Public Disclosure Authorized a 2FEB 2015 Public Disclosure Authorized FINANCIAL ATTEST AUDIT REPORT ON THE ACCOUNTS OF SUSTAINABLE DEVELOPMENT OF WALLED CITY LAHORE PROJECT Public Disclosure Authorized I M LOCAL GOVERNMENT & COMMUNITY DEVELOPMWT DEPARTMENT GOVERNMENT OF THE PUNJAR MATIONAL BANK FOR RECONSTRUCTION & DEVELOPMW-p0W (LOAN NO. 738WP Public Disclosure Authorized FOR THE FINANCIAL YEAR 201344 AUDITOR GENERAL OF PAISTAN
FINANCIAL ATTEST AUDIT REPORT ON THE ACCOUNTS OF SUSTAINABLE DEVELOPMENT OF WALLED CITY LAHORE PROJECT LOCAL GOVERNMENT & COMMUNITY DEVELOPMENT DEPARTMENT GOVERNMENT OF THE PUNJAB INTERNATIONAL BANK FOR RECONSTRUCTION & DEVELOPMENT (IBRD) (LOAN NO. 7380-PAK) FOR THE FINANCIAL YEAR 2013-14 AUDITOR GENERAL OF PAKISTAN
TABLE OF CONTENTS Page No ABBREVIATIONS & ACRONYMS 1 PREFACE 2 PART-I 3 PROJECT OVERVIEW 4 AUDITOR'S REPORT TO THE MANAGEMENT (AUDIT OPINION) 5 FINANCIAL STATEMENTS 6 PART-II 16 MANAGEMENT LETTER 17 EXECUTIVE SUMMARY 18 1. Introduction 19 2. Audit Objectives 21 3. Audit Scope and Methodology 21 4. Audit Findings and Recommendations 21 4.1 Organization and Management 21 4.2 Financial Management 22 4.3 Contract Management 23 4.4 Construction and Works 23 4.5 Asset Management 25 4.6 Monitoring and Evaluation 25 4.7 Compliance with Grant/ Loan Covenants 25 4.8 Environment 26 4.9 Sustainability 26 4.10 Overall Assessment 26 5. Conclusion 27 ACKNOWLEDGEMENT 28
ABBREVIATIONS & ACRONYMS ADP BOQ B&R Code Cft EIA EMP FD IBRD IPSAS ISSAI IT MRS MTDF NAM P/L PDWP PMU SDAC SDAP Sft SDWCL TSE TST WB XEN Annual Development Programme Bill of Quantities Buildings & Roads Department Code Cubic Feet Environmental Impact Assessment Environmental Management Plan Finance Department International Bank for Reconstruction & Development International Public Sector Accounting Standards International Standards of Supreme Audit Institutions Information Technology Market Rates System Medium Term Development Framework New Accounting Model Providing and Laying Provincial Development Working Party Project Management Unit Special Departmental Accounts Committee Social Development Assistance Plan Square Feet Sustainable Development of Walled City Lahore Technical Sanction Estimate Triple Surface Treatment World Bank Executive Engineer 1
PREFACE The Auditor General conducts audit under Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan 1973, read with section 7 of the Auditor General's (Functions, Powers, Terms and Conditions of Service) Ordinance, 2001. The financial attest of the accounts for the financial year 2013-14 of "Sustainable Development of Walled City Lahore Project IBRD Loan No. 7380-PAK" was carried out accordingly. The Directorate General of Audit Works (Provincial), Lahore conducted audit of the project for the financial year 2013-14 in September 2014 with a view to express opinion on Financial Statements and report significant findings to the management. 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 Report indicates specific actions that, if taken, will help the management to realize the objectives of the project in a more effective manner. The Report consists of two parts. Part-I contains Auditor's Report (Audit Opinion) and Financial Statements. Part-II contains Management Letter, Executive Summary and Audit Findings. The Report has been prepared for submission to the World Bank in terms of Loan Agreement of the project. Dated: A5.12.2014 (IFTIKHAR AHMAD) Place: Lahore DIRECTOR GENERAL AUDIT WORKS (PROVINCIAL) LAHORE 2
PART-I 1. PROJECT OVERVIEW 2. AUDITOR'S REPORT TO THE MANAGEMENT (AUDIT OPINION) 3. FINANCIAL STATEMENTS 3
