NATIONAL AUDIT OFFICE - J HUD/C/SCDP/4/18/01 oY J 1-9 June 2019 Secretary Ministry of Megapolis and Western Development Report of the Auditor General on the Financial Statements of the Strategic Cities Development Project for the year ended 31 December 2018 The English version of the above mentioned report is sent herewith along with a copy of the financial statements certified. W.P.C. Wickramaratne Auditor General Copies to 01. Secretary, Ministry of Finance 02. Project Director, Strategic Cities Development Project 03. Senior Financial Management Specialist, International Development Association, for information ~1 ' 11) 7, I((UuJi, OJ&CuL~,~ 1. L u 306/72, LGnftim dA,j uo pC6luoo 96v4oigs No. 306/72, Poldirwa Road, B3atlaranvulla, Sri L anka. 94I 11 IM 70 ?8 - 34 ±9 4 112 88 72 23 g .ld1rgmtd.g'1 n s.t mlitY o k * 65M) SQD&a3 MZz)D ob NATIONAL AUDIT OFFICE 6TOTm" R9. HUD/C/SCDP/4/18/01 at . ptJune 2019 My No. Your No. Pale Secretary Ministry of Megapolis and Western Development Report of the Auditor General on the Financial Statements of the Strategic Cities Development Project for the year ended 31 December 2018 1. Financial Statements 1.1 Qualified Opinion The audit of the financial statements of the Strategic Cities Development Project for the year ended 31 December 2018 comprising the statement of financial position as at 31 December 2018 and cash flow statement for the year then ended, and notes to the financial statements, including a summary of significant accounting policies was carried out under my direction in pursuance of provisions in Article 154(1) of the Constitution of the Democratic Socialist Republic of Sri Lanka read in conjunction with provisions in Financing Agreement No.5428-LK dated 12 September 2014 entered into between the Democratic Socialist Republic of Sri Lanka and the International Development Association. In my opinion, except for the effects of the matters described in the Basis for Qualified Opinion section of my report, the accompanying financial statements give a true and fair view of the financial position of the Project as at 31 December 2018, financial performance and its cash flows for the year then ended in accordance with Sri Lanka Accounting Standards. 1 V16 fl 72. uynroOf, ruof1k' 0--~' ao3 6/72, GIO&~Jimbn 614 amniemn% No. 306/72. Polduwa R oad, lBatlaraimulla, Sri Lanka 94 I1I 2 8870 28 -34 f 1 94 11 2 8X 72 13 andaloreeral.j.o0 k 4 rono) rI NATI ON A . AU IT OFFICE NAOSL 1.2 Basis for Qualified Opinion Out of the unsettled advance balances amounting to Rs.1,237.08 million shown in the statement of financial position as at 31 December 2018, the balances aggregating Rs.1,208.12 million had not been confirmed by the respective outside parties including contractors and other private sector entities. * Compensation on land acquisition amounting to Rs. 13.50 million payable as at 31 December 2018 had not been brought to account. * It was observed that the local taxes aggregating to Rs.1.31 million had been paid during the year under review, out of the proceeds of the Loan, contrary to the Section IV -A of the Financing Facility Agreement. I conducted my audit in accordance with Sri Lanka Auditing Standards (SLAuSs). My responsibilities, under those standards are further described in the section of Auditor's Responsibilities for the Audit of the Financial Statements appeared in my report. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. 1.3 Other Information on performance of the Project The other information as stated below does not include in the financial statements and my opinion thereon does not cover the other information. * The Statement of Intermediate Result Indicators and the Procurement Administration Manual to be prepared by the Project, as required by the Section 10 and Section 24 of the Project Appraisal Document had not been prepared as enable to evaluate the progress on procurement activities of the Project based on the Procurement Performance Indicators prepared under the Section 33 (f) of the Project Appraisal Document. * According to the information received, only a sum of US$ 36.28 million equivalent to Rs.5,638.31 million representing 18 per cent of the total allocation of US$ 202 million equivalent to Rs. 27,507 million made by the Lending Agency had been utilized as at 31 December 2018, after lapse of 2 NATIONAL AUDET OFFICE NAOSL 4 2 years from the commencement of the activities of the Project. It was further observed that only US$ 13.12 million equivalent to Rs.2,206.51 million had been withdrawn during the year under review from