public disclosure authorized government of karnataka...2017/04/01 · karnataka state highways...

Tel No: 2212 6758/59/60161 Fax: 22229666 e-mail: [email protected]

GOVERNMENT OF KARNATAKAKARNATAKA STATE HIGHWAYS IMPROVEMENT PROJECT

(Public Works, Ports & Inland Wtater Transport Department)

No. PIU:KSHIP:ACTS:WB:AG:03:2018-19/Q 860 O/o The Project Implementation Unit,Karnataka State HighwaysImprovement ProjectK R Circle,Bangalore - 560 001.

Date: 22.10.2018

The Country Director,The World Bank,New Delhi Office,No.70, Lodi Estate,New Delhi - 110003.

Dear Sir,

Sub: Audit Report on the Annual Financial Statements of KSHIP-1I LoanNo. 8022-IN for the Financial Year 2017-18.

Ref: Letter of the Deputy Accountant General No. AG (ERSA)/IAU-I/F/2018-19/28 dated 08.10.2018.

With reference to the above, please find enclosed the Audit Report dated 08th October 2018

along with the Audited Financial Statements of KSHIP-II pertaining to IBRD Loan No.

8022-IN for the Financial Year 2017-18 issued by the Principal Accountant General, Karnataka

Bangalore. This is in accordance with Section II Part B4 of the Project Agreement dated

3 0 h May 2011.

In the Audit Report of the Project Financial Statement, there is a Memo of disallowance of

Rs. 6.316 mn (reimbursable amount at 80% Rs. 5.052 mn). In this regard payment of Rs. 6.316

mn (audit findings Rs. 5.997 mn) was paid to the Contractor in IPC 32 during FY 2017-18

(March 2018) towards tack coat over Bituminous Surface. This has been subsequently

recovered by PIU, KSHIP in the IPC-34 for the period ended 3 0 th April 2018. This fact has

been replied to the AG on an Audit Enquiry issued during the course of the audit and also

supplementary reply through this office letter dated It September 2018 (Copy of the same is

enclosed for ready reference) and requested AG to drop the Audit Enquiry.

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Inspite of the reply given to AG and subsequent deduction of Rs. 6.316 mn in the FY

2018-19, AG have proposed for disallowance in the Audit Report.

Further it is brought to the notice of the World Bank that, the amount deducted Rs. 6.316

mn (reimbursable amount Rs. 5.052 mn) in the IPC 34 paid on 04 th August 2018 is not claimed

in the IUFR Application No.58 for the period 01-07-2018 to 14-08-2018 for reimbursement.

In view of the facts stated above, it is requested that World Bank may consider the action

taken by PIU, KSHIP and waive the proposed disallowance by AG.

Yours faithfully,

Encl: (1) Audit Report dated 08-10-2018 and AuditedFinancial Statements for the FY 2017-18

(2) Copy of the reply furnished to AG dated sd/01S" September 2018 Chief Project Officer,

PIU, KSHIP,Bangalore.

CC: To:

1) Shri. Sameer Kumar Khare, Joint Secretary (Fund Bank & ADB), #39B,Department of Economic Affairs, Ministry of Finance, New Delhi - 110001.

2) Shri. Ashok Kumar, Task Team Leader, The World Bank, The HT House Building,18-20 Kasturba Gandhi Marg, New Delhi - 110001.

3) Shri. Anantha Krishna Karur, Financial Management Specialist, The World Bank,No.70, Lodi Estate, New Delhi - 110003.

4) Shri. Sukhbir Singh, Controller of Aid Accounts and Audit, B wing, 5th Floor,Janpath Bhavan, New Delhi.

5) The.Additional Chief Secretary to Government, PWP & IWT Department, Vikasa

Soudha, Bangalore - 560001.

6) The Additional Secretary to Government (Fiscal Reforms), PMU, Finance

Department, 4 Floor, M.S. Building, Bangalore - 560001.

Chief P ect Officer,,IKSHIP,

Indian Audit And Accounts Department Office of the Accountant General (E & RSA)Karnataka.

No.AG (ERSA)/IAU-I/F/2018-19/2-9 CPO :.10.2018

PDt

To CAOSPL. D.C.

