FINANCIAL ATTEST AUDIT REPORT ON THE ACCOUNTS OF PUNJAB EDUCATION SECTOR REFORMS PROGRAM-II&III WORLD BANK CREDIT NO. 5106-PK SCHOOL EDUCATION DEPARTMENT, GOVERNMENT OF THE PUNJAB * FOR THE FINANCIAL YEAR 2016-17 AUDITOR GENERAL OF PAKISTAN ISLAMABAD TABLE OF CONTENTS Page No. List of abbreviations Preface 3 PART-I 4 Program Overview 5 Auditor's Report to the Management (Audit Opinion) 6 Financial Statements 7 PART-I 8 MANAGEMENT LETTER 9 COVERING LETTER TO THE MANAGEMENT LETTER I0 EXECUTIVE SUMMARY 11 1. Introduction 12 2. Audit Objectives 12 Audit Scope and Methodology 12 4. AUDIT FINDINGS AND RECOMMENDATIONS 12-23 4.1 Organizational Management 4.2 Financial Management 4.3 Procurement and Contract Management 4.4 Overall Assessment 24 5. CONCLUSION 25 ACKNOWLEDGEMENT 26 1 Abbreviations and Acronyms SDAC Special Departmental Accounts Committee DDO Drawing and Disbursing Officer DFID Department for International Development DLIs Disbursement Linked Indicators EA Executing Agency ECNEC Executive Committee of the National Economic Council FC Foreign Currency GoPb Government of the Punjab INTOSAI International Organization of Supreme Audit Institutions IPSAS International Public sector Accounting Standards ML Management Letter MTDF Medium Term Development Framework PESRP Pun,jab Education Sector Reforms Program PRA Pun jab Revenue Authority 2 PREFACE The Auditor General of Pakistan conducts audit in terms of articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan. 1973. read with Sections 7, 8 & 12 of the Auditor Generals (Functions, Powers and Terms & Conditions of Service) Ordinance, 2001. This audit of Financial Statements of the "Punjab Education Sector Reforms Programme-JI and IIl" financed by Government of the Punjab and the World Bank for the tinancial year 2016-17 was carried out accordingly. The Directorate General Audit, Punjab Lahore conducted audit of the Program during October, 2017 for the financial year 2016-17 with a view to report significant findings to stakeholders. Audit examined the economy, efficiency and effectiveness aspects of the Program. In addition, audit also assessed. on test check basis, whether the management complied with applicable laws, rules and regulations in managing the Program. The audit report indicates specific actions that. if taken, will help the management realize the objectives of the Program. The report has been discussed with the Program Management in October. 2017. The report consists of two parts i.e. Part-I contains Auditor's Report (Audit Opinion) and Financial Statements and Part-11 consists of Executive Summary, Management Letter and Audit Findings. The report has been prepared for submission to the World Bank in terms of' Loan Aureement. (Fareed Mehmood Ch.) Director General Audit, Punjab Lahore Date: Place: Lahore. 3 PART-1 1- PROGRAM OVERVIEW 2- AUDITOR'S REPORT TO THE MANAGEMENT 3- FINANCIAL STATEMENTS 4 AUDITOR'S REPORT TO THE MANAGEMENT Auditor's Report on PESRP Financial Statements We have audited the accompanying Financial Statements of Punjab Education Sector Reforms Program that comprises of Statement of Receipts and Payments. Statement of Comparison of Budget and Actual together with the notes forming part thereof for the year ended 30th June, 2017. Management's Responsibility It is the responsibility of Program 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 International Standards of Supreme Audit Institutions (IPSAS). Financial Reporting under the Cash Basis of Accounting Standard, Auditor's Responsibility The responsibility of the auditor is to express an opinion on the Financial Statements based on the audit conducted. We conducted our audit in accordance with IPSAS. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Financial Statements are free of material misstatements. The audit process includes. examining on a test basis. evidence supporting the amounts and disclosures in the Financial Statements. It also includes a 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. Opinion In our opinion: (a) The Financial Statements present fairly. in all material respects, the cash receipts and payments by the Program for the year ended 30" June, 2017 in accordance with Cash Basis IPSAS. Financial Reporting under the Cash Basis of Accounting Standards. (b) The expenditure has been incurred in accordance with the requirements of the legal agreement. (Fareed Mehmood Ch.) Director General Audit Punjab Lahore Place: Lahore Date: 6 FINANCIAL STATEMENTS FOR THE YEAR ENDED ON 30"'JUNE, 2017 -7 I FINANCIAL REPORTING UNDER CASH BASIS OF ACCOUNTING GOVERNMENT ENTITY Statement of Receipts and Payments Punjab Education Sector Reform Programme (PESRP) For the year ended June 30, 2017 (Rupees Ir '00CY) 2016-17 2015-15 Receipts/ Receipts/ DescrIptioll Notes (Payments) Payments by (Payments) Payments by controlled by external third Total controlled by external third Total etit parties entity parties Auhrzed n!'ocations /Approinrij:ions/Gop 4.4 199,282,460 - 199,282,450 174,748,296 - 174,748,296 Gronts/Assistance fromn --- - DFID 4,3 6,251,637- 6,251,637 3,029,871 - 3,029,871 Roceipts froTn IDA 4.1.3 152,515 - 152,516 2,652,327 - 2,652,327 Direct Payme! nt lby tne- IDA 4.1.