EXTERNAL AUDIT REPORT

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized EXTERNAL AUDIT REPORT OF ODRP PROJECT OF BERHAMPUR MUNICIPAL CORPORATION FOR THE FINANCIAL YEAR Public Disclosure Authorized Audit by B.N.MISRA & CO CHARTERED ACCOUNTANTS S-29 MAITRI VIHAR PHASE-Il BHUBANESWAR

2 EXTERNAL AUDIT REOPRT& OBSERVATIONS We have conducted audit of books of account of ODRP, Berhampur for the financial year and also examined the annexed Balance Sheet as on 3 1 st March, 2015 and Receipts and Payments Account and Income and Expenditure account for the Year ended on 3 1 st March, 2015 of ODRP, BeMC, Berhampur, Dist.- Ganjam, Odisha attached to this report.in our opinion and to the best of our information and according to the explanations given to us, the said accounts, subject to audit observations attached to our report, give a true and fair view. Followings are our observations:- 1. Observations on Vouching a. Followings are the observations found during the vouching of bank payment vouchers during the period of audit. Date Voucher Amount in Remarks No Rs. 24/11/ ,10,112 Pre-paid to Public Procurement Group towards training fees of two employees on world bank procurement policy on which TDS of Rs11,011 have not been deducted. 09/01/ ,877 Telephone bill has not been deposited with in due date of deposit for which discount of Rs not availed by the project. Due date of deposit 29/12/2014 Actual date of deposit 13/01/ /03/ ,880 1% TDS has been deducted on Rs 78,880 i.e. Rs 788, paid towards hiring charges of two number of vehicle to Galaxy Tours and Travels under sec 194C of income tax act,1961.

3 However 2% TDS should have been deducted instead of 1% as per section 1941 because Vehicle falls under definition of Machinery as perincome Tax Act. 16/03/ ,80,120 An advance amount of 10% of the contract amount was paid to Consultants Mukesh& Associates for the consultancy work towards project management, Supervision and quality control in the PIU based in Berhampur and PMU based in Bhubaneswar. As per Section 194J of income tax act, 1961, tax shall be deducted at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier. However it is observed that TDScompliance has not been made at the time of payment of advance to Consultant Mukesh& Associates. 23/03/ ,800 Payment made to Sri Sisir Kumar Swain for supplying, fitting and fixing of sign board including labour and T& P with fabrication, welding charges etc. Bill is given by the Contractor in letter pad without mentioning VAT Regd.no and service tax regd no. b. Voucher is not serially numbered as it was maintained in the BeMC Cash Book. c. Journal Register and Journal voucher are not maintained by the project.

4 2. Advance to Staff Rs 30,000 Rs 30,000 paid to employee on towards travelling advances for attending training at New Delhi on 5/2/14 and 6/2/14 was still not adjusted at the end of audit period i.e. as on 31/03/ Professional Tax Deducted on the salary of employee Rs 600 and Rs 1500 deducted from salary on 07/01/2015 and 16/03/2015 was not deposited as on 31/03/ Service Tax It has been observed that, PIU has paid service tax on various services received during the period of audit but input credit on the same was not availed. 5. VAT Payable Rs 1,000 During the sale of tender paper, the project had collected Rs 1,000 on 05/03/2015 towards VAT. The same had not been deposited till at the end of the year i.e. as on 31/03/ Other observations on various clause of Project Appraisal Documents (PAD) a. Staffing: As per clause no 14 under Financial Management Disbursement and procurement in annexue-2 Detailed Project Description in Project Appraisal Documents (PAD ) issued by the World Bank in connection to Odisha Disaster Recovery Project in the matter of Staffing "At BeMC the post of a dedicated finance manager, who will be responsible for maintaining clear and complete accounts thereof, needs to be sanctioned and hired/deputed." However it observed that a dedicated finance managerhad not been appointed during the period of audit. The Chief Financial Officer of BeMC in addition to his own assignment has been in charge for maintaining clear and complete accounts. Steps should be taken to appoint such finance manager for this project work.

