Address: 556/26, Sujanpura LAXMI TRIPTI & ASSOCIATES Alarbagh, Lucknow Contact: +91-9451897708 CHARTERED ACCOUNTANTS E-mail: Raca.lko@gmai.com caprokhorsaxena@gmoil.com INDEPENDENT AUDITOR'S REPORT OF UP SODIC LAND RECLAMATION III PROJECT (UPSLR - III P) FOR FY 2018-19 To 21.06.2019 The Managing Director U,P. Sodic Land Reclamation III Project Uttar Pradesh Bhumi Sudhar Nigarn T.C./l 9V, Vibhuti Khand, Gomti Nagar LucknoW-2260 10 Dear Sir 1. Report on the Financial Statements We have aLidited the accompanying financial statements of Uttar Pradesh Sodic Land Reclamation - III Project financed under World Bank Credit No. 4640 (hereinafter referred to as "UPSLR -Ill Project" which has been carried out by Uttar Pradesh Bhumi Sudhar Nigam. Lucknow (hereinafter referred to as " the Management") which comprises the Balance Sheet as on 3" March 2019, Statement of Receipts and Payments and Statement of Income and Expenditure for the year ended 31st March 2019 and a surmmary of significant accounting policies and other explanatory information in relation to UPBSN Head Office, 20 DPU's, Nodal Offices of the implementing agencies (Department of Agriculture, Animal Husbandry, Remote Sensing Application Centre) at Lucknow and 7 DPU's of Irrigation Department. 2. Management's Responsibility for the Financial Statements Management is responsible for preparation of these financial statements that give a true and Iair view of the financial position and financial performance of UPSLR-III Project (hereinafter referred to as "the Management"). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation of the financial statements that give a true and fair view and are free from material misstatements, whether due to fraud or error. 3. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes, examining on test basis, evidence supporting the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 4. Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements read together with the appended accounting policies and notes thereon, give a true and fair view subject to our observations in the management letter attached: - i. In the case of the Balance Sheet of the state of affairs of the UPSLR - III Project as at 31st March, 2019; ii. In the case of the Income and Expenditure Account of the Income and Expenditure for the year ended on that date; iii. In the case of the Receipts and Payment Account of the receipts and payments during the year ended on that date. iv. With respect to IFRs, adequate supporting documentation has been maintained through support claims to the world bank for reimbursement of expenditures incurred and v. The expenditure incurred are eligible for financing under the Credit Agreement. For and behalf of M/s Laxmi Tripti & Associates Chartered Accountants FRN-009189CAt CA Prakhar SaC{ 1 1< Partner M.No 414991 dAcQ Uttar Pradesh Sodic Land Reclamation III Project IDA Credit No. : 4640 IN Balance Sheet as at 31s March 2019 (Amount in Rs.) Previous Liabilities Sch Current Previous Assets Sch Curr Year No Year Year No Year 22,12,53,720 Opening Balance of Grant 15,73,45,719 Current Assets 1,00,00,72,000 Add: Grant Received 1,AduiGnt Y Re e 1,30,00,00,000 1,140 Cash in Hand F 291 during the Year 1,22,13,25,720 Net Grant 1,45,73,45,719 41,10,05,288 Bank Accounts F 29,36,95,539 Less: Transferred to 13,70,15,675 Stock In Hand G 49,114 1,06,39,80,001 Income & Expenditure 1,43,48,13,549 Account (being grant utilized) 15,73,45,719 Grant Unutilized A 2,25,32,170 Loans & Advances 12,74,83,519 Loan & Advances H 66,87,235 Current Liabilities 2,10,627 Duties & taxes B 1,82,468 28,01,835 Provisions C 25,58,038 11,80,00,174 Sundry Creditors D 73,47,608 39,71,47,267 Other Current Liabilities E 26,78,11,895 67,55,05,622 30,04,32,179 67,55,05,622 30,04,32,179 