III låfi (m¯ ) gud Indian Audit & Accounts Department Office of The Director General of Audit (Central), l Trdi i Pol Chandigarh - ~ /T ~rTr/2019-20/ Dated: IS-09-2019 The Director NHP, BBMB, Flao. 67 -70 SLDC Complex, MB Colony, Industrial Area Phase-1, \ Chandigarh. I fi4ýT i 2018-19 z ý T r r f ur W~ (LAR) vzf vqmff~r uf (Audit Certificate) A~~ CnI'cc«- zpar4 2018-1.9 Zý cW~rr È-Fr f~ Date (LAR) iT um ~faer f (Audit Certificate). xffir wrdr vrrT ti9 1. f jur jM (LAR) 2. minwhur M ~ ~r (Audit Certificate) dif 4 2018-19 i fW1iar fM (LAR) f f- Z r,, v æ w~ ~ 1. The Secretary, GOI, Ministry of Water Resources, RD & GR National Hydrology Project Unit 2"d Floor, Rear Wing, MDSS Building 9, CGO Complex, Lodhi Road, New Delhi 110003. 2. The Secretary, GOI, No. 201, Shram Shakti Bhawan, Ministry of Power, New Delhi- 110001. . 20-21, Y - 17t, 160017 Plot Nø. 20-21, Sector-17E, Chandigarh - 160017 -W/ Tel.No0172 . - 2782020 IbW/ FAX No:0 172 - 2782021 2783974 t-4If/E EmaIl :pdacchandigarh@cag.gov.in Indian Audit & Accounts Department Office of The Director General of Audit (Central), Chandigarh '1t: 3ft ( ) /#ctzVT/NJP-BBMB/2ol 9-20/ fTi Audit Certificate The Expenditure Statement/Financial Statements relating to the National Hydrology Project in BBMB (Loan No.8725-IN) for the year 2018-19 attached hereto have been audited in accordance with regulations and standards of audit of the Comptroller and Auditor General of India and accordingly included such tests of accounting records, internal checks and controls, and other auditing procedures necessary to confirm - (a) That the resources were used for the purpose of the project and (b) That the expenditure statement/s financial statements are correct. During the course of audit referred to above, Statement of Expenditure/ Interim Unaudited Financial Reports for Rs.1,45,79,254.06 and the connected documents were examined and these can be relied upon to support reimbursement under the aforesaid loan/credit agreement. On the basis of the information and explanations that have been obtained as required and according to the best of our information as a result of the test audit, it is certified that the Expenditure Statement/ Financial Statements represent a true and fair view of the implementation and operations of the Project for the year 2018-19. Net admissible amount is Rs.1,44,97,914.06 This certificate is issued without prejudice to CAG's right to incorporate any further/detailed audit observation if and when made in the Report of CAG of India for being laid down before Parliament/State Legislature. D/puty Director Central Expenditure uFT r. 20-21, # -17, W-T-160017PlotNo. 20-21, Sector-17E, Chandigarh - 160017 ?KiTe.No.0172- 2782020& 27061174m/FAX No:0172-2782021 I 2783974t-/Email:-pdacchandigarh@cag.gov.m Audit Report of the Comptroller and Auditor IGeneral of India in respect of World Bank Aided National Hydrology Project, BBMB, Chandigarh for the year ended 3111 March 2019 Report on the Project Financial Statements We have audited the accompanying financial statements of World Bank aided 'National Hydrology Project' which comprise the Statement of Sources and Applications of funds and the Reconciliation of claims to total applications of Funds for the year ended 31s March 2019. 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. Those 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 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. In our opinion, the financial statements present fairly, in all material respects the sources and applications of funds of the National Hydrology Project for the year ended 31st March 2019 in accordance with Government of India accounting standards. In addition, in our opinion, (a) with respect to Interim Unaudited financial Reports (IUFRs), adequate supporting documentation has been maintained to support claim to the World Bank for reimbursements of expenditures incurred and (b) except for inadmissible expenditures of Rs.81340/- as detailed in the audit observations, appended to this audit report, expenditures are eligible for financing under the Loan/ Credit Agreement. During the course of the audit of Interim Unaudited Financial Reports (IUFRs), an amount of Rs.1,44,97,914.06 can be relied upon to support reimbursement under the Loan/ Credit Agreement. The audit report is issued without prejudice to CAG's