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Office of the
Special Sector Audit WingConstitution Avenue
Islamabad
No.SSAW/FAP/Federal/F-13/ / 9 7 Dated: 23 -02-2017
To,1. The Secretary
Economic Affairs Division, Government of Pakistan
Pak Secretariat Block-CIslamabad
2. The Country Director,
World Bank, Resident Mission
20A, Shahrah-e-Jamhuriat
G-5/1, Islamabad
Subject:- FOREIGN AIDED PROJECTS (FAPs) AUDIT REPORTS
Financial Attest Audit of the following FAP Audit Report has been conducted by this
office:
S.No Name of Projects Loan No/Agreement No Executing Agency
I FATA Rural Livelihood & TF-l 1857-PK FATACommunity Infrastructure
2 FATA Urban Centers Project TF-01 2160-PK FATA
2. Financial Attest Audit Reports of the above projects together with the management letter
(ML) are hereby issued simultaneously to the Government (EAD) and to the World Bank
Resident Mission Islamabad through EAD.
3. The Director General Audit concerned is also being requested to issue a copy of the above
mentioned FAP Audit Report to the concerned Project Manager as well
Enclosure: As above
Muhammad Tahir Kamal
Deputy Auditor General
Cc:i. DG Audit Federal Government Islamabad, with the request to issue a copy of the above
reports to the project management for their further necessary action.
ii. SPS to DAG FAOiii. Master File
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Financial Attest Audit Report
On The Accounts Of FATA Urban Centres Project
Grant Agreement No. TF 012150 PK
Local Government And Rural Development Department, FATA
For the Financial Year 2015-16
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I Auditor General of Pakistan Islamabad
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TABLE OF CONTENTS
ABBREVIATIONS AND ACRONYMS .................. I.................... .. I
PREFACE ........................................................................ 11
PART-I........ ............................................................
PROJECT OVERVIEW ....................... 2.........................2
I AUDITOR'S REPORT TO THE MANAGEMENT (AUDIT OPINioN).................................... 3
FINANCIAL STATEMENTS ....................................... ........................ 4
I PART-ll............................................................5
COVER LETTER TO THE MANAGEMENT LETTER...........................6
EXECUTIVE SUMMARY. ............................................... 8
MANAGEMENT LETTER ............................................... 9
1. INTRODUCTION ...... .......................................... 10
2. AUDIT OBJECTIVES............................................. 0
3. AUDIT SCOPE AND METHODOLOGY................................10
4. AUDITFINDINGSANDRECOMMENDATIONS.......................... 12
4.1 Organization and Management...................................... 12
4.2 Financial Management........................................... 13
I4.3 Procurement and Contract Management.................................................... 154.4 Asset Management.............................................. 16
4.5 Sustainability................................................. 17
S4.6 Overall assessment ..................................................... 17
5 CONCLUSION ...................................................... 17
ACKNOWLEDGEMENT ............................................... 18
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Abbreviations and Acronyms
ADP Annual Development Program
FATA Federally Administered Tribal Areas
FDWP FATA Development Working Party
FUCP FATA Urban Centres Project
GOP Government of Pakistan
IPSAS International Public Sector Accounting Standards
ISSAI International Standards of Supreme Audit Institutions
ISU Implementation Support Unit
KP Khyber Pakhtunkhwa
MDTF Multi Donor Trust Fund
NOL No Objection Letter
PMU Project Management Unit
TARUCCI Tribal Areas to Urban Centres Conversion Initiative
IIIIIIIII1I
131
PREFACE
The Auditor General conducts audit subject to 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 FATA
Urban Centers Project under Planning and Development Department FATA Grant Agreement
No. TF 012150 PK for the financial year 2015-16 funded by the Multi Donor Trust Fund through
World Bank was carried out accordingly.