The Project Director,Project Implementation Unit, S0Karnataka State Highways Improvement Project (KSHIP), SE

K.R. Circle, -2

Bangalore - 560 001. SE-3

EE

Sub: Report on the Project Financial Statement of Karnataka State Highways Improvement

Project-Il (KSHIP-II) World Bank Loan No.8022 IND for the period ending

2017-18.

Sir,

With reference to the subject above, I am to enclose the Report on the Project Financial

Statement of the Karnataka State Highways Improvement Project - II (KSHIP - II) under World

Bank Loan No.8022 IND for the period ending 31s March 2018. A management letter containing

recommendation that requires your attention is issued separately.

The receipt of the same may please be acknowledged.

Yours faithfully,

Deputy Accountant General(Economic Sector-1)

IftZ 'WR: ' WW, fr f . 5398 - 560 001. Audit Bhavan, 'C' Block, Post Box. No. 5398, Bengaluru - 560 001Ph: 080 22289101 Fax: 080 22253753 E-mail: [email protected] website : http://www.agkar.cag.gov.in

Indian Audit And Accounts Department Office of the Accountant General (E & RSA)Indin Auit nd Acouns DpartentKornataka.

REPORT OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA

ToThe Project Director,Project Implementation Unit,Karnataka State Highways Improvement Project (KSHIP) II,ICR. Circle,Bangaloare-560001.

REPORT ON THE PROJECT FINANCIAL STATEMENT

We have audited the accompanying financial statements of Karnataka State Highways

Improvement Project-Il World Bank Assisted Project Loan No-8022-IN including HighwayFinancing Modernization Component being executed through Karnataka State Road Development

Corporation Limited which comprises of the Statement of Sources and Applications of Funds andreconciliation of claims to Total Application of Funds for the year ended March 2018. These

statements are the responsibility of the Project's management. Our responsibility is to express an

opinion on the accompanying financial statement based on our audit.

We conducted our audit in accordance with the Audit Standards promulgated by the

Comptroller and Auditor General of India. Those standards require that we plan and perforn theaudit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. Our audit examines, on a test basis, evidence supporting the amounts and disclosurein the financial statements. It also includes assessing the accounting principles used and significantestimates made by the management, as well as evaluating the overall statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the sourcesand application of funds of Karnataka State Highway Improvement Project-Il for the year ended31s March 2018 in accordance with Government of India accounting standards.

In addition, in our opinion, (a) with respect to Financial Monitoring Report adequatesupporting documentation has been maintained to support claims to the World Bank forreimbursement of expenditures incurred, and (b) except for ineligible expenditure Rs.63.16 lakhas detailed in the memo of disallowances appended to this audit report, expenditure is eligible forfinancing under the loan/credit agreement. During the course of audit, Statement ofExpenditure/Financial Monitoring Reports and the connected documents were examined and thesecan be relied upon to support reimbursement under the loan/Credit agreement as detailed below;

alftT W% : '* * W, ITM 4 . 5398 *1W3 - 560 001. Audit Bhavan, 'C' Block, Post Box. No. 5398, Bengaluru - 560 001Ph : 080 22289101 Fax : 080 22253753 E-mail : [email protected] website : http://www.agkar.cag.gov.in

(Rs in Millions)

SI. Eligible Less Percentage of AmountDisbursement Category Expenditure EiblLes admissible as .

No Expenditure inadmissible Reimbursement Reimbursableper audit

Consultants' services, training, studies,Incremental Operating Costs under

1 a a 452.593 315.706 - 315.706 80% 252.565Parts A. 1, A.2,

C, and D of the Project

Consultants' services, training, studies,

2 Incremental Operating Costs under 189.682 105.024 - 105,024 80% 84.019Parts B.1, B.2

and B.3

3 Goods and works underPart A.1, C, *3126.013 2857.104 **6.316 2850.788 80% 2280.630and D of the Project

4 GoodsandWorksunderPartA.2ofthe 3324.580 1361.306 - 1361.306 100% 1361.306Project

Goods and Works under Part B.2 of the5 1458.220 1250.753 - 1250.753 100% 1250.753

Project

6 Front End Fee 0 0 - 0 0 0

eTotal 8551.088 5889.893. 6.316 5883.577 5229.273

Note: *Includes unnecessary expenditure of i 6.316 million which was incurred due to faulty estimation which is disallowed by audit.

