NATIONAL AUDIT OFFICE S TC(&AM1PFA 04 18/12June 2019 T he Secretary Ministry of l iighwa\ s. Road Development and PetroleumI R esources Development. Report of the Auditor General on the Financial Statements of the Transport Connectivity and Asset Management Projeet for the year ended 31 Decemher 2018. 01. Vinaincial Statements 1.1 Opinion The audit of the financial statements of the T ransport Connectivity and Asset Management Project for the year ended 31 Decernber 2018 comprising the statement of financial position as at 31 December 2018 and the statement of financial performance and cash flow statement for the year then ended, and notes to the financial statemnnts. icluding a pursuance of provisions in Articie i 54(1) io the Constiui of the Demcratic cilis Republic of Sri Lanka read in conjunetion witli provisions in the Credit Agreement No. 5788 SRI - .K dated 29 September 2017 entered into between the Democratic Socialist Republic of Sri Lanka and the International Development Association ( IDA). In my opinion, the accompanying financial statements give a true and fair view of the financial position of the Project as at 3 1 December 2018, and of its financial performance and the cash flow-s for the year then ended in accordance with Sri Lanka Public Sector Accounting Standaids. 1.2 Basis for Opinion I conducted my audit in accordance with Sri ILanka Auditing Standards (SLAuSs). My responsibilities, under those standards are further described in the Auditor's Responsibilities flor the Audit of the Fiinancial Statements section of m' report. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. 1 1 3 tlher information on performance of the ProjeCt Tle olher infiormiion an stated beltw does not includ in te financial statements und mny opikion ihereo docs not cov er the otlici information. Tle ObJcti\ceo tbe Pject is to strengthen the capacity of the Road Declopmenit nuthoit on asset management and implementation f a Design- !3uild-Nlaintenance system using an Oput and Pcrlfomiiiiance 1ased Road Contrac M uranae krinciples. 1icrefoire pilo programs bad been iiplemenled to maintain the sections of PPiagoda - Puttalam Road fronm Ja-1a to ChiMla. However, tbe Ninisters of Cabinel had decided at its neting held on 15 August 2018 to restructnrc of the scope of works of the ProJect, after incurring a sum of Rs,91.23 mill on 6or land acquisitions, survcying, esiing of works and other operatäng costs by te Projcct up to 31 Decembc 2018. lFrtier, tbe detailed ork plan under te nvw scopc ol works had not been prepared and concurrnce of tbe Lending Agency bad not been obtained even as at 31 December 201 i Furher. no records had been iaintaiiind bi the Projct to enable to mcasure tbe physical progress of the m wIks as at 31 Decembei 2018. According to the information received, out f tbc allocations of USS 125 nillion (SDR 90.5 million) equivalent to Rs.18,125 million madc in te Dcelopmcnt Credit Agrceint, an allocation of USS 100 million equiv alent to Rs.14.500 million bad been translertred subscquently to tb Mienistry of Provincial Council. ocal Govnemment and Sports lor improEmc1t purposes of tbc provincial roads. FurthrC, out of tbc remuaining balance, only a sum of USS 15 milloin equivalent to Rs.2,175 million bad been allocated to continuc the activitics of Project and the balance of USS 8K5 milbon equivalent to Rs.1,232.50 million bad been transferred to te Road Mainitenanec Trust Fund. Eventhough the ac\ties of te Project had been commenced on 30 June 2016 only a sum of Rs.96.97 million bad been utillied as at 31 December 2018. 