PROJECT OVERVIEW Name of the Project Sustainable Development of Walled City Lahore Project Sponsoring Authority i. World Bank (IBRD) ii. Government of the Punjab Executing Authority Director General Project Management Unit (PMU) Sustainable Development of Walled City Lahore Project Loan No. IBRD No.7380-PAK PC-I Cost Rs 551.00 million Rs in million PC-I Cost (Revised) Revision Date Amount 1 23.06.07 609.00 2 06.11.07 862.00 3 23.02.08 862.00 4 28.01.09 838.00 5 11.01.11 1,143.16 6 07.03.12 1,359.77 7 03.10.13 1,369.25 Date of signing Loan Agreement 5 June, 2006 Date of Approval by PDWP September 2006 Date of Commencement September 2006 Actual Date of Commencement April 2012 Date of Completion (as per PC-I) August 2010 Date of Completion (as per revised 7hPC-I) March 2014 Loan Closing Date 3 0 th November, 2012 Loan Closing Date Revised 30' November, 2013 Loan Utilization Status in 2013-14: i. World Bank (IBRD) Share Rs 141.852 million ii. Punjab Government Share Rs 98.925 million Total amount for the year Rs 240.777 million Progressive expenditure up to June 2014 Rs 958.041 million 4
AUDITOR'S REPORT TO THE MANAGEMENT (AUDIT OPINION) The Directorate General of Audit Works (Provincial) Lahore audited the accompanying financial statements for the financial year ended on 30 ' June, 2014 pertaining to Sustainable Development of Walled City Lahore Project, Loan No.7380-Pak that comprises of Receipts and Payments Statement, Statement of Comparison of Budget and Actual together with the notes forming part thereof. It is the responsibility of the project management to establish and maintain a system of internal control and prepare and present the Statement of Receipts and Payments in conformity with the requirements of Cash Basis IPSAS, Financial Reporting under the Cash basis of Accounting Standard. The responsibility of auditor is to express an opinion on the financial statements based on the audit conducted. Audit was conducted in accordance with the International Standards of Supreme Audit Institutions (ISSAI). These standards require to plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatements. The audit process includes examining, on a test check basis, evidence supporting the amounts and disclosures in the financial statements. It also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our 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 30 h June, 2014 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 agreement. Dated: O12.2014 Place: Lahore (IFTIKHAR AHMAD) DIRECTOR GENERAL AUDIT WORKS (PROVINCIAL) LAHORE 5
FINANCIAL STATEMENTS SUSTAINABLE DEVELOPMENT OF WALLED CITY LAHORE PROJECT, IBRD LOAN NO. 7380-PAK FOR THE YEAR ENDED 30m JUNE, 2014 Page No. Statement of Receipts and Payments 7 Statement of Comparison of Budget and Actual Amounts 8 Notes to the Financial Statements 9 6
SUSTAINABLE DEVELOPMENT OF WALLED CITY OF LAHORE Statement of Receipts and Payments For the period ended 30 June, 2014 * Project Management Unit (PMU) Sustainable Development of Walled City of Lahore Project LG&CD Department, Government of the Punjab, Lahore 'I 2013-14 2012-13 To date Receipts/ Receipts/ Receipts/ Notes (Payments) Third Party (Payments) Third Party (Payments) Third Party controlled by Payments controlled by Payments controlled by Payments Project Project Project Rupees Receipts From the World Bank (IBRD) Loan 4.1 74,089,269 200,268,000-577,832,845 [ Counter Part Fund (GoPb) 4.2 235,162,000 200,000,000 988,355,000 - Total Receipts 4 309,251,269-400,268,000-1,566,187,845 PAYMENTS From