EXTERNAL AUDIT REPORTOF

ODRP PROJECT

OF

BERHAMPUR MUNICIPAL CORPORATION

FOR THE FINANCIAL YEAR 2015-16

Audit by :-

B.N.MISRA & COCHARTERED ACCOUNTANTSS-29 MAITRI VIHAR PHASE-IlBHUBANESWAR-751223E-mail- bnmisraco@yahoo.co.in

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

EXTERNAL AUDIT REOPRT& OBSERVATIONS2015-16

We have conducted audit of books of account of ODRP, Berhampur for thefinancial year 2015-16 and also examined the annexed Balance Sheet as on 31t

March, 2016 and Receipts and Payments Account and Income and Expenditureaccount for the Year ended on 31t March , 2016 of ODRP , BeMC,Berhampur , Dist.- Ganjam , Odisha-760002 attached to this report. In ouropinion and to the best of our information and according to the explanationsgiven to us, the said accounts, subject to audit observations attached to ourreport, give a true and fair view.

Followings are our observations :-

1. Observations on Vouching

a. Followings are the observations found during the vouching of bank

payment vouchers during the period of audit.

Date Voucher Amount in Rs. RemarksNo

04/06/2015 459 52,000.00 Hire charges for vehicle was paid08/09/2015 1326 1,04,000.00 to Galaxy Tour and Travel07/11/2015 1941 52,000.00 without deduction of TDS.26/12/2015 2273-74 29,033.0019/01/2016 2601 26,000.0008/02/2015 2773 26,000.0021/03/2016 3032-3033 28,900.0021/03/2016 3036 26,000.00

26/12/2015 2275 39,044.00 Hire charges for vehicle was paid08/02/2016 2769 52,498.00 to NilanchalMohapatral without21/03/2016 3032 44,854.00 deduction of TDS.

b. Voucher is not serially numbered as it was maintained in the BeMCCash Books .

c. Journal Register and Journal voucher are not maintained by theproject.

IL 0

2. Advance to Mukesh& Associates Rs 71,80,120

During the year 2014-15 , ODRP ,Berhampur had engaged Mukesh&Associates of Hyderabad for Project Management , Supervision andQuality control consultancy services for PIU based in Berhampur & PMUbased in Bhubaneswar vide agreement no. ODRP-02-SBCC-CF-661122 dt.05-010-2015. An advance amount of 10% on the contract amount i.e. Rs71,80,120 has been paid to Mukesh& Associates on 16/03/2015.

During the year 2015-16 ,the contract with Mukesh& Associates hadbeen terminated due to non compliances of terms of the contractw.e.f31/10/2015 vide letter no 555/ODRP dt 26/08/2015.

The project office should take step to recover/adjust the above advanceat earliest. It is observed that the Project Office has request severaltimes to the Govt. to look after above matter.

3. Advance to Staff Rs 30,000

Rs 30,000 paid to employee on 03.02.2014 towards travelling advances forattending training at New Delhi on 5/2/14 and 6/2/14. Rs 28,245 has beenadjusted on 07/11/2015 towards travelling expenses and rest amount ofRs1,755 received from the employee as cash which is lying with BeMC.

4. Professional Tax Deducted on the salary of employee

Rs600 deducted from salary on 07/01/2015 during the year 2014-15 andRsis 1,400 and Rs 1,200 deducted from salary on 08/06/15 and 10/06/15 onrespectively during the year 2015-16 was not deposited till 31s march 2016.

5. Service Tax

It has been observed that , PIU has paid service tax on various servicesreceived during the period of audit but input credit on the same was notavailed.

RA

0U

6. Tax Deducted at Sources

In case of Tax deducted by an office of the Government and taxdeposit is accompanied by an income tax challan or not being anoffice of the Government , deducted tax should be deposited on orbefore 7 days from the end of the month in which tax is deducted. Itis observed that in the given below cases tax was not deposited intime.