- 104,432 104,432 - Re!ce pts from IBIRI) 4.2.3 5,458,888 5,49R,S88 RECEIPTS 4.0 211,185,501 104,432 111,289,933 180,430,494 180,430,494 From GCi`o Assignme.nt Account 5.2 199,282,460 - 199,282,460 174,748,295 - 174,748,296 Fror DFID Grant 511 6,251,637 - 6,251,637 3,029,871 - 3,029,871 From IDA & !RD credit 5.1 5,679,557 - 5,679,557 2,769,171 - 2,769,171 DA - 104,432 104,432 - surrentderec/Iap;edi in PAYMENTS 5.0 211,213,654 104,432 211,318,086 180,547,338 180,547,338 Cash at beginning of year 3.0 47,958 - 47,968 164,812 - 164,812 ncrease/(Decrease) in Casn due to exhango 'ate Cash at end of year 6.0 19,815 19,815 J 47,968- 47,968T FINANCIAL MANAGEMENT SPECIALIST ADDITIONAL PE DIRECTOR Punjab Education Sector Reform Programme (PESRP) Receipts & Payments Against Financing Sources (Donors & GoPb) Statement of Cash Flows For the year ended June 30, 2017 (Rupees in '000') Description Notes Donors Own Source Total (GoPb) US$ GBP £ Rs. Rs. Rs. Opening Balance 3 513,116 - 47,968 - 47,968 RECEIPTS 4 - GoP Ailocat[on, 4.4 - 199,282,460 199,282,460 IDA Credit 4.1.3 1,455,747 152,516 - 152,516 Direct Payment by IDA 4.1.2 996,780 - 104,432 104,432 IBRD Credit 4.2.3 52,487,867 5,498,888 5,498,888 DFJD Grant 4.3 - 46,800,000 6,251,637 - 6,251,637 Total 55,453,510 46,800,000 12,055,441 199,282,460 211,337,901 PAYMENTS 5 - From GoPb allocat an 5.2 - 199,282,460 199,282,460 Payment from Donors Financing 5.1 54,212,225 46,800,000 11,931,194 11,931,194 Direct Payment by IDA 5.1 996,780 - 104,432 104,432 Total 55,209,005 46,800,000 12,035,626 199,282,460 211,318,086 Amount surrendered from GoPb Amount lapsed from GoPb Increase/decrease in cash due to exchange rate Amount surrendered/lapsed Closing Balance 6 244,505 19,815 - 19,815 FINANCIAL MANAGEMENT SPECIALIST ADDITIONAL PROGR ME DIRECTOR FINANCIAL STATEMENT FOR THE YEAR 2016-17 Punjab Education Sector Reform Programme (PESRP) Statement of Comparison of Allocated and Actual Amounts For the year ended June 30, 2017 Rs in 000s Rs in 000s Components 16-17 015-16 Allocated Amounts Revised Amount Actual Amounts Allocated Amounts Revised Amount Actual Amounts Cornionent-lI Salary Related Expense s 280,213,887 280,507,400 181,679,922 180,477,282 176,806,194 167,045,004 Punjab Education FoEndaUn(PEF) 15,022,704 15,022,704 14,905,927 13,047,271 12,708,898 12,379,617 Girs Stiends 73,132 89670 38,357 1,771,161 810,569 799,854 Grants to School Councils Tea1cher Incent ver uncer nigh Improvers Programme - -- 150,000 Monitoring Systems (CM Monitoring force) 517,076 340,127 329,298 321,441 281,510 253,987 Non-Salary Budget 14,000,000 14,000,000 13,999,996 - Total 309,826,799 309,959,901 210,953,500 195,767,155 190,607,171 462 Component - 1i Incremental TA SteffQj 75,000 56,250 54,000 75,000 23.180 16,678 Capacity Building (AO3982) 380,000 285,000 205,194 380,000 234,732 100,166 Doc payment by World bank 104,432 _ 104,432 104,432 - . Expenditure Tracking/ TPVs 50,000 37,500 19,775 50,000 4,000 - Total 609,432 483,182 384,4015, 261,912 116,844 Grand Total 310,436,231 310,443,083 211,337,901 196,272,155 190,869,083 180,595,306 FINANCIAL MANAGEMENT SPECIALIST ADDITIONAL PRT AMME DIRECTOR - IV Programme Monitoring & Implementation Unit Punjab Education Sector Reform Programme School Education Department Government of the Punjab Notes to the Financial Statements for the year ended June 30, 2017 1. THE PROJECT 1.1 Project Description The Punjab Government has entered into a Project Agreement with International Development Association (IDA) dated May 2; 2012 bearing Credit No.51060 -P1ak in connection with the Financing Agreement of the same date between the Government of Pakistan and the IDA for financing Punjab Education Sector Project -II, cost amounting to US S 4.407 million for a period of three years. The Government of Pakistan and Government of Punjab has also entered into a Grant Agreement dated March, 2013 with the UK Government through the Department for International Development (DFID) for a grant off 350.3 million (for break up and description of on/off budget component ofDFID grant please see note 4.3) for a period of six years (March 1, 2013 to June 30,2019) to support PESP-II (the project) along with World Bank. DFID further approved Additional Financing of £ 70 million, as a grant, for institutional strengthening of key institutions in education sector in Punjab. The Canadian International Development Agency (C IDA) initially was partner in PESP-11 as a continuity of PESP-I; however after taking part in negotiations for PESP- 1 i. could not joined the partnership because of its internal restructuring. The Project supports Punjab Education Sector Reform Program (PESRP) initiated in 2003. PESP-11 has two components: (i) a result based Component I -- to 1finance PES RP-ll. amounting to USD 340 million (97% of total credit) (ii) Component 2 - Technical Assistance (TA) component-to finance essential advisory, technical and capacity building support for PESRP-11, amounting to USD 10 million (3% of the total credit).The Credit proceeds are periodically disbursed on achievement of 10 mutually agreed and equally-weighted Disbursement Linked Indicators (DLIs). The credit proceeds