the Special (Dollar) Account maintained at the Central Bank of Sri Lanka, out of the credit balance of US$ 16.49 million equivalent to Rs.2,473.50 million remained in the respective Account including the balance of US$ 4.23 million equivalent of Rs.647.35 remained as at 01 January 2018. Therefore, the balance of US$ 9.84 million equivalent to Rs.1,799.21 million had remained unutilized as at 31 December 2018, due to slow progress of the activities of the Project and poor forecasting of financial needs. According to the information received, the Project had implemented several programs to improve selected urban services and public urban spaces in Kandy, Galle and Jaffna. It was observed that 74 contracts scheduled to be awarded at an estimated cost of Rs. 21,437 million for rehabilitation works in Kandy, Galle and Jaffna and out of that works under 64 contracts valued at Rs. 11,420 million had been awarded as at 31 December 2018. The following observations are made thereon. - The rehabilitation works of drainage systems and roads and improvements of public utility services etc had been carried out by the Project in Kandy under 36 contracts and out of that 17 contracts had been completed as at 31 December 2018. The contracts awarded under the rehabilitation of underground drainage tunnel, reconstruction works of Dharmashoka Road, rehabilitation of water purification and treatment plants at Dunumadalawa and improvements of common facilities such as car park roof top, lake site walkability improvements etc had shown slow progress, due to changes made on scope of works, failures of the contractors, lack of stakeholder's support etc. The contract on rehabilitation works of the section of the road from Madawala to Digana had been terminated during the year under review. Further, the mobilization advances amounting to Rs. 242.24 million made on the contract for reconstruction of the section of Meda-ela had not been recovered even as at 31 December 2018, eventhough the contract was terminated on 01 June 2018. 3 d0m)w EX041LM OaIoywi&&t NATIONAL AUDIT OFFICE INA OSLI - The rehabilitation works of drainage systems and roads and improvements of public utility services etc had been carried out by the Project in the City of Galle under 22 contracts and out of that works under 05 contracts had been completed as at 31 December 2018. Further, the contracts under 10 rehabilitation works had remained at initial stages as at 31 December 2018, eventhough the improvement works in Galle is scheduled to be completed by 31 December 2019. In addition, the report on consultancy services under the Urban updating Invention in Galle scheduled to be submitted on 27 April 2017 had not been submitted even as at end of the year under review. - The rehabilitation works of drainage systems and roads and improvements of public utility services etc in Jaffna had been commenced under 06 contracts and out of that only works under 02 contracts had been completed as at 31 December 2018. The contracts under 04 rehabilitation works had remained at initial stages at the end of the year under review. Further, a sum of Rs.144 million had been allocated for the consultancy services for Jaffna City Development purposes under 03 programs and no consulting works had been carried out up to end of the year under review. A sum of Rs. 5.8 million had been allocated to facilitate the proposed development intervention in Jaffna peninsula and no respective program also had been conducted. * The rehabilitation works of Arthar's Seat viewing desk in Kandy had been completed during the year under review at a cost of Rs.24.22 million and revealed at the site inspection made on 10 December 2018 that the electricity supply for the location had not been provided. It was observed that the machineries and equipment procured during the year under review at a cost of Rs.278.67 million and handed over to the Municipal Councils of Kandy and Galle and to the Department of Irrigation for the maintenance purposes had remained idle even as at 31 December 2018, due to lack of Asset Utilization Plans. Further, the drainage pipes and accessories procured in 2016 at a cost of Rs. 120 million had also remained as at 31 December 2018 at the premises of the National Water Supply and Drainage Board. Further, it was observed that assets including motor vehicles procured by the Project at a cost of Rs. 245 million had not been brought to the Register of Fixed Assets of the Project. 