SI Name of Party Gross TDS Date of Due date of Actual Date DelayNo Amount amount deduction deposit of deposit period

In Rs In Rs in days1 HT Media 51,300 1,026 04/06/2015 07/07/2015 05/08/2016 292 KLSR Infra Tech 1,35,77,000 271540 06/02/2016 07/03/2016 - -

Ltd3 KLSR Infra Tech 3,28,64,764 6,57,295 20/02/2016 07/03/2016 08/04/2016 32

Ltd

7. VAT Payable Rs 2,500

During the sale of tender paper, the project had collected Rs 1,000 on05/03/2015 , Rs 500 on 30/06/2015 and Rs 1,000 on 06/08/2015towards VAT. The same had not been deposited till at the end of the

year i.e. as on 31/03/2016.

8. Other observations on various clause of Project Appraisal Documents

(PAD)

a. Staffing: As per clause no 14 under Financial ManagementDisbursement and procurement in annexue-2 Detailed ProjectDescription in Project Appraisal Documents (PAD ) issued by the WorldBank in connection to Odisha Disaster Recovery Project in the matter ofStaffing "At BeMC the post of a dedicated finance manager, who will beresponsible for maintaining clear and complete accounts thereof, needsto be sanctioned and hired/deputed."

However it observed that a dedicated finance manager had not beenappointed during the period of audit. The Chief Financial Officer of

BeMC in addition to his own assignment has been in charge for

0

BERKA?

maintaining clear and complete accounts. Steps should be taken toappoint such finance manager for this project work.

b. Accounting (Maintenance of Books of Accounts ) - As per clause no 15Financial Management , Disbursement and procurement in annexue-2Detailed Project Description in Project Appraisal Documents (PAD )issued by the World Bank in connection to Odisha Disaster RecoveryProject in the matter of accounting " BeMC needs to maintain separatebooks of accounts for this project."However the PIU is not maintaining the separate cash and bank book forthis project. The financial transactions of this project was maintained inBeMC cash and bank book.

Steps should be taken to maintain the books of account preferably inTally accounting software as maintained by OSDMA which is adequatefor recording financial transactions and forgenerating reports forfinancial disclosure requirements.

c. Financial Reporting -As per clause no 19 under Financial Management,Disbursement and procurement in annexue-2 Detailed ProjectDescription in Project Appraisal Documents (PAD ) issued by the WorldBank in connection to Odisha Disaster Recovery Project in the matter offinancial reporting ,BeMC will submit separate quarterly IUFR providingthe financial progress against the project components, within 45 daysfrom the end of each calendar quarter. IUFRs will be prepared on thebasis of actual expenditure information received from the field divisionsand actual expenditure incurred at the PIU and reconciled with the bankaccounts. The form and content of the IFRs are under preparation andwill be agreed with GoO during negotiations.

It is observed that IUFR for the quarter for the financial year 2014-15had not been submitted to world bank by PIU , ODRP Berhampur inschedule time i.e. with in 45 days from the end of quarter.

IUFR for quarter ending Due Date of submission Actual Date ofsubmission

30tjun'2015 15th Aug 2014 18/11/201530th Sep'2015 15th Nov 2014 18/11/2015

BRAMU

d. Banking arrangements: As per clause no 19 under Financial

Management , Disbursement and procurement in annexue-2 Detailed

Project Description in Project Appraisal Documents (PAD ) issued by the

World Bank in connection to Odisha Disaster Recovery Project in the

matter Banking arrangements of BeMC will also open a separate bank

account to receive funds from H&UD as per thework plan requirements.

It is observed that a separate Saving Bankaccount in Bank of Baroda and

HDFC had been opened by PIU ,ODRP Berhampur on 17/10/2014 and

17/04/2015 respectively .

e. Internal Controls and Internal Audit: As per clause no 19 under Financial

Management , Disbursement and procurement in annexue-2 Detailed

Project Description in Project Appraisal Documents (PAD ) issued by the

World Bank in connection to Odisha Disaster Recovery Project in the

matter Internal Controls and Internal Audit " Since funds will be

transferred to separate Bank accounts; reconciliation of bank book with

the bank statement will be an essential control mechanism in the

project."