can only be utilized against selected budget heads of GoPb. These budget heads have been declared Eligible Expenditure Programme (EEPs) by the donors. Eligible Expenditure Programme (EEPs) for PESP-ll comprise of - Salary related expenditure, School Council (SC) Grants, Girls Stipends, Performance-Based Incentives, School Monitoring, Eligible budget lines of PEF as declared so by Donors and TAThe closing date of the project, only to the extent of component-ll (TA) for its efective utilization, has been extended from 31 December, 2015 to 31 December, 2016. SED and PESRP have successfully achieved all the DLIs within original stipulated time and all committed funds to the extent of Component- I have already been disbursed by the WB. The Punjab Government has entered into a new project agreement with International Bank for Reconstruction and Development (IBRD) dated 31 August, 2016 bearing credit No. 8160-PK. In connection with the loan agreement of the same date between Government of Pakistan and IBRD; the project was declared effective on 5 October, 2016 for financing Third Punjab Education Sector Project (PESP-I) cost amounting to US$ 300 million for a period of five years. PSP-lll has two components i.e.( i ) Component I- Program financing relates to the total financing provided by the World Bank and (ii) Component 2- Technical Assistance is to strengthen existing capabilities for implementation and monitoring of the sector program. 1.2 .,rojvtt Objectives The Project's Development Objectives are to support the education sector reform program of the Government of Pu Jlab w ith major goals of increased child school participation (at multiple level) and student achievements. It also aims to improve access and equity, and the quality and relevance of education in Punjab. 1.3 Scope of the Project Scope of PESP-ll and PESP-ll include provision of support to School Education Department and GoPb by bridging the implementation gap and delivery mechanism. PESP-II embraces the principles of increased transparency, participation and collaboration as essential to accomplish its mission, while spotlighting the parameters of access, quality and governance. 1.4 Estimated Cost Estimated Cost in USD million: Partners PESP-II PESP-1Il IDA/IBRD 350.00 300.00 DFID 200.00 150.00 CIDA 19.30 . Provincial Govt. financing 3,837.70 12,907.50 Total 4,407.00 13,357.50 * Copy of Project Appraisal Document (PAD) is attached at Annexure-A. 2 Significant Accounting Policies 2.1 Basis of Presentation Thcse finuncia statements have been prepared on the cash basis of accounting which recognizes transactions and - events only when cash is received or paid by the entity. 2.2 Accounting Convention The system-generated accounting records are the basis for preparation of these financial statements which are in conformity with international Public Sector Accounting Standards (IPSAS) issued by the Public Sector Committee of the International Federation of Accountants. Accounting records are maintained using the government-wide integrated financial management information system (PIFRA) and in accordance with the governmental accounting procedures and policies defined in the New Accounting Model, issued by the Auditor General of Pakistan and are in conformit% wihll iitCniational good practices. These policies are consistently applied at the provincial as well as district levels. 2.3 Foreign Currency Transactions Proceeds from the Donors in foreign currency are translated into equivalent Pakistani Rupees by the State Bank of Pakistan at the rates prevailing on the date of transaction to the Consolidated Account No I (Non Food) of the Punjab Siovciniment. No foreign currency transaction takes place in PMIU/SED or any organization under SED. Conversion rates from foreign currency to PKR in these financial statements have been applied as communicated by SBP at the time of transfer of funds to Provincial Consolidated fund (Account-I), both for receipt and payment purposes. - 2.4 Fixed Assets Fixed Assets of PMIU are disclosed on Historical Cost Basis. Schedule of Fixed Assets has been given at Annexure- B. 2.5 Provisions Due to cash basis of accounting, no provision is recognized in financial statements. However, if there were any event which may have a legal or other obligation with contingent financial Implication, then it would have been identified by separate disclosure in the notes to the financial statements. 2.6 Offsetting Neither asset-liabilities nor fund flow and expenditure have been off set in the financial statements. 2.7 Recognition of Receipts Receipts are recognized when the required amounts are credited to the Punjab Government Consolidated Account No. I (Non Food) held with the State Bank of Pakistan. 2.8 Recognition of Expenditure ExpCnditUrc is recognized on the date when payment is made or cheque is issued. Financial year to which payment pertain is determined by the date on which a cheque or payment advice is issued, 2.9 Cash and Cash Equivalents For the purpose of cash flow statement, cash and cash equivalents comprise cash in the Punjab Government Consolidated Account No. I (Non-Food) maintained with the State Bank of Pakistan related to IDA &IBRD Credit for EEPs and for TA in the Special Drawing Account with Government Treasury (Treasury Office Lahore). 