4 NATIONAL AUDIT OFFICE NAOSL, The approved cadre of the Project consisted with 194 posts and out of that 71 posts including 09 key managerial positions of an Additional Project Director, 05 Deputy Project Directors and 15 Assistant Project Directors had remained vacant for over 02 years as at 31 December 2018. The shortages of staff members had influenced for the slow progress in implementing of the activities of the Project. 1.4 Responsibilities of management and those charged with governance for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal control as management determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Projects ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intend to liquidate the Project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. The Project is required to maintain proper books and records of all its income, expenditure, assets and liabilities, to enable annual and periodic financial statements to be prepared by the Project. 5 NATIONAL AUDIT OFFICE NAOSL, 1.5 Auditor's Responsibilities for the audit of the Financial Statements My objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sri Lanka Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Sri Lanka Auditing Standards, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 6 NATI[ONAL AUDIT OFFICE NAOSL I communicate with those charged with governance regarding, among other matters, significant audit findings, including any significant deficiencies in internal control that I identify during my audit. 2. Report on other requirements of the Donor Agency As required by the International Development Association, I state the followings (a) The basis of opinion and scope and limitations of the audit are as stated above. (b) In my opinion: - except for the effect of the matters described in the Basis for Qualified Opinion section of my report, I have obtained all the information and explanation that required for the audit and as far as appears from my examination, proper accounting records have been kept by the Project, - the funds provided had been utilized for the purposes for which they were provided, - the Statements of Expenditure submitted could be fairly relied upon to support the applications for reimbursement in accordance with the requirements specified in the Financing Agreement, - the satisfactory measures had been taken by the management to rectify the issues highlighted in my previous year audit report, and - the financial covenants laid down in the Financing Agreement had been complied with. W.P.C Wickaramaratne Auditor General 7 Ministry of Megapolis & Western Development Strategic Cities Development Project Financial Statement for the year Ended December 31, 2018 IDA Loan No 5428 LK, 5800LK Table of Contents 1 Introduction 1 2 Project Components 3 3 Statement of Financial Position 4 4 Statement of Funds and Reserves 5 5 Cash Flow Statement 6 6 Significant Accounting Policies & Notes to the Financial Statement 7 7 Property Plant & Equipment 10 8 Notes to the Financial Statement 11 1. Introduction The project development objective is to improve selected urban services and public urban space in Kandy & Galle and Jaffna cities. Loan Agreement No. 5428 LK dated ]2th September 2014, entered into between THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ("Recipient") and INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association") for Kandy & Galle city project. The Financing Agreement became effective from ]6th October 2014. The total project cost is USD 192.08 million of which USD 147.00 million shall be financed by the International Development Agency (IDA) and the USD 45.08 million from gosl funds. Additional finance Loan Agreement No. 5800 LK dated 20th July 2016, entered into between THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA ("Recipient") and INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association") for Jaffna City. The Financing Agreement became effective from 19th October 2016. The total project cost of Jaffana city is USD 65 million of which USD 55.00 million shall be financed by the International Development Agency (IDA) and the USD 10 million from gost funds The disbursement of the credit is on the basis of the Interim unaudited financial report (IUFR). The PMU is required to submit quarterly financial monitoring to World Bank as per the agreed formats no later than 45 days following the end of the reporting quarter. The project has received an advance amount of USD 6.8 million in 2014, year 2015 was USD 3 million, for the year 2016 USD 10 million, for the year 2017 USD7 million and for the year 2018 USD 15 million respectively. Project Compon, 