Tel No : 2212 6758/59/60/61 Fax: 22229666 e-mail: piukship@gmail.com GOVERNMENT OF KARNATAKA KARNATAKA STATE HIGHWAYS IMPROVEMENT PROJECT (Public Works, Ports & Inland Water Transport Department) No. PIU:KSHIP:ACTS:WB:AG:01:2017-18 O/o The Project Implementation Unit, Karnataka State Highways Improvement Project K R Circle, Bangalore - 560 001. Date: 15.06.2017 [9 JUN 2017 he Country Director, The World Bank, New Delhi Office, No.70, Lodi Estate, New Delhi - 110003. Dear Sir, Sub: Audit Report on the Annual Financial Statements of KSHIP-jc Loan No. 8022-IN for the Financial Year 2016-17. Ref: Letter of the Deputy Accountant General No. Pr.AG (ERSA)/IAU- I/F/2017-18/16, dated 02.06.2017. With reference to the above, please find enclosed the Audit Report dated 2 June 2017 along with the Audited Financial Statements of KSHIP-II pertaining to IBRD Loan No. 8022- IN for the Financial Year 2016-17 issued by the Principal Accountant General, Karnataka Bangalore. This is in accordance with Section II Part B4 of the Project Agreement dated 30th May 2011. Y s faithfully, (Maniv nan. P) Chief Project Officer, PIU, KSHIP, angalore. Encl: As above Indian Audit And Accounts Department Office of the Accountant General (E& RSA), Karnataka No. AG (ERSA)/IAU-I/F/2017-18/ 16 Date: 02.06.2017 To The Project Director, Project Implementation Unit, Karnataka State Highways Improvement Project (KSHIP), K.R. Circle, Bangalore - 560 00 1. Sir, Sub : Report on the Project Financial Statement of Karnataka State Highways Improvement Project - If (KSHIP - I) under IBRD Loan No. 8022-IN and ADB Loan No. 2705-IND for the period ending 2016-17. With reference to the subject above, I am to enclose the Report on the Project Financial Statement of the Karnataka State Highways Improvement Project - I (KSHIP - 11) under IBRD Loan No. 8022-IN and ADB Loan No. 2705-IND for the period ending 2016-17. The receipt of the same may please be acknowledged. Yours faithfully, CAO SPL. D.C Deputy Accountant eneral DS (F) - SE-1 (Economic Sector - 1) SE-2: SE-3 EE01efo S. C-Block, "Audit Bhavan", Near Vidhana Soudha, Post Box No. 5398, Bengaluru - 560 001 Ph : 080 22289101 Fax: 080 22253753 E-mail : agauKarnataka2@cag.gov.in website: http://www.agkar.cag.gov.in Indian Audit And Accounts Department Office of the Accountant General (E&RSA), Karnataka REPORT OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA To The Project Director, Project Implementation Unit, Karnataka State Highways Improvement Project (KSHIP)-II, K.R. Circle, Bangalore-560001 REPORT ON THE PROJECT FINANACIAL STATEMENT We have audited the accompanying financial statements of Karnataka State Highways Improvement Project-l World Bank Assisted Project Loan No-8022-IN including Highway Financing Modernization Component being executed through Karnataka State Road Development Corporation Limited which comprises of the Statement of Sources and Applications of Funds and reconciliation of claims to Total Application of Funds for the year ended March 2017 . These statements are the responsibility of the Project's management. Our our responsibility is to express an opinion on the accompanying financial statement based on audit. We conducted our audit in accordance with the Auditing Standards promulgated by the plan and perform the Comptroller and Auditor General of India. Those standards require that we of material audit to obtain reasonable assurance about whether the financial statements are free and misstatement. Our audit examines, on a test basis, evidence supporting the amounts used disclosure in the financial statements. It also includes assessing the accounting principles statement and significant estimates made by the management, as well as evaluating the overall presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements present fairly, in all material respects, the sources for the year ended and application of funds of Karnataka State Highway Improvement Project-Il 3 1s" March 2017 in accordance with Government of India accounting standards. In addition, in our opinion, (a) with respect to Financial Monitoring Reports adequate to the World Bank for supporting documentation has been maintained to support claims reimbursement of expenditures incurred, and (b) except for ineligible expenditure (nil) as is eligible for detailed in the memo of disallowances appended to this audit report, expenditure of Expenditure/ financing under the loan/credit agreement. During the course of audit, Statement and these can be Financial Monitoring Reports and the connected documents