.L C. TAK & CO. Tele Fax 0651-2482864, 32903441, New AnantpurCHARTERED ACCOUNTANTS Ranchi -834 002 (India)

E-mail kctco@yahoo.co.uk

AUDITOR'S REPORT

ToThe SPECIAL SECRETARY CUM DIRECTORNATIONAL RURAL WATER SUPPLY & SANITATIONPROJECT FOR LOW INCOME STATES (NEER NIRMAL PARIYOJNA)JHARKHAND STATE WATER & SANITATION MISSION SOCIETYDRINKING WATER & SANITATION DEPARTMENTJHARKHAND, RANC I

Introductory Paragraph

We have audited the accompanying financial statements of the NATIONAL RURAL WATERSUPPLY & SANITATION PROJECT FOR LOW INCOME STATES (NEER NIRMAL

PARIYOJNA), JHARKHAND STATE WATER & SANITATION MISSION SOCIETY(JSWSMS), JHARKHAND, 4TH FLOOR, CITADEL TOWER, MAHATMA GANDHI ROAD,RANCHI-834001 as of March 31, 2016 for the year then ended. Our responsibility is toexpress an opinion on these financial statements based on our audit.

Scope Paragraph

We conducted our audit in accordance with Auditing and Assurance Standards issued by theInstitute of Chartered Accountants of India. Those Standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

Opinion Paragraph

In our opinion and subject to the observations given in Annexure - , the financial

statements give a true: and fair view of the Sources and Application of Funds and the financialposition of NATIONAL RURAL WATER SUPPLY & SANITATION PROJECT FOR LOW

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INCOME STATES (NEER NIRMAL PARIYOJNA), JHARKHAND STATE WATER &SANITATION MISSION SOCIETY (JSWSMS) for the year ended March 31, 2016, inaccordance with relevant national standards. We are also satisfied that the procurementprocedure prescribed in the Procurement Manual under JSWSMS has been followed.

For K.C.TAK & CO.Chartered Accountants

FRN 000216C

RAJIV TAK)PARTNER

MEM NO. 073716PLACE: RANCHI

DATE: 23/09/2016

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NATIONAL R IlRAL WATER SUPPLY SANITATION PROJECT FOR LOW INCOME STATES INEER NIRMAL PARrYOJNA)JHARKHAND STATE WATER & SANITATION MISSION SOCIETY

(under the aegis of Drinking Water& Sanitation Department Govt. ofJharkhand)4th Floor, Citadel Tower, Mahatma Gandhi Road, Ranch] 834001

Regn No.1"2013-20K Rancht, Dated - 06.07.2013

DISTRICT PROJECT MANAGEMENT UNIT, EAST SMGHBHUM

Schedule 9 §undry GMgf1lors & Oftw Current Llabilift

Aniount(Pa.) Aniount(lis.)

Labour Coss table 387,616.00Performance urantee Deposit from Uday Pratap Sifigh 270,100,00

as nal Payable Z350.00Tax Payable 11,5W,455 00

T.D.S Payable' ow,680,00Mr.ArvindKu rSingh 157.792.01)Mr. Prasham ingh 146,513.00Mr. Ravindra Nath Puran 46,3W.00T.D.S Payablel 29,681.00Labour Cass Payable (JBAASKK) 59,078,0DProfessional 7 ix Payable 4,20D.00Royalty Payat a 41,500.00Sales Tax Pa ibis 168.601.00Security Depo it Payable (Anand Singh) 262,570.00Security Depo N Payable (Arvind Kumar Singh) 39,151.00Security Depo A Payable (AS.Enlerpri[ses) 69,058.00Security Depo it Payable (Bal*ee Tubewell) 20,471,00Seciurity, Depo it Payable (M.S.Enterpfises) 69,973.00Saciffity Depo eit Payable (Prashant Singh) 155,592.00Security Depoed Payable (Sum! Miner) 45,4%00Security Dep4t Payable (Violish Kumar) 34.470.00Solar Panel P ' ble (Anand Singh) 2118,529 00Solar Pand Pz:blle (Prashant Singh) 206,646.00