** While the amount held inadmissible by the audit was i 5.997 million, a sum of T 6.316 million was recovered out of IPC 34 as inadmissible by PIU,KSHIP for the period ended April 2018, hence the amount of I 6.316 million is shown as inadmissible.

This report is issued without prejudice to Comptroller & Auditor General's right to incorporate the audit observations in the report of C&AG of India forbeing laid before Parliament/State Legislature.

Deputy Accountant GeneralEconomic Sector-I

O/o the Accountant General (ERSA)Karnataka, Bangalore

MEMO OF DISALLO WANCES

World Bank Assisted Project Loan No.8022-IN

As per Ministry of Road Transport & Highways specifications Tack Coat is not required unless

surface is extremely dry. Project Coordinator suggested not to apply tack coat over bituminous

surface. However, despite specific instructions from the Project Authority not to operate Tack

Coat over Bitumen Surface, the same was executed and paid resulting in not only undue

payment of T59.97 lakh to Concessionaire(WAEP-4) which is disallowed by the Audit but also

in unnecessary expenditure due to faulty estimation. In reply, PIU, KSHIP stated that a sum of

T63.16 lakh was recovered as inadmissible in 2018-19.

Deputy Accountant GeneralEconomic Sector-I

Annexure 1Karnataka State Highways Improvement Project - II

World Bank Assisted Project - Loan No.8022 IN

Statement of Sources & Application of FundsReport for the year endqd 31"t March 2018

(Rs. In Millions)Particular Receipts/Expenditure Project to date

For the year

Sources of Funds

Opening Bank Balance -

Government of Karnataka Funds 3910.858 13242.177

World Bank Funds: 0.000

PPIAF Grant 8.973

Loan Funds 4640.230 13907.805

Total Funds 8551.088 27158.955

Uses of Funds

Road Improvement Works 6582.989 21125.914

Highwy Financing Modernization Component 1647.901 3803.533

Road Safety Component 86.856 315.973

Road Sector Policy & Institutional Development 146.912 343.182

Incremental Operating Costs 77.229 319.264

Advances 9.201 1212.046

Front End Fee 0.000 39.043

Total Expenditure 8551.088 27158.955

ClosingfBank Balance-

t VROJtedoD ecreta (Finance), IP ProittDirector, Accountant Gene al,KSHIP 0 A 0 GALORE mn AHIP Karnataka.

Date: 125 SEP20 8ocf&?.VNotes:.

1. This Financial Statement is prepared on a cash basis of accounting as per provisions of the FinancialRules and codes applicable.

2. The Expenditure figures are based on monthly/quarterly abstract of Tally Software used for project accounts.3. The receipt of World Bank Loan Funds were accounted based on ACA release from Government of India.4. Highway Financing Modernization Component expenditure Rs.1647901 Million includes Rs. 196.771 Million

Expenditure out of Cumulative advance R&790.00 Million released as advance to KRDCL for Resettlement &Rehabilitation and Land Acquisition activities.

5. Names ofAccounting units whose financial statements are aggregated to prepare the consolidated accounts are:PIU-KSHIP, Bangalore and four Project Divisions namely Tumkur, Shimoga, Raichur and Belgaum.

6. During the FY2017-18, the GOK released Rs.8837.50 mn towards KSHIP-II (WB Project)and Rs.3910.86 mn shown asamount of GOK grant received represents the net amount of GOK grant utilized towards KSHIP-II after reducing KSHIP-1Expenditure (Rs.16.13 mn), expenditure incurred towards recurrent cost/salary expenditure (Rs.80.43 mn), andre-imbursement received from World Bank (Rs.4640.23 mn) and adjusting mobilization advance recovered during theyear (Rs.350.15 mn) from the total expenditure of Rs.8997.78 mn.