2. Part 1: Kandy City Region Urban Interventions This Component aims to support priority infrastructure investments in Kandy City, to improve connectivity, achieve significant urban transformation to support economic growth in Kandy City Region, and improve the overall liveability and investment attractiveness of Kandy City Region, through the following activities: (a) Urban services improvements and public urban spaces enhancements. Provision of support for urban services improvements and public urban spaces enhancements, including: (i) Traffic improvements, including rehabilitation of selected by-pass roads, and establishment and improvement of selected transport facilities and traffic management measures; (ii) Augmentation and rehabilitation of Kandy City Region's municipal water supply system: (iii) Rehabilitation of major drains; (iv) Urban upgrading, including the enhancement of selected streetscapes and public spaces, restoration and adaptive reuse of historic and landmark buildings; (v) Development of an integrated master plan. (b) Institutional strengthening and capacity building. Provision of capacity building support for Project Partner Agencies for the planning, design, and maintenance of urban infrastructure, and the provision of municipal services. Part 2: Galle City Region Urban Interventions This Part of the Project aims to improve liveability by protecting and developing the urban environment of Galle City Region; support priority investments in infrastructure and services, organize city functions to increase investment attractiveness, enhance public urban spaces, and achieve significant urban transformation to support economic growth in the Galle City Region, through the following activities: (a) Urban services improvements and public urban spaces enhancement. Provision of support for urban services improvements and public urban spaces enhancements, including: (i) Flood reduction measures, including the rehabilitation of selected canals and surface drainage infrastructure (ii) Coastal erosion reduction measures for selected areas; (iii) Urban upgrading, including the enhancement of selected streetscapes and public spaces, restoration and adaptive reuse of historic and landmark buildings; and (iv) Development of an integrated master plan. (b) Institutional Strengthening and Capacity Building. Provision of capacity building support for Project Partner Agencies for the planning, design, and maintenance of urban infrastructure, and the provision of municipal services. 2 Part 3: Implementation Support Strengthening the capacity of the Recipient to carry out Project activities, including: (a) Provision of implementation support in the areas of Project management monitoring and evaluation, procurement, financial management, and environmental and social safeguards; (b) Facilitation of public awareness and communications; (c) Provision of support with respect to construction, supervision, and compliance with environmental and social safeguards; (d) Provision of technical advisory services, operational support, acquisition of vehicles and equipment and financing of operating costs; and (e) Support for the National Strategic Cities Program, including for preparatory studies and planning for other strategic cities, and other implementation and management tools. Part 4 : Jaffna City Region Urban Interventions. This Part of the Project aims to support priority investment in Jaffna City to improve basic services and to enhance the capacities of relevant institutions for urban planning and management through the following activities. a) Roads and Traffic Improvement Provision of Support for Improvement of selected sections of key connectivity roads within and around Jaffna Municipal Council; and development of a comprehensive public transport and traffic management strategy including bus terminal and parking. b) Drainage Improvement Provision of Support for the reinstatement of the existing drainage system in Jaffna City Region and acquisition of equipment and services for the operation and maintenance of the drainage system; rehabilitation and restoration of selected water ponds within the Jaffna City Region and improvement of the urban amenity around ponds; and carrying out of a comprehensive drainage improvement study and preparation of a drainage master plan implementing High priority activities as identified in the master plan. c) Urban Upgrading and Cultural Heritage Provision Of support to carry out urban upgrading activities for both area specific and city wide improvements, including the enhancement of selected streets, parks, community centres and public spaces Public amenities Such as public toilets, restoration of cultural heritage assets public safety and adaptive reuse of historic and Landmark building. d) Capacity Building and Implementation Support Strengthening the Jaffna Municipal Council by delivering systems and building the capacities of its staff to improve urban planning and management and service delivery. 