2.1(1 Project Iiplementation and Closing Period (i) I )A Credit - starting July 1, 2012 and ended on December 31, 2016 (with a grace period of four months) (ii) IBRD Credit -- starting August 31, 2016 and will end on December 31, 2021 (ii) DFID Grant - March 1, 2013 and ending on June 30, 2019, with a grace period of six months 3 Opening Balance Opening balance comprises: Description - 2016-17 2015-16 Us i Rs. (in 000) US$ Rs, (in 000) Cash at Bank 513,116 47,968 1,681,556 164,812 GoPb Share - - ITotal 513,116 47,9681,681,556 164,812 Closing Balance of the last year is shown as the Opening Balance of this year. 4 Receipts Receipts from Donors Details of donor receipts for the Financial Year 2016-17 is enclosed as Annexure-C. 4.1 IDA Credit: The IDA under Financing Agreement dated May 25, 2012 bearing Credit No. 51060-PK extended the credit in an amount equivalent to SDR 225 million (US $350 million) to assist the Punjab Government in financing the Project. The Credit proceeds are periodically disbursed for: (i) Eligible Expenditure Programme (EEPs) comprising of; Salary related expenditure, School Council (SC) Grants, Girls Stipends, Performance-Based Incentives, School Monitoring, Eligible budget lines of PEF as declared so by Donors and (ii) TA - Goods, Consultants' services, and Training and Workshops, from the IDA Credit account to the Government of Punjab Consolidated Account No. I (Noon-Food) through State Bank of Pakistan, based on Withdrawal Application submitted by GoPb. I lovei er, TA component funds received into Consolidated Fund Account are released into a Special Drawing Account (SDA) by GoPb. The funds maintained in SDA are part of the government's Treasury Single Account, is operated by the PNIIU's designated persons. Use of SDA ensures availability of earmarked funds to PMIU for critical TA activities on a timely basis. The quanta of resources transferred to the Provincial Consolidated Fund at each disbursement cycle are linked, to successful achievement of Disbursement Link Indicators (DLIs); there, however, are two important conditions (i) disbursement is done on reimbursement basis except for one time $45 million advance at the effectiveness of the agreement (ii) yearly allocated amount increases i.e. S 90,110 and 140 million respectively for EEPs and DLI allocation increases accordingly each year. Funds for TA are, however, disbursed on advance basis by the World Bank against forecasted amount by PMIU/SED. The DLIs are monetized equally, based on the planned disbursement for a particular cycle to incentivize the Punjab Government to focus on the priority implementation of actions that, together, support the Project outcomes. Disbursement Linked Indicators for PESP-11 are: DLI-I -Field based professional development: strengthening field- based teaching advisory support for improved teacher performance; DLI-2- Teacher recruitment: Improving Teacher Quality at entry; DL1-3-Teacher rationalization: Fixing teaching posts at the school level based on school needs and reallocating teachers inline with rationalized posts; DLI-4-School non salary budget: Setting and executing school budget inline with school resourcing needs; DLI-5-Decentralized resource management: Decentralizing resource iana,ement powers to schools; DLI-6-Teacher performance incentive: incentivizing teacher and student performance by strengthening the link between monetary rewards and student achievement; DLI-7-School councils: Strengthening Ilh apacity or and empowering committees to support monitor and promote school performance; DLI-8-Provision and use of system and school performance information: Regularly feeding relevant and reliable information to various levels to improve evidence-based school performance management; DLI-9-Private school vouchers: Strengthening pvoran design and expanding coverage of tuition replacement voucher to children from disadvantaged, urban households by increasing school choice to include private schools under a quality- assurance system; DLl-10-Stipend for secondary school girls: increasing incentives, efficiency and delivery performance for promoting the transition to and retention of girls at the secondary level. 4.1.1 For Eligible Expenditure Program us $ Is in 000s Funds received under IDA Credit No. 51060-PAK FY 2012-13 Withdraval credited by SBP on June 26, 2012 45,000,000 4,243,514 Balance as of June 30, 2012 on of EEPs 45,000,000 4,243,514 Withdrawal credited by SBP on June 27, 2013 24,479,987 2,420,010 Total funds received for the FY 201212013 69,479,987 6,663,524 Funds received under IDA Credit No. 51060-PAK FY 2013-14 Us S Rs in 000s Withdrawal credited by SBP on December 13, 2013 17,840,054 1,923,368 Withdrawal credited by SBP on June 19, 2013 98,840,054 9,623,852 Total funds received for the FY 2013/2014 115,851,888 11,576,220 Funds received under IDA Credit No. 51060-FY 2014-15 Withdrawal credited by SBP on June 27, 2015 13 Total funds received for the FY 2014/2015 111,296,560 11,321,743 Funds received under IDA Credit No. 51060- FY 2015-16 Withdrawal credited by SBP