IBRD Assignment Account: Civil Works 5.1 118,394,117-245,039,000-439,644,367 Consultancies 5.1 23,457,582-18,464,000-68.976,085 Incremental Operating Cost 5.1 - - 7,545,000-41,336,659 From GoPb 5.2 98.925,034-39,572.000-408,085,000 Total Payments 5 240,776,733-310,620,000-958,042,111 Amount Surrendered/lapsed in 7.2 (136,236,966) (160.428,000) (580,270,000) Increase/(Decrease) in Cash (67,762,430) - (70,780,000) - 27,875,734 Cash at beginning of year (IBRD) 3 95,638,164-166,418,164 - Cash at end of the Year 6 27,875,734-95,638,164-27,875,734 * Note-1: Period of June, 2014 shown for GoP Share * Note-2: For IBRD funds, period till 31 March, 2014 may be considered The accompanying notes form an integral part of these financial statements and to be read therewith. DIRECTOR (AD ISTRATION) A IT Project Manag ment Unit Aid Officer Sustainable Development of Walled City O/e the Di ctot General of Lahore Project Audit Works ( vitcial) Labore 7
SUSTAINABLE DEVELOPMENT OF WALLED CITY OF LAHORE Statement of Comparison of Budget and Actual Amounts For the period ended 30 June, 2014 * Project Management Unit (PMU) Sustainable Development of Walled City oflahore Project LG&CD Department, Government of the Pnjab, Labore Notes 2013-14 2012-13 To date Original Revised Original Revisedi cualude Acta Budgeted BOr R e Actual BB e Actual Budget Ata Budgeted Amut Budgeted Budgeted Amount Amount J Amunt Aon Amut Aon AmutAmount Amount Amount Amount Rupees Receipts From the World Bank (IBR 4) 21,000,000 74,089,269 74,089,269 200,268,000 200,268,000 200,268,000 577,832,845 577,832,845 Loan III I Counter Part Fund (GoPb) 4 9,162,000 235,162,000 235,162,000 200,000,000 200,000,000 200,000,000 988, 355, 000 98 5 5, 0 0 0 Total Receipts 4 30,162,000 309,251,269 309,251,269 400,268,000 400,268,000 400,268,000 1,566,187,845 1,566,187,845 PAYMENTS From IBRD Assignment Account: Civil Works 5 118,394,117 118,394,117 118,394,117 245,039,000 245,039,000 245,039,000 439,644,367 439,644,367 Consultancies 5 23,457,582 23,457,582 23,457,582 18,464,000 18,464,000 18,464,000 68,976,085 68,976,085 Incremental Operating Cost 5 - - - 7,545,000 7,545,000 7,545,000 41,336,659 41,336,659 From GoPb 5 98,925,034 98,925,034 98,925,034 39,572,000 39,572,000 39,572,000 408,0S5,000 408,085,000 Total Payments 5 240,776,733 240,776,733 240,776,733 310,620,000 310,620,000 310,620,000 958,042,111 958,042,111 Note4: Period of June, 2014 shown for GoP Share Note-2: For IBRD funds, period till 31 March, 2014 may be considered The accompanying notes form an integral part of these financial statements and to be read therewith. DIRECT4R (AD INISTRATION) Urf DI Project MaitAn Man ement Unit Jfl eer Sustainable Development of Walled o0 e Di l1 General of Lahore Project *Cis! LAore
Sustainable Development of Walled City Lahore Project Local Government & Community Development Department Government of the Punjab Notes to the Financial Statements 1. Project Description 1.1 Introduction The project was consequent upon a pre-feasibility study, conducted by Mr. Raffaele Gorjux in August, 2005. On June 5, 2006, a loan agreement was signed with the World Bank, which assigned US $6 million (revised at US $7.7 million) for cultural heritage activities through funding line already available in Punjab Municipal Services Improvement Project (PMSIP), in the Urban Development Sector. 