7. The Project Expenditure to date includes expenditure towards KSHIP-II only and does not include expenditure towardsKSHIP-I (Rs.186.714 mn which includes Rs.29.215 mn upto 31-03-2010 and Rs.157.499 mnfrom 01-04-2010 to31-03-2018) and recurrent costs fRs152.913 mn?.

Annexure 2

Karnataka State Highways Improvement Project - II


Reconciliation of Claims to Total Applications of Funds

Report for the year ended 3 1 st March 2018

Amt (Rs. Million)Schedules Current Year Previous Project to

Year date

Bank Funds Claimed (A)

IUFR-Application No.44 655.820












Funds Claimed for the year Ref: Schedule 1 5234.327

Less: Claims of previous years IUFR 0.000

Funds claimed for the current year(A) 5234.327

Total Expenditure made (B) 8551.088 5441.349 27158.955

Expenditure as per books of account 8551.088 5441.349 27158.955

Less: Expenditure Not Claimable (C) Ref: Schedule 1 2661.195

Expenditure Not Claimed (D) 0Claimable Expenditure (F) = (B)-(C)-(D) 5889.893

World Bank Share (E) 5234.327

Claims in excess of Expenditure (A-E) 0

PRO>

D tSecr ary-Finance, S&IP oject Director, KSHIP Accountant GeneraKSHIP 40ORE Karnataka

Date: 7t1 i SEP ZOAS'BNotes:

1) Total expenditure made during the year (B above) must be the same as the Total Expenditureshown on the Statement of Sources and Applications of Funds.

2) Total Expenditure made during the year (B above) included advances of Rs. 9.201 Mi Ilion toConsultants and Contractors.

Karnataka State Highways Improvement Project - II


(Rs. In Millions)

Disbursement C*egory and Expenditure for the year ended 31.03.2018

Disbursement Category Expenditure Eligible ClaimExpenditure Amount

Consultants' services, training, studies,Incremental Operating Costs under Parts A.1, A.2, 452.593 315.706 80% 252.565C, and D of the Project

Consultants' services, training, studiesIncremental Operating Costs under Parts B.1, 8.2 189.682 105.024 80% 84.019and B.3

Goods and works under Part A.1, C,and D of the Project 3126.013 2857.104 80% 2285.684

Goods and Works under Part A.2 of the Project 3324.580 1361.306 100% 1361.306

Goods and Works under Part 8.2 of the Project 1458.220 1250.753 100% 1250.753

Front End Fee 0 0 0

Total 8551.088 5889.893 5234.327

Breakup for claim amount:

Reimbursement claimed during 3071.105the period (Ref. Schedule - 1)

Pending claim amount as of 31.3.2018(IUFR Application No. 52 to 55)

Total 5234.327

De II7etyinance, r Projec rect, KKSHIP Accountant General,KSHIP tlKarnataka

Da t5 SEP 01B tDo

Schedule - IKarnataka State Highways Improvement Project - 11

World Bank Assisted Project - Loan No. 8022 IN

Details for Withdrawal Applications for the Year Ended 31-03-2018

(Rs. In Millions)

SL. IUFR Period Expenditure Eligible Reimbur Reimburse Reimbursem Expenditure RemarksNo Appl for the Period Expenditure sable ment Claim ent through Not Claimable

No. for the Period %age Amount ACA Release

1 2 3 4 5 6 7 8 9=(4-5) 10

167.956 137.301 80% 109.8411) 44 01-04-2017 to 31-05-2017

545.979 545.979 100% 545.979 654.284 30.655

Total 713.935 683.280 655.820

288.265 242.492 80% 193.9942) 45 01-06-2017 to 14-06-2017

330.329 251.630 100% 251.630 446.685 124.472

Total 618.594 494.122 445.624

212.249 182.219 80% 145.7753) 46 15-06-2017 to 30-06-2017

43.768 0 100% 0 145.703 73.798

Total 256.017 182.219 145.775

333.848 280.637 80% 224.5104) 47 01-07-2017 to 31-08-2017

131.930 131.930 100% 131.930 355.316 53.211

Total 465.778 412.567 356.440

384.354 305.781 80% 244.6245) 48 01-09-2017 to 30-09-2017

28.281 0 100% 0 243.504 106.854

Total 412.635 305.781 244.624

1006.103 901.970 80% 721.576-49 01-10-2017 to 30-11-2017

S E. 0135.837 0 100% 0 721.300 239.970

!C Total 1141.940 901.970 721.576

Page 1 of 3

Schedule - IKarnataka State Highways Improvement Project - II

World Bank Assisted Project - Loan No. 8022 IN

Details for Withdrawal Applications for the Year Ended 31-03-2018

(Rs. In Millions)