The Directorate General Audit (Federal Government), Islamabad conducted audit of the "FATA
Urban Centers Project " in 2016 for the financial year 2015-16 with a view to reporting
significant findings to stakeholders. Audit examined the economy, efficiency, and effectiveness
aspects of the "FATA Urban Centers Project". In addition, audit also assessed, on test check
basis, whether the management complied with applicable laws, and rules and regulations in
managing the "FATA Urban Centers 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-l contains Executive Summary, Management Letter and Audit Findings.
The Report has been prepared for submission to the International Development Association
(IDA) in terms of Grant Agreement No. TF 099175 PK.
Dated: /6 .02.2017 (MUHAM D A GONDAL)Place: Islamabad IRECTOR GENERAL
III
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I1 PART一,
1 .PRO.IECT OVERVIEW
l:.Aon;ToR,、.Po。:。TH,MANAc;。,、TI&F,NANC,AL sTATEMENTs
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PROJECT OVERVIEW
Name of Project: FATA Urban Centers Project
Sponsoring Authority: Fata Secretariat through Federal Government
Executing Authority- PM-U- TARUCCI- FATA
Grant Agreement No: TF 012150 PK
PC-1 Cost (Original) Rs. 598,500 million
PC-1 Cost (Revised) Rs,750.00 million
Date of Commencement: April, 2012
Date of Completion: June 2015(as per PC-1):
PC-1 Cost: Rs.750 million
Grant Closing Date: January, 2016(Extended time)
Expenditure (2015-16). Rs. 139,036,296
Aggregate Exp up to2014-15. Rs. 555,776,006
2
IIIE Mr. Fayaz Ali Shah
Project Director,FATA Urban Centers ProjectGround floor, Zai Apartments.Warsak Road, Peshawar.
I Auditor's Report on the "FATA Urban Centers Project" Financial Statements
We have audited the accompanying financial statements of the FATA Urban Centers Projectunder the Planning and Development Department, FATA Grant Agreement No. TF 012150 PKthat comprises Statement of Receipts and Payments together with the Notes forming part thereoffor the year ended 3 0 'h June, 2016.
Management Responsibility
It is the responsibility of the project management to establish and maintain a system of internalI controls, and prepare and present the Statement of Receipts and Payments in conformity with therequirements of Cash Basis IPSAS Financial Reporting under the Cash Basis of AccountingStandard.
Auditor's Responsibility
The responsibility of the auditor is to express an opinion on the financial statements based on theE audit conducted. We conducted our audit in accordance with the International Standards ofSupreme Audit Institutions. These standards require that we plan and perform the audit to obtainreasonable assurance whether the financial statements are free of material misstatements. TheI audit process includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. It also includes assessing the accounting principles usedand significant estimates made by the management, as well as evaluating the overall statementE 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 30"' June, 2016 in accordance with Cash Basis
IPSAS Financial Reporting under the Cash Basis of Accounting Standard.
b) The expenditures have not been incurred in accordance with the requirements of legalagree nt(N--
(MUHAMMA A AL GONDAL)Director G ne alDirectorate eral Audit (Federal Government),Benevolent Fund Building, Zero Point, Islamabad
Dated: /6.02.2017
I 3
I
IIIIUIII
FATA URBAN CENTERS PROJECT
IFinancial Statements
UI FOR THE YEAR ENDED 30TH, JUNE 2016
I1IIIIII
I U4
IFATA URBAN CENTERS PROJECT
Statement of Cash Receipts and PaymentsFor the year enWJanuary 31st, 2016
Note 2015-16 2014-15
Receipts(Payments) Payment by Third Receipts(Payments) Payment by ThirdControlled by Project Parties Controlled by Project Parties
Rupees
tunal Assistance 5 - 438,157,450
tal Receivts 0 438,157,450
I vmentsConsultancy Services 6 33,501,571 - 72,465-255ILprating Expenses 7 7,470.233 - 19.315,963
vil Works 8 81,200,040 - 2511678,021Goods 9 16,800,812 - 44.353.029I ainings 63,640 -I 6,703
Cal Paiwients 139,036,296 - 388,508,971
crease (Decrease) in Cash (139,036,296) - 49,648,479sh at Beginning of Year 208,795,756 - 159,147,277 -
ash at End of Year 10 69,759,460 - 208,795,756
I c accompanying notes form an integral part of these financial statements and are to be read therewith.
