Financial Attest Audit Report on the accounts of Sindh Resilience Project Project Implementation Unit, Provincial Disaster Management Authority, (PIU-PDMA), Sindh WB Loan Project ID P155350 WB IDA-5888 Financial Year 2017-18 AUDITOR GENERAL OF PAKISTAN TABLE OF CONTENTS ABBREVIATIONS AND ACRONYM S ........................................................................................ i P RE FACE ...... ................................................ ........... ............. ..........l............. ........................ i PART-I ................................................... I........................................................... I...................iil Project Overview .............................................................................................. Auditor's Report To The M anagem ent (Audit Opinion).................................. 2 Financial Statem ents......................................................................................... 3 PART-II .................................................................................................... 11 M anagement letter .......................................................................................... 12 Executive Sum m ary ....................................................................................... 13 1 Introduction......................................................................................... 14 2. Audit Objectives ................................................................................. 14 3. Audit Scope And M ethodology .......................................................... 14 4. Audit Findings And Recomm endations............. ............................... 15 4.1 Financial M anagem ent .. ................... 15 4.2 Compliance with Loan C asts .2.................... 21 4.3 Sustainability.............................................................................. 22 4.4 Overall Assessm ent.................................................................... 22 5. CONCLU SION ................................................................................... 23 ACKNOW LEDGEM ENT ................................................................................................ 24 A* ABBREVIATIONS AND ACRONYMS AGP Auditor General of Pakistan DAC Departmental Accounts Committee DM Disaster Management GFR General Financial Rules IBRD International Bank for Reconstruction Development IDA International Development Association ISSAI International Standards of Supreme Audit Institutions IPSAS International Public Sector Accounting Standards NSO National Support Organization P&D Board Planning & Development Board PDMA Provincial Disaster Management Authority PSC Program Steering Committee SFR Sindh Financial Rules SRP Sindh Resilience Project WB World Bank i PREFACE The Auditor General conducts audits under Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan, 1973 read with Sections 8 and 12 of the Auditor General's (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001. The audit of foreign aided project titled "Sindh Resilience Project (PDMA component) for the financial year 2017-18 funded by the World Bank was carried out accordingly. The Directorate General Audit (Disaster Management), Islamabad conducted audit of foreign aided project titled "Sindh Resilience Project (PDMA component) during October, 2017 for the financial year 2017-18 with a view to reporting significant findings to stakeholders. Audit examined the economy, efficiency, and effectiveness aspects of the project. In addition, Audit also assessed, on test check basis, whether the management complied with applicable laws, rules and regulations in managing the project. The Audit Report indicates specific actions that, if taken, will help the management realize the objectives of the project. The Report consists of two parts. Part-I contains Auditor's Report (Audit Opinion) and Financial Statements. Part-II contains Executive Summary, Management Letter and Audit Findings. The Report has been prepared for submission to the World Bank in terms of loan agreement with Government of Pakistan. (Adnan Raltque) Director General December A/, 2018 Islamabad Hi PART-I 1. PROJECT OVERVIEW 2. AUDITOR'S REPORT TO THE MANAGEMENT 3. FINANCIAL STATEMENTS iii PROJECT OVERVIEW Name of Project: Sindh Resilience Project (PDMA component) Sponsoring Authority: World Bank Executing Authority: Provincial Disaster Management Authority (PDMA), Sindh Loan No. / Project ID: P 155350 PC-I Cost: Loan: Rs 1,996.70 million GoS: Rs 499.170 million Date of Commencement: 20.06.2016 Actual Date of Commencement 13.08.2016 Date of Completion (as per PC-I) 2021 Date of Approval as per CDWP 08.06.2016 Loan Closing Date 28.02.2022 Loan Utilization Status in FY 2017-18 Rs 18.697 million Progressive Expenditure upto FY 2017-18 Rs 24.762 million 1 AUDITOR'S REPORT TO