OFFICE OF THE ACcOUNTANT GENERAL (G&SSA) KERALA, FFC1OFTH VANANTHAPURAM - 695 001 ralo utm and P~tk No. SGS-11(11Q)1V/EAP/ 16-25/KS'FP/18-1912019-20/ 131q331 Dated a November 2019. To e T ihe po et I)irectOr, KSTP Kowdiar (PO) Thiruvananthapuramn -03. Sir, S tf World Bank assisted, Kerala State r-Anport Pone aK >II) for the ycar ending 31 March. Sl 1\uihe Project Financial Statentts of Kerala State r2nh e i I 1,oan No.8254-IN) for the year ending 31 March 2019 have been ad it ni audit report is forwarded herewith. and also for leprovement of internal recomnmendations that require your attentio anal fo control and acc)oulntilg system is issued separatey Yours faithfully, ( Anu Jose ) Senior Deputy Accountant Genera, (SGS-ll) Copy tq D eret o omie Affairs, Ministry of Finance, Governmnclt of India, New Delhi. 2. The P incipal Director (PPG), Office of the Comptroller and Auditor General of India, Pocke 9, DeendayalUpadhyay Marg, New Delhi 110 124 ( Anu Jose Senior Deputy Accountant General (SGS-Il) -*i Email : agaukeralac .gov.i *s/Fax :0471 - 2331326 Tf elephone :0471 2330799 OFFICE OF THE ACCOUNTANT GENERAL (G &SSA), KERALA, THIRUVANANTHAPURAM - 695 001 -Ducæted to Truth and Pubd lNerast i gef ge I (3IV-4gì116-25/1~ 1lËi18-19/2019-20/ -7W I fa, g g /111/2019 JM |WWeiU, tri- T +441 NÉÍåe s y ip¿ ãs il gd Èè«I TGUqifi-gdIfftdiIli (KSTP- 11) - 2018-19 - Wrjavr Š fri~d Wr No.8254 IN-3~Mft Nlfti R¶t t X t[I-« tc1 t#-iflTHHI (KSTP- lI) - 2018-19 i 14 IIuÌWR1l 110124, Email: agaukeraLa@ýcag.gov.if n / Fax :0471 -2331326 î /Telephone :0471 2330799 AUDIT REPORT ON THE PROJECT FINANCIAL STATEMENTS OF KERALA STATE TRANSPORT PROJECT-Il (KSTP-II), LOAN NO.8254 IN FOR THE YEAR ENDED 31 MARCH 2019. We have audited the accompanying revised financial statements of the Kerala State Transport Project-Il financed under World Bank Loan No 8254 IN which comprise the Statement of Sources and Applications of Funds, and Reconciliation of Claims to Total Applications of Funds for the year ended 31/03/2019. These statements are the responsibility of the Project's management. Our responsibility is to express an opinion on the accompanying financial statements based on our audit. We conducted our audit in accordance with the Auditing Standards promulgated by the Comptroller and Auditor General of Indiz. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit examines, 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. In our opinion, the financial statements present fairly, in all material respects, the sources and application of funds of Kerala State Transport Project-Il for the year ended 31/03/2019 in accordance with Government of India accounting standards. In addition, in our opinion, (a) with respect to SOEs, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred; and (b) except for the ineligible expenditures as detailed in the audit observations appended to this audit report expenditures are eligible for financing under the Loan/Credit Agreement. During the course of the audit, SOEs for Rs. 270.11 crore from Government of Kerala and the connected documents were examined and these can be relied upon to support reimbursement under the Loan/Credit Agreement. This report is issued without prejudice to CAG's right to incorporate the audit observations in the Report of CAG of India for being laid before Parliament/State Legislature. Thiruvananthapuram ( Anu Jose ) ,* November 2019. Senior Deputy Accountant General(SGS - II) Appendix Audit Observations 1.0 Statement of Sources and Application of Funds Report for the year ended 31 March 2019 1.1 Expenditure by Component - A. Road Network Upgrading and Safety improvement - Rs.187.29 crore. This includes an amount of Rs 3,36,380 paid to a project affected person towards compensation of loss to his residence which was recovered from the contractor, resulting in overstatement of expenditure under the component 'Road Network Upgrading and Safety improvement' with corresponding understatement of 'Non -reimbursable Project Items' by Rs 3,36,380. 1.2 Expenditure by Component - B Road Safety -Rs.36.70 crore - BI Safe Corridor Demonstration Project - Civil Works - Rs. 10.10 crore. This includes an amount of Rs 50,000 imposed on the contractor as a penalty for non- compliance of work zone safety measures for the work 'Safe Corridor Demonstration Project (recovered from the bill IPC 18 but not deducted while claiming re- imbursement as per Claim 36) resulting in overstatement of expenditure under the component 'Road Safety ' with corresponding understatement of 'Non-reimbursable Project Items' by Rs 50,000. 1.3 D. Non-reimbursable Project Items - Rs.45.90 crore. This includes an amount of Rs 930.90 lakh claimed in the IUFR for the period from 01 April 2018 to 31 May 2018 (Claim No.30) and Rs 899.16 lakh claimed in the IUFR for the period 01 July 2018 to September 2018 (Claim No.34) whereas as per the Cost Category Summary for the above periods the net amount under 'Category Not Applicable' comes to only Rs 920.50 lakh and Rs 884.19 lakh resulting in a difference of Rs 10.40 lakh and Rs 14.97 lakh. This has resulted in overstatement of 'Total Expenditure' by Rs 25.37 lakh ( Rs 10.40 lakh + Rs 14.97 lakh). Thiruvananthapuram (Anu Jose ) 2, November 2019. Senior Deputy Accountant General (SGS-lI)