5 b. Accounting (Maintenance of Books of Accounts )- As per clause no 15Financial Management, Disbursement and procurement in annexue-2 Detailed Project Description in Project Appraisal Documents (PAD ) issued by the World Bank in connection to Odisha Disaster Recovery Project in the matter of accounting " BeMC needs to maintain separate books of accounts for this project." However the PIU is not maintaining the separate cash and bank book for this project. The financial transactions of this project was maintained in BeMC cash and bank book. Steps should be taken to maintain the books of account preferably in Tally accounting software as maintained by OSDMA which is adequate for recording financial transactions and forgenerating reports for financial disclosure requirements. c. Financial Reporting -As per clause no 19 under Financial Management, Disbursement and procurement in annexue-2 Detailed Project Description in Project Appraisal Documents (PAD ) issued by the World Bank in connection to Odisha Disaster Recovery Project in the matter of financial reporting,bemc will submit separate quarterly IUFR providing the financial progress against the project components, within 45 days from the end of each calendar quarter. IUFRs will be prepared on the basis of actual expenditure information received from the field divisions and actual expenditure incurred at the PIU and reconciled with the bank accounts. The form and content of the IFRs are under preparation and will be agreed with GoO during negotiations. It is observed that IUFR for the quarter for the financial year had not been submitted to world bank by PIU, ODRP Berhampur in schedule time i.e. with in 45 days from the end of quarter. lufr for quarter ending Due Date of submission Actual Date of submission 30th Sep' h Nov' /07/ st Dec' th Feb' /07/ st Mar' th May'2015 IUFR for the period 1't January 2015 to 16th March 2015 was submitted on 04/07/2015 and from

6 17/03/2015 to 31/03/2015 was on 18/11/2015. It has been observed that expenditure incurred /advance paid for the period 17/03/2015 to 31/03/2015 in IUFR submitted to world bank is nil. However following expenditure /advance has been incurred/paid during the above period- Date Nature of expenditure Amount in Rs 23/03/2015 Telephone Expenses 1, /03/2015 Sign Board 19, /03/2015 Advertisement expenses 21, /03/2015 Advertisement expenses 1,78, /03/2015 Advertisement expenses 53, /03/2015 Advertisement expenses 27, Total 3,01, d. Banking arrangements: As per clause no 19 under Financial Management, Disbursement and procurement in annexue-2 Detailed Project Description in Project Appraisal Documents (PAD ) issued by the World Bank in connection to Odisha Disaster Recovery Project in the matter Banking arrangements of BeMC will also open a separate bank account to receive funds from H&UD as per thework plan requirements. It is observed that a separate Saving Bankaccount in Bank of Baroda had been opened by PIU,ODRP Berhampur on 17/10/2014. e. Internal Controls and Internal Audit: As per clause no 19 under Financial Management, Disbursement and procurement in annexue-2 Detailed Project Description in Project Appraisal Documents (PAD ) issued by the World Bank in connection to Odisha Disaster Recovery Project in the matter Internal Controls and Internal Audit " Since funds will be transferred to separate Bank accounts; reconciliation of bank book with the bank statement will be an essential control mechanism in the project." e)

7 Bank reconciliation of bank book with the bank statement has been done upto 31st March,2015. Bank Reconciliation Statement as on is given below:- Amount in Rs. Bank Reconciliation Statement as on Name of Bank:- Bank of Baroda Bank Account No: Bank Balance as per Bank Book as on ,05,80, Dr. Add Cheque issued but not presented in Bank Date of Issue Cheque No To whom Amount issued 16/03/ Bennett 1,78, Colomen& Co 16/03/ M/s Kasturi& 53, Sons 16/03/ H.T Media Ltd 27, /03/ CBTD (income 3, Tax) Total 2,62, Dr. Bank Balance as per Bank Statement as on ,08,42, Cr. 7.Maintenance of other subsidiary Registers PlU had not maintained following subsidiary register for the financial year for internal reference. a. Advance Register for Staff advance and outsiders. b. Security Deposit Register c. Fixed Assets Register d. Printing and Stationery Register e. Tax deduction Register i.e. TDS,WCT and Service Tax. f. Salary Register g. Professional Tax Deduction Register h. Journal register i. Fixed assets Register j. Vehicle Log Book k. Telephone Log Book Steps should be taken to maintain following subsidiary Register to have better internal controls. 4eMO RA

