OFFICE OF THE ACCOUNTANT GENERAL (AUDIT)[ASSAM. BELTOLA,GUWAHATI-781 029 No. FINAT/AC-WB/NERLP/2017-18/604 Date: 29.12.2017 To The Project Director, North East Rural Livelihoods Pr'bject, Regional Project Management Unit, Ministry of DONEAR, Govt. of India, House No.102, Dilip Huzuri Path P.0-Assam Sachivalaya, Dispur Guwahati-781006 Sub: Issue of Audit Certificate on World Bank Aided-North East Rural Livelihoods Project (Credit No. 5035-IN) for the year 2016-17. Ref: Letter No. PD/NERLP/2010-11/56/PT-I1/182 dated 22.06.2017 Sir, With reference to the subject cited above, I am to forward herewith two copies of Audit Certificates on the expenditure incurred in respect of World Bank Assisted "North East Rural Livelihood Project" (Cr. No. 5035-IN) for the year 2016-17. This is for your information and necessary action please. Yours faithfully, Enclo: As stated above Sr. Ad fficer /FINAT OFFICE OF THE ACCOUNTANT GENERAL (AUDIT)ASSAM, BELTOLA, GUWAHATI-781 029 FFr ~I : 9. f .4 / AC -WB/NERLP/ 2017-18/604 f4[i: 29.12.2017 AUDIT CERTIFICATE The Project Director, North East Rural Livelihoods Project, Regional Project Management Unit, Ministry of DONEAR, Govt. of India, House No.102, Dilip Huzuri Path P.O-Assam Sachivalaya, Dispur Guwahati-781006 Report on the Project Financial Statements We have audited the accompanying financial statements of the World Bank Assisted-North East Rural Livelihoods Project (Credit No. 5035-IN) which comprise the Statement of Sources and Applications of Funds and the Reconciliation of Claims to Total Applications of Funds for the year ended 31.03.2017. These statements are the responsibility of the Project's management. Our responsibility 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 & Auditor General of India. 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 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 North East Rural Livelihoods Project for the year ended 31.03.2017 in accordance with the 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 ineligible expenditures as detailed in the audit observations' appended to this audit report at Annexure, expenditures are eligible for financing under Loan/Credit Agreement. During the course of the audit, SOEs/FMRs (application No.PD/NERLP/2010-11/56/PT-II/182 dated 22.06.2017 and amount of T1,61,29,84,886.00 ) and the concerned documents were examined and these can be relied upon to support reimbursement under the Loan / Credit Agreement. This Certificate/report is issued without prejudice to CAG's right to incorporate the audit observations relating to this project in the Report of CAG of India for being laid before Parliament /State or UT Legislature. *An Annexure containing Audit observations on utilization of the World Bank assistance, is enclosed to this Certificate. (S.S.DUDHWAL) Sr. Deputy Accountant General/GS ANNEXURE BRIEF DESCRIPTION OF OBSERVATIONS RAISED DURING AUDIT OF WORLD BANK ASSISTED NORTH EAST RURAL LIVELIHOOD PROJECT ( Cr.No. 5035-IN) FOR THE YEAR 2016-17 S1. Para No. Particulars Amount involved _ (in T) A. Authority : Inspection Report of RPMU, Guwahati by the A.G.(Audit), Assam 1 Para 1 of Part IIB Outstanding advances 6,87,658.00 2 Para 2 of Part IIB Excess expenditure 216,00,000.00 3 Para 3 of Part IIB Purchase of laptop/Mac Book-Observation thereof(payment made 2,36,000.00 without receipt of4 laptop) 4 Para 4 of Part 1113 Short/ Non-deduction of Income Tax 52,000.00 5 Para 5 of Part IIB Non deposition of professional tax 17,021.00 6 Para 7 of Part IIB (a) Excess amount against duration of class session 61,59,000.00 (b) Excess payment on training(Dialysis & Optometry 18,43,000.00 technician) on skill building of unemployed youth (c) Overpayment on food and accommodation of trainees 122,51,500.00 TOTAL (A) 428,46,179.00 B. Authority : Inspection Report of DPMU North Tripura by the A.G.(Audit), Tripura 7 Para I of Part IIB Wasteful expenditure on defunct Self Help Groups 68,20,000.00 8 Para 2 of Part IIB Non-execution of Entry Point Activites-Funds remaining unutilized 21,50,000.00 with implementing agencies. 