2 ilTheProjc had PliO/e only sum o du k ": k i e ei eniding Agency on I January 2018 T lance amous of RN25). 4 million had rmained un-pent in the Special Dollar Accou mintained Ile Ce itiral Banka o Sri I.anka on behaiolflhe Project. 1.4 Respolsibilities of anagemet ad hIlose Charged wt ilG] oernace for thle Financial Statements Management is responsible for ile prelpalion of i-Inancial staemIents that give a true and t-air \iw in accrdance itl Sri Lanka >uli Sector \ccounti ig Sandards and fo such internal control as maieent deterimine is necessary to eiable the preparation of financial sttements thait are free froi mlaterial mi sstatcment, whether due to fraud or errør. Those charged with governance are responsible Ior oversceinllg le Proect's financial reporingl! pocess. L S Auditor Responsiiliies for ilhe Audit ut F inaleia NMy objectie is to obtain reasonabil assurance about whether ile iInancial statements as a wvIhole are free from inalerial misstatemicnt.N, wheller due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a hig,h lev el of assurance, but is not a guarantee that an audit conducted in accordance w,ith Sri lanka Auditing Standards will always detect a material misstatemieiit when it exists. Nlisstatements can arise from fraud ør error and are considered material ilf, individually or in the aggregate. tliy culd reasonably be expected to infiluince ih economic decisions ol users taken on the basis of these financial stalements. As part of an audit in acordance w\ ithl Sri Lanka Auditinu Standards, I exerie professional jundgimeni and mainitain professional skepticismi througlout ile audit. I also: (a) identify and a iss the risk of malcrial misstatement of tie financial statements, i hether due to fraud ur error, design and perform audit procedures iesponsi\e to tliose risks, and obtain audit evidence tihat is sufficient and appropriate to provide a NATIONAL AUDIT: OFFICEý 1 basis lor my opinion. he risk of not detecting a nateril missttement resuhing fron fraud is higher than for one resultinc from error, as fraud may involve collusion, forger intentional onssrions, nisrepresentations. or the override of internal control (b) Obtain an understanding of internal control releant to the audit in order to desian audit procedures that are appropriate in the circurstances. but not for the purpose of expressing an opinion on the effectiveness of the Projeci's internal control. (c) Evaluate the appropriateness of accourning policies used and the reasonableness of accounting estimates and related disclosures made by the imaagemiet. (d) Evaluate the overall presentation, strueture and conent of the financial statements. including the disClosures. and ohether the mnancial statements represent the underlying transaetions and evenis in a manner that achieves fair presentation. I communicate with those charged with governance regarding, among other natters, significant audit tindins, includig any significant deficiencies in internal control that 1 identify during my audit. 