Significant Accounting Policies and Notes to Accounts as per Schedule "I" The Schedule referred to above form an integral part of the Project Financial Statements As per our separate report of even date attached. For, Laxmi Tripti & Associate Chartered Accountants FRN. 009189C (CA PrakharSaena) Manager inance Finance Controller/JMD Partner M. No. 414991 Place : Lucknow Dated : 21/06/2019 Managing Director Uttar Pradesh Sodic Land Reclamation Ill Project IDA Credit No.: 4640 IN Income & Expenditure Account for the Period 01.04.2018 to 31.03.2019 (Amount in Rs.) No Particulars Current Previous Year Year INCOME A Grant (to the extent utilized) 1,43,48,13,549 1,06,39,80,001 B Other income 5,25,117 1,45,383 Total income (1) 1,43,53,38,666 1,06,41,25,384 EXPENDITURE a) On-farm Development and Land Treatment (i) Reclamation of Sodic Lands 83,70,85,399 70,50,63,021 (ii) Site identification, Mapping and monitoring 73,05,591 78,88,476 (iii) Ravine Management 7,86,03,701 6,97,36,045 Sub Total on Farm Development and Land Treatment 92,29,94,691 78,26,87,541 b) Improvement of Drainage Systems 22,43,53,724 8,57,72,576 c) Agricultural Support Services 5,34,28,081 2,93,22,943 d) Institutional Strengthening and Capacity Building for 4,89,65,610 1,09,49,066 e) Project Management 18,55,96,560 15,53,93,258 Total Expenditures (11) 1,43,53,38,666 1,06,41,25,384 III Excess of income over Expenditure Significant Accounting Policies and Notes to Accounts as per Schedule "I" The Schedule referred to above form an integral part of the Project Financial Statements As per our separate report of even date attached. For, Laxmi Tripti & Associates Chartered Accountants & FRN- 009189C (CA Pra ar Sa en* anle Finance Finance &8ntroller/ JMD Partner M. No. 414991 dAct Place Lucknow Dated :21/06/2019 Manag Director Uttar Pradesh Sodic Land Reclamation III Project IDA Credit No. : 4640 IN Receipts & Payments Account for the Period 01.04.2018 to 31.03.2019 (Amount in Rs.) 51 Particulars Current Previous No Year Year A Opening Balance (A ) 41,10,06,427 13,70,80,266 B Receipts Funds from Government through Budget (These will include external 1,30,00,00,000 1,00,00,72,000 assistance received by Government for the project) Other Income 5,25,117 1,45,383 Total Receipts ( B) 1,30,05,25,117 1,00,02,17,383 Total Sources (A+B) 1,71,15,31,544 1,13,72,97,649 C Expenditures by Component a) On-farm Development and Land Treatment (i) Reclamation of Sodic Lands 83,70,85,399 70,50,63,020 (ii) Site Identification, Mapping and monitoring 73,05,591 78,88,476 (iii) Ravine Management 7,86,03,701 6,97,36,045 Sub Total on Farm Development and Land Treatment 92,29,94,691 78,26,87,541 b) Improvement of Drainage Systems 22,43,53,724 8,57,72,576 c) Agricultural Support Services 5,34,28,081 2,93,22,943 d) Institutional Strengthening and Capacity Building for Market Access 4,89,65,610 1,09,49,066 e) Project Management 18,55,96,559 15,53,93,258 Total Expenditures ( D) 1,43,53,38,665 1,06,41,25,384 Total (A+B-D) 27,61,92,879 7,31,72,265 D Net Increase/ Decrease in Current Assets & Liabilities a Closing Balance of Current Assets 67,36,349 26,44,99,194 b Opening Balance of Current Assets 26,44,99,194 34,54,43,923 c Increase/(Decrease) in Current Assets -25,77,62,845 -8,09,44,729 d Closing Balance of Current Liabilities 27,79,00,009 51,81,59,903 e Opening Balance of Current Liabilities 51,81,59,903 26,12,70,470 f increase/(Decrease) in Current Liabilities -24,02,59,894 25,68,89,433 Net Total (c-f) -1,75,02,951 -33,78,34,162 E Closing Balance 29,36,95,830 41,10,06,427 a Cash in Hand 291 1,140 b Cash at Bank 29,36,95,539 41,10,05,288 Significant Accounting Policies and Notes to Accounts as per Schedule "1" The Schedule referred to above form an integral part of the Project Financial Statements As per our separate report of even date attached. For, Laxmi Tripti & Associates Chartered Accountants 8 FRN. 009189C (CA Prakha aSna Manag r Finance Finance Controller/ JMD Partner M. No. 414991 Place : Lucknow Dated . 