9 Para 3 of Part IIB Community Development Groups - Idle parking meant for 173,00,000.00 development activities. 10 Para 4 of Part IIB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund 11 Para 5 of Part IIB Non adherence of procedure for invalid cheques-observatoin thereof 0 12 Para 6 of Part IIB Observation on annual accounts prepared by the Management 0 13 Para 7 of Part IIB General observation on SHG Village Federations. 0 TOTAL (B) 262,70,000.00 C. Authority : Inspection Report of DPMU West Tripura by the A.G.(Audit), Tripura 14 Para 1 of Part 1113 Non-execution of Entry point Activities -funds remaining unutilized 45,00,000.00 ____ with implementing agencies. 15 Para 2 of Part IIB Wasteful expenditure on defunct Self Help Groups 20,40,000.00 16 Para 3 of Part IIB Non deduction of VAT at source for hiring of vehicles 24,474.00 17 Para 4 of Part IIB Observations on annual accounts prepared by the Management 0 18 Para 5 of Part IIB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund 19 Para 6 of Part IIB Non-adherence to the periodicity of Seed grant disbursement to 0 SHGs. TOTAL (C) 65,64,474.00 D. Authority : Inspection Report of DPMU Sepahijala District Tripura by the A.G.(Audit), Tripura 20 Para 1 of Part IIB Community Development Groups-Observations thereof. 0 (A) Deficiency in the working of CDGs (B) Idle parking meant for development activities 1,00,00,000.00 (C) Inappropriate site selection for execution of development 0 plan 21 Para 2 of Part IIB Non-execution of Entry point Activities funds remaining unutilized 42,50,000.00 with implementing agencies 22 Para 3 of Part IIB Hiring of private vehicles-observation thereof (a) Non deduction of VAT at source for hiring of vehicles. 12,617.00 (b) Unauthorised use of hired vehicles 0 (c) Non-assessment of mileage of hired vehicle 0 23 Para 4 of Part IIB Observation on defunct/inactive Self Help Groups 0 24 Para 5 of Part IIB General observation on SHG Village Federations 0 25 Para 6 of Part IIB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund TOTAL (D) 1,42,62,617.00 E. Authority: Inspection Report of DPMU UNAKOTI DISTRICT Tripura by the A.G.(Audit), Tripura 26 Para 1 of Part IIB Community Development Groups-Idle Parking meant for 35,00,000.00 development activities. 27 Para 2 of Part IIB Irregular payment on training module and review meeting 1,22,808.00 28 Para 3of Part IIB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund TOTAL (E) 36,22,808.00 F. Authority: Inspection Report of DPMU KHOWAI DISTRICT Tripura by the A.G. (Audit), Tripura 29 Para 1 of Part IIB Non completion of Entry point Activities-observatoin thereof. 0 30 Para 2 of Part IIB Non Deduction of VAT at source from hiring charges of vehicles. 11,257.00 31 Para 4 of Part IIB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund TOTAL (F) 11,257.00 G. Authority : Inspection Report of Gyalshing, DPMU West Sikkim by the A.G.(Audit), Sikkim 32 Para 1 of Part JIB Implementation of the NERLP in West Sikkim: Observation 0 thereof (a) Delay in creation/establishment of basic units for the schemes (b) Delay Disbursement of seed money livelihood funds (Tranche- 1 to Tranche-III) (c) Non- creation of Youth Groups(YG) and Producers Organization (PO) (d) Delay in release of fund to the DPMU from RPMU and non- utilisation of fund 33 Para 2 of Part IIB Non-deduction of contractor's profit 16,27,000.00 34 Para 3 of Part JIB Non-submission of Utilization Certificates 59,89,000.00 35 Para 4 of Part IIB Incorrect showing of opening balance in "fund receipt" head in 0 Ledger TOTAL (G) 76,16,000.00 H. Authority: Inspection Report of Jorthang, DPMU South Sikkim by the A.G.