were examined as detailed below: relied upon to support reimbursement under the loan / Credit agreement C-Block, "Audit Bhavan", Near Vidhana Soudha, Post Box No. 5398, Bengaluru - 560 001 Ph 080 22289101 Fax : 080 22253753 E-mail : agauKarnataka2@cag.gov.in website : http://www.agkar.cag.gov.in (RS. in million) SI Category Expenditure Eligible Less Expenditur Percentag Amount No Expenditure inadmissi e e of Reimbursable ble admissible Reimburs as per audit ement I Consultants Services, 367.783 280.032 280.032 80% - 224.026 training, studies, incremental operating costs, under Part A.1, A.2, C and D of the project 2 Consultants Services, 39.734 25.493 -25.493 80% 20.394 training, studies, incremental operating costs, under Part B.1, 8.2 and B.3 of the project 3 Goods and Works under 2632.971 2361.239 - 2361.239 80% 1888.991 part A.1, C and D of the project 4 Goods and Works under 1070.281 698.720 - 698.720 100% 698.720 part A.2 of the project 5 Goods and Works under 1330.580 383.560 - 383.560 100% 383.560 part B.2 of the project 6 Front End Fee 0 0 - 0 0 0 Total 5441.349 3749.044 - 3749.044 - 3215.691 This report is issued without prejudice to Comptroller & Auditor General's right to incorporate the audit observations in the report of C&AG of India for being laid before Parliament /State Legislature. Deputy AccountanyGeneral (Economic Sector-I) O/o the Accountant General (ERSA) Karnataka, Bangalore MEMO OF DISALL 0 WANCES World Bank Assisted Project Loan No.8022-IN NIL Deputy AccountantYeneral Economic Sector-I Annexure 1 Karnataka State Highways Improvement Project - II World Bank Assisted Project - Loan No.8022 IN Statement of Sources & Application of Funds Report for the year ended 315 March 2017 (Rs. In Millions) Particulars Receipts/Expenditure Project to date For the year Sources of Funds Opening Bank Balance _ Government of Karnataka Funds 1948.463 9331.319 World Bank Funds: 0.000 0.000 PPIAF Grant 0.000 8.973 Loan Funds 3492.886 9267.575 Total Funds 5441.349 18607.867 UsesofFunds Road Improvement Works 3844.262 14542.925 Highwy Financing Modernization Component 1362.551 2155.632 Road Safety Component 107.997 229.117 Road Sector Policy & Institutional Development 72.598 196.270 incremental Operating Costs 46.180 242.035 Advances 7.761 1202.845 Front End Fee 39.043 Total Expenditure 5441.349 18607.867 Closing Bank Balance Dep ty eta (Finance), KSHIP Project irector, Accountant General, KSHIP BANGALO KSHIP Karnataka. Date: 2 5 APR Date:Senior 2017 %wr- Audit Officer was wa . Notes. Office of the Accountant General (E&RSA) 1. This FinancialStatement is preparedon a cash basisofaccounting as per provisions fdAfitlavan, 4f/Kamataka, Sngalum. ,* Rules and codes applicable. 2. The Expenditurefigures are based on monthly/quarterlyabstractof Tally Software usedfor project accounts 3. The receiptof World Bank Loan Fundswere accountedbased on ACA releasefrom Government of India. 4. Highway FinancingModernizationComponent expenditure Rs.1362.551 Million includes Rs. 750.00 Million (Cumulativeadvance Rs. 790.00 Million) releasedas advance to KRDCL for Resettlement & Rehabilitationand LandAcquisition activities. 5. Names ofAccounting units whosefinancialstatements areaggregatedto preparethe consolidated accounts are: PIU-KSHIP, Bangaloreandfour ProjectDivisionsnamely Tumkur, Shimoga, Raichurand Annexure 2 Karnataka State Highways Improvement Project - II World Bank Assisted Project - Loan No.8022 IN Reconciliation of Claims to Total Applications of Funds Report for the year ended 31e March 2017 Amt (Rs. Million) Schedules Previous Project to Current Year Yerdt Year date Bank Funds Claimed (A) IUFR-Application No.37 _ _ .. 84.374 IUFR-Application No.38 698.695 IUFR-Application No.39 _ 171.197 IUFR-Application No.40 556.678 IUFR-Application No.41 127.337 IUFR-Application No.42 485.678 IUFR-Application No.43 1091.735 Funds Claimed for the year Ref: Schedule I 3215.694 Less: Claims of previous years IUFR 0.000 Funds claimed for the current year(A) 3215.694 Total Expenditure made (B) 5441.349 5166.237 18607.867 Expenditure as per books of account 5441.349 5166.237 18607.867 Less: Expenditure Not Claimable (C) Ref: Schedule 1 1692.305 Expenditure Not Claimed (D) 0 Claimable Expenditure (F) = (B)- (C)-(D) 3749.044 World Bank Share (E) 3215.694 Claims in excess of Expenditure (A-E) 0 VRo De u tary-Finance, KSHIP roject Director, KSIHIP AccountantGeneral, KSHIP - dmarnataka Senior Audit Offic Date: '25 APR 2017 Office of the Accountant Genaall &AS Notes: WI/Audi Bavan,W , /Kamata enap 1) Total expenditure made during the year (B above) must be the same as the Total Expenditure shown on the Statement-ofSources and Applicationsof Funds. 