on April 12, 2016 25,350,120 2 ,6 5 2 ,3 2 7 Total funds received for the FY 2015/2016 25,350,120 2,652,327 Funds received under IDA Credit No. 51060-during the current period Total funds received for the FY 2016/2017 4.1.2 For Technical Assistance Under component 11 of PESP-1I an amount of US $ 10 million has been allocated for Technical Assistance (TA) to be administered by PMIU under World Bank Financial and Procurement guidelines. TA component is executed through a special drawing account (SDA), and funds allocation is done by GoPunjab as part of regular budget of PMJU. Detail of funding trom IDA in TA component for the period is as follows: Funds received for the FY 2012/2013 US $ Rs in 000s Wihdrawal credited by SBP on June 26, 2012 500,000 47,150 Balance as of June 30, 2012on account of TA 500,000 47,150 Withdrawal credited by SBP on June 27, 2013 3,579,399 353,007 IDA Funds received during FY 2012/2013 4,079,399 400,157 Direct payment made by World Bank on March 05, 2013 249,195 24,919 Direct payment made by World Bank on March 07, 2013 249,195 24,919 Direct payment made by World Bank on March 07, 2013 249,195 24,920 Total Direct Payments made by World Bank from TA 747,585 74,758 Total funds received for the FY 2012/2013 4,826,984 474,915 Funds received for the FY 2013/2014 Withdrawal credited by SBP on June 20, 2014 671,19965980 IDA Funds received during FY 2013/2014 671,199 65,980 Direct payment made by World Bank on Jan 13, 2014 448,551 44,855 Direct payment made by World Bank on Jan 13, 2014 448,551 44,855 Direct payment made by World Bank on March 04, 2014 448,551 44,855 Total Direct Payments made by World Bank from TA FY2013-14 1,345,653 134,565 Total funds received for the FY 2013/2014 2,016,852 200,545 Funds received for the FY 2014/2015 Withdrawal credited by SBP on 23 Feb 2015 271,852 27,584 IDA Funds received during FY 2014/2015 271,852 27,584 Direct payment made by World Bank on 20 April 2015 398,712 9871 Total Direct Payments made by World Bank from TA FY2014-15 398,712 39,871 Total funds received for the FY 2014/2015 670,564 67,455 'und's received for the FY 2015/2016 Us 5 Rs in 000s Withdrawal credited by SBP on IDA Funds received during FY 2015/2016 Direct payment made by World Bank on Total Direct Payments made by World Bank from TA FY2015-16 - Total funds received for the FY 2015/2016 Funds received for the FY 2016/2017 Withdrawal credited by SBP on 27 July 2016 1,350,747 141,516 Withdrawal credited by SBP on 13 Feb 2017 105,000 11,000 IDA Funds received during FY 2016/2017 1,455,747 152,516 Direct payment made on 25 Aug 2016 498,390 52,216 Direct payment madc on 25 Aug 2016 498,390 52,21 Total Direct Payments made by World Bank from TA FY2016-17 996,780 104,432 Total funds received for the FY 2016/2017 2,452,527 256,948 4.1.3 Total Funds from IDA for FY 2016-17 Us S Rs in 000s EEPs funds received for the FY 2016/2017 TA Funds received during FY 2016/2017 (excluding Direct Payments) 1,455,747 152,516 1,455,747 152,516 4.2 1IIRD Credit: ie ilBRD udcr Finaicing Agreement dated August 31, 2016 bearing Credit No. 8620-PK extended the credit amounting to US $300 million to assist the Punjab Government in financing the Project. The program has been declared effective on 5 October, 2016. The Credit proceeds are periodically disbursed for: (i) Eligible Expenditure Programme (EEPs) comprising of; Employees related expenditure,Eligibale expenditures incurred by PEF, Girls Stipends Program, Provision of Non- Salar Budget and Monitoring System of CMMF as declared so by Donor and (ii) TA - Goods, Consultants' services, and Traininu and Workshops, from the IBRD Credit account to the Government of Punjab Consolidated Account No. I (Noon-Food) through State Bank of Pakistan, based on Withdrawal Application submitted by GoPb. TA component fends received into Consolidated Fund Account are released into a Special Drawing Account (SDA) by GoPh. The funds maintained in SDA are part of the government's Treasury Single Account, is operated by the PMIU's designated persons. Use of SDA ensures availability of earmarked funds to PMIU for critical TA activities on a timely basis. I lc quanta ol resources transferred to the Provincial Consolidated Fund at each disbursement cycle are linked, to successful achievement of nine Disbursement Link indicators (DLls). Funds for TA are, however, disbursed on advance basis by the World Bank against forecasted amount by PMfU/SED. Disbursement Linked Indicators for PESP- III are: DLl-I-Private School Vouchers; DLI-2-Public-private partnerships in education ; DLI-3- Stipends for Secondary school girls; DL.l-4- Early Childhood education ; DL]-5- Human Resource management; DLI-6- Quality in the Primary classroom; DLI-7- Student Assessment; DI1-8- School specific NSB; DLI-9-Data strengthening and per 1riannancc m11,an agement. 