(Audit), Sikkim 36 Para 1 of Part IIB Delay in completion of works 1,24,00,000.00 37 Para 2 of Part IIB Overstatement of expenditure 2,55,00,000.00 38 Para 3 of Part IIB Release of instalment in excess of norms 24,00,000.00 39 Para 4 of Part IIB Non-deduction/Non-remittance of State Valued Added 1,168.00 Tax/environment Cess 40 Para 5 of Part IIB Defunct SHGs and idling of fund 2,60,000.00 41 Para 5 of Part IIB Non- submission of Utilization Certificates 29,54,000.00 42 Para 6 of Part IIB Incorrect showing of opening balance as "fund receipt" head in 23,64,53,128.00 Ledger TOTAL (H) 27,99,68,296.00 TOTAL (A+B+C+D+E+F+G+H) 38,11,61,631.00 Sr. A icer/FINAT miq Tq; Lq# tw jFg-781 029 OFFICE OF THE ACCOUNTANT GENERAL (AUDIT ASSAM, BELTOLAGUWAIATI-781 029 HqWFTi:I 95 . T. .4 / AC -WB/NERLP/ 2017-18/604 ft9tq: 29.12.2017 AUDIT CERTIFICATE The Project Director, North East Rural Livelihoods Project, Regional Project Management Unit, Ministry of DONEAR, Govt. of India, House No.102, Dilip Huzuri Path P.0-Assam Sachivalaya, Dispur Guwahati-781006 Report on the Project Financial Statements We have audited the accompanying financial statements of the World Bank Assisted-North East Rural Livelihoods Project (Credit No. 5035-IN) which comprise the Statement of Sources and Applications of Funds and the Reconciliation of Claims to Total Applications of Funds for the year ended 31.03.2017. These statements are the responsibility of the Project's management. Our responsibility 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 & Auditor General of India. 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 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 North East Rural Livelihoods Project for the year ended 31.03.2017 in accordance with the 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 ineligible expenditures as detailed in the audit observations' appended to this audit report at Annexure, expenditures are eligible for financing under Loan/Credit Agreement. During the course of the audit, SOEs/FMRs (application No.PD/NERLP/2010-11/56/PT-11/182 dated 22.06.2017 and amount of T1,61,29,84,886.00 ) and the concerned documents were examined and these can be relied upon to support reimbursement under the Loan / Credit Agreement. This Certificate/report is issued without prejudice to CAG's right to incorporate the audit observations relating to this project in the Report of CAG of India for being laid before Parliament /State or UT Legislature. *An Annexure containing Audit observations on utilization of the World Bank assistance, is enclosed to this Certificate. (S.S.DUDHWAL) Sr. Deputy Accountant General/GS ANNEXURE BRIEF DESCRIPTION OF OBSERVATIONS RAISED DURING AUDIT OF WORLD BANK ASSISTED NORTH EAST RURAL LIVELIHOOD PROJECT ( Cr.No. 5035-IN) FOR THE YEAR 2016-17 S1. Para No. Particulars Amount involved (in T) A. Authority : Inspection Report of RPMU, Guwahati by the A.G.(Audit), Assam 1 Para 1 of Part 1113 Outstanding advances 6,87,658.00 2 Para 2 of Part IIB Excess expenditure 216,00,000.00 3 Para 3 of Part IIB Purchase of laptop/Mac Book-Observation thereof(payment made 2,36,000.00 without receipt of 4 laptop) 4 Para 4 of Part IIB Short/ Non-deduction of Income Tax 52,000.00 5 Para 5 of Part IIB Non deposition of professional tax 17,021.00 6 Para 7 of Part IIB (a) Excess amount against duration of class session 61,59,000.00 (b) Excess payment on training(Dialysis & Optometry 18,43,000.00 technician) on skill building of unemployed youth (c) Overpayment on food and accommodation of trainees 122,51,500.00 TOTAL (A) 428,46,179.00 B. Authority : Inspection Report of DPMU North Tripura by the A.G.(Audit), Tripura 7 Para 1 of Part IIB Wasteful expenditure on defunct Self Help Groups 68,20,000.00 8 Para 2 of Part IIB Non-execution of Entry Point Activites-Funds remaining unutilized 21,50,000.00 with implementing agencies. 9 Para 3 of Part IIB Community Development Groups - Idle parking meant for 173,00,000.00 development activities. 10 Para 4 of Part IIB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund 11 Para 5 of Part JIB Non adherence of procedure for invalid cheques-observatoin thereof 0 12 Para 6 of Part IIB Observation on annual accounts prepared by the Management 0 13 Para 7 of Part 1113 General observation on SHG Village Federations. 0 TOTAL (B) 262,70,000.00 C. Authority: Inspection Report of DPMU West Tripura by the A.G.