Project tor
mance OfficerFUCPIPMU For TARUCII
AUDir . RFATASecretariat PeshawarIU I rI,Z aaFede$.
fSub fce Vezhawar
IIIIIII
FATA URBAN CENTERS PROJECT
Statement of Comparison of Budget and Actual AmountsFor the year ended January 31st, 2016
Note 2015-16 2014-15
Budgeted Amount Actual Amount Budgeted Amount Actual Amount
Rupees
ternal Assistance 5 - - 438,157,450 438,157,450
Total Receipts - 438,157,450 438,157,450
IPaymentsInsultancy Services 6 2910,000 33,501,571 60,765,000 72,465,255
crating Expenses 7 9,760,000 7,470,233 23,222,000 19,315,963vil Works 8 59,175,000 81,200,040 530,055,000 251,678,021
Goods 9 25,850,000 16,800,812 70.570,000 44,353,029
I ainings 0 63,640 1.380,000 3
tal Parments 97,695,000 139,036,296 685,992,000 88,50 1
e accompanying notes form an integral part of these financial statements and are to be read therewith.
Sub C 6alitPehawa
I
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AUD RFed ntSub i:'uvShawcar
IIII
IFATA URBAN CENTERS PROJECT
Notes to the Financial Statements
For the year ended January 31st, 2016
1 Reporting EntityThe financial statements are for FATA Urban Centers Project (FUCP). The financial statement encompasses the reporting entity as
defined in the Financing Agreement between the Islamic Republic of Pakistan and the World Bank. The Financing Agreement was
signed on April 12, 2012 for an amount of US $ 7 million. The project became effective from April 12, 2012 with the closing date
ofJune 30. 2015.
The objective of FUCP is to improve urban services and management in Khar, Bajaur Agency and develop a framework for urban
management in FATA.
The project is implemented through FATA Secretariat
Financing
The financing is made in the Iorm of Credit based on Standard World Bank terms. The Financing Agreement No is Credit Cr
1-112150-PAK.
2 Certification by Project Management on Application of Funds
The FUCP management certified that the funds have been appliediexpenditure have been incurred for the purposes intended in the
financing agreement.
3 Accounting Convention and Statement of Compliance
These Financial Statements have been prepared in accordance with Cash Basis International Public Sector Accounting Standards
(IPSAS). Financial Reporting under the Cash Basis of Acl ting standard.
[he accounting policies have been applied consistently throughout the period.
4 Significant Accounting Policies
4.1 Foreign Currency Transaction
Cash receipts and payments arising from transactions in US 5 are recorded in Pak Rupees by applying the US $ amount the
exchange rate between the Pak Rupee and US $ at the date of receipts and payments. Exchange differences arising at the settlement
of these transactions are recognized in the Statement of Receipts and Pa)ments.
I.2 Reporting Currency
All amount in the Financial Statements are in Pak Rupees.
43 Revenue Recognition
Rcenue is recognized on the date of receipt of money by bank or clearance of cheque. Revenue is recognized on gross basis and
any related costs are recorded separately
4.4 Recognition of Expenditure
Expenditure is recognized on the date when payment is made or cheque is issued. Financial year to which the payments pertain is
determined by the date on which a cheque or payment advice is issued.
4,5 Employee Terminal Benefits
Serx ice benefits of government deputations employees are accounted for in their respective departments whilep- er e terminal
benefits are paid to the contractual employees.
ct Director
dmin & Finance Ufficer1,i ru MU For TARU'
A UFA ., Uc t arit PeIawa,
Eede4- .ment.eePashawar
IIIIII
IFATA URBAN CENTERS PROJECT
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