4,856,869.00

Dy D)I r rics) Inser reAs Per Our report of even date annexed herewith

For K C TAK & CO.SHARTIERED ACCOUNTANTSFRN: 00,1112116C

(RAJIV TAK)

.Partner-Mom. No. 73716

PLACE: RANCHIDATE:231=2016

(. C. TAK & CO. Tele Fax 0651-2482864,3290344T A1, NewAnantpur

CHARTERED ACCOUNTANTS 0Ranchi - 834 002 (India)E-mail kctco@yahoo.co.uk

GFR, 19 - A

Form of Utilization CertificateNATIONAL RURAL WATER SUPPLY & SANITATION PROJECT FOR LOW INCOME STATES

(NEER NIRMAL PARIYOJNA)JHARKHAND STATE WATER & SANITATION MISSION SOCIETY(Under the aegis of Drinking Water & Sanitation Department, Govt. of Jharkhand)

Particulars Amount (Rs.) 2. Certified that I have satisfied myself that theNo. conditions on which the grant-in-aid was

Receied dringsanctioned have been duly flulfilled/and are being1. Received during fulfilled and that we have exercised theIndia, Ministry of 108,79,00,000.00 following checks to see that the money wasIdink iniWtr &f actually utilized for the purpose for which it wasDrinking)

sanctioned. Certified that out of RsSanitation108,79,00,000/ (Rupees One Hundred and Eight

Crore Seventy Nine Lakhs only) sanctioned andbank interest Rs. 55,59,895.00 ( Rupees Fifty

tFive Lakh Fifty Nine Thousand Eight Hundredfulfilled0and Ninety Five Only )during the year in favourof National Rural Water Supply & SanitationProject For Low Income States,Jharkhand.Under Government of India, Ministryof Drinking Water & Sanitation Sanctioned andRs. 3,69,60,902.00 ( Rupees Three Crore SixtyNine Lakh Sixty Thousand Nine Hundred andTwo only) on account of unspent balance of theprevious year, a sum of Rs 15,54,64,187.88(Rupees Fifteen Crore Fifty Four Lakh Sixty FourThousand One Hundred and Eighty Seven andPaise Eighty Eight only ) has been utilized forthe purpose of National Rural Water Supply &Sanitation Project For Low Income States,

Total Jharkhand for which it was sanctioned and thatthe balance of .s 97,49,69,609.12 ( RupeesNinety Seven Crore Forty Nine Lakhs Sixty Nine Thousand Six Hundred and Nine and PaiseTwelve Only ) comprising of cash & bank of Rs. 78 o 58,65,286.82, advances of s.19,64,29,522.00 and current liabilities of Rs. 73,25,199.70 remaining unutiized at the end of theyear will be adjusted towards the grant-in-aid payable during the next year 2016-17.

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-K. C. TAK & CO. Tele Fax 0651-2482864,32903441, NewAnantpur

CHARTERED ACCOUNTANTS Ranchi -834 002 (India)E-mail kctco@yahoo.co.uk

Kinds of Checks exercised1. Verification of Bank Book.2. Verification of Cash Book.3. Verification of Vouchers.

4. Verification of Ledgers and other supporting documents.

Fin cial Management Dy Director Superintending S retarySpecialist (Finance) Engineer u ector

For K. C. Tak & Co.CHARTERED ACCOUNTANTS

TAk

Rajiv Tak(Partner) coMem. No. 073716

Ranchi23/09/2016

ANNEXURE - I

DPMU EAST SINGHBHUM:( Audit objections raised during Statutory Audit of F.Y. 2015-16, on 10/08/2016 and12/08/2016)

1. Observation: Amount paid to M/S Chotagovindpur and Bagbera Drinking Water Supply Project Ltd.Rs. 3,11,32,028.00 on 31.03.2016 vide cheque no. 746042.

a. Invoice/ Running Bill for the above amount from M/S Chotagovindpur and Bagbera Drinking WaterSupply Project Ltd. Was not available at the time of audit.

b. As per Appendix 2 Terms and Procedures of payment (Page 9) Point no. 1.1 of Agreement1.1 General

In Accordance with the provisions of GC Section 5.2, the owner shall pay the Operator in the mannerand at the times set out in this Terms and Procedures of Payment Appendix. All such payments by theowner would be made into the Escrow Account. The Escrow Account would in turn have sub accountssuch as construction sub accounts, operations sub accounts and maintenance reserve sub accounts. Thewithdrawals from the Escrow Account for various expenditure during like milestone payments andpayment for operation and maintenance services shall be made by the joint signature of the Operatorand DW & SD. The Milestone payments would be based on the certification by the Design BuildEngineer. The payments for operation and maintenance services shall be authorized by DW & SD basedon sign off on performance indicators by GP-WSCs and MV-WSCs.