21/06/2019 Managin Director Uttar Pradesh Sodic Land Reclamation III Project IDA Credit No.: 4640 IN Reconciliations of Claims to Total Applications of Funds Report for the Period 01" Apri 2018 to 31't March 2019 (Amount in Rs.) Particular Current Previous Project Year Year up to Date Bank Funds Claimed During the year 1,04,88,77,601 74,67,47,445 10,47,03,00,001 Total Expenditure made as per Balance Sheet 1,43,48,13,549 1,06,39,80,001 13,10,77,67,338 Add: Last Year unclaimed Liabilities in IUFR reversed back 15,38,52,016 10,41,98,538 Procurement of stock (unutilized stock, consider as exp in the IUFR) 49,114 13,70,15,675 49,114 Advances claimed as Exp in the IUFR 64,67,235 11,59,99,583 64,67,235 Excess claim in the IUFR reversed during audit (Net) Excess claim in the UFR as "Other Income" reversed in the PFS 5,25,117 1,45,383 51,86,085 Less: Liabilities not claimed in the IUFR 3,15,94,771 15,38,52,016 3,15,94,771 Expenditure incurred but not claimed in the IUFR Last Year claimed advances in lUFR reversed back 25,30,15,258 32,15,24,871 - Expenditure reversed in PFS last year, rectification in the IUFR - 1,25,27,988 Total Expenditure claimed 1,31,10,97,001 93,34,34,306 13,08,78,75,001 World Bank Share @ 80% of above 1,04,88,77,601 74,67,47,445 10,47,03,00,001 Significant Accounting Policies and Notes to Accounts as per Schedule "I" The Schedule referred to above form an integral part of the Project Financial Statements As per our separate report of even date attached. For, Laxmi Tripti & Associates - Chartered Accountants F 009189C (CA PraTar xena Manag r Finance Finance Controller/JMD Partner M. No. 414991 Place Lucknow Dated 21/06/2019 Ma agin Director Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Grant Account Schedule "A" (Amount in Rs.) Particulars Current Previous Year Year Opening Balance ( A) 15,73,45,719 22,12,53,720 Receipts Funds from Government through Budget (These will include external 1,30,00,00,000 1,00,00,72,000 assistance received by Government for the project) Other income 5,25,117 1,45,383 Less: Returned to UP GOVT. Total Receipts ( B ) 1,45,78,70,836 1,22,14,71,103 Expenditures by Component a) On-farm Development and Land Treatment (i) Reclamation of Sodic Lands 83,70,85,399 70,50,63,020 (ii) Site Identification, Mapping and monitoring 73,05,591 78,88,476 (iii) Ravine Management 7,86,03,701 6,97,36,045 b) Improvement of Drainage Systems 22,43,53,724 8,57,72,576 c) Agricultural Support Services 5,34,28,081 2,93,22,943 d) Institutional Strengthening and Capacity Building for Market Access 4,89,65,610 1,09,49,066 e) Project Management 18,55,96,560 15,53,93,258 Total Expenditures ( C) 1,43,53,38,666 1,06,41,25,384 Closin& Balance ( D= B - C 2,25,32,170 15,73,45,719 Manage Finance Financp Controller Place : ucknow Dated 21/06/2019 n ~ 0 D V'yV cn ( Ao Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Duties & Taxes Payable Schedule "B" Unit Head Code Amount Etah TOS Contractor 743.00 TDS Salary -4,800.00 Lucknow TDS Contractor 4,901.00 Pratapgarh TDS Contractor 22,574.00 TDS Salary 51,736.00 Raibareilly TDS Contractor 10,154.00 TDS Salary 13,677.00 Sultanpur TDS Contractor 5,591.00 Unnao TDS Contractor - Ho TDS Contractor 1,333.00 TDS on Salary 41,600.00 GST TDS 33,806.00 ID Fathepur TDS Professional 6,099.00 Vat and Cess -4,946.00 Total 1,82,468.00 Manag r Finance Finance Controller Place Lucknow Dated 21/06/2019 0 0 rdAWDo'~ Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Provision Schedule "C" Unit Particular Amount HO External Audit Fee Payable 11,50,500.00 HO Internal Audit Fee