THE MANAGEMENT (Audit Opinion) We have audited the accompanying financial statements of Sindh Resilience Project comprising Statements of Receipts and Payments, Statement of Cash flows together with the notes forming part thereof for the year ended 2017-18. Management Responsibility It is the responsibility of project management to establish and maintain a system of internal controls, and prepare and present the Statement of Cash, Receipts and Payments in conformity with the requirements of Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standard. Auditor's Responsibility The responsibility of the auditor is to express an opinion on the financial statements based on the audit conducted. We conducted our audit in accordance with the International Standards of Supreme Audit Institutions. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. The audit process includes examining, 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. Opinion In our opinion: a) The financial statements present fairly, in all material respects, the cash receipts and payments by the project for the year ended June, 2018 in accordance with Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standard. b) The expenditure has been incurred in accordance with the requirements of legal agreements. (A nan Rtque) Director General December 80, 2018 Islamabad 2 FINANCIAL STATEMENTS FOR THE YEAR ENDED ON JUNE 30, 2018 3. GOVERNMENT OF SINDH OFFICE OF THE PROJECT DIRECTOR SINDH RESILIENCE PROJECT (PDMA COMPONENT) Bungiow No:27, Park Lane No. 2. Schar Street No. 21. Off Khayaban-a-Nishst- DHA, Phase -VI. Karachi. Phone: 021-99332496-99 No.PD/SRP/Audit/2018/1 4,2. Dated 304h August,2018 Director General (Audit), Disaster Management Department. Auditor-General of Pakistan, First Floor Block B-Il Benevolent Fund Building, Zero Point, Islamabad. SUBJECT: SUBMISSION OF FINANCIAL STATEMENT FOR FY 2017-18 OF SINDH RESILIENCE PROJECT (PDMA COMPONENT) PR4JECT ID 156350, TF I APPROVAL # IDA 6850- Dear Sir, Reference your letter # 34-Audit Plan(HQ)/TP/2018-19/Vol-II/155 dated 4th July,2018. Please find enclosed required Financial Statement for FY 2017-18 for mandatory audit attestation by your department. 2. We would appreciate for your early completion of the said audit. MUHAMMAD ALl SHAIKH Project Coordinator Slndh Resilience Project (PDMA) Financial Statement FY 2017-18 4 SINDH RESIL1ENCE PROGRAMME PDMA (COMPONENT) - CREDIT No: 5888 (Pk) Statement of Cash Receipts and Payments For the yar ended June 30, 2018 FY-2017-2018 *YMM0U641(107 NOTES o$ Funding Donor Funding Total Go5 Fund4l Donor Ftdlg Total RECEIPTS Receipts from IDA (WB) J 29.657 2957 646 6346 Receipts from GoS (1st Qtr) 11461 1.461 TOTAL RECEIPTS 1.461 29.67 31-117 6SW PAYMENTS Improving Risk Identification and using Risk information for Development Decision - Making . Strengthening Disaster Risk Management Agencies 4-2 ..850 5.850 - 0.650 0650 Enhancing Fiscal Resilience 4-3 - * Capital Expenditure 4.4 - - . - 1.540 1.540 Operational Expenditure 4-5 1.461 11.386 12.847 - 3.875 3.875 TOTAL PAYMENTS .461 17236 18697 - £065 £0S5 Net payments 1.461 17,236 18.697 £065 6.065 Net ReceIpts 1.461 29.657 31.117 61346 6346 Increase/Decrease in cash 12,421 12.421 0.281 0.281 Cash at the beginning of the Year - 0281 0.281 - - - increase/Decrease in cash 421 12.421 0181 0.281 Cash at the end of the year 12.702 112.702 0.281 0.281 AH DS 8 MUHAMMAD AU SHAlKH Fina t Specialist, Project Coordinator, SRP, PDMA (Component) SRP, PDMA (Componeit) 5 SINDH RESIUENCE PROGRAMME PDMA (COMPONENT) - CREDIT No: 5888 (Pk) Cash Flow Statement For the year ended JWneL, 2018 Ruprs in millio FY-2017-2018 17 NOT S Funding unn Total GoS Fundl1 n Total Cash at the beginning of the Year 0.28 281 Feceipts DurIng the year 3 177 29.j57L 31.117 IJ 6.346 6.3461 lExtra Budgeary Receipts .-I- I- Totat Available Funds 1.46! 29.938 31.399 346 Payments During The Year mproving is enti]icabo and using Fsk nfomaton or Development Decision - Making 4-1 Strengthening Disaster Risk Management Agencies 4-2 5850 5.850 - 0.650 0.650 Enhancing Fiscal Resilience 43 - - - Capital Expenditure 4-4 - - 1540 1.540 Operational Expenditure 45 1.46, 11.386 12.847 - 3.875 3.875 Total PMents During The Year 1.461 17.236 18.696.06 6.065 Cash at the end of the year 12.T02 2.702E- 0.281 0.281 H ED 8, MUHAMMAD AU SHAIKH Specialist, Project Coordinator, P, PDMA (Component) SRP, PDMA (Component) 6 SINDH RESUEtENCE PROGRAMME POMA (COMPONENT) - CREDIT NO:5888 (Pk) NOTES TO THE FINANCIAL STATEMENT 1. THE PROJECT FRTEPRO NE UE9.22 Sindh Govemment had conceived a project titled Sindh ReslEnce Project (SRP) with asilstance of World Bankto Improve reshienceof the people and economic assets to floods and drought. The SRP has two components, (J) $Rp - irrigation (Component) and (I1) SRP - PUMA (Component). The Sindh Resilience Pro)ect - PDIVIA (Component) wil(primarily focus on