(Audit), Tripura 14 Para I of Part IIB Non-execution of Entry point Activities -funds remaining unutilized 45,00,000.00 with implementing agencies. 15 Para 2 of Part IIB Wasteful expenditure on defunct Self Help Groups 20,40,000.00 16 Para 3 of Part IIB Non deduction of VAT at source for hiring of vehicles 24,474.00 17 Para 4 of Part IIB Observations on annual accounts prepared by the Management 0 18 Para 5 of Part IB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund 19 Para 6 of Part IIB Non-adherence to the periodicity of Seed grant disbursement to 0 SHGs. TOTAL (C) 65,64,474.00 D. Authority : Inspection Report of DPMU Sepahijala District Tripura by the A.G.(Audit), Tripura 20 Para 1 of Part IIB Community Development Groups-Observations thereof. 0 (A) Deficiency in the working of CDGs (B) Idle parking meant for development activities 1,00,00,000.00 (C) Inappropriate site selection for execution of development 0 plan 21 Para 2 of Part IIB Non-execution of Entry point Activities funds remaining unutilized 42,50,000.00 with implementing agencies 22 Para 3 of Part IIB Hiring of private vehicles-observation thereof (a) Non deduction of VAT at source for hiring of vehicles. 12,617.00 (b) Unauthorised use of hired vehicles 0 (c) Non-assessment of mileage of hired vehicle 0 23 Para 4 of Part IIB Observation on defunct/inactive Self Help Groups 0 24 Para 5 of Part IIB General observation on SHG Village Federations 0 25 Para 6 of Part IIB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund TOTAL (D) 1,42,62,617.00 E. Authority : Inspection Report of DPMU UNAKOTI DISTRICT Tripura by the A.G.(Audit), Tripura 26 Para 1 of Part IIB Community Development Groups-Idle Parking meant for 35,00,000.00 development activities. 27 Para 2 of Part IIB Irregular payment on training module and review meeting 1,22,808.00 28 Para 3of Part IIB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund TOTAL (E) 36,22,808.00 F. Authority: Inspection Report of DPMU KHOWAI DISTRICT Tripura by the A.G. (Audit), Tripura 29 Para 1 of Part IIB Non completion of Entry point Activities-observatoin thereof. 0 30 Para 2 of Part IIB Non Deduction of VAT at source from hiring charges of vehicles. 11,257.00 31 Para 4 of Part IIB Non-adherence of norms of fund management of the DPMU. The 0 deviation of prescribed norms fixed for 4 components of expenditure were noticed.ie 1. Social Empowerment 20% of the project fund 2. Economic Empowerment 60% of the project fund 3. Partnership Empowerment 10% of the project fund 4. Project Management 10% of the project fund TOTAL (F) 11,257.00 G. Authority: Inspection Report of Gyalshing, DPMU West Sikkim by the A.G.(Audit), Sikkim 32 Para 1 of Part IIB Implementation of the NERLP in West Sikkim: Observation 0 thereof (a) Delay in creation/establishment of basic units for the schemes (b) Delay Disbursement of seed money livelihood funds (Tranche- 1 to Tranche-III) (c) Non- creation of Youth Groups('YG) and Producers Organization (PO) (d) Delay in release of fund to the DPMU from RPMU and non- utilisation of fund 33 Para 2 of Part IIB Non-deduction of contractor's profit 16,27,000.00 34 Para 3 of Part 1IB Non-submission of Utilization Certificates 59,89,000.00 35 Para 4 of Part IIB Incorrect showing of opening balance in "fund receipt" head in 0 Ledger TOTAL (G) 76,16,000.00 H. Authority : Inspection Report of Jorthang, DPMU South Sikkim by the A.G.(Audit), Sikkim 36 Para 1 of Part IIB Delay in completion of works 1,24,00,000.00 37 Para 2 of Part IIB Overstatement of expenditure 2,55,00,000.00 38 Para 3 of Part IIB Release of instalment in excess of norms 24,00,000.00 39 Para 4 of Part IIB Non-deduction/Non-remittance of State Valued Added 1,168.00 Tax/environment Cess 40 Para 5 of Part IIB Defunct SHGs and idling of fund 2,60,000.00 41 Para 5 of Part 1113 Non- submission of Utilization Certificates 29,54,000.00 42 Para 6 of Part JIB Incorrect showing of opening balance as "fund receipt" head in 23,64,53,128.00 Ledger TOTAL (H) 27,99,68,296.00 TOTAL (A+B+C+D+E+F+G+H) 38,11,61,631.00 Sr. Audit Of-er/FINAT