right to incorporate the audit observations in the Report of CAG of India for being laid before Parliament/ State or UT Legislature. Deputy Director Central Expenditure PROJECT FINANCIAL STATEMENT Annexure -1 STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS Consolidated Statement of Sources and Application of Funds Report for the year ended 31 st March 2019 Name of the Project: NATIONAL HYDROLOGY PROJECT Name of Proect Implementing Agency (PIA):Bhakra Beas Management Board Loan! Credit! Grant No.8725-IN Particulars Current FY Last FY Cumulative for the Project SOURCES OF FUNDS World Bank (A) Funds - GEF Others (B) 1,00,00,000 1,49,00,000 2,71,50,000 Total Sources Sum 1,00,00,000 1,49,00,000 2,71,50,000 (A to B) APPLICATION OF FUNDS Component 1 (C) Water 20,04,571.80 2,07,360 22,11,931.80 Resources Monitoring System Component 2 (D) Water Nil Nil Nil Resources Information System Component 3 (E) Water 49,19,988 25,18,215 74,38,203 Resources Operations and Planning Systems Component 4 (F) Institutional 7654694.26 867165.65 10136071.91 Capacity Enhancement Tota nt (G)=Sum 14579254.06 3592740.65 19786206.71 Expenditure (C to F) Advances H Nil Nil Nil Total (G+F) 14579254.06 3592740.65 19786206.71 Applications Dep Director Central Expenditure Annexure -2 Loan/Credit/Grant No.8725-IN Reconciliation of Claims to Total Applications of Funds Report for the year ended 31st March 2019 Schedules Amount (Rs.in lakhs Current Previous Project to Year Year date Bank Funds claimed during the year I 100.00 149.00 271.50 A IUFR 1 IUFR 2 IUFR 3 IUFR 4 IUFR 5 Total Expenditure made during the 145.79 35.93 197.86 year (B) Less: Outstandin Advances C II-- Ineli ible ex enditure (D (-) 0.81 -- -0.81 Ex enditure not claimed E IV Expenditure not covered for allocation i.e. 100% money will be reimbursed by some other funding a encies (F) Total Eligible Expenditure Claimed 144.98 35.93 197.05 Deputy Director Central Expenditure - & i-［「！ :--F「――떼 Audit Report of the Comptroller and Auditor General of India on the financial statements of World Bank aided National Hydrology Project for the year ended 3111 March 2019 Director NHP-BBMB, Flat No.67&70, Industrial Area-1, Chandigarh Report on the Project Financial Statements We have audited the accompanying expenditure statements of World Bank aided NationalHydrology Project (financed under World Bank Loan No.8725-IN) which comprise the Statement of Sources and applications of funds and the reconciliation of claims to total application of funds for the year ended 3 I't March 2019. 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. Those 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 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. In our opinion, the financial statement present fairly, in all material respects, the sources and applications of ftmds. of World Bank aided National Hydrology Project for the year ended 3 1 st March 2019, in accordance with Government of India accounting standards. 11 In additional, in our opinion, (a) with respect to statements of expenditure, 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 observations appended to this audit report, expenditure is eligible under the Loan Agreement No. 8725-IN. Ouring the course of audit, statements of expenditure/UIFR and connected documents were examined and these can be relied upon to support reimbursement under the Loan Agreement. This certificate is issued without prejudice to CAG's right to incorporate the audit observations in the Report of CAG of India for being laid before State Legislature. Audit Observation: Sr. Para Subject No. No. Amount (Rs. in lakhs) 1 1 Irregular expenditure on account of Air Travel tickets 0.81 2 2 Non-utilization of funds 3 3 Non-conducting of Internal Audit of NHP Project by CA -- Firm 4 4 Slow pace of utilization of funds during the year 2018-19 -- Deputy Director Central Expenditure Component of Expenditure for the year 2018-19 (National Hydrology Project) Sr. Component Name of the Target as Target (Rs. in lakhs) No. Poetagta Tagt Achievement Balance Project per against against Amount AWP available available (Grant- fund in-aid) 0 ening Balance 1 A Water 294.00 20.04 273.96 Resources Monitoring System 2 B Water 5.00 Resources -- 5.00 Information System 3 C Water 170.00 Resources 120.80 Operations and Planning 4 systems 4D Ihnstitu-tional -233-0 Capacity 