2 Report on Other Requirenents of the Donor Agency As required by the International Developnent Association, I state the followings: (a) Ihe basis of opilion and scope and limitations of the audit are as stated above. (b) 111 iy opinion: - The funds proXided has been utilized for the purposes for which they Xwere provided. - The opening and closing balances, withdrawals from and replenishlents to the Special Dollar Account had been truly and fairlv disclosed in the books and records maintained by the Projeet and the balance as al 31 Decenber 2018 bad been satisfactorily reconciled wvith the accounting records of the Central Bank of Sri 1 anka as at that date. 4 TheC mme t of xEpend iIre suritd old be~ fail relied upon to suppior theapleation for reimbursement in accordance w.h he req uiremnt sped'- icifie t in the rcdit A reemn. The satisfaclory measures Ihad been taken hyt icto ea ity te Io I Й . �� .�. � � � й }-�-+ � �� �`"�.� О дй i � I а I .,. ,- .-+ iI д' '�.D �'Г У бС ..... � . . г� , ',. �,,, ГЕ1 ('°°1 U !� �в-� � '�_ � � ~ � 4 у rt'...w I ',, Z7 . . . , ,,. 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Г''ы � �. ,,, 7 ,.. пе - .,, 1.... .,, F'_ } J /J �СуΡа � fiч , ,,, :r '�ч � ,. f -. � � tJ ,' /'�, ,' 4 аz MINISTRY OF11IGHWAYS & ROAD I)FVEI,OPMFNT AND PEA'ROLEUM RESOURCES DEVELOPMENT 'Fransport Connectivity & Asset Management Project NOTES TO'HIE, ACCOUNTS AS AI'31'1'11 DECEMBER - 2018 Note 05. Civil Works & Work-in Progress Ace. Account Name Note As at Movement During As at Code No 31.12.2017 the Year 2018 31.12.2018 Rs Rs Rs Project Expenses - PMU 5 (i) 15,476,674.04 3 1,784,235,12 47,260,909.16 2002 IDRC - User Satisfaction 1,363,933,85 604,562.00 1,968,495.85 Survey 2004 R DC - SIAJ RAP 1,175,932.50 - 1,175,932.50 2005 TNNI - ConCCPtLIal Design,,; 38,238,276. 12 38,2338 276.12 2003 Survey Technologies - I,and 305,500.00 - 305_500 00 Acquisition Survey RAP Including Black, spot - 2006 RDC 0 - 879,750.00 879,750 00 2007 Topography Survey 740,000.00 740,000.00 56,560,316.-Sl 34,008,5.17.12 90,568,S63.63 Note 06. Accrued Expenses Ace. As at Movement During As at Code Account Name 31.12.2017 the Year 2018 31.12.2018 Rs Rs Rs 4004 Project Allowance - Dec 2018 289,524.50 (289,524.50) 323,004.00 4007 OT - Dec 20 18 18,637.8-33 (18,637.83) 47,471 79 4008 Batta - Dec 2018 15,150.00 (15,150AO) 9,100.00 4009 Holiday 36,500.00 (16,500.00) 42,000.00 4033 Vehicle I liring -Dec ?0 18 169,123.00 (169,12100) 157,24 1.339 4037 Security 86,578.57 (86,578.57) - 405 Rent - 215,000.00 4071 Telephone 30,191.69 0, 19 r")) 4,475.08 645,705.59 (645,705.50) 798,292.26 13 MINISTRY OF HIGHWAYS & ROAD DEVELOPMENT AND PETROLEUJM RESOURCES DEVELOPMENT Transport Connectivity & Asset Management Project NOTES TO THE ACCOUNTS AS AT 31TH DECEMBER - 2018 Note 07._Other Current Liabilities As at IVMovement During As at Ace Account Name 31.12.2017 the Year 2018 31.12.2018 Code Rs Rs Rs 5406 RDA Control AC 245,593.77 245,593.77 - 245,593.77 245,593.77 Note 08. Government Contribution As at Movement During As at Ce Account Name 31.12.2017 the Year 2018 31.12.2018 Code Rs Rs Rs 6001 Government Contribution - DF 63,791.425.61 16,604,761.5 1 80,396,187.12 63,791,425.61 16,604,761.51 80,396,187.12 Note 09. World Bank IDA Credit Note As at Mqovenent During As at Ce No 31.12.2017 the Year 2018 31.12,2018 Code Rs Rs Rs 5304 World Bank Advance from IDA Credit 223,183,011.75 223,183,011.75 6002 World Bank IDA Credit 5788 LK ** - 12,941, 183.52 12,944,183.52 6003 Add: Exchange Rate DiferenCe 40,631,933.78 40,631933.78 - 276,759,129.05 276,759,129.0- Expenditure reported and approved