8 ODISHA DISASTER RECOVERY PROGRAMME (A Project Funded by World Bank) Berhampur Municipal Corporation, Berhampur, Ganjam District, Odisha Receipts & Payments Account for the year ended 31st March 2015 Receipts Amount Payments Amount in Rs. in Rs. To Opening Balance By Programme & Training Expenses Cash in Hand - ILI -PPG Training Expenses 1,10, Cash at Bank - Workshop Expenses 42, To Grant from State Govt. 20,00,00, By Employees Cost Salary & Allowances 11,53, To Bank interest 3,28, By Establishment Expenses To Sale of Tender Paper 20, Advertisement Expenses 5,57, Travelling Expenses 1,26, To VAT Collected on Sale Repair & Maintenance 19, of Tender Paper 1, Telephone Charges 7, Bank Charges By Project & Other Advances Advances to Mukesh Associates 71,80, TA Advance 30, By Fixed Assets Purchased Computer-Desktop 1,00, Furniture 4,42, By Closing Balance Cash in Hand Cash at Bank 19,05,80, Total 20,03,49, Total 20,03,49, Place: Berhampur For B.N. MSRA & CG Date : 31/12/2016 ChademdAccou 13.S. UATRA PARTNER \y al.no-08 fef9 Accounts Officer ( ODRP-cum-BeMC, Berhampur Project D ODRP-cum-M icipal Commissioner, Berhampur

9 ODISHA DISASTER RECOVERY PROGRAMME (A Project Funded by World Bank) Berhampur Municipal Corporation, Berhampur, Ganjam District, Odisha Income & Expenditures Account for the year ended 31st March 2015 Receipts Amount Payments Amount in Rs. in Rs. To Programme & Training Expenses ILI -PPG Training Expenses 1,10, By Grant from State Govt. 20,70, Workshop Expenses 42, By Sale of Tender Paper 20, To Employees Cost Salary & Allowances 11,55, To Establishment Expenses Advertisement Expenses 5,57, Travelling Expenses 1,26, Repair & Maintenance 19, Telephone Charges 7, Bank Charges To Depreciation On Furniture 22, On Computer 30, TO Excess of income over Exp. 20, Total 20,90, Total 20,90, Place: Berhampur Date: 31/12/2016 Fr BN. WISRA & CG Chartered Accou nts S.S. Ib PAT? PARTNER 41.No-08l19 Accounts OffiCer Project or ODRP-cum-BeMC, Bqern' pur DRP-cu! nicipal Commissioner, Berhampur

10 ODISHA DISASTER RECOVERY PROGRAMME (A Project Funded by World Bank) Berhampur Municipal Corporation, Berhampur, Ganjam District, Odisha Balance Sheet as at 31st March 2015 Liablities Amount Amount Assets Amount Amount In Rs. In Rs. in Rs. In Rs. Corpus Fund Fixed Assets Opening Balance - Furnitures & Fixtures Add Excess of Income Opening Balance over Expenditure 20, , Add : Addition during the Year 4,42,536,00 Total 4,42, Grant Fund Less Depreciation 22, , Grant from State Govt. 20,00,00, Computers Less Grant utilesd during Opening Balance Financial Year ,70, ,79,29, Add : Addition during the Year 1,00, Total 1,00, Interest received Out of Grant Fund 3,28, Less Depreciation 30, , Current Liablities & Provs Current Assets Professional Tax Payable 2, Loans & Advances VAT Payable 1, Advances to Mukesh Associates 71,80, TA Advances 30,000,00 Cash and Bank Balance Cash in Hand Cash at Bank-BOB 19,05,80, Total 19,82,81, Total 19,82,81, r-or B.N. MISRA & CC., Place: Berhampur Date : 31/12/2016 Chartered Accoun = S.S. AfoHA TRA PARTNER 48.No Accounts Officer Project DI ODRP-cum-BeMC, Brnampur ODRP-c um- nicipal Commissioner, Berhampur