2) Total Expendituremade during theyear B above) included advances of Rs. 7.761. Mi llion to Consultantsand Contractorsand advance of Rs.750.00 Million to KRDCLfor implementation of Resettlement and Rehabilitationand LandAcquisition activities. Karnataka State Highways Improvement Project - II World Bank Assisted Project - Loan No.8022 IN (Rs. In Millions) Disbursement Category and Expenditure for the year ended 31.03.2017 Disbursement Category Expenditure Eligible Claim Expenditure Amount Consultants' services, training, studies, Incremental Operating Costs under Parts A.1, A.2, 367.783 280.032 80% 224.026 C,and Dof the Project Consultants' services, training, studies, Incremental Operating Costs under Parts B.1, B.2 39.734 25.493 80% 20.394 and B.3 Goods and works under Part A.1, C, and D of the Project 2632.971 2361.239 80% 1888.994 Goods and Works under Part A.2 of the Project 1070.281 698.720 100% 698.720 Goods and Works under Part B.2 of the Project 1330.580 383.560 100% 383.560 Front End Fee 0 0 0 Total 5441.349 3749.044 3215.694 Breakup for claim amount: Reimbursement claimed during 1638.281 the period (Ref. Schedule - 1) Pending claim amount as of 31.3.2017 (IUFR Application No.42 &43) Total 3215.694 Deputy Se ry-Finance, L Project Director, KSHIP Accountant General, KSHIP 0 Karnataka oae 2 5 APR 2017 Aud O ca r Schedule - I Karnataka State Highways Improvement Project - II World Bank Assisted Project - Loan No. 8022 IN Details for Withdrawal Applications for the Year Ended 31-03-2017 ke_urse Reimbursem ;Expenditure(Rs. In Millions) SL. IUFR Period Expenditure Eligible Reimbur Reimburse Reimbursem Expenditure Remarks No Appl for the Period Expenditure sable ment Claim ent through Not No. for the Period %age Amount ACA Release Claimable 1 2 3 4 5 6 7 8 9=(4-5) 10 135.377 105.467 80% 84.374 1) . 37 01-04-2016 to 15-06-2016 6 67.835 0 100% 0 84.197 97.745 Total 203.212 105.467 84.374 502.086 424.842 80% 339.875 2) 38 16-06-2016 to31-08-2016 496.660 358.820 100% 358.820 694.634 215.084 Total 998.746 783,662 698.695 272.621 213.997 80% 171,197 3) 39 01-09-2016 to 30-09-2016 52304 0 100% 0 52.04 10% 0 170.928 110,928 Total 324.925 213.997 171.197 360.351 270.972 80% 216.778 4) 40 .01-10-2016 to 02-11-2016 391.158 - 339.900 100% 339.900 553.867 140.637 Total 751.509 610.872 556.678 161.015 159.171 80% 127.337 5) 41 03-11-2016 to 31-12-2016 437,798 0 100% 0 127.196 439.642 Total 598.813 159.171 127.337 (A) Expenditure Claimed & Received 2877.205 1873.169 1638.281 1630.822 1004.036 during the Year 636.445 607.097 80% 485,678 6) 42 01-01-2017 to 28.02.2017 71.381 0 100% 0 0 100.729 Total 707.826 607.097 485.678 Claim is in pipeline Please 972.593 885.218 80% 708.175 refer foot note (2) 7) 43 01.03.2017 to 31.03.2017 883.725 383.560 0 587.540 Total 1856.318 1268.778 1091.735 (B) Expenditure Claimed & yet to be 2564.144 1875.875 1577.413 0.000 688.269 received as on 31,03,2017 Schedule - I Karnataka State Highways Improvement Project - II World Bank Assisted Project - Loan No. 8022 IN 31-03-2017 Details for Withdrawal Applications for the Year Ended (Rs. In Millions) Remarks Expenditure Eligible Reimbur Reimburse Reimbursem Expenditure SL, IUFR Period Not for the Period Expenditure sable ment Claim ent through No Appl %age Amount ACA Release Claimable for the Period No. 8 9=(4-5) 10 4 5 6 7 1 2 3 3749.044 3215,694 1630.822 1692.305 (A+B) Total 5441.349 453,936 435.110 80% 348.089 8) 34 01-01-2016 to 04-03-2016 630.497 339.900 100% 339.900 687.621 309,423 1084.433 775.010 687.989 Total 157.637 133.250 80% 106.600 9) 35 05-03-2016 to 24-03-2016 711.817 629,882 100% 629,882 740,265 106.322 869.454 763.132 736.482 Total 399.852 288,481 80% 230.785 10) 36 25-03-2016 to 31-03-2016 378.908 203.940 100% 203.940 434.178 286.339 778.760 492.421 434.725 Total 2030.563 1859.196 1862.064 702.084 Claims of previous year received 2732.647 during the year 3492.886 2394389 8173.996 5779.607 5074.890 Total Bank Funds Claimed during the Year Note: (1) Application No. 42 &43 were in pipeline as of 31,03.2017. expenditure of Rs.1875,875 Million IUFR 42 for the period 01.01.2017 to 28.02,2017 & IUFR 43 for the period 01,03.2017 to 31.03.2017, out of the eligible (2) In the Million. Million. The ineligible expenditure is Rs.688.269 an4 Reimbursement claim amount of Rs. 1577.413 Project irector, Accountant General, De n;ance, Karnataka KSHIP KSHIP DATE: Senior Audit Officet w~(U.V.