SL. IUFR Period Expenditure Eligible Reimbur Reimburse Reimbursem Expenditure RemarksNo Appi for the Period Expenditure sable ment Claim ent through Not Claimable

No. for the Period %age Amount ACA Release1 2 3 4 5 6 7 8 9=(4-5) 10

161.762 140.213 80% 112.1707) 50 01-12-2017 to 19-12-2017

169.279 160.642 100% 160.642 272.824 30.186

Total 331.041 300.855 272.812

61.671 54.311 80% 43.4498) 51 20-12-2017 to 31-12-2017

226.171 184.985 100% 184.985 226.000 48.546

Total 287.842 239.296 228.434

Expenditure Claimed &(A) 4227.782 3520.090 3071.105 3065.616 707.692

____Received during the Year _____ ____________

323.244 291.372 80% 233.0989) 52 01-01-2018 to 31-01-2018

247.422 197.440 100% 197.440 0 81.854

Total 570.666 488.812 430.538

31.602 18.276 80% 14.62110) 53 01-02-2018 to 28-02-2018

780.563 339.900 100% 339.900 0 453.989Claim is in

Total 812.165 358.176 354.521 pipeline. Please

298.135 260.425 80% 208.340 refer foot note11) 54 01.03.2018 to 19.03.2018 (2)

583.061 453.927 100% 453.927 0 166.844

Total 881.196 714.352 662.267

499.099 462.837 80% 370.27020.03.2018 to 31.03.2018

X¼ 2 . 1560.180 345.626 100% 345.626 0 1250.816

Total 2059.279 808.463 715.896

Page 2 of 3

Schedule-IKarnataka State Highways Improvement Project - II

World Bank Assisted Project - Loan No.8022 INDetails for Withdrawal Applications for the Year Ended 31-03-2018

(Rs. In Millions)SL. IUFR Period Expenditure Eligible Reimbur Reimburse Reimbursem Expenditure RemarksNo Appi for the Period Expenditure sable ment Claim ent through Not Claimable

No. for the Period %age Amount ACA Release1 2 3 4 5 6 7 8 9=(4-5) 10

(B) Expenditure Claimed & yet to(B)__ be received as on 31.03.2018 4323.306 2369.803 2163.222 0.000 1953.503

(A+B) Total 8551.088 5889.893 5234.327 3065.616 2661.195

636.445 607.097 80% 485.67813) 42 01-01-2017 to 28.02.201771.381 0 100% 0 485.823 100.729

Total 707.826 607.097 485.678

972.593 885.218 80% 708.17514) 43 01.03.2017 to 31.03.2017 9258518 0787

883.725 383.560 100% 383.560 1088.791 587.540

Total 1856.318 1268.778 1091.735Claims of previous year 2564.144 1875.875 1577.413 1574.614 688.269received during the year

Total Bank Funds Claimed 11115.232 1765.768 6811.740 4640.230 3349.464during the Year 1115.22 765.68 81174 4640.230 3349.464

Note: (1) Application No. 52, 53, 54 & 55 were in pipeline as of 31.03.2018.

(2) In the IUFR 52 to 55 for the period from 01.01.2018 to 31.03.2018, out of the eligible expenditure of Rs.2369.803 Million and Reimbursement claimamount of Rs. 2163.222 Million. The ineligible expenditure is Rs.1953.502 Million.

DlKSPecretary-Fnance, ' Project Director, Accountant General,KSHIP KSHIP Karnataka

DATE: 0

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public disclosure authorized government of karnataka...2017/04/01 · karnataka state highways...

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