4,2.1 For Eligible Expenditure Program US $ Rs in 000s Funds received under IBRD Credit No. 8620-PK during the current period Withdrawal credited by 5BP on 22 Nov 2016 39,000,000 4,085,371 Withdrawal credited by SBP on 7 June 2017 12,540,000 1,314,217 Total funds received for the FY 2016/2017 51,540,000 5,399,588 4.2.2 For Technical Assistance Under component 11 of PESP-Ill an amount of US $ 9.36 million has been allocated for Technical Assistance (TA) to be administered by PM1I under World Bank Financial and Procurement guidelines. TA component is executed through a special drawing account (SDA), and funds allocation is done by GoPunjab as part of regular budget of PMIU. Detail of funding from IDA in TA component for the period is as follows: Funds received for the FY 2016/2017 Wthdrawal credited by SBP on 09 Feb 2017 947,86S7 Ejl999,300 IBRD Funds received during FY 2016/2017 947,867 99,300 Direct paymenits - Total Direct Payments made by ]BRD from TA FY2016-17 - Total funds received for the FY 2016/2017 947,867 99,300 4.1.3 Total Funds from IBRD for FY 2016-17 US S Rs in 000s EElPs funds received for the FY 2016/2017 51,540,000 5,399,588 TA Funds received during FY 2016/2017 947,867 99,300 52,487,867 5,498,888 4.3 DFID Grant: DfD joined Government of Punjab and World Bank for implementation of Punjab Education Sector Reform Programme in PESP-I (2009-12) with a grant of £80 million out of which £77 were marked for PESP-I with WB in line with DLIs and EEPs whereas £3 million were kept by DFID itself as TA. DflD has further agreed to support GoPunjab with its biggest program in the world with a grant of £350.3 million as Punjab Education Sector Program-11 (PESP-II) for six years (March 1, 2013 to June 30, 2019). Important highlights of the DFID Programme is the fund flow mechanism. It has been agreed between GoPb and DFID that DFlID will disburse about 50% funds to GoPb as on-budget support whereas rest will be spent by DFID itself. SBS, PEF and PEEF allocations will be spent through Government funding channels and will be transferred to GoPb, Provincial Consolidated Fund (Account-I) through SBP and remaining funds will be utilized by DFID. During Jan to June, 2013, alter the effectiveness of the agreement, fund amounting to £25 million have been received from DFID. Detail of the programme with major sub components and expected disbursement schedule is as following: DFID has allocated £100 million for Sector Budget Support (SBS) to GoPb which will be spent on activities in alignment with DLIs of World Bank PESP-II. DFlD has allocated £68.6 million Aid to support PEF to make programme focus more on low performance district in south Punjab. DFID has introduced a Credit Guarantee Scheme (CGS) at a cost of £9 million to facilitate low cost private schools/education entrepreneurs in getting bank loans without mortgage. With £104 million DFID is launching an ambitious infrastructure program in education sector in Punjab to eliminate missing facilities in schools. DFID allocated £10.8 million through civil society Irogramine DFID will be focusing to enroll more than 54,000 children of inarginalized segment of society. An amount of £18.2 million has also been allocated through PEEF and LUMS to provide scholarship to talented student from poor and disadvantaged background. DfID will retain £39-7 million to be utilized as technical assistance throughout the program mainly to hire two consultancy firms for infrastructure development program and management SuPpOrt Component. Funds received under DFID Grant FY 2012-13 L Rs in 000s Amount Credited by the SBP on March, 2013 (SBS Component) 20,000,000 2,969,262 Amount Credited by the SBP on March, 2013 (PEF Component) 5,000,000 742,316 Total DFID Grants received during FY 2012/2013 for PESP-Il 25,000,000 3,711,578 c'unS received under DFID Grant FY 2013-14 R Rs in 000s Amount credited by SBP on July 30, 2013 (PEEF) 1,500,000 231,937 Amount credited by SBP on December 12, 2013 (PEF) 5,000,000 883,216 Amount credited by SBP on December 13, 2013 (SBS) 45,300,000 8,032,356 51,800,00 9,147,509 Funds received under DFID Grant FY 2014-15 Amount credited by SBP on December 17, 2014 (PEF) 12,000,000 1,897,380 Amount credited by SBP on December 22, 2014 (SBS) 32,100,000 5,076,503 Amount credited by SBP on October 02, 2014 (PEEF) 2,300,000 383,115 46,400,000 7,356,998 Funds received under DFID Grant FY 2015-16 Amount credited by SBP on July 27, 2015 (PEEF) 2,400,000 381,331 Amount credited by SBP on November 2, 2015 (SBS) 10,600,000 1,710,516 Amouni credited bv SBP on Feb 3, 2016 (PEF) 6,000,000 938,024 19,000,000 3,029,871 Funds received under DFID Grant FY 2016-17 £ Rs in 000s Amount credited by SBP on 24 August 2016 (SBS) 20,000,000 2,730,028 Amount credited by SBP on 25 August 2016 (PEEF) 2,300,000 316,821 Amount credited by SBP on 25 November 2016 (PEF) 12,000,000 1,570,409 Amount credited by SBP on 11 Jan 2017 (SBS) 5,500,000 708,120 Amount credited by SBP on 16 Feb 2017 (PEF) 3,000,000 393,941 Amount credited by SBP on 23 Feb 2017 (PEF) 1,000,000 130,337 Amount credited by SBP on 27 April 2017 (PEF) 3,000,000 401,981 46,800,000 6,251,637 4.4 GoPb Receipts: see Para 5.2 of Punjab Govt. financing 5 Payments Donors have identified payment/expenditure under certain budget heads as Eligible Expenditure Programme (EEPs) and have declared that expenditure under EEs is eligible to receive funds from them. These funds are disbursed on reimbursement basis except for TA funds which are disbursed on advance basis. TA funds are, therefore, mentioned