In this case Escrow Accodnt was not opened and payment was made directly to the Contractor MISChotagovindpur and Bagbera Drinking Water Supply Project Ltd. which is a violation of Sub Clause 1.1 ofAppendix 2: Terms and Procedures of Payment.

Commentsa. Invoice/Running Bill should be obtained from the contractor and thereafter verification of the work

done by the Design Build Engineer, then the payment should have been released.

b. Payment to the Contractor without opening an Escrow Account, is a clear violation of the terms ofagreement (Clause 1.1 of Appendix 2: Terms and Procedures for Payment)

Management's Reply:a) Invoice/Running Bill vide letter no. CGB/JSR/EE[DWSD]/2015-16/018 and Tax Invoice No. RA Bill

No. 3 dated 24.03.2016(copy enclosed) for the above amount from M/S Chotagovindpur andBagbera Drinking Water Supply Project Ltd. was not available at the time of audit because it wasin the custody of cashier DW & S Division and at that time he was involved in the SwachtaBharat Abhiyan in the field.

b) Further opening of Escrow Account in SBI Adityapur Branch has been opened dated 30.08.2016in accordance with the agreement. Moreover payment to the contractor without Esrow accountis concerned, this has been followed as per previous payment(Mobilisation Advance) practicewhich has been effected without Escrow Account. Now it shall be taken total care from nexttime onward that all payment shall be effected in Escrow Account only.

Auditors Opiniona) All the Original Bills/Invoices should be kept separately in voucher file & not in personal custodyof Cashier. However the original invoices were brought to our office on 10/09/2016 forverification.b) Payment to the Contractor without opening an Escrow Account, is a clear violation of the termsof agreement (Clause 1.1 of Appendix 2: Terms and Procedures for Payment).

2. Observation: Communication allowance paid to the professionals forms a part of Professional Feesand therefore TDS should have been deducted on communication allowance also @ 10%.

Comment: TDS should have been deducted on communication allowance @ 10% U/S 194J of theIncome Tax Act. There is a non deduction of TDS on communication allowance.

Management's Reply: It will be deducted from next payment (on which it was not deducted [April 15to October 15]) of all professionals. From November 2015 it has already been followed.

Auditors Opinion: TDS on Communication allowance for the period from April 2015 to October 2015should be recovered from the concerned consultants and deposited in Bank immediately.

3. Observation: On 27.07.2015 Rs. 20000.00 was paid to Executive Engineer DW & SD Adityapur videcheque no. 746003 as an advance, which has still not been reversed.

Comment: Advances should be reversed within 15 days or a month and the corresponding expenditurebe booked on the basis of supporting bills and vouchers. Any advance should not be carried on for sucha long period, and immediate action should be taken to recover the amount.

Management's Reply: Advance has been given in the name of Executive Engineer, DW & SD, Adityapurand the same has been deposited in account of Executive Engineer, DW & SD Adityapur. This matter hasbeen brought in the knowledge of Executive Engineer, DW & SD Adityapur for necessary action.

Auditors Opinion: Advances should be reversed within 15 days or a month and the correspondingexpenditure be booked on the basis of supporting bills and vouchers. Any advance should not be carriedon for such a long period, and immediate action should be taken to recover the amount.

4. Observation: In the following cases TDS has not been deducted on payment to the contractors U/S194C of the Income Tax Act.

Date Voucher Cheque Amount Payment Details RemarksNo. No. (Rs.)