3 MINISTRY OF MEGAPOLIS AND WESTERN DEVELOPMENT STRATEGIC CITIES DEVELOPMENT PROJECT INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NO 5428 LK & 580OLK Statemen Of Financial Position as at 31st December 2018 (All amounts in Sri Lankan Rupees) Note Kandy Gall & Jaffna Kandy & Galle Jaffna 2018 2017 2018 1017 2018 2017 NON CURRENT ASSETS Property, Plant And equipIenTt 7 34.868,678.456 34,175,493.360 32,350,493.471 32,285,238.610 2,518,184.985 1,890,254.750 CURRENT ASSETS Advance to Contractors 8 1,237.085,277 - 1083,756,811 . 153.328,466 Advances and LC margin Account 9 1,068,016 296,708 903,016 266.708 165,000 30,000 Cash and Cash Equivalents 10 1,819,455,847 654,505,240 1.317,009,800 599,934,573 502.446,047 54,570,667 3,057,609,141 654,801,948 2,401.669,628 600,201,281 655,939,513 54,600,667 DEVELOPMENT EXPENDITURE COMPONENT01 Kandy City Region Urban Interventions 11 3,249,061,031 2,497,247,161 3,249,061,031 2,497,247,161 COMPONENT 02 Galle City Region Urban Interventions 12 983,826,918 704,480,760 983,826,918 704,480.760 - COMPONENT 03 Implementation Support 13 786,593,844 541,227,082 786,593,844 541,227.082 - COMPONENT 04 4,1 Road & Traffic Management 52,912,348 20,078,514 - - 52,912,348 20,078.514 4.2 Drainage Improvement 48.723,589 22,707,351 - - 48,723,589 22,707.351 4.3 Urban Upgrading & Cultural Heritage 23,492.768 1779,998 - - 23,492,768 1,779,998 4.4 Capacity Building & implementation Support - 4.4.1 Capacity Building 10,684,781 - - - 10,684,781 - 4.4.2 Implementation Support 13 66,848,770 37,334.128 - - 66,848,770 37.334.128 Land Resettlement and Land related payment 14 911,957,963 671.416.207 866,737,567 671,416.207 45,220,396 Expenditure for Anuradhapura and Trinco City Development Project 74,775 74,775 74,775 74,775 - - 6,134,176,787 4,496,345,974 5,886,294,135 4,414,445,984 247,882,652 81,899,990 TOTAL ASSEST 9,226,654,606 5,185,323,416 8,320,314,256 5,046,932,504 906,340,350 138,390,912 LIABILITIES Retention 15 129,536,228 - 127,763,796 1,772,432 129,536,228 127.763,796 1,772,432 FINANCED BY IDA Loan- Foreign Component 5,363,t10,301 3,184.385,351 5,108,845,286 3,141.001,379 254,265,015 43,383,973 IDA Advance - Foreign Component 1,491,785,389 731,049,289 1,054,739,424 676,448,621 437,045,965 54,600,667 Domestic Funds 1,637,342,814 1,097,786,457 1,524,379,559 1,058,720,562 112,963,255 39,065,895 Finance by UDA 939,744 939,744 939,744 939,744 Revaluation Gain or(Loss) 603,940,130 171,162,575 503,646,447 169,822;198 100,293.683 1,340,377 9,097,118,376 5,185,323,416 8,192,550,460 5,046,932,504 904,567,918 138,390,912 TOTAL EQUITY AND LIABILITIES 9,226,654,606 5,185,323,416 8,320,314,256 5,046,932,504 906,340,350 138,390,912 The Accounting policies on Pages 7to9 and notes onpages 10to 12 are an integral part of this financial statement The chief Accounting Oficer is responsible for the preparation and presentation of these financial statements. 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(г.3гд.зПЫ�' (vз.2Ч0) Тгапslагiоп .. _. .___.. . (2В7.Ч32) (2ufi.3d5) (R1.iRR) (19б.77в)�.. , (ЧR.21з). (цN.jRЫ Tдaccl0ngcost (12а.д23) � (Э20.д2з) (би7.266)�..,.� (ЭЧ.Зьб).. {i67.ЧUU} pfгccRrn[ (17.OOl.бi6) - {16.653ь56J (Зан,оn01 (12.71Ч.Ч1В) (12r+i5.Ч1A1 {гбаА(1i1) еl�гпсп� апд wагст {1,Оз5.•1ьв) (агб.37s) (гиВ.8Чзf (Чаб.92Ч) . (д6a.i iv) {аЯZ.яiгд . еоге�8п тгаугиьп8 {ь.дч7.вВS} {ь.дц7.8аs} - р�.зья.Чц0) tl.збн.ЧЧо) - 5anilaп Espcnses ¢1.723.В71} i1.323.871) - (51б Ь12)`. . (i1б.б12)�� ° Postalandcourierchargcs � 20.067 ��� 2U.Об7 - (1о9.99П) � (Юзбба}, (4.731q ��TmnпiпgCan (1Я2.7ац)'. . . .. 1�1А2.78Ч) - (1нб.бд3) ` (1АЬ.бд7)�� - �Hiringafpremises (ц1.зоU] (41.70П) - (2fi.250) � (2Ь.2?91.... Rгpair6:Mainlanantc . . _ (32д1.б72) (3219д60} (22.212) {з.П52.Ч72)�~ (2.9Ау.359).�. (Ь].Ь141 lnsumncc (77.933) (77.9i3} . �. . . - U3J23}'. (ii,125). - м�5�iопе.р<ч,scs (1оо_оа9} (10о-О7Ч) - (1.is©) ° u.i�o) - LARC Espcn5c5 _..(г.?d2.82bS (1.Ч32..3д7) (�Ч0.319) (22.Ог1Л �� (22.007} . . _ � э.апд Ра.тспг (2да5а1.Т5б) (l9i,з2г.ЗбОТ . . .(а5.220.зЧЫ (2S2.za3.R32) '� 12Я2.2аз.Я72) Nагiопзl 5tre�•gic Citfes fhиclopmcn[ Рго�гс[ (1.i40,3JЧ) (1.3до.3@Ч} - - - - Communfcaпon апд Mпiia �� - (SZU.;6t) ` G2oSUS} . ТЕСрлтепг (i.