7.5164 Enhancement Total 702 145.79 556.21 (3' Audit Officer As no other material came to the notice during audit other than audit observations mentioned in the audit report on financial statements of the National Hydrology Project (Credit No.8725-IN) for the year 2018-19, no management letter has been prepared. Deputy Director Central Expenditure Audit and Inspection report on the accounts of the National Hydrology Project (Loan No.8725-IN) for the year 2018-19. Part-1 (A) Introduction National Hydrology Project (NHP) is World Bank aided project to improve the extent, quality and accessibility of water resources information and to strengthen the capacity of targeted water resources management institutions in India. The project was started on 23.06.2016 by Government of India on G.R&R.D, approved by Ministry of Water Resources The Project consists of following four components:- A. Water Resources Monitoring System B. Water Resources Information System C. Water Resources Operations and Planning Systems D. Institutional Capacity Enhancement A loan agreement (No.8725iBN) was signed on 08.14.2017 between Government of India and International Bank for Reconciliation and Development (IBRD). A Memorandum of Agreement (MoA) was signed on 07.11.2016 between Ministry of Water Resources, River Development and Ganga Rejuvenation (MoWR, R.D&G.R), Government of India and BBMB for implementation of NHP from 2016-17 to 2023-24 as a Central Sector Scheme. The project will be of 8 years duration and would be taken in two phases of four years each. Geographical Jurisdiction: -The office of the Deputy Director, NHP is situated at '.No.67 & 70, SLDC Complex, Industrial Area, Phase-I, Chandigarh and the Di rHis situated at Plot No.6-B, Sector-19-B, Chandigarh.' Budget and financial performance: The details of budget and expenditure incurred there against during 2017-18 is as under:- Year Grant-in-Aid Expenditure Opening Balance 1,26,66,942.35 Receipt from 1,00,00,000 Component A 20,04,571.80 Government Component B Component C o1 988 ToaComponent D 76,54,94.26 'Total2,26,66,942.35 Total (B) Scope of audit The present audit certification which embraced verification of expenditure, test check of records and examination of books of accounts of National Hydrology Project implemented by the BBMB Chandigarh for the year 2018-19 was conducted by an audit party consisting of Shri Gur Parshad, Assistant Audit Officer w.e.f. 08.07.2019 to 19.07.2019 under the supervision of Shri Raj Paul, Audit Officer. DISCLAIMER This Inspection report has been prepared onl the basis of information~ furnished and made avail Iable by the department. This office disclaims any responsibility for mis-information a nd/or non-information on the part of the auditee. Part-1I: Audit findings The result of the current audit has been incorporated in the succeeding paragraphs. Part-I Section-A: Serious Irregularities -NIL- Part-II Section -B :-Other Irregularities Para-:1 Irregular expenditure on account of Air Travel tickets Rs.0.81 lakh Ministry of Finance, Department of Expenditure, New Delhi vide O.M.No924/1/2009eEdIV dated 16.09.2010 followed by O.M.No. 19029/22/2017-E-IV dated 19.07.2017 directed to ensure strict compliance of extant guidelines for purchase of air tickets directly from Airlines (at Booking counters/ office/website of Airlines) or from three authorised Travel agents viz. M/s. Balmer Lawrie & Company Ltd., M/s. Ashoka Tours & Travels and IRCTC only by all officials / offices under their control. During scrutiny of records of the office of the Director, National Hydrology Project, Chandigarh, it was noticed that officers/officials were travelling by air by purchasing air tickets thorough unauthorized agents/airlines. A few instances are as under- Sr. Name & Designatio Air Travel wat instances. a asunde: No. /Shri fom o travel Date (Rs.) Airline S.K.Seth, Director N. Delhi Ahmadabad 21.2.18 & 05 dated 7978 Spciejet 25.2.18 28.5.2018 2. Saurabh Garg, ADE N. Delhi Ahmedabad 21.2.18 & 06 dated 8717 Go Air 24.2.18 28.5.2018 . Ajay SinghKundu Delhi Pune 12.2.18 to 07 dated 24317 Air ADE16.2.2018 28.5.2018 India(n authorize 4. S.K.Seth, Director Chandigarh Delhi '24.4.2018 10 dated 20164 aet) 27.4.2018 30.7.2018Aiwy 5. Saurabh Garg, ADE Chandigarh Gangtok 24.4.2018 03 dated 20164 Jeiray 27.4.2018 03.01.2019 Airways Total 81340 On being pointed