1.2 Project Objectives Urban Unit was entrusted with the task of developing a PC-I for the project that was approved by PDWP in September, 2006. Major components of the approved PC-I were; i. Establishment of a PMU/ Authority for restoration, development and management of Walled City Lahore ii. Developing a sound regulatory and Institutional framework for sustainable development and restoration of cultural heritage in the province. iii. Pilot Project: Restoration of Shahi Guzargah (from Delhi Gate to Lahore Fort, including Wazir Khan, Sonehri and Begum Shahi mosques), entailing complete restoration and renovation of the entire built heritage, urban infrastructure and services. 1.3 Scope of the Project Planned period of the Project was four years from September, 2006 extended for three years till November, 2013 with a grace period of four month i.e. till March, 2014. 1.4 Estimated Cost The Project was financed with a total cost of Rs.1369.253 million. SSd t'adeem Director (Administration) Walled City of Lahore Authority Audit
Sustainable Development of Walled City Lahore Project Local Government & Community Development Department Government of the Punjab Notes to the Financial Statements 1.5 Sources of Finance The Project was financed with a total cost of Rs.1369.253 million with Technical Assistance Loan through World Bank having a total outlay of US $7.7 million equivalent to Rs.702.293 million (51%) and Rs.666.960 million (49%) as counterpart funding by Government of the Punjab in local currency. 1.6 Components of PMU-SDWCL There are four components of PMU-SDWCL: 1. Developing a sound regulatory and institutional framework II. Establishment charges/ Purchase of Equipment and other administrative expenses ill. Implementation of the pilot project IV. Urban Rehabilitation and infrastructure improvement 2. Significant Accounting Policies 2.1 Basis of Presentation The financial statements have been prepared in accordance with Cash Basis under IPSAS. The accounting policies have been applied consistently throughout the period. 2.2 Accounting Convention These financial statements have been prepared under the historical cost convention with cash basis of accounting. Accordingly, expenses are recognized when paid rather incurred. 2.3 Foreign Currency Transactions Cash receipts and payments arising from transaction in foreign currencies are recorded in Pak Rupees by applying to the foreign currency amount, exchange rate between the Pak Rupee and Foreign Currency at the date of receipts and payments. 2.4 Fixed Assets Fixed Assets are disclosed on Historical Cost Basis. Proje 'ti Audit SHA I DEEM Direc -r (Adrn istrat7on) Walled City of Lahore Authority
Sustainable Development of Walled City Lahore Project Local Government & Community Development Department Government of the Punjab Notes to the Financial Statements 2.5 Provisions Due to cash basis of accounting, no provision is recognized in financial statements. However, if there is any event which may have a legal or other obligation with contingent financial Implication, then it would be identified by separate disclosure in the notes to the financial statements. 2.6 Offsetting Neither asset-liabilities nor fund flow and expenditure have been set off in the financial statements. 3. Opening Balance Opening balance comprises: 4. Receipts Description US$ Rs. Cash in Hand --- --- Cash at Bank (IBRD) 1,497,240.76 95,638,163.78 Total 1,497,240.76 95,638,163.78 4.1 IBRD Receipts Total receipts are Rs.169.727 million (i.e. opening balance of Rs.95.638 million and Rs.74,089,268.71 equivalent to US $724,507.94 received from World Bank) during Financial Year 2013-14. Status of IBRD receipts Withdrawal Application wise for the Financial Year 2013-14 is enclosed as Annexure-A. 4.2 GoPb Receipts An amount of Rs.235.162 million was allocated for the FY 2013-14 out of which an amount of Rs.98.925 million was utilized. An amount of Rs.106 million was surrendered and Rs.30.237 million was lapsed. Project :ntl t SHA DJ EEM Direct r (Admiiu t;a!on) Walled City of Lahore Authority Audit