as closing balance at the end of the period, 5.1 Payment from Donors Financing Sub-Component 2016-17 2016-17 2016-17 Programme Activities USD GBP PKR in '000' IDA- EEPs 11RD-EEPs 51,540,000 - 5,399,588 TA* 2,672,225 279,969 DFID - 46,800,000 6,251,637 DIRECT PAYMENT BY WORLD BANK* 996,780 - 104,432 Total 55,209,005 46,800,000 12,035,626 (P-l. see note 5.2.8 ofTA for detailed expenditure under TA component of during the financial year 2 aIn41enits from GoPb Funds Punijab GoNernmient Financing for Eligible Expenditure Program (EEPs) Rs in 000s Rs in 000S 2016-17 2015-16 Salary related expenses (Note 5.2.1) 181,679,922 167,045,004 Grant to Punjab Education Foundation (Note 5.2.2) 14,905,927 12,379,617 Girls Stipend (Note 5.2.3) 38,357 799,854 Grant to School Councils (Note 5.2.4) Teacher Incentive under High Improvers Programme (Note 5.2.5) 1onitoring System - Chief Minister Monitoring Force (Note 5.2.6) 329,298 253,987 Non-Salary Budget (Note 5.2.7) 13,999,996 - Got. 1inancing for EEPs Total 210,953,500 180,478,462 TA paxment through SDA (Note 5.2.8) 279,969 116,844 Direct payment by WB (Note 5.2.8) 104,432 - TOTAL 211,337,901 180,595,306 Less: Funds provided by Development Partners under: Opening bal. 2016-17 0.5 million (2015/16: USDI.68 m) 47,968 164,812 IDA: TY 2016/17 US$ 2.5 m (FY 2015/2016: US $ 25.35 m) 256,948 2,652,327 [3RD. :Y 2016/17 USS 52.49 million 5,498,888 - DFID Grant: FY 2016/17 £32 million (FY 2015/2016 £19 million) 6,251,637 3,029,871 CIDA Grant: Funds receiv ed from Development Partners 12,055,441 5,847,010 Expenditure of Government of Punjab own financial resources 199,282,460 174,748,296 5.2.1 Salr related Expenditure Salary related Expenditure is the biggest expenditure under EEPs as it is eligible to consume major part of the funding by the donors. It has been agreed that 70% credit proceed will be allocated for salary related expenditure and the remaining 30% of funding will be disbursed for other activities of EEPs. Salary related expenditure includes 091- Primary Education and 092- Secondary Education of Provincial and District salaries under School Education Department. The original budget allocated in the FY 2016-17 for Salary related expenditure for primary and secondary education was Rupees 280.21 billion. However, only Rs.181.68 billion could be utilized against Revised Budget of Rs. 280.51 billion. (Annex-D) 5.2.2 Grunt to Punjab Education Foundation PEF Was established in 1991 and restructured in 2004 as an autonomous Not For Profit entity to provide technical and financial assistance for establishment, expansion, improvement and management of low cost educational institutions, incentives to students and teachers and promotion of quality education in the Province through Public-Private pIrtnersllp. Grants are released to the Punjab Education Fund in quarterly installments into the Personal Ledger Account maintained with the Government Treasury, operated by the Managing Director of PEF. Development Partners have identiled certain expenditure lines in PEF budget that have been designated as Eligible Expenditure Programme (EEPs) of PEE. 5.2.3 Girls Stipends Lnder Punjab Education Sector Reform Programme, Government of Punjab is implementing an activity that offers cash stipends to girls of grades (6-10) of government schools in selected districts with the objectives of improving enrollment, increasing retention, reducing gender disparities and enhancing female prestige. The beneficiary girls are paid in four equal quarterly payments subject to the condition of 80% attendance rate during the period. The stipend program is being administered through district education administrations and delivered through Khidmat Cards. 5.2,rants to School Councils School Councils have been formulated for strengthening the capacity of and empowering communities to support, monitor, and promote school performance. Under Punjab Education Sector Reform Program school councils are being working in primary, middle, high and higher secondary schools in 36 districts. Grant for school council (A03975) has been replaced by NSB in all 36 districts. 5.2.5 Performance Based Incentives Incentive Program (AO 1295) has been closed and no expenditure was incurred during the financial year. 5.2.6 Chief Minister Monitoring Force (CMMF) GoPunjab plans to address shortfalls in outcomes mainly by strengthening governance and accountability. The quiet corruption from the underperformance of service delivery agents is a major concern. The most overt manifestation of uidIerporrnance is absence from work. Education managers at various levels may not carry out their administrative, monitoring, and support responsibilities and roles as expected, so GoPunjab plans to detect and address these risks through the (I) monitoring of school staff performance by communities through school councils, (2) regular collection of credible information on teacher absence and teacher on-task through CMMF school inspections and feeding the information back to internal and external stakeholders and decision makers at multiple levels. Expenditure amounting to Rs.329.30 million was incurred during FY 2016/2017 under Grant No. PC21015(015)-92102-Administrative-LQ- 4493. 