Financial Attest Audit Report on the Accounts of FATA Urban Centres Project Grant Agreement No. TF 012150 PK Local Government and Rural Development Department, FATA For the Financial Year 2014-15 Auditor General of Pakistan Islamabad TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMSRO.............................................................................NYMS I PREFACE ..............................................I.................................................................................... II P AR T -I .......................................................................................... I......................................... 1 PROJECT OVERVIEW ..................................................................................................OE...... 2 E AUDITOR'S REPORT TO THE MANAGEMENT.............................NT................................ 3 FINANCIAL STATEM ENTS .............................................................................................. 4I IPART-II.................................................................................................................................. 5 COVER LETTER TO THE MANAGEMENT LETTER........................................................ 6 EXECUTIVE SU M M ARY .......................................... .. ............................... ......... ... .. 8 M ANAG EM ENT LETTE R ................................................................................................. 10 1 1. INTRODU CTION ...................................................................................................... 11 2. A UD IT OBJECTIVES.............................................................................................. 1 3. AUD IT SCOPE AN D M ETHO DOLO GY .................................................................. 11 4. AUDIT FINDINGS AND RECOMMENDATIONS................................................. 13 4.1 Organization and M anagem ent........................................................................ 13 4.2 Financial M anagem ent....................................................................................... 18 4.3 Sustainability .................................................................................................... 28 4.4 Overall A ssessm ent........................................................................................... 28 5. CONCLUSION .......... ........................................................................................... 30 ACK NOW LEDGEM ENT ................................................................................................... 31 I I I I I I I I Abbreviations and Acronyms E ADP Annual Development Program FATA Federally Administered Tribal Areas FDWP FATA Development Working Party FUCP FATA Urban Centres Project I GOP Government of Pakistan IPC Interim Payment Certificate IPSAS International Public Sector Accounting Standards ISSAl International Standards of Supreme Audit Institutions ISU Implementation Support Unit KP Khyber Pakhtunkhwa MDTF Multi Donor Trust Fund NOL No Objection Letter PCC Plain Concrete Cement PMU Project Management Unit TARUCCI Tribal Areas to Urban Centres Conversion Initiative I I I I U I I I I I I PREFACE The Auditor-General conducts audit subject to Articles 169 and 170 of the Constitution of Islamic Republic of Pakistan, 1973 read with Sections 8 and 12 of the Auditor-General's (Functions, Powers, Terms and Conditions of Service) Ordinance, 2001. The audit of FATA Urban Centres Project under Local Government and Rural Development Department, FATA Grant No.TF 012150 PK for the financial year 2014-15 funded by the Multi Donor Trust Fund E through World Bank was carried out accordingly. The Directorate General Audit (Federal Government), Islamabad conducted audit of the FATA Urban Centers Project during October, 2015 for the period 2014-15 with a view to reporting significant findings to stakeholders. Audit examined the economy, efficiency, and effectiveness aspects of the "FATA Urban Centres Project". In addition, audit also assessed, on test check basis, whether the management complied with applicable laws, rules, and regulations in managing the FATA Urban Centres Project. The Audit Report indicates specific I actions that, if taken, will help the management realize the objectives of the FATA Urban Centres Project. * The report consists of two parts. Part-I contains Auditor's Report (Audit Opinion) and Financial Statements. Part-lI contains Executive Summary, Management Letter and Audit Findings. The Report has been prepared for submission to the International De elopment Association (IDA) in terms of Loan Agreement No.TF 012150 PK with the e t of the Islamic Republic of Pakistan. Dated:16.11.2015 (JUNAID ISHTAQ QUERASHI) Place: Islamabad DIRECTOR GENERAL I I I I I I i 1 PART-I Ii. PROJECT OVERVIEW 2. AUDITOR'S REPORT TO THE MANAGEMENT I 3. F[NANCIAL STATEMENTS I I I I I I I I I I I U I I I PROJECT OVERVIEW I Name of Project: FATA Urban Centres Project Sponsoring Authority: MDTF (through World Bank) 3 Executing Authority: Local Government and Rural Development Department, FATA Secretariat I Grant No: TF 012150 PK PC-I Cost (Original) Rs. 598.500 million PC-1 Cost (Revised) Rs.750.00 million Date of Commencement: 12.04.2012 Date of Completion (as per PC-I) 30.06.2015 (as per Extension): 30.09.20 15 Grant Closing Date: 30.09.2015 Date of Approval by FDWP: April, 2012 I FATA Urban Centers Project was designed to improve urban services and management E in Khar, Bajaur Agency and to reform institutional and financial frameworks for the management of all urban centers in FATA. ttlThis project is funded by Multi Donor Trust Fund (MDTF) through World Bank with a total cost of US$ 7.000 million under Grant Agreement No. TF 012150 PK signed between World Bank/MDTF and FATA Secretariat on 24.04.2012. Project Objectives: The objective of the Project is to contribute towards the implementation of the Tribal Areas Rural to Urban Centers Conversion Initiative (TARUCCI) for the 14 Urban Centers in FATA, which has been initiated by the FATA Secretarial following the recently completed I Post Crises Needs Assessment. I N I I AUDITOR'S REPORT TO THE MANAGEMENT I Auditor's Report on the FATA Urban Centers Project Financial Statements We have audited the accompanying financial statements of the FATA Urban Centres Project under Local Government and Rural Development Department, FATA Grant No. TF 012150 PK that comprises Statement of Receipts and Payments together with the Notes forming part thereof for the year ended 30th June, 2015. Management Responsibility It is the responsibility of the project management to establish and maintain a system of internal controls, and prepare and present the Statement of Receipts and Payments in conformity with the requirements of Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standards. 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 the International Standards of Supreme Audit Institutions. These standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The audit process includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. It also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the N overall statement presentation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 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 project for the year ended 30'h June, 2015 in accordance with Cash Basis IPSAS, Fin al Reporting under the Cash Basis of Accounting Standard. b) The expen s ave been incurred in accordance with the requirements of legal I agreem t NAID HTAQ Q SHI) DIRECTOR GENERAL I Directorate General Audit (Federal Government), Benevolent Fund Building, Zero Point, Islamabad. Dated:/& 11.2015 1 3 I I I I I I I I I FINANCIAL STATEMENTS I I I I I I I I I T 1 [i \\ (TNTI RS UXG.JECT stikmren,t f ý1 C m iptnd] P,Iymelt 1'11r qle enr . 'ed Jine 3011l. 2015 --201-15 2013-14 Reccipts(Pa Me '6. P.,yimeiJ by Third Reccipis(Pa3 nients) Pny n2nt by i 1:ir Co iolied by fl oject Partie, Controlled by Projeet Parties S d3~27;.ss 21.35 1 l_ ,+I_ 43.i~~.i - 179,324,31: £ 724ö5 5 - -9,445,385 1Ynrrscs r t.315,963 7,168,842 8 25 l 678.021 106,286.708 9 -14,353.029 427,848 1 ~38,508,9'. . j33,35'. 33 *'j49,648,4`9 ·· 145,111579 47-.-7 1 3, 1" 1 698 C s i nF 0 15),147,277 I li h:.. 'S r o. int:rI par otlese tancial c iSand ac to be .. i j redh 1 ?:oject Directo puWA. u 1(v 1jp\ *,ä F .\ I RR :N CENTERS PRO.IlECT mamk-lne iÉf Conpirison af .lud-rt and Actual Amounts F>r the vcar cnu.d June 301h, 2015 Note 2014-15 2013-14 Budr1ed An.ount Actlial Atwunt Budgeted Amonnt Actual A Rupees ,•3 .1 L .3,157,450 79: 4,312 ~j 279,32 b. ,:v 430,j57,450 438.157,450 279,324,312 279,32 P-ments Consultawu Nerv ..s 6 60.765,000 72,465,255 108,515,000 19,445 Operating Exrerses 7 23,222,000 19,315.963 27,540,000 7,168; S;Works 8 ý.3.055,000 25[,678,021 161 ~~'5,000 106,28 9 70,570,000 44,353.029 - --7,| 'i ra i1,38n,CO0 696,703 30000.' I'r,l P' mttfm 685,992,>00 388,508,971 298,770,000 133,35 i i!'.. ;,r- :m itegra, pai off (hese flwincial statenemins and are to be read therewith. Preect I I -..-T FATA URBAN CENTERS PROJECT Statement or Comparison of Budget and Actual Amounts For the year ended June 30th, 2015 Note 2014-15 2013-14 Budgeted Amount Actual Amount Budgeted Amount Actual Amount Rupees Receipts External Assistance 5 438,157,450 438,157.450 279,324,312 279,324,312 TotalReceipts 438,157,450 438,157,450 279,324.312 279,324.3 12 Payments Consultancy Services 6 60,765,000 72,465,255 108,515,000 19,445.385 DperatingExpenses 7 23,222,000 19,315,963 27,540,000 7.168,842 tivil Works 8 530,055,000 251,678,021 161,785,000 106.286,708 Joods 9 70,570,000 44,353,029 - 427,848 Trainings 1,380,000 696,703 930,000 29,950 Total Payments 685,992,000 388,508,971 298,770,000 133,358,733 The accompanying notes form an integral part of these financial statements and are to be read therewith. Project Direct / I, � ' - � � 7�.н ?7: й{�г •'-]5 i:� ' Э . + •111,.�ii г :и� с5� 1 � r .. f. 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