ы5.з;0) (1оьЯ,3sа) tб07.1юа) 466i.ЧSa) �. (ьнi.Чз0} � - вапkСЬпг8сs fla.гьi) (sz.Чз0} {L73s) (1г.)ба) ' (1о.ь20} (i.7.гд1 Fue1 (zа.зю) � (г•1,з�П} - (�у2.уао) - ПЧZ.чдд) KMTCпnsSeost [2Чг.712) Izv2.7IP} . . . . - ..-_ - - Nгг Cash F7pws Ггот ррсгаб.лg Acfivэiies (l,д56,22i,б6Э) (1,338,952,579) (3(7,173,124) {2,Зб7,215,453) (2,З19,б63,9Т3) {47 Sд9,Ч791 СааЬ. F1.он'х fгот lпьтягтrоС ActiьiПes ... ��.PurchascofPropert+�.Plant.чпduquipmem (6.D90.i73) (3.1Ч7.07a) 1893502} (з.з�д128) ' (2.763гзЧ) (73U-цну} PamorгofReFu�ndaЫcpcposы - - ' � - .._... " - Rctnnat[ivc financu . .. . - - - - . �� " КегСяs8 F1eя�sFrem дтrпггпепгАсгпчпс# (6,09a.�73} (5,197,ОТ0) � (893,54i} (3,51а,228) (г,Т6Э,239) (750.984i СвsЬ F7aws Ггот Niaaocong Aгtiйties Fiпaпciпg frдпг Wor1d Bank ��. . �.� 2.ЧзЧ.S61,дэ0 2.зJ6.13A.710 s93,32Ь.зJД 1.163.fiнJ.6Jo �. i Оfij..7дU.дад Ч7.ЧВ4.ЬJ(1 Fnancin8franrCoьcmmentofSпEanka 5ЭЧ.5iб.ЭS7. .... �бS.бiВ.цЧ7 73.АЧ7.Эбо 5д2.515.S1Я � дЧЧ.аU0.00а 7.�1i.11н Retrwus��u fiпапос - - .. . " - - Rcsa]vaгioпGaiпarfloss) ... ..... d32.777.iii 333.9242А9 Ч8.ЧSз.70fi 2ЯАiо9Ч1- г7.1дЧ.71J i?д0.?77 Nc[Casб€гаиеГготЕапаасiаВАгriпriгя 3_цILlЧJ.Чfi2 l.1dS.617.Чa6 ТЬfi.17У,диб 1.ЬЧА.бд9.А4Ч 1.?Ч1.Я6Ч.714 ..107.в441,13? Net lпггкатгl(Dнгеаsгl СаsЬ впд С'аsЬ Equiwalents 3 2�19.д7а.72Ь 4-801.J6A.747 dAR,U1U,ЭR0 1Ь7Ь.08U.77П} {73U.ЬlЧ.J98) 5J.7зЧ.1б7 Cash апд Cash Equiralenг Bг�ginпing of 1hc pcriod � 654,8(l1,949 б00,20(.1В1 54,боа,бб7 1,370,882,279 �� ... l,Эз0,82д��,779 � ... 61,SfЮ СиЬ вад СвsЬ Equiralencs в[ гhе Епд oEfhe репод 1,9о4,29о,Ь75 � 2,4д1,ббц,б28� 502,67I,047 Ьц,801,9д8 600,201,281 54,ЬОО,бб7 rvогс Ов) дР91г �� .... саsы лачппс� апд 1.С иаг8�п Ассопт - - - � ' ' ВОС Вапагатиllа (Fortfgгч) 2а.23д.5J4 15.1б7.217 д,д77,33г 7.179 JA0 ._ . 1.7ti.16a 3.JR1.321 CcmraiBankбгsignaпdAcsounг 1.799.Z111Ч8 1.7Пг.гJ2.5В3 ... -097.9бВ.7I5 бJ7.зд_-ч.7бо iЧ8.1i9,�#U .. . йЧ.lЯб.3д7 ���Cash Advancc апд Огhи:г Rпcivaбc 1,G8�1.82д.Я27 1,аВд.659.В27 lб3:Gд0 24fi.70R 266.7П8 ]П.Поо Cash апд Cash Еqиiчаlгпга at гЬе Епд оГгЬе period 2,9fW,28o,ь7S 2,40l,бб4,628 502,611,Od7 � Ь53,84Е,ЧА8 600,201,281 54,ЬПо.бб7 6 MINISTRY OF MEGA POLIS AND WESTERN DEVELOPMENT STRATEGIC CITIES DEVELOPMENT PROJECT Significant Accounting Policies & Notes to the Financial Statement 6.1 The financial statements of the. project have been prepared in accordance with Sri Lanka Accounting Standards (LKAS) and are applied consistently on a Accrual basis except the implementation Support expenses. No adjustments have been made for inflationary factors affecting the financial transactions other than for exchange rate variations. Cost has been capitalized broadly into development cost and operational cost where applicable, An Income and Expenditure Statement has not been presented as there was no income to the project and since all expenditure is capitalized. Miscellaneous receipts, specially non. refundable tender deposits, if any have been directly remitted to the consolidated fund through the Ministry of Mega polis Western Development. Administration and other recurrent costs have been capitalized as implementation support and purchases of asset cost is accumulated in non-current asset accounts after deducting the Depreciation. 6.2 Post Balance Sheet events There were no material post balance sheet events which require adjustments in the financial statements for 2018 6.3 Assets and Basis of their Valuation 6.3.1 Property, plant and equipment (a) Recognition and measurement Property, plant and equipment purchased under Component 3 in Kandy and Galle project Component 4 in Jaffna project- implementation support as per the Project Appraisal Document of the project are shown at historical cost less depreciation. Property, plant and equipment are recognised if it is probable that future economic benefits associated with the asset will flow to the project and the cost of the asset can be measured reliably. All items of property, plant and equipment are initially recorded at cost. Subsequently it will be measured at cost less accumulated depreciation. Significant components of an asset are identified and depreciated separately. (b) Cost The cost of property, plant and equipment comprises its purchase price and any directly attributable cost of bringing the asset to working condition for its intended use. (e) Subsequent expenditure Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately, including major inspection and overhaul expenditure, is capitalised. Other subsequent expenditure is capitalised only if the recognition criterias. are met. 7 MINISTRY OF MEGA POLIS AND WESTERN DEVELOPMENT STRATEGIC CITIES DEVELOPMENT PROJECT Significant Accounting Policies & Notes to the Financial Statement (d) Depreciation (e) Property, plant and equipment Depreciation is calculated by using a straight-line method on the cost of all property, plant and equipment at the following rate per annum in order to write-off cost of such assets over their estimated useful lives Office Partition and renovation 10% Air Condition 10% Office Equipment 10% Office Furniture 10% Computers and Accessories 15% Depreciation has been charged form the subsequent year of purchase such assets.. 