Payable 13,20,420.00 Aligarh Unpaid Salary 30,721.00 Farrukhabad Unpaid Salary 28,833.00 Etah Unpaid Salary 16,280.00 Pratapgarh Unpaid Salary 11,284.00 Total 25,58,038.00 Manag r Finance Finan Controller Place Lucknow Dated 21/06/2019 dAc %dkAco Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Sundry Creditors Schedule "D" DPUJ Name Name of Party Amount Amount AJgarh Raj Shree Pipe 31,7'95.00 N.CCF 92,002.00 1,23,797.00 Alahabad Ot her d Lablites 2,576.00 FNational Seed Corporation Ltde Lucknow 1,90,230.00 1,92,806.00 Azamgarh M/s NCCF LUCKNOW 1,16,216.00 1,16,216.00 Etah N.C.C.F.I.Ltd. 2,22,305.00 2,22,305.00 Etawah National Seeds Corporation Ltd 2,59,680.00 2,59,680.00 Fatehpur National Seeds Corporation Limited 1,87,115.00 1,87,115.00 Farrukhabad Mahavir Polyplast Pvt.Ltd Agra 30,182.00 N,C.C.F.I. Lucknow 5,98,360.00 U.P.C-OPERATIVE FEDERATION 36,724.00 6,65,266.00 Hardoi NATION CO-OPERATIVE CONSUMERS FEDERATION OF INDIA 1,55,124.00 P.C.F HARDOF 10,83,670.00 12,38,794.00 Jaunpur NSC Varansi 12,820.00 M/s National Co-Operative Consumers Fed 2,44,654.00 2,57,474.00 Kannauj P C F Kannauj 9,06,880.00 N C C F Lko 1,50,097.30 10,56,977.30 Kanpur Dehat NATIONAL SEED CORP. 2,48,690.00 Other Credit 13,584.00 2,62,274.00 Kanpur Nagar NCCF OF INDIA LTD 1,00,000.00 1,00,000.00 Mainpuri M/S N.C.C.F.Lko 62,064.00 N.S.C.Ltd.Lko. 79,599.00 1,41,663.00 Raibarelly METRO HYBRID SEED 5,98,416.00 5,98,416.00 Sant Ravidas Nagar Uppcf Varanasi 4,35,429.00 METRO HYBRID SEED 12,37,110.00 16,72,539.00 Sultanpur National Seed Corporation Ltd 38,654.00 N.C.C.F. Lko 1,14,320.00 Vijay Singh Kuswaha 1,000.00 1,53,974.00 HO Good Bakery 62,090.00 Up State Yarn Corporation Jaunpur 35,672.00 RN Khanna & co 550.00 98,312.00 Total 73,47,608.30 73,47,608.30 Manager Finance Finance Controller Place Lucknow Dated :21/06/2019 dAccO Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Other Current Liability Schedule "E" Account Head Accounting Location Amount Amount Interest on Aligarh 83,415.00 bank account Allahabad Azamgarh Etah 1,68,84300 Etawab 13,007.00 Farrukhabad 56,363.00 Fatehpur Ghazipur 820.76 Hardai Jaunpur 44,418.00 Kannauj 38,481.00 Mainpuri 1,95,235.30 Kanpur Dehat Kanpur Nagar Lucknow 68,454.60 Mainpuri Sant Ravidas Nagar Sultanpur 35,656.09 Pratapgarh Railbareilly Unnao 53,93500 RSAC Animal Husbandry Department of Agriculture ID Aligarh ID Pratapgarh ID Sultanpur ID Etah 15,826.00 ID Fatehpur 34,986.00 ID Unnao Head office 65,22,063.94 73,31,504.69 Security Deposit Aligarh 2,18,109.00 Allahabad 43,501.00 Azamgarh 94,902.00 Etah 2,94,166.00 Etawah 6,92,182.22 Farrukhabad 2,06,071.00 Fatehpur 4,86,895.69 Ghazipur 4,52,515.00 Hardoi 54,220.00 Jaunpur Kannauj 49,612.00 Kanpur Dehat 3,86,206.00 Kanpur Nagar 36,874.00 Lucknow 2,02,084.65 Mainpuri 2,68,921.00 Pratapgarh 66,115.00 Raibareilly Sant Ravidas Nagar 14,815.10 Sultanpur 54,251.55 Unnao 1,45,799.80 Head office 98,843.00 8,66,084.01 Aq, Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Other Current Liability Schedule "E" Account Head Accounting Location Amount Amount Farmers Contribution Aligarh 356.62 Allahabad 10,156.00 Azamgarh Etah 2,86,285.68 Etawah 19,756.68 Farrukhabad Fatehpur Ghazipur Hardoi Jaunpur 59,640.06 Kannauj 18,201.00 Kanpur Dehat - Kanpur Nagar Lucknow Mainpuri 5,92,200.00 Pratapgarh Raibareilly 7,375.00 Sultanpur 25,651.00 Sant ravidas nagar 242.63 Unnao Head office 23,82,71,778.28 23,92,91,642.95 Security deposit & ID Aligarh 91,132.00 Retention Money JD Etah Io Etawah 2,12,147.00 JD Fatehpur 2,11,358.00 ID Pratapgarh 53,09,643.00 ID Sultanpur 68,023.00 ID Unnao 85,84,298.00 1,44,76,601.00 Salary Deduction Aligarh 52,595.00 Allahabad - Azamgarh Etah 28,624.00 Etawah 26,242.00 Farrukhabad Fatehpur 2,830.00 Ghazipur Hardoi Jaunpur Kannuj Kanpur Dehat Kanpur Nagar Lucknow