add: Interest 20.24 20.24 Add: Prior Period Interest 0.73 0.73 Total Sources 1,986.01 1,986.01 Expenditure by Component: Component 1:Innovations in engaging the private sector Sub-component 1.1: Innovations in integrated delivery of healthcare services 480.00 480.00 80% 384.00 Sub-component 1.2: Innovations in H lealthcare Financing Component 2: Stewardship and System Improvement Project core team and office expenses 218.53 218.53 80% 174.82 Capacity building, Information System, Research as per PP TOTAL Uses (PROJECT EXPENDITURE) 698.53 698.53 80% 558.82 Closinz Balance as on 31.03.2019 1,287.48 _1,287.48 _ _ FinaA iijiroller Project irector WD"'' A1ccou% Notes: 1. This financial statement is prepared on CASH basis of accounting. 2. Any other project specific Note. For N O.N1TTAL Co. \j§E r'J_- Chartered Accountants Independent Auditor's Report To, Project Director Uttarakhand Health System Development Project 2nd Floor, Indian Red Cross Society Building P.O.Gujrara, Dandalakhond, Sahastradhara Road, Dehradun, Uttarakhand Report on the Audit of the Project Financial Statements Opinion We have audited the accompanying special purpose financial statements of Uttarakhand Health System Development project (the Project) financed by the International Development Association (IDA) under Credit/Loan 5948-IN and implemented by Department of Medical Health & Family Welfare, Uttarakhand. These financial statements comprise of the Statement of Sources and Uses of Funds, Statement of reconciliation of claims along with notes to accounts to these financial statements, including a summary of significant accounting policies (collectively referred to as the "Project Financial Statements"). These statements are the responsibility of the Project's management on which we are expressing our opinion on the Financial Statements provided by them and other documents connected with the records, maintained & produced before us to base our opinion. Our responsibility is to express an opinion on the accompanying financial statements based on our audit. In our opinion, the aforesaid special purpose Project Financial Statements give a true and fair view of the financial position of the Project as on March 31, 2019, and receipts and disbursements of the Project for the year ended on March 31, 2019 and the expenditure of the Project for the year ended on March 31, 2019, in accordance with the financial reporting provisions of Section 5.09 of the General Conditions of the World Bank read with the Financing Agreement and Project Agreement both dated 23rd Day of March 2017. Basis for Opinion We conducted our audit in accordance with the Standards on Auditing issued by Institute of Chartered Accountants of India (ICAI). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the implementing agency in accordance with the Head Office: Behi House, 13, Daryaganj, New Delhi, 110002 Ml,- Phone: +91-93151-01923, +91-96504-35454 Fax: +91-011-23275021, 23241613 MI Email: n _ * * om Firm's Website: Resource Website: www.auditfirm.nct r Offices at: Faridabad, Bangalore, Bikaner, Chennai, Dhanbad, Ernakulum, Guwahati, Hyderabad, r Rajkot, West Bengal, Ranchi, Shimla, Kolkata Nu01 it el Mawe. Chartered Accountants ICAI's Code of Ethics for undertaking this assignment, and we have fulfilled our ethical responsibilities in accordance with ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter We draw attention to the PFS describing the basis of accounting. The PFS is prepared to assist the Uttarakhand Health System Development Project to meet the financial reporting requirements of the Project's Financing Agreements for Investment Project Financing dated 23rd March 2017 in respect of preparation of the Project Financial Statements in a manner to reflect the operations, resources and expenditures related to the Project. As a result, these special purpose financial statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter. Responsibilities of Management and those charged with Governance for the Project Financial Statements The Management of the implementing agency is responsible for the preparation and fair presentation of the Project Financial Statements in accordance with the financial reporting framework described in these financial statements, and for such internal control as management determines is necessary to enable the preparation of Project Financial Statements that are free from material misstatement, whether due to fraud or error. The Management and those charged with governance are responsible for overseeing the implementing agency's financial reporting process. Auditor's Responsibilities for the Audit of the Project Financial Statements Our objectives are to obtain reasonable assurance about whether the Project Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Standards of Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Standard of Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: TA Head Office: Behl House, 13, Daryaganj, New Delhi, 110002 NE EI Phone: +91-93151-01923, +91-96504-35454 Fax: +91-011-23275021, 2324161 Email. iAc Firm's Website: Resource Website: www.auditfirm.net Offices at: Faridabad, Bangalore, Bikaner, Chennai, Dhanbad, Ernakulum, Guwahati, Hyderabad, Raipur, Rajkot, West Bengal, Ranchi, Shimla, Kolkata Chartered Accountants * identify and assess the risks of material misstatement of the Project Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. * evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Evaluate the overall presentation, structure and content of the Project Financial Statements, including the disclosures and whether these financial statements present the Project's operations and underlying transactions and events in a manner that achieves fair presentation in accordance with the financial reporting provisions described in Notes to the Project Financial Statements. * communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. * provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Other Matter The implementing agency Uttarakhand Health & Family Welfare Society has prepared a separate set of entity financial statements for the year ended March 31, 2019 on which M/s Sanjay Kalyani & Co. (Lucknow) have issued a separate auditor's report to the Governing Body dated 17th December2019 and expressed an unmodified audit opinion. Report on Other Legal and Regulatory Requirements Further to our opinion on the Project Financial Statements we further report that: NE Head Office: Behl House, 13, Daryaganj, New Delhi, 110002 Phnne- in1 rvi1,1 0ni7m, 191-96504-35454 rax- 1.91-011-2127,021, 23241G13 Email: Firm's Website: h: t d Resource Website: www.auditfirm.net Offices at: Faridabad, Bangalore, Bikaner, Chennai, Dhanbad, Ernakulum, Guwahati, Hyderabad, Raipur, Rajkot, West Bengal, Ranchi, Shimla, Kolkata Chartered Accountants 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 accounts have been kept by the implementing agency for Project purposes so far as appears from our examination of those books; c) the Project Financial Statements dealt with by this report is in agreement with the books of accounts; d) the Project funds were utilized for the purposes for which they were provided; e) expenditures, including assets created under the Project, shown in the PFS are eligible for financing under the Project Financing Agreements; f) Interim Financial Reports (IFR) submitted by the Project management can be relied upon to support applications for withdrawal of the Loan, and adequate supporting documentation has been maintained to support these claims; g) Procurement has been carried out in line with the agreed procedures as detailed in the Operations Manual/Procurement Manual/Project Implementation Plan/Legal Agreements; and h) The Project has an adequate internal financial control system (including IT controls) and such controls were operating effectively as at March 31, 2019 and the Project complies with the provisions on financial management contained in the Operations Manual/ Project Implementation Plan/ Financial Management Manual, in all material aspects. For NC Mittal & Co Chartered Accountants FRN: 000237N ci Nohar Chand Mittal Aco (Chartered Accountants) (MRN: 014213) Place of Signature: Delhi Date: 29/01/2020 UDIN: 20014213AAAAAE8471 Head Office: Behi House, 13, Daryaganj, New Delhi, 110002 Phone: +91-93151-01923, +91-96504-35454 Fax: +91-011-23275021, 23241613 Email: Firm's Website: Resource Website: www.auditfirm.net Offices at: Faridabad, Bangalore, Bikaner, Chennai, Dhanbad, Ernakulum, Guwahati, Hyderabad, Raipur, Rajkot, West Bengal, Ranchi, Shimla, Kolkata