out in audit, it was stated that detailed reply will be submitted after verification of records. Para-2: Slow pace of utilization of funds during the year 2018-19 With the objective to improve the extent, quality and accessibility of water resources in formation and to strengthen the capacity of targeted water resources management institutions, the National Hydrology Project (N rP) was started in 2016-17. The project consists of following four components:- A. Water resources monitoring system B. Water resources information system C. Water resources operations and planning systems D. Institutional Capacity enhancement Further, as per the Memorandum of Association (MoA) signed between Ministry of Water Resources, River Development & Ganga Rejuvenation (MoWR R.D &G.R), Govt. of India and Chairman, BBMB, Chandigarh on 07.11.2016 for the implementation of NHP. The project cost is Rs.30.00 crores and to be completed in 08 years duration (2016- 17 to 2023 -24) in two, phases of four years each. The 1st phase is going to be completed in March 2020. The Implementing Agency will prepare 08 years project Implementation Plan (PIP) and will prepare an Annual Work Plan (AWP) for the Project every year. These Plans will be appraised and approved by the Ministry of WR and RD & GR. The National Hydrology Project as a whole was of Rs.3679.77 crore and the outlay of I stage is Rs.1681.57 crore and that of Stage II Rs.1998.20. During scrutiny of records, it was noticed that Annual Work Plan (AWP) for the year 2018-19 was approved for Rs.702.00 lakh. The funds position under the project (BBMB) for the year 2018-19 was as under:e Openig BaanceRs. in lakhs Receipts during the year 166 Funds available for utilization 100.00 Other receipts (interest, penalties etc) 4.46 Grand Total 24.4 Expenditure 1.13 Amount deposited in Bharat Kosh 4.52 Closing Balance/ unutilized funds 80.82 includes expenditure of Rs.54.62 lakh incurred on International onference held in December 2018. The data reflects that total funds available were Rs.226.67 lakh, against which expenditure to the tune of Rs.145.79 lakh only were utilized during the year 2018-19. The percentage of expenditure against available funds was 64% and against approved AWP was only 21%. No expenditure was incurred under component B (Water Resources Information System) whereas a provision of Rs.5.00 lakh was made in AWP. Since the I't Stage is likely to be completed by March 2020, the accumulated expenditure on project upto March 2019 was Rs.202.38 lakh, thus, the achievement of targets was far behind. On being pointed out in audit, it was stated that detailed reply will be submitted after verification of records. Para-3 Non-Utilization of Funds Para 38 of Project Appraisal Report of the World Bank provided that the Ministry of Water Resources, River Development and Ganga Rejuvenation (MoWR, RD&GR), Governent of India will release funds in two tranches each year through Direct transfers into lAs Bank Account. For all fund releases following first trancbe, the state and Central lAs will be required to submit documents as outlined in the MoA. Fund flows to the state and central lAs will be based on the actual expenditure and contractual commitments of the IAs. The milestone for release of payments are outlined as under Tranche Period Conditions of release First (upto 60% April- On fulfilling conditions imposed at the time of release of of the AWP) May previous tranche. *IUFR for the previous half year and C for the previous period * Audit Report for the previous FY, which are due before the tranche is required. Second (Balance October- On the request of the PMU of all IAs, in prescribed proforma and of the AWP) November on fulfillment of the following conditionsp * Utilization of atleast 60% of the actual available funds (including opening balance) and submission of Utilization Certificates. The opening balance of the PMU not to exceed 10% of the. allocation of the previous year, central funds would be proportionately reduced for unutilized amount. * Audit reports for the last fiscal year (with auditor's remarks) * Utilization Certificates and Bank Reconciliation Statement for the previous year furnished alongwith non-diversion of fund certificate. * IUFR for the previous half year. * Achievement with reference to the AWP. * Other terms & conditions stipulated at the