Mainpuri 2,200.00 Pratapgarh Raibareilly 3,982.00 Sant Ravidas Nagar 60,760.00 Sultanpur . Unnao 60,230.00 Head office 26,08,598.98 28,46,061.98 Total 26,78,11,894.63 Ma?Ta er Finance &Finance bntroller Place : Lucknow Dated :21/06/2019 ed" Arcc Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Cash and Bank Balances Schedule "F" SI No Unit Cash in Hand Cash at Bank 1 Aligarh 23,46,280.00 2 Allahabad 56,913.02 3 Azamgarh 43,199.24 4 Etah 14,20,953.82 5 Etawah 9,92,061.38 6 Farrukhabad 51,205.46 7 Fatehpur 25,35,550.79 8 Ghazipur 5,16,600.91 9 Hardol 3,18,673.86 10 Jaunpur 22,47,944.52 11 Kannauj 2,40,545.52 12 Kanpur Dehat 4,31,004.50 13 Kanpur Nagar 10,32,720.00 14 Lucknow 14,24,363.79 15 Mainpuri 27,01,788.14 16 Pratapgarh 7,20,026.48 17 Raibareilly 5,87,831.01 18 Sant Ravidas Nagar 6,11,853.66 19 Sultanpur 3,54,922.18 20 Unnao 14,75,337.11 21 ID Aligarh 4,52,346.33 22 1D Etah 1,19,957.68 23 ID Etawah 10,83,160.77 24 JD Fatehpur 23,48,732.87 25 ID Pratapgarh 7,92,000.64 26 ID Sultanpur 8,71,156.00 27 ID Unnao 2,58,414.76 28 RSAC 19,52,818.28 29 Animal Husbandry 1,000.00 30 Agriculture Department 32 Head Office 291.00 26,57,06,176.52 Total 291.00 29,36,95,539.24 Managgr Finance Finarce Controller Place : Lucknow & Dated: 21/06/2019 A -' d c, Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Stock in Hand Schedule "G" Unit Stock Quantity Rate Value Value Aligarh GYPSUM-P-11' 15,000 MT 3,165.75 47486.25 47,486.25 Kannauj UREA -P-Ill 0.116 MT 6,644.48 770.76 770.76 Mainpuri DHAINCHA SEEDS-P-Il1 0.149 MT 5,754.03 857.35 857.35 I49,114.36 49,114.36 Mana r Finance Finance Controller Place Lucknow Dated :21/06/2019 dAcc Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Loan & Advances Schedule "H" Particular Amount Advance to Party / Supplier / Service Provider Annexure "1" 21,56,700.20 Advance to WUG 5 Annexure 2" 41,24,655.00 Advance to Staff Annexure "3 4,05,879.56 Total 66,87,234.76 Advance to Party Annexure "1" of Schedule "H" DPU Name Party Name Amount Amount Allahabad Kribhko Lucknow 1,333.10 1,333.10 Pratapgarh Adv to supplier 1,906.00 1,906.00 Sant Ravidlas Nagar IFFCO 14,580.10 KRIBHCO 235.00 14,815.10 Head Office Advance to Panchyati Raj Department 2,23,000.00 Cyber Max Enterprises 51,800.00 Dy Director Agricuture Basti 15,525.00 FAMILY BAZAR 09 45,600.00 Saheed Major Amiy Tripathi Filling Centre 37,826.00 UPDESCO 12,82,098.00 WAPCOS Ltd 900.00 Sarvodya Gramyodog Sewa Samiti 4,40,625.00 Telephone Security 10,000.00 Voltas Limited 28,272.00 21,35,646.00 Receivable from UPBSN 3,000.00 Total 21,53,700.20 21,56,700.20 Manage Finance Finan Controller Place: Lwcknow Dated 21/06/2019 Advance to WUG's Annexure "2" of Schedule "H" S1 No OPU Name Amount 1 Etawah 4,49,873.00 2 Mainpuri 36,74,782.00 Total 41,24,655.00 Manager Finance Finance Controller Place Lucknow Dated :21/06/2019 VIV% Advance to Staff Annexure "3" of Schedule "H" SI No DPU Name Amount 1 Aligarh 12,272.40 2 Allahabad 3 Azamgarh 4 Etah -8,036.00 5 Etawah -635.73 6 Farrukhabad 8,000.00 7 Fatehpur 8 Ghazipur 9 Hardoi 10 Jaunpur 26,971.00 11 Kannauj 12 Kanpur Dehat 58,890.00 13 Kanpur Nagar 45,000.00 14 Lucknow 15 Mainpuri 16 Pratapgarh 375.00 17 Raibareilly 118 ISant Ravidlas Nagar 26,707.36 f19 ISultanpur 450.53 20 jUnnao 1,66,363.00 21 IRSAC 5,000,001 22 Head Office 64,522.00 Total 4,05,879.56 Ma Finance Financ Controller Place Lucknow Dated :21/06/2019 v\\ &As 0 Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Significant Accounting Policies & Notes to Accounts Schedule "I" A) Significant Accounting Policies 1. Administration : UPSLR-llI Project is a World Bank assisted Project implemented by Government of Uttar Pradesh (GoUP) through Uttar Pradesh Bhumi Sudhar Nigam Limited from September 18th, 2008 vide Credit & Project Agreement between International Development Association (iDA) and Indian Delegation (Government of India and Government of Uttar Pradesh) dated 20.07.2009 with retroactive financing w.e.f. 18.09.2008. 