Sustainable Development of Walled City Lahore Project Local Government & Community Development Department. Government of the Punjab Notes to the Financial Statements 5. Payments 5.1 Payment from World Bank Financing (Rupees in '000) Sub-Components 2013-14 2012-13 Civil Works 118,394 245,039 Consultancies 23,458 18,464 Incremental Operating Cost ------ 7,545 Total 141,852 271,048 5.2 Payments from GoPb Funds (Rupees in '000) Description 2013-14 2012-13 Establishment Charges 1,964 20,167 Repair & Maintenance of Durable Goods 146 2,063 Rent of Office Building/Rate & Taxes 21 7,082 Travel & Transportation Charges 104 3,852 Communication Expenses 18 660 Utilities Expenses 1,434 General Expenses 709 4,202 Pay to others for services rendered 9,797 Repair of other buildings 85,045 Land & Buildings 1,112 Medical Charges 9 112 Total 9895 3,7 6. Closing Balance Closing balance comprises: 142206 Description US$ Rs. Cash -at-bank- 13 BRD 787,716.09-27,875,733.49 Total 2787,716.09 27,875,733.49 The unspent dollar balance was refunded to the World Bank. t Director (Adm~ Istratr,on) Walle4 City Of L, Authority 9 Audit
Sustainable Development of Walled City Lahore Project Local Government & Community Development Department Government of the Punjab Notes to the Financial Statements 7. Reconciliation: 7.1 Special Account Description Pak Rs. US $ Balance as per Bank Statement on 01.07.2013 95,638,163.78 1,497,240.76 Received against W/A No.16-SDWCL 74,089,268.71 724,507.94 Cheques Issued and Cleared during 141,851,699.00 1,434,032.61 the year 2013-14 Balance as per Bank Statement on 27,875,733.49 787,716.09 31.03.2014 Less: Cheques issued but not presented till 31.03.2014 Balance as per Cash Book on 27,875,733.49 787,716.09 31.03.2014 7.2 GoPb Account During the FY 2013-14 Funds released by the GoPb were Rs.235.162 million whereas expenditure was made by the SDWCL for Rs.98.925 million. An amount of Rs.106 million was surrendered and Rs.30.237 million was lapsed. 8. Management Assertion This is certified that the funds have been utilized by the PMU-SDWCL for the intended purposes as per legal requirements of IBRD Loan No.7380-PAK for the financial year 2013-14. 9. Authorization These financial statements were authorized for issuance by management of the Sustainable Development of Walled City of Lahore Project. A A Dlire tor (Ad1hr istration) Walled City of Lahore AuthoritY 1-3 Audit
Sustainable bevelopment of Walled City Lahore Project Local Government & Community bevelopment bepartment Government of the Punjab Notes to the Financial Statements Annexure - A Project Management Unit STATEMENT OF WITHDRAWAL IBRD Loan No.7380-PAK (FY-2012-13) Released Sr. by. Amount in Exch. Amount in N.WIApp. No. Patbulr No. SBP/World US $ Rate PKR Bank Advance & 1 16-SDWCL 13-08-2013 Documentation of 724,507.94 102.2615 74,089,268.71 Prior Advance Total 724,507.94 74,089,268.71 Projec Ee itv SHAt D D-EEM Direct r (Admin trationl Walled City of Lahore Authority Audit
Project Management Unit STATEMENT OF WITHDRAWAL IBRD Loan No.7380-PAK (FY-2013-14) Sr. Released by Amount in U Exch. WIApp. No. SBP/World Particulars $ Amount in PKR No. Bank Rate Advance & 1 16-SDWCL 13-08-2013 Documentation 724,507.94 102.2615 74,089,268.71 of Prior Advance Total 724,507.94 74,089,268.71 PROJEC I AUDIT SHAUP4W