6.3.2 Development Expenditure Development expenditure includes expenses on components 1, 2 for Kandy & Galle project and component 4.1, 4.2, 4.3 and 4.4.1 Jaffna Project as per the Project Appraisal Document of the project, including the value of property plant and equipment purchased for the administration of the projects. 6.3.3 Implementation Support Operational expenditure includes all staff cost and incremental recurrent cost relating to the project administration and operation incurred under Component 3 and 4.4.2 of the projects. 6.4 Receivables Receivables, if any, are stated at the values estimated to be realized. 6.5 Advance Advance made by the project on consultancy services and works are capitalized. 6.6 Cash and cash equivalents Cash and cash equivalents include cash at banks including balances at the Central Bank Designated Account and Bank of Ceylon Accounts and Advances and Balances petty cash imprest. 6.7 Cash Flow Statement Cash flow statement has been prepared as per LKAS 7. 6.8 Liabilities and provisions All known liabilities as at the end of the Balance Sheet date are included in the financial statements. No Provision has been made for this financial Statement 6.9 Letigation Legal action against the project in the high court of the Western province (case number 383/2017/MR, Value RS. 403,740,842.12). A case has been filed by the V.V. Karunarathne & Company at 579, Kandy Road , Bulugaha Junction , Kalaniya against the termination of contract of Katugasthota Madawala Digana Road under contract number SCDP/WB/WK/KD/02 8 MINISTRY OF MEGA POLIS AND WESTERN DEVELOPMENT STRATEGIC CITIES DEVELOPMENT PROJECT Significant Accounting Policies & Notes to the Financial Statement 6.10 Financing 6.10.1 World Bank The loan has been categorized in terms of the loan agreement depicting foreign currency withdrawals and local currency withdrawals separately. 6.10.2 GOSL Funds used for project activities are reflected in the Government of Sri Lanka (DF) Account. 6.10.2 Revaluation Gain / (Loss) The cumulative amount is as a result of valuing the balance as at the end of each month in the Dollar account at the Central Bank at the spot rate on the last day of each month. Parity difference if any is shown separately as a revaluation gain or loss and added /deducted from the loan balance. 6.11 Expenditure Recognition Expenditure is accounted on accrual basis except project implementation cost. 9 °-' м� � ю и м� r V� �n гп, rn о й а w. .о о н. п а ~ � ги- °° 4 �-л О_ д'. . т°� п и v � Fi Й , . х 1 - с "v! а �-r °° е ё. °� _ и ^ �° °° , . - о� м г�ч ю м � � А о� ° г�ч а н и ri og й �. � м* � '�-' ё F7 ё q _ � rи �i vi т °м U � а � _ й .�ь . . У -т " а �� ° м п т � n й и = ё � м_ U� z н и R � ' п _ n о аа мS �' ° у'д _ __ т, о_ чо - м .У ,� � О й ry р � у Yi � Q и. � � У'� ад' _' � ,. � M1 Н . � м д � N � Н д ® о - � � �'� го ° У� � U С9' -. � R аё ;д r °� а ,Т.� � � s � гJ ~ _ _• 'а , м а ui. а' У � у �=. ,м.д, '$' �. N г�- � '3н °а w � т °л U .. ti .`"-� �о и ' ё�. о�с. й �о ё ё .. q �,:. �ь �:' е� . _ ri .е У у л �п h,' $ � оvi й И N � - д _ � Й Й � L7 �С 3� д1 н, а�м, . й`" � о°� � г� ю л _ _ _ ... - у о о й С7 w о:.. � й У � � ыi У - � � � � w � V' 4 ,�с, п 9 ' - rвi n h z� О � и о д ~ R � и д iП У � п о м й Q п 0 S О _ !. �. Ю W - о = � _ й � ё и ,г `� � �л м а �У г-� �г н � й� ё й � а�л м�� о vi Х � о а © Т ов о т �^ � � а 8 �-; п а� о, оа 9�` � ,®г, вс г�и °� � � Г д у N М е у� п � м - У � b � Ф .. .г° q 5+ � а » � " т 'v ю адд � а` 4 +Ус У. � - '� �.J ti а6 " г� Т M1 � +rU_ Й д д � : О_ л ? � � у ; � `с Q ° nл OV У°+� г9 .ч м й й r а�с "' м м w гю- С9 � - л _ ry � _ аа � еа w м е `а о � � е дS ' � pr ' р й� т q°Oi м - - г иr f а а ц Т о. р, ю ..� р �� qy т т '.�.' а. �°л_ °т eW-, W Ov- `�� `%^ ^ - = v а j о �о т �,., � с� � - а � r д � у ш °'' � � � � � F- оо � � й z р^ Е ,°,� .ES е � � и v н ао � � ш �°- ` - w � � � а �' л с. � �й � .