key disaster management institutions In terms of strengthening operational systems and capacities at the provincial And districtlevels. In addition, the Component will support other departments at the Government of Sindh - through the Provincial Disaster Management Authority (PDMA) Sindh to develop greater 'fiscal resilience' through strengthening financial capacity and risk financing mechanisms, and mainstream disaster risk reduction In development planning and budgeting processes. The Sindh Resilience Project - PDMA (Component) was approved by CDWP on 8th June 2016 at cost of Rs.Z49S.897 million including 80% of foreign funding through World Bank amounting to Rs.,996.70 million for five years from 2016-17 to2020-22 and 20% of 6oS funding amounting to RS.499.197 mllion. 2. SIGNIFICANT ACCOUNTING POLICIES Folowing accounting policies have been applied in dealing with items, which are considered material to Sindh Resilience Project (PDMA Component) financial statements i MAIS Of PREPARATION The financial statement has been prepared in accordance with international Public Sector Accounting Standard (IPSAS) Cash Basis. 2.2 ACCOUNTING CONVENTION These financial statements have been prepared under the historical cost convention with cash basis of accounting. Accordingly, expenses are reccognized when paid rather Incurred. 2.3 CURRENCY The financial statements have been prepared in equivalent Pak Rupees. The receved foreign currency amounts were translated / converted into Pak. Rupees at the SOP Weighted Average uying Rate of exchange rate prevailing on the date of transfer of funds by the donor end payments were translated notionally at the SOP rate of exchange at which the foreign currency was purchased by the SBP (date of recept of funds from the donor In SOP). The financial statements have been prepared In Pak Rupees. 24 GOODS / PHYSICAL ASSETS Fixed Assets are stated at cost 25 GOVERNMENT FUNDS & GRANT Funds allocated to Project from Government of Sindh & Donor Agenciesare notrecognied till these have been accounted for by the State Bank of Pakistan against the Special Account marintined with the National Bankof Pakistan, Income Tax Building Branch, Karachl. No future related funding commitments have been recognized against any financing source. 2.6 FOREIGN EXCHANGE TRANSACTIONS Transaction in local and foreIgn currencies Is accounted for In compliance with the Finance Division O.M. Mo. .2. (14- BR-1/200 949 dated 2nd August,2013. 2.7 PROVISIONS Due to cash basis of accounting, no provision is recognized in the financial statements. However, If ther aIs any event which may have a legal or other obligation with contingent financial implications, then It Is Identified by a separate disclosure in the notes to the financial statements, LS OFFSETING Neither assets-flabilities nor fund flow & expenditure have been set off In the financial statennts, Fin aMUAMMADAUSHAII SRP PDMA tpOnentI Project Coordinatmt SEP, POMA ICOnVanntl SRP, POMA (Componmnt .7 SINDH RESILUENCE PROGRAMME PDMA (COMPONENT) CREDIT No: 5888 (Pk) NOTES TO TH9E FINANCIAL STATEMENT For the vear endedlJune 30.2018 FY-2017-2018 0164017 ~ ~ kdn Total G«s ding Total Note 3 Recelpts RecelptsfromIDA - AF 2 7 29 656,570 VS46,298 6.346,298 eceipts from Gos (1st Qtr) 1,,92]1_0,221 Total Recelpts 1460,92Z 29,656,570 31,117,492l6346298 6346,298 AHME 'SAAMUHAMMAD AU SNAIKH Proje o krdi tor, Project Coordinator. SRP, PoMA (Compnent) SRP, POMA (Component) 8 SISpH RESLI.ENCE PROGRAMME oDMA (COMPONENT)- CREDIT No: 5888 (Pk) NOTES TO THE FINANCIAL STATEMENT For the year ended June 30, 201 Note .4 FY-2017-2018 F -2016-2017 GoS Fuding 1 Donor Fuding Total Gos Funding or Funding Total 4-1 ImProvin Risk Identifictlon and usin Risk information for Delopment 4.2 StnatbeninOaDisaster Risk Mag"aement *encies CapacityAssessment o PDMASindh and -DDMAs 5,850,000 5,850,000 r 650,000 650,000 - 5,850,000 5,850,000 650,000 650,000 4-3 Enhandng Fiscal Resillence 4 4 Capital Expenditure Furnitue FIxture - - 510,000 510,000 J.T.Equipments - 851,308 851,308 Office Equipments - 179,000 179,000 Vehides --- i l - - 1,540,308 1,540,308 4-5 Operational Expenditure Salarles and Benefits 1460,922 7,426,734 8,887,656 1,494,741 1,494,741 Rent of Office Premises 2,578,565 Z578,565 2,344,155 2,344,155 Other Operational ExpendItures 380,725 1,380,725 35,654 35,654 1,460,922 11,386,024 12,846,946 - 3,874,550 3,874,550 UIS MIJHAMMAD All SHAIKHI 1ancial anägementSpecialist, PrMOjco ArLNator, p PnMA frnmnnnnC KRP PnMA Ifnrnnnnpnti * 9 r e) Pariculars Of Outstandbng forward exchange contracts (e.g. rate, dates, rupeøs and foreign currency amounts etc.) ) Tota øf outtanding liabilites under documnentary credits; g) Other- please give details, 9 Other Information A list Of Other banks, or branches of your bank, where you are aware that relationship has been established Yours truly, SBani 1A ized SIgnatorY) 10