previous release havng eenmet. since in e i scrutiny of records, it was noticed that the position of utilization of funds e Ption of N p project was as under Year balanne recivds oa Expenditure Balance 10% of Excess bal duercingd out of funds balance theryea released released 2016-17 Nil 2250000 2250000 1614212 5788 225000 410788 2017-18 635788 14900000 15535788 3592741 637 15000 1088 2018-19 11943047 10000000 21943047 14579254 1193 19435 16948 Closing balances during the period 2016-17, 2017-18 and 2018-19 remained excess of permissible 10% of allocated funds which was against the above referred provisions. On being pointed out in audit, it was stated that the detailed reply will follow after consulting the records. Para-4:- Physical & Financial Reports Clause 3 OV) of Memorandum of Agreement (MOA) between the Ministry of Water Resources River Development and Ganga Rejuvenation (MoWR, RD&GR), Government of India and Bhakra Beas Management Board (BBMB), Ministry of Power, Government of India for the implementation of National Hydrology Project (NHP) provides thatg Qu arterly Progress Report (QPR) indicating quarterly physical and financial targets/ achievement matching with annual targets certified by the Nodal Officer of the Project Monitoring Unit (PMU) of the implementing agency shall be submitted to the NPMU by the end of month of April, July, October and January positively. QPR shall be submitted through the web based Monitoring Information System (MIS) of NHP. The annual physical & financial reports executed during the immediate preceding financial year will be submitted to the NPMU by July 3lIs' of every financial year. During scrutiny of records, it was noticed that only financial reports were submitted but the physical progress of works! projects executed against the utilized funds was not maintained. Non-maintenance of physical report/status was against the project guidelines and in the absence of maintenance of physical report, the actual physical achievement against the funds utilized could not be verified. On being pointed out in audit, it was stated that detailed reply will follow after verification of records. Para 5 NOn-conducting of internal audit of NHP Project by CA Firm As per provisions made under para 21 of Financial Management Guidelines ol National Hydrology Project framed by the Ministry of Water Resources, River Development and Ganga Rejuvenation (MoWR, RD&GR) Government of India, Internal Audit would be an integral part of the project design. CA Firms would be hired to carry out the Internal Audit of the Project. The firins would be selected on a region wise basis based on the risk perception and the expenditure incurred and progress achieved by the agencies. During scrutiny of records, of the office of the Director, NHP, Chandigarh, it was observed that internal audit of the NHP Project was not conducted by any CA Firm upto the year 2018-19. On being pointed out in audit, it was stated that the matter will be taken up with the Ministry for the purpose. Part-(III):-Review of old objections LAR 2014-15 Para-1 Irregular transfer of grant to the BBMB account Rs. 15.26 lakhs. Para stands. LAR 2014-15 Para-3 Non conducting of physical verification of fixed assets Already settled MoD in 05/2019. LAR 2014-15 Para-2 Non crediting of Rs.65.91 lakh to final head. Para stands. LAR 2016-17 Para-1 Irregular expenditure of Rs.4.27 lakh Already settled MoD 05/2019. LAR 2017-18 Para 1 Incurring of expenditure over and above the sanctioned grant Rs. 6182 15/-. Recommended for settlement. Para 2 Slow utilization of funds Para updated in current LAR, hence, deleted from here. Para 3 Non-formulation of,investment policy and parking of surplus funds in saving bank accounts - loss of interest Rs.1.56 lakh Para is recommended for settlement. Para 4 General Recommended for settlement/ updated in current LAR. Part-(IV):- Best practices: Nothing worth mentioning has been noticed during course of audit. Part-(V)- Acknowledgement Director, National Hydrology Project and his staff extended all possible co-operation and the records called for audit. The environment of audit was very cordial and professional on the either side at the time of audit. Shri Tarun Aggarwal, Secretary, BBMB was holding charge of the office of Nodal Officer-cum-Director, National Hydrology Project, Chandigarh. - Audit Officer