Bank reconciliation of bank book with the bank statement has been

done upto 3 1st March,2016. Bank Reconciliation Statement as on

31.03.2015 is given below:-

Amount in Rs.

Bank Reconciliation Statement as on 31.03.2016

Name of Bank:- Bank of Baroda

Bank Account No:-51300100001111Bank Balance as per Bank Book as on 31.03.2016 22,46,69,203.GODr.

Add Cheque issued but not presented in Bank

Date of Issue Cheque No To whom issued Amount

21/03/2016 000115 NilanchalaMohapatra 44,854.00

21/03/2016 000116 Galaxy Tours 26,000.00

21/03/2016 000117 E.E. South Co 1,14,767.00

30/03/2016 000121 NilanchalaMohapatra 50,402.00

31/03/2016 000122 Eastern Media 13,189.00

31/03/2016 000123 The Samaj 5,821.00

31/03/2016 000124 M/s Kasturi& Sons 13,230.00

SAOG

31/03/2016 000125 Bennett Colomen& 29,400Co

31/03/2016 000126 CBTD( Income Tax) 1,258.00Total 2,98,921.OODr.

Bank Balance as per Bank Statement as on 31.03.2016 22,49,68,124.00 Cr.

Amount in Rs.Bank Reconciliation Statement as on 31.03.2016

Name of Bank:- HDFCBank Account No:-50100097859401

Bank Balance as per Bank Book as on 31.03.2016 49,06,11,346.00Dr.

Bank Balance as per Bank Statement as on 31.03.2016 49,06,11,346.00 Cr.

8 .Maintenance of other subsidiary Registers:-

PIU had not maintained following subsidiary register for the financial year2015-16 for internal reference.

a. Security Deposit Registerb. Tax deduction Register i.e. TDS,WCT and Service Tax.c. Salary Registerd. Professional Tax Deduction Register.e. Journal registerf. Telephone log Book

Steps should be taken to maintain following subsidiary Register to have betterinternal controls.

SRAt

WY0

ODISHA DISASTER RECOVERY PROGRAMME(A Project Funded by World Bank)

Berhampur Municipal Corporation, Berhampur, Ganjam District, Odisha-760002

Receipts & Payments Account for the year ended 31st March 2016

Receipts Amount Payments Amount

in Rs. In Rs.To Opening Balance By Employees Cost

Cash in Hand - Salary & Allowances 55,74,536.00

Cash at Bank

Bank of Baroda 19,05,80,201.00 By Establishment Expenses

Advertisement Charges 12,10,900.00

Bank Charges 331.00

TO Grant from State Govt. 60,00,00,000.00 Electric Expenses 1,28,204.00

Hire Charges 5,01,831.00To interest Received Out of 1,66,70,379.00 Fuel Expenses 1,77,019.00

Grant Fund Repair & Maintenance 50,602.00

Telephone 20,813.00

To Sale of Tender Paper 30,000.00 Travellings 11,673.00

Installation Expenses of LAN 26,455.00

To VAT Collected on Sale

of Tender Paper 1,500.00 By Project Expenses/Advances

Payment to Contractor 6,82,65,366.00

To Refund of TA Advance 1,755.00 Advance to Contractor 1,54,88,712.00

By Security Deposit

Security Deposit-SOUTHCO 42,051.00

By Fixed Assets Purchased

Computer-Desktop 2,94,300.00

Furniture 6,978.00

Air Conditioner 2,01,760.00

By aosing Balance

Cash in Hand

Cash with BeMC 1,755.00

Cash at Bank

Bank of Baroda 22,46,69,203.00

HDFC 49,06,11,346.00

Total 80,72,83,835.00 Total 80,72,83,835.00

Place: Berhampur

Date : 31 12/2016

Accounts Officer I Projec(g a orODRP-cum-BeMC, Berhampur ODRP-cum-Municipal Commissioner, Berhampur

For B.N. MISRA & CGChartered Accoun: i3

S.S. MO21 TRAPARTNER

Af .No-0861619

ODISHA DISASTER RECOVERY PROGRAMME(A Project Funded by World Bank)

Berhampur Municipal Corporation, Berhampur, Ganjam District, Odisha-760002

Income & Expenditures Account for the year ended 31st March 2016

Receipts Amount Payments Amountin Rs. in Rs.