TA

N16)

21.04.2015 3 745983 48200.00 Paid to Prem Marble for work of TDS notShilanyas of Bagbora Deducted @ 1%

U/S 194C21.04.2015 4 745984 49500.00 Paid to Sony Radio & Tent for TDS not

work of Shilanyas of Bagbora Deducted @ 1%U/S 194C

09.06.2015 2 745994 142500.00 Paid to Shri Anil Kumar for TDS nothoarding in 5 different places Deducted @ 1%

U/S 194C17.08.2015 5 746011 246939.00 Payment made to M/S Kamal TDS not

Caterer for catering work Deducted @ 1%U/S 194C

Comment: TDS should have been deducted U/S 194C @ 1% on the above payments.

Management's Reply: It has been dealt by Mrs Shalini Kumar (Ex Finance Specialist). All above mentionparties are not in practice/contract future we will take care.'

Auditors Opinion: Efforts should be made to trace the above parties and recover TDS amount fromthem and deposit the TDS amount in Bank. However if the above parties are not traceable, step shouldbe taken to blacklist the above parties.

DPMU SARAIKELLA:

(Auit obections raised during Statutory Audit of F.Y. 2015-16, on 11/08/2016

1. Observation: Communication Allowance paid amounting to Rs. 48932. TDS not deducted oncommunication allowance.

Comment: Communication allowance paid to the professionals forms a part of Professional Fees. TDSneeds to be deducted on such payment @ 10%. There is a non payment of TDS amounting to Rs.4893.00 on Professional Fees.

Management's Reply: TDS on all communication allowances will be deducted as soon as professionalfees will be paid.

Auditors Opinion: Communication allowance paid to the professionals forms a part of ProfessionalFees. TDS needs to be deducted on such payment @ 10%. There is a non payment of TDS amounting toRs. 4893.00 on Professional Fees.

2. Observation: Non deduction of TDS on newspaper advertisement amounting to Rs. 263000.00 duringthe F.Y. 2015-16.

Comment: TDS @ 1%/2% as applicable has to be deducted on newspaper advertisement U/S 194C ofthe Income Tax Act. There is a non payment of TDS on newspaper advertisement. Ensure that the TDSamount should be deducted from the next payment & TDS deposited at Bank.

Management's Reply: TDS on all newspaper advertisement payment will be deducted from the duepayment of newspaper.

Auditors Opinion: TDS @ 1%/ 2% as applicable has to be deducted on newspaper advertisement U/S194C of the Income Tax Act. There is a non payment of TDS on newspaper advertisement. Ensure thatthe TDS amount should be :deducted from the next payment & TDS deposited at Bank.

3. Observation: During the F.Y. 2015-16, there are many instances where the TDS deducted has beendeposited very late, which attracts both interest and penalty. Usually TDS deducted in a month shouldbe deposited within 7th Of the next month. Few instances where TDS has been deposited late areenumerated below:

Date of Deduction Amount (Rs.) Due Date of Deposit Actual Date ofDeposit

10.10.2015 352.00 07.11.2015 06.02.201609.11.2015 1800.00 07.12.2015 06.02.201610.09.2015 8215.00 07.10.2015 06.01.2016

RDc'0* 1R0

08.09.2015 7562.00 07.10 .2015 06.01.201611.09.2015 7601.00 07.102015 06.01.201611.09.2015 7601.00 .2015015 201611.09.2015 7604.00 07.10.2015 06.01.201607.09.2015 10893.00 07.10.2015 06.01.201607.10.2015 11280.00 07.11.2015 06.01.201631.10.2015 7673.00 07.11.2015 06.01.201616.11.2015 8187.00 07.12.2015 06.01.201623.11.2015 2116.00 07.12.2015 06.01.201624.11.2015 15264.00 07.12.2015 06.01.201626.11.2015 11165.00 07.12.2015 - 06.01.2016

Comment: TDS should be deposited timely within 7 1 of the next month. Non timely deposit of TDSwill attract interest and penalty.

Management's Reply: Inmstarting period it was not very clear regarding deduction from contractors'payment. In terms of deduction NRDWP guidelines has been followed because in our agreement nothinghas been mentioned regarding deduction. In NRDWP all deduction are settled through book transfer.Later on this matter was cleared and TOS was deposited on time which is clear by my records,

Auditors Opinion: TDS sholpld be deposited timely within 7t of the next month. Non timely deposit ofTDS will attract interest and penalty.

TA

*0

0 06.01.2016

06.01.201

060.21060.21

060.21