�и « г�i � С � 0 о °� ^�' fl Ё Ё Е £ � � _ Ci _ � п ' � й �э �`� д Е а с" с с� с" г� 1- '" °- - �ь U � `� F � м _ О U а. ` � �O .`с у� � ё .. � � � F Ш °' � т" а° т ё�О $ т а" i<" а" и д г_ о4 г- � й MINISTRY OF MEGA POLIS AND WESTERN DEVELOPMENT STRATEGIC CITIES DEVELOPMENT PROJECT Notes to (he Financial Statements (All amounts in Sri Lat"kan Rupees) Kandy & Galle, Kan -ndo& G -11 Jaffna Kandy At Galle Jaffna Jaffna I many & Gall a 2,18 1, Jaffn. 2018 2017 2017 2017 2018 7018 8 Advance to Contractors EML Consultant 5,512,042 5,512,D42 SWS Consulting Engineering 11,522,342 11,522342 Resources Development Constfliards 20,766.861 20,766361 MAGA Engineering 112.292,319 112,292,319 Mary Construction 780,378 780,373 KPK Building Construction L343,500 1,343.500 Gnanam Builders 1.111,023 1,111.023 Subasinghe Contractors& Earth Movers 14,839,800 54.839,800 - S effa Construction Ltd 29,017,009 29.017.009 Sierra Construction Ltd 70,683.014 70,683,014 Sierra Constructiun Ltd 98.117.106 918,1 [1,106 V.V.Kimnarathno & Conipan 79,109.934 79,109 934 V V Kar-arathna & Cornpan 242,244,504 242,244,504 ELS C t-fi.n (P,t Lid 17,277.496 [7,277,496 Dhan. Com-mrs 2,203.464 2,203,464 - IV fLudip Pr.iffer-G,psurn SMcl-.1 115,494.769 115,494.769 - Squite Mtch Engineering P%t) Ltd. 6,277,193 6,277,193 - Do k -ard Gcnensl En8ineering Smices 27,499.073 27,499.073 - B-darartay.ke B.ildc,s & C-rrucuorr 4.490,858 4,490,858 - Bioduar*-ake Builders & C.nst..ti.. 2,a 16,530 2,8 J 6,330 - G-1-h C-sultanis P, 1) Lid 24,043 801 24,043,801 - Laugfs Engincering(Ni)LId 18,5X676 18,578.676 - BusincssPromot-& Panne,sEns-ring(Nit Ltd 168,981,440 168,98 [,440 - Ed, ard and Christie 26,a93,255 26,393,255 - Edu tud & Christie %505,370 9,505,370 - Na,,.1.k.Coasuv,ti-Co (P,t) Lid 29,245 959 28,245,959 - 14a,,alok. Corurtwion Co (N 1) Lid 22,739,418 22,739,418 - Edh,ard -d Chnstic 29.742.298 29,742.298 - ELS Construction (Ptt) Lid 4,955,842 4,955,842 1,237,085, 9 Advances and Letter of Credit Margino Accou"t LC margin Account - - Petty Cash Imprest 110,OOD 95,000 15,000 51,000 55,000 Cash Advance & Other Receivable 958,016 808,016 150,000 241,708 211,708 30,OOD I,W8,016 903016 165,000 29 08 266,708 30,000, 10 Bank Balances Designated ACCOLm 1.799,211,298 1,301,242,583 497,969,715 647,345,760 598,159,413 49,196,347 Bank of Ceylon -(Foreigri) Battaramutla, 20,244,549 15,767,217 4,477,332 7,159,490 1,775,160 _1394,321 1,81,9.455,847 1,317 009 800 502 446.047 654505240 $99,934,573 54.570,667 11 Kandy City Region Urban Interventions LL' Urb3X1 Upgrading 613,472,545 6 L 3,472,545 - 378.704,347 378.704,347 - 1.2 Drainage 666,162,241 666,162,241 493.103.469 493,103,469 13 Roads 815.904,590 815,904,590 840,238,061 840,23 8,061 1.4 Water 780,493,956 790,493,956 618.333,269 618.33 3,269 1.5 Trarisport 258.193,599 258,193,588 72,375,280 72,375,2aO 1.6 Institutional Development & Goods & Equipment 114,914,111 114,834,111 94,492,735 94,492,735 3,249,061,031 3,249 G61 031 21497 247 161 2 497247 161 12 GAlle City Urban Interventions 2.1 Urban upgradmg 131,025,552 131.025,552 78,228,928 78,229,928 22 Drainage 688,q57.703 688,957,703 474,001,964 474,WI.964 1.6 Institutional Development & Goods & Equipment 163,943,663 163,a43,663 152,249,869 152,24%969 - 704 480 76D 704,480,760 13 fropItmentation Support InCTCHIC11tall and Operating Cost 847,979.973 78 096.775 66,533.198 578.407,013 541.227,082 37,179.931 Depreciatimi 5,462,641 5,197,069 2 5,572 4,974,325 4,820,129 154,[96 66,M$,770 -,83 381 339 541,227,082 37,334,128 M[NlSTRYOFtEGA POLES AND WESTERN DEVELOPMENT STRATEGICCITIES DEVELOPMFNT PROJECT Notes to the F sni Statements (All amaunt3 in Sri Lankatn Rupees) Kandy & GalLe, Kand & G alle gafna Z ]fe Jaffam& Ie - 1 2018 K 00Ga0 2017 2017 2017 14 Land ReCtrlement and Land related payment 860.191,571 45,220,396 664,870.212 664,870212 Land Reserlernent ,interetst paymnen EAC 905,411.967 5 191,725 54972 tntensive payrnen for Land acquisition 254,762 254,762 254,762 254.762 WReý Supply Scheme uder resettlemtent (Social Activity) 1099,508 86 93 5 451 .039 PP911,957,963 --7356 1s RCIention 184,815 khan Ererprises 234,308 234,308 Rohan Eerises 540,796 540,796 Mary Con5ruction 374,608 374,608 StarCotractors g ,945 1,945 KPK BUIding ConstrcOn 199,614 199,614 StarCAotractors 65,015 65,015 Mapil cOid Engineering 91,331 - 91,331 QnanamaBuilders 160,111 160,111 Kandy Mlunicipal Council 5,377,297 5,377,297 Subasinghe Contracters & Earth Movers 4,086,424 4,086,424 Sierra Constnctiou Ltd 3,957,087 3,957,087 Sierra Coanstruction Lid 2,673,065 2,673,065 Sierra Constiction Ltd 33.247,950 33,247.950 VV'