2. Basis of Accounting: The Project Accounts have been maintained at Head Office and its 20 District Project Unit's, 4 Nodal Offices of implementing line agencies i.e. Remote Sensing Application Center (RSAC), Department of Irrigation, Department of Agriculture (DA), and Department of Animal Husbandry (AH)] and 7 implementing districts of Irrigation Department. Accounts are being kept on accrual basis under double entry accounting principles & historical cost convention and following the accounting standards issued by the ICAI, pertinent laws and regulations. 3. Grant in Aid : Grant in Aid is recognized as Income in the Income & Expenditure account to the extent of fund utilization against it (net of other income). Grant in Aid to the extent unutilized is shown as a liability in the Balance Sheet. 4. Valuation of Inventory: Consumption and closing stock of input/materials pertaining to On Farm Development and Land Treatment are valued at Cost on First-In-First-Out (FIFO) method. Cost for valuation purposes would be arrived at Free on Rail or Landed Cost Method. 5. Accounting of Inventory: Inventory procured for Project implementation are being managed by the DPU's and it's Sub district level offices. Inventories are being stored at the contracted warehouses at districts and the storage facilities of the Sub - Units and Circle offices at the sub - district level. Inventory records and reports are being prepared manually by the designated staff at each of the offices. These records and reports are being captured the quantitative details for each item of inventories. All inventory on receipt at the predefined location (rail head in case of gypsum and other location in case of any other inventory) are being checked for outward damage to the package and shortages (quantity verification), if any, by the designated staff of the DPU (Store keeper), authorized representative of the supplier (in case of gypsum) and the representative of the transporter/railways on the basis of the RR/other relevant transport documents and suppliers invoice. Later on GRN is being prepared by designated officer post inspection of the quality of inventory based on the above documents and PO. On the basis of GRN, Input inventory transaction are being accounted for in the books of account (TALLY) of DPU's. Distribution channel of inventories are as under. 1. Store Keepers at DPU's are issuing inventory to Deputy Manager (Sub - office) on the basis of requirement. 2. Deputy Manager (Sub - office) are issuing inventory to Implementation Assistant. Later on utilization / distribution of inventories are being submitted to DPU's duly verified by implementation assistant. On the basis of the utilization document, accounting entry for utilizations are being accounted for under relevant heads of account in the accounting software (TALLY). 6. Fixed Assets & Depreciation : As per the financial manual Para no 3.2 related to Accounting Policies, The Fixed Assets acquired under the Project are valued at Cost including all direct costs and accounted for under the respective component head of expenditure. No depreciation is being charged on Fixed Assets. 0 1'6 d N Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Significant Accounting Policies & Notes to Accounts Schedule "1" 7. Bank Account: A separate bank account, in a lead bank of the area, have been opened in all the accounting locations of the UPBSN. All the transactions relating to the project are being routed from these accounts. Furthermore, separate bank accounts in the district unit of Agriculture Department (DA) and department of Animal Husbandry (AH) are also in operation. Although, the bank accounts which are in operation in the District unit of Agriculture Department (DA) and Animal Husbandry (AH), closing balance of these accounts are being classified as imprest under the head loan and advances. 