To Employees Cost

Salary & Allowances 55,75,636.00 By Grant from State Govt. 80,21,547.00

To Establishment Expenses By Sale of Tender Paper 30,000.00Advertisement Charges 12,10,900.00Bank Charges 331.00 By Work-in-Progress 8,53,31,706.00Electric Expenses 1,28,204.00 (Water Supply Project)Hire Charges 5,01,831.00Fuel Expenses 1,77,019.00Repair & Maintenance 52,090.00Telephone 20,813.00Travellings 39,918.00Installation Expenses of LAN 26,455.00

To Project Expenses 8,53,31,706.00

To Depreciation

On Furniture 42,739.00On Computer 2,18,946.00On Air Conditioner 26,665.00

To Excess of Income overExpenditure 30,000.00

Total 9,33,83,253.00 Total 9,33,83,253.00

Place: BerhampurDate: 31/12/2016

Accounts Officer Project r

ODRP-cum-BeMC, Berhampur ODRP-cum- unicipal CommissIoner, Berhampur

For B.N. MISRA & CCGChartered Accou

S.S. MONAPATRAPARTNER

f.No-08 1619

ODISHA DISASTER RECOVERY PROGRAMME(A Project Funded by World Bank)

Berhampur Municipal Corporation, Berhampur, Ganjam District, Odisha-760002

Balance Sheet as at 31st March 2016

Liablities Amount Amount Assets Amount Amount

in Rs. In Rs. in Rs. in Rs.

Corpus Fund Fixed Assets

Opening Balance 20,000.00 Furnitures & Fixtures

Add Excess of income Opening Balance 420,409.00

over Expenditure 30,000.00 50,000.00 Add Addition during the Year 6,978.00

Total 4,27,387.00

Grant Fund Less Depreciation 42,739.00 3,94,648.00

Grant from State Govt. Computers

Opening Balance 20,00,00,000.00 Opening Ralance 70,610.00

Add : Received during Add Addition during the Year 2,94,300.00

the Year 60,00,00,000.00 Total 3,64,910.00

Less Grant utilesd during Less Depreciation 2,18,946M 1,4S,964,00

Financial Year 2015-16 1,00,92,074.00 78,99,07,9260 Air Conditioner

Opening Balance

Interest Receiced Out of Grant Fund 1,69,99,146.00 Add: Addition during the Year 2,01,760.00

Total 2,01,760.00

Current & Other Liabltles Less Depreciation 26,665.00 1,75,095.00

Performance Security 42,68,073.00

Withheld from Contractor 42,66,585.00 Work-in-Progress (Water Supply Project) 8,53,31,706.00

Professional Tax Payable 3,200.00

VAT Payable 2,500.00 Current Assets

Loans & Advances

Advances to Mukesh Associates 71,80,120.00

Advances to KSLR Infratech Ltd 50,43,830.00

Advances to TCE Ltd 19,11,712.

Security Deposts

Security Deposit-SOUTHCO 42,051.00

Cash and Bank Balance

Cash in Hand

Cash ith BeMC 1,755.00

Cash at Bank-BOB 22,46,69,203.00

Cash at Bank-HDFC 49,06,11,346.00

Total 81,54,97,430.00 Total 81,97,430.00

Place BBerhampur

Date: 31/12/20162 ,

Accounts Officer oPro g r

ODRP-cum-BeMC, B ampur ODRP-cubunicipal Commissioner, Berhampur

For B.N. MISRA & GChartered AccounntsokAcs0

S.S. M~TRAPARTNER

Advances toTCE.Ltdo19, 119

Schedule to Financial Statement as on 31/03/2016.

The Financial Statement is compiled with the Schedules and the Significant Policies and Notes on

Accounts in compliance with the Accounting Standards of the Institute of Chartered Accountants of

India and OMAR,2012 Guidelines, to the extent applicable, feasible and relevant to the Project.