5.2,7 Non-Salary Budget Pros ision of school-specific Non-Salary Budget (NSB) to schools is an important initiative by the Government of Punjab under Punjab Education Sector Reforms. NSB program is aimed to equip Government schools with the ability to manage their resources based on their specific needs. Expenditures amounting to Rs.13.99 billion were incurred during FY 20 16-17, out of revised budget of Rs. 14.00 billion. 5.2.8 Technical Assistance IDA credit proceeds are periodically to disbursed on advance basis against forecast by PM1U/SED. The funds are transferred to GoPb Account-I by SBP accordingly. Whereas funds for all direct payments are placed with the World Bank to make payment on behalf of GoPh. TA component is executed through a Special Drawing Account (SDA), and funds allocation is done by GoPunjab as part of regular budget of PMIU.IDA Credit proceeds have been utilized for the following activities on account of Technical Assistance as provided by Go Punjab through SDA to PMIU 2016-17 Rs in 000s Incremental TA staffing, 54,000 Capacity Building 206,194 Expenditure Tracking/ TPVs 19,775 * Total TA expenditure from SDA 279,969 TA expenditure by World Bank (Direct payments) 104,432 ** Total TA cxpenditure 384.401 *Conk ersion rate LtS$= PKR 104.j PKR 279,969,000 is equal to USD= 2,672,225 ** TA component comprises of three heads i.e. (i) Incremental TA staffing- includes individual consultants remuneration(ii) Capacity Building- includes training workshops, hiring of consultancy firms for execution of difficult assignments. (iii) Expenditure tracking/ TPV- includes expenditure incurred on hiring of firm or consultant to review, validate or impact evaluations conducted by third parties contracted by GoPunjab. I V Detail of funding from IDA in TA component and its disbursement is as follows: Funds received under IDA Credit No. 51060-PAK FY 2012-13 US S Rs in 000s IDA Funds received during FY 2012/2013 4,826,984 474,915 TA expenditure (SDA#1 52) 776,196 74,389 Direct payment made by World Bank on March 05, 2013 249,195 24,919 Direct payment made by World Bank on March 07, 2013 249,195 24,919 Direct payment made by World Bank on March 07, 2013 249,195 24,920 Total Direct Payments made by WB from TA 747,585 74,758 Less TA expenditure 1,523,78 49,147 Balance as of June 30, 2013 on account of TA 3,303,203 325,768 Funds received under IDA Credit No. 51060-PAK FY 2013-14 Opening Balance as of June 30, 2013 3,303,203 325,768 IDA Funds received during FY 2013/2014 2,016,852 200,545 5,320,055 526,313 TA expenditure (SDA#152) 1,147,728 112,823 1.)rect payment made by World Bank on Jan 13., 2014 448,551 44,855 Direct payment made by World Bank on Jan 13, 2014 448,551 44,855 Direct paymen made by World Bank on March 04, 2014 448,551 44,855 Total Direct Payments made by WB from TA 1,345,653 134,565 Less TA expenditure 2,493,381 247,388 Balance as of June 30, 2014 on account of TA 2,826674 278,925 Funds receiNed under IDA Credit No. 51060-PAK FY 2014-15 Opening Balance as of June 30, 2014 2,826,674 278,925 1D bunds received during FY 2014/2015 670,564 67,455 3,497,238 346,380 TA expenditure (SDA#I52) 1,416,970 141,697 Direct payment made by World Bank on April 20, 2015 398,712 39,871 Less TA expenditure 1,815,682 181,568 Balance as of June 30, 2015 on account of TA 1,681,556 164,812 Funds received under IDA Credit No. 51060-PAK FY 2015-16 Opening Balance as of June 30, 2015 1,681,556 164,812 IDA Funds received during FY 2015/2016 (Note 4.1.2) 1,681,556 164,812 TA expenditure (SDA4152) 1,168,440 116,844 Direct payment made by World Bank on . Less TA expenditure 1,168,440 116,844 Balance as of June 30, 2016 on account of TA 513,116 47,968 TA Funds received FY 2016-17 Opening Balance as of June 30, 2016 513,116 47,968 IDA Funds received during FY 2016/2017 (Note 4.1.2) 2,452,527 256,948 IBRD Funds received during FY 2016/2017 (Note 4.1.2) 947,867 99,300 3.913.510 404,216 TA expenditure (SDA#152) 2,672,225 279969 Direct payment made by World Bank 996,780 104432 total 'IA expenditure 3,669,005 384,401 Balance as of June 30, 2017 on account of TA 24415.M 981 6 Closing Balance ClOsinbhmee comprises: Description 2015-16 2016-17 USS Rs. (in 000) US$ Rs. (in 000) Cash at Bank 513,116 47,968 244,505 19,815 Cash at Bank (GoPb Share) Total 513,116 47,968 24405 19,815 7 Reconciliation of GoPb Accounts As per PFRA generated budget execution report (BER) of sub function 091-Pre and Primary Education and 092- Secondary Education for financial year 2016-17 (authenticated copy attached at annexure-D), Govt. of the Punjab allocated an amount of Rs.310.43 million for EEPs and TA for FY 2016-17. A total amount of Rs.211.34 million was spent against revised budget of'Rs.310.44 million during FY 2016-17. 8 Management Assertion This is certified that the funds have been utilized for intended purpose as defined in Project Agreement as well as Financing Agreement of the PESP-1 and PESP-ll for the financial year 2016-17. (Annex-E) 9 Authorization These financial statements were authorized for issuance by management of the Punjab Education Sector Reforms ProgramNme. FINANCIAL .ANAGEMENT SPECIALIST ADDITIONAL PROGRAM?ME DIRECTOR