by the World Bank local office based on IUFR's submitted. MINISTRY OF HIGIIWAYS & ROAD DEVELOPMENT AND PETROLEUM RESOURCES DEVELOPMENT TJ'ransport Connectivitv & Asset Management Project NO IFS TO THE ACCOIJNTS AS AT 3ITH DECEMBER - 2018 Note 5 - (i) . Project Expens" - Project Management Unit Acc. As at movement During As at Ace' Account Name 31.12.2017 the year 2018 31.12.2018 Code Rs Rs Rs 4001 Salaries - PMJ 3,357,170.08 3,804 ,672.72 7,161,84.80 4002 Salaries - RDA Staff - 11,275,960.16 1 1,275,960.16i 4004 50% Project Allowance - RDA Staff 3,760,552. 17 3,746,825.79 7,5 07,377.96 4005 12% EPr - PMU 402,860.41 458,240.72 861 101. 4006 3%F IT - PMIJ 100,715.12 114,560,23 215,27 5.3 4007 Overime 286,]_16.99 523,758.97 809,875.96 1008 Travelling & Subsistence 207,467.50 122.750.00 330,217_50 4009 iLoliday Pay 86,000.00 96,000.00 182,00000 4010 lGiatuity - 229,439,37 229,439.37 4011 Overhead Charges to RDA 796,895.07 796,895.07 4022 Mainitenance of Office Premises 13,383.00 14,763.00 '28,146.00 4023 Office Equipment Maintenance 4,615.00 647,845.43 652.460.43 4025 Maintenance & Repairs - Vehicle 2,150 00 2, 150.00 4031 Il nsurance License - Vehicle - 21,224,09 21 4. 09 1033 Vehicle Hire Charges 2,781,573.10 1,724,7,19.27 4.506,322,37 4034 Hlectricity 14,384,15 554,918.35 569 302.50 4035 Rent 1,423,407.00 4,229,415.28 5,652 822 28 4037 Seeurity Expenses 941,192.83 337,935.71 I 279 128 54 4042 Consumable 24,23 4 56 2,700.00 26,954.56 4043 Stationary 118,218.38 102,159.05 220,377.43 4045 Newspapers 60.00 130.00 190.00 4051 Staff Trainig - Local 35,000.00 30,110,10 65,410.10 4053 Membership Subscriptons 18,363.39 I 6,583.00 34,946.39 4071 Telephone 385,470.05 20 1 A 32' 586,91 I. 4073 Water -22_278 57 2 2,.278.57 4074 osa I t 00 12 445 00 ' I05.00 15 MINISTRY OF HIGHWAYS & ROAD DEVELOPMENT AND PETROLEUM RESOURCES DEVELOPMEN'T Transport Connectivity & Asset Management Project NOTS TO T11F ACCOUNTS AS AT 31TH DECEMBER - 2018 Note 5 - ( i) . Proect Expens -ei As at Movement During As at Acc. 31.12.2017 the year 2018 31.12.2018 Code Rs Rs Its Total B/F 13,969,119.73 29,088,095.10 43,057,214.83 4076 Cleaning Services 260.00 260.00 4077 Advertisement -528,471.00 528,471 00 4080 Miscellaneous 1,480.00 1,229.92 2,709-92 4083 Entertainment 92,919.00 11 1,2800 204,1 57.0 4084 Site Visit Expenses 2,065.00 9,93>00 12,000.00 4085 Stamp Fee 103,200_00 103,200 00 4086 Work shop & Awareness Programme 20,64500 20,645 00 4087 1 Fuel 700000 7000.00 4088 Othice Shifling 215,000.00 21.5,00000 4090 Translation 5 1, 17.50 51,137.50 4100 Depreciation - Software & Accessories 1,287,245.31 1,386,889.23 2,674,134.54 4101 !Depreciation - Partitioning 3107607 310,7077 4 102 Depreciation - Telephone System 27,810.21 27,810.? 4103 Depreciation - Office Network 33,006.40 3366.4) 4104 Depreciation Narne Board 886.88 886.88 4105 Depreciation - Water Boiler 1,271.46 1,271 4 4106 Depreciation Furnishing 10,5---- ----5---- - 15,476,674.04 31,784,235.12 47,260,909.16 16C MINISTRY OF HIGHWAYS & ROAD DEVELOPMENT AND PETROLEUM RESOURCES DEVELOPMENT Transport Connectivity & Asset Management Project Trail Balance As atL31.12.21018lh__ Account Account Ir. (LKR) Cr (LKR) Code -_---- 2002 Road Usci Satisfaction Surveys- IDRC 1,968,495.85 2003 Land Acquisitions Survey - 07 Location - Surveys 305,500.00 Technologites 2004 SIA/ RAP RDC 1,175,932.50 2005 TNM 38,238,276 1 2006 RAP Including Black spot - RDC 879,75000 2007 Topography Survey 740,000.00 3012 Telephone System 149,500,00 Computers. Computer Accessories & Softhvare- Asset 5,642,1300 301 --,63027.540 3017 Partitioning 1,637227.54 3018 Office Network 361,962.50 3019 Name Board 9,900.00 3020 Water Boiler 15,610.00 3021 Furnishing 115,420.00 4001 Salaries - Contract Staff 7,161,842.80 4002 Salaries IRA Staff 11,275,960 16 4004 50% Project Allow ance RD Stafl 7,507,S7af96 4005 12% LEP PMU 861,101 1 4006 3% ETI - PMU 215,275 35 1007 Overtirne 809,875.96 4008 Travelling & Subsistence 330,217.50 4009 Holiday Pay 182,000M00- 4010 Gratuity 22 9,43 9.3 7- 4011 Overhead Charoes to RI)A 796,89-11.[- 40'2 Maintenance ol'Ottice Premises 28,146.00 4023 Maintenantce of Off-ice Equipment 652,60.43 1(P4 Maintenance & Repairs -Vhce2150,00- 4031 Insurance & License Vch 2 4 403 Vehicle Ilire Charges 406,322.37 40 14 Electricity 569,302.50 17 Account Account Dr. (LKR) Cr. W Code ---_--_-_-_- 92,042,117.48 TIotal B/F- - - - 179,1'28.54 4037 Security Expenses - - ~26,954.5 4042 Other Consumahle - Tools ------_-_- 220,377.43 4043 Stationery & Prining --- 4045 Newspapers Periodicals & Books 65,410.10 4051 Training - Local 4053 Memnber-ship Subscriptions34969 586,911.27 4071 Telephone - 22,278.57 4073 Water-- - 18,605.00 4074 Postage Charges 4076 Cleaning 200 528,471.00 4077 Advertisement -- 2,709.92 4080 Miscellaneous Expenses 4083 Lntertaimmenlt 2 4084 Sit Visit Expenses12000 03,200.00 4085 SlItmp F ees -- 4086 Workshop & Awareness Programme 20,645.00M- 7,000.00 4087 Fuel Expenses ~ý8- -fieSitn 2 15,000A00 4089 RDA Bonus, Medical & Others 4090 Translation Fee 51,137.50 4100 Depreciation - Software & Accessories 2,674,134.51 310,760.77 4101 Depreciation - Partitioning 0 4102 Depreciation - I elephone system 27,810.21 4103 Depreciation - Network 33,666.40 4104 Depreciation - Name Board 886.88 4105 Depreciation Water Boiler ,27 6 4106 Depreciation - Furmshin 10,583 65 i101 BOC CIA 7040509 8,037,513.73 5102 Central Bank Special Dolar Account 252,140,1887- 5103 BOC CIA 7040463 5202 Petty Cash Imprest -- 5205 Festival Advance 07I Local Purchase Adance 18 Account Account Dr. (LKR) CAcu (LKRZ) 5304 W358f678,31611 Total B/F -- 1--580,000,00 5250 Refundable Deposit for Rent 1401) Imprest Fund Account - D)F- - - - -- - - 798,2921M 5302 Accrued Expenses2318017 5304 World Banik - Advance from IDA - 5401 Salary Payable--- - - - - 5402 EPF Payable --- -- 5403 ETF Payable -----_--_- 5404 PAYF Tax Payable 5405 Salary Control RDA - _--- _-_--- - 245,593,77 5406 RDA Control A/C 5408 Creditor - IDRC -- - ---- - 5409 Creditor - GIS Solutions 41 1 Creditor - B. D. Prernarathe---- 54Creditor - Damm -To-u-r-s- 544 Creditor -PraveenTours &Travel 54 15 Ci editor Sool iv', 1N'Te S___________ 51 0 WlIlT Payable 5,140 CBfBOC (7040509) Control Account - 2,674,134.54 5501 Provision for Depreciation - Software & Accessories ---- arttion-- 310,76037 5502 Provision for Depreciation - Partit oning 27,810.21 5503 Provision for Depreciation -Telephone System -- - 33,666.40 5504 Provision for Depreciation - Network 886 88 5505 Provision for Depreciation - Name Board 1,271.46 5506 Provision for Depreciation - Water Boiler 5507 Provision for Depreciation - Furnishing- -10,583.65 6001 Government of Sri Lanka (GOSL) 80,396,18712 6002 Wu ld Dank IDA Credit 57881 k 12,944,1815- 6003 Difference In Exchan,1 40,631,9337 Total 361,258,316.11 361,258,316.11 ~19