Sitnificant Accounting Principles:

1. Basis of Accounting:

i) TheseFinancial Statements has been prepared in accordance with Generally Accepted

Accounting Principles in India to comply with the Accounting Standards notified and the same

have been prepared under historical cost convention on cash basis.

ii) ThesesFinancial Statements has been prepared assuming the project completion period for five

years as appearing from the financial agreement. However the furtherance of the project will be

increased depending upon the work status of the project.

iii) Whenever applicable OMAR , 2012 Guidelines have been followed for preparation of

accounts.

2. Grants Fund:

i) The funding of the total projects cost named as ODRP will be borne by the State Government in

terms of Grant to the Berhampur Municipality Corporation to improve the infrastructure damaged

due to Phailin under the Berhampur Municipality Corporation area.

ii) The amount of the Grant to the extent related to Project Cost is recognized under Grant Fund

on Cash basis.

iii) Interest on unutilized fund in bank account is recognized separately under specific Grant on

receipt basis in the Balance Sheet.

3. Revenue Recognition

(i) As per As-11 of the Accounting Standard revenue towards grant from State Government is

recognized on the basis of indirect expenditure incurred for the financial year on cash basis.

1~SRA

ii) Expenses Related to Contractors/ Suppliers are booked only if their bills are passed during the

period of audit.

4. Fixed Assets

i) All the depreciable assets purchased or constructed are shown at historical cost of purchase or

construction less accumulated depreciation.

ii) Any addition or improvement to the fixed asset that results in increasing the utility or capacity

or useful life of the asset are capitalized and included in the cost of asset.

5. Depreciation

i) Depreciation on all depreciable fixed assets is provided consistently on Written Down Value

Method, at the rates prescribed for urban local bodies in the OdishaMunicipal Accounting Manual

issued by Central Government of India.

vii) Depreciation is provided at full rates for assets, which are purchased / constructed before

October 1 of an Accounting Year. Depreciation is provided at half the rates for assets, which are

purchased / constructed on or after October 1 of an Accounting Year. Similarly, additions /

extensions / improvements which are of capital nature and which becomes an integral part of that

asset are depreciated over the remaining useful life of the asset. Any addition or extension, which

retains a separate identity and is capable of being used after the existing asset is disposed of, is

depreciated independently on the basis of an estimate of its own useful life.

viii) Depreciation is provided at full rates for assets, which are disposed on or after October 1 of an

Accounting Year. Depreciation is provided at half the rates for assets, which are disposed before

October 1 of an Accounting Year.

6. Bank Balances:

Bank balance represents the balance lying in the bank accounts of the ODRP project adjusted for

items under reconciliation.

~BERRQft

Reconciliation for the F.Y. 2015-16(Amount in INR)

Sri No. Particulars Total

Year to date Cumulative to dateA. AMOUNT OF REPORTED EXPENDITURE

i Total project Expenditure as per PFS 9,20,01,531.00 10,17,71,097.00ii Less: In-eligible expenditure

iii Net Project expenditure as per PFS (i-li) 9,20,01,531.00 10,17,71,097.00iv Net reimbursable from World Bank * 6,44,01,072.00 7,12,39,768.00

v Reimbursable expendirures as reported in IUFRs** 7,04,20,397.00 7,68,69,885.00

B DIFFERENCE (iv-v) (60,19,325.00) (56,30,117.00)

C AMOUNT OF WB FUNDS RECEIVEDvi Total funds received from the Bank as per PFS 42,00,00,000.00 56,00,00,000.00

vii Total Funds disbursed as per the World Bank *** 42,00,00,000.00 56,00,00,000.00

D DIFFERENCE (vi-vii)E EXCESS/ SHORT CLAIM, if any

Notes:* After application of Eligible % for BID/GEF disbursement to Net Project expenditure as per PFS** The World Bank share as reported in the IUFRs submitted to the Bank* Source: Application for reimbursements (client Connection). Application wise detail should** Direct Payments made should be indicated separately by way of detailed note