11 Schedule to Financial Statement as on 31/03/2015. The Financial Statement is compiled with the Schedules and the Significant Policies and Notes on Accounts in compliance with the Accounting Standards of the Institute of Chartered Accountants of India and OMAR,2012 Guidelines, to the extent applicable, feasible and relevant to the Project. Significant Accounting Principles: 1. Basis of Accounting: i) These Financial Statements has been prepared in accordance with Generally Accepted Accounting Principles in India to comply with the Accounting Standards notified and the same have been prepared under historical cost convention on cash basis. ii) ThesesFinancial Statements has been prepared assuming the project completion period for five years as appearing from the financial agreement. However the furtherance of the project will be increased depending upon the work status of the project. iii) Whenever applicable OMAR, 2012 Guidelines have been followed for preparation of accounts. 2. Grants Fund: i) The funding of the total projects cost named as ODRP will be borne by the State Government in terms of Grant to the Berhampur Municipality Corporation to improve the infrastructure damaged due to Phailin under the Berhampur Municipality Corporation area. ii) The amount of the Grant to the extent related to Project Cost is recognized under Grant Fund on Cash basis. iii) Interest on unutilized fund in bank account is recognized separately under specific Grant on receipt basis in the Balance Sheet. 3. Revenue Recognition (i) As per As-11 of the Accounting Standard revenue towards grant from State Government is recognized on the basis of indirect expenditure incurred for the financial year on cash basis.

12 ii) Expenses Related to Contractors/ Suppliers are booked only if their bills are passed during the period of audit. 4. Fixed Assets i) All the depreciable assets purchased or constructed are shown at historical cost of purchase or construction less accumulated depreciation. ii) Any addition or improvement to the fixed asset that results in increasing the utility or capacity or useful life of the asset are capitalized and included in the cost of asset. 5. Depreciation i) Depreciation on all depreciable fixed assets is provided consistently on Written Down Value Method, at the rates prescribed for urban local bodies in the OdishaMunicipal Accounting Manual issued by Central Government of India. vii) Depreciation is provided at full rates for assets, which are purchased / constructed before October 1 of an Accounting Year. Depreciation is provided at half the rates for assets, which are purchased / constructed on or after October 1 of an Accounting Year. Similarly, additions / extensions / improvements which are of capital nature and which becomes an integral part of that asset are depreciated over the remaining useful life of the asset. Any addition or extension, which retains a separate identity and is capable of being used after the existing asset is disposed of, is depreciated independently on the basis of an estimate of its own useful life. viii) Depreciation is provided at full rates for assets, which are disposed on or after October 1 of an Accounting Year. Depreciation is provided at half the rates for assets, which are disposed before October 1 of an Accounting Year. 6. Bank Balances: Bank balance represents the balance lying in the bank accounts of the ODRP project adjusted for items under reconciliation. 43

13 Reconciliation for the F.Y (Amount in INR) Sri No. Particulars Total A. AMOUNT OF REPORTED EXPENDITURE Year to date Cumulative to date i Total project Expenditure as per PFS 97,69, ,69, ii Less: In-eligible expenditure iii Net Project expenditure as per PFS (i-fi) 97,69, ,69, iv Net reimbursable from World Bank 68,38, ,38, v Reimbursable expendirures as reported in IUFRs** 64,49, ,49, B DIFFERENCE iv-vt 3,89, ,89, CIAMOUNT OF WB FUNDS RECEIVED I viltotal funds received from the Bank as per PFS 14,00,00, ,00,00, viiltotal Funds disbursed as per the World Bank * 14,00,00, ,00,00, DIDIFFERENCE (vi-vlii EJEXCESS/ SHORT CLAIM, if any Notes: * After application of Eligible % for BID/GEF disbursement to Net Project expenditure as per PFS ** The World Bank share as reported in the IUFRs submitted to the Bank * Source: Application for reimbursements (client Connection). Application wise detail should ** Direct Payments made should be indicated separately by way of detailed note osa, tb0

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