8. WUG Accounting: Funds given to the WUGs are initially being recorded as advance to WUG in the books of account maintained at DPU. Later on the WUGs are submitting its fund utilization in prescribed booklet format duly verified and recommended by the site implementation assistant. The format includes summary of funds and utilization (under different heads) for the WUG's functioning under his jurisdiction and through the Deputy Manager, documents are being send to the DPU's. Based on these documents, the Advances to WUG's are being adjusted and expenditure accounted for under relevant heads of account. 9. Farmer's Contribution Farmer's Contributions towards their physical labour and inputs is not accounted in the financial records. Contribution in Cash is shown as Current Liabilities. 10. Expenditure Incurred by Implementing Agencies other than UPBSN Fund transfers to implementing agencies other than UPBSN are initially recognized as inter transfer of funds. Treatment as expenditure are being made to the extent expenditure is actually incurred and paid for, reported through the Interim Financial Report and approved by a competent authority. Assets includes bank balances and liabilities remains to implementing agencies have considered as the assets and liability of the project and consolidated accordingly. 11. Treatment of Interest Earned : Interest earned on balances in Project Bank Accounts is treated as liability towards the Government of Uttar Pradesh. 12. Reimbursement: All expenditures incurred on the project through implementing agencies are reimbursed by the World bank. The reimbursement claim is praperd ans sent to the bank on Cash Basis. 13. Contingent Liability: Contingent Liabilities have not been accounted for for in the books of account, However, cotingent liabilities have been disclosed by way of notes in Notes to Accounts here below. B) Notes to Accounts 1. The balance of Sundry Creditors, Loan & Advances are subject to their confirmation. 2. Provision represent value of unpaid salary and expenditure accrued during the year. 3. Other current liability includes an amount of ' 73.32 Lacs (current year earned 174.65 lacs and paid 191.57 to GoUP) which represent the Income generated by way to interest received from bank. L0 Av' Schedule annexed to and Forming Part of the Accounts For the Year Ended March 31, 2019 Significant Accounting Policies & Notes to Accounts Schedule "I" 4. Line Agencies All Accounting entries have been taken from the agreed accounting software "TALLY" which is being maintained by the Line Agencies (Irrigation Department, Animal Husbandry, Agriculture Department and RSAC) as per the guidelines suggested in the financial manual of the Project. The accounting entries have been grouped, re - grouped where ever required to comply the guidelines of Financial Manual. 5. Contingent Liability :- a) Demand if any, on Income Tax, Sales Tax etc. on pending cases to be accounted for in year which the case will be decided, however at present there is no demanded liability which is known to the best of our knowledge. b) Accounting provision for employee benefits like as Gratuity, Bonus etc. to be accounted for in the year in which these will declared by the project management. 6. All the figures reflecting in the "Project Financial Statement " are in Indain Rupees. For, Laxmi Tripti & Associates Chartered Accountants FRN. 009189C (CA PrffkhrSaeTra > * jj Partner Manar Finance Finance Controller M. No. 414991 Place Lucknow Dated 21/06/2019