EXTERNAL AUDIT REPORTOF

ODRP PROJECT

OF

BERHAMPUR MUNICIPAL CORPORATION

FOR THE FINANCIAL YEAR 2014-15

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& OBSERVATIONS2014-15

We have conducted audit of books of account of ODRP, Berhampur for the

financial year 2014-15 and also examined the annexed Balance Sheet as on 3 1st

March, 2015 and Receipts and Payments Account and Income and Expenditure

account for the Year ended on 3 1st March , 2015 of ODRP , BeMC,

Berhampur , Dist.- Ganjam , Odisha-760002attached to this report.In our

opinion and to the best of our information and according to the explanations

given to us, the said accounts, subject to audit observations attached to our

report, 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 RemarksNo Rs.

24/11/14 2811 1,10,112 Pre-paid to Public Procurement Grouptowards training fees of twoemployees on world bankprocurement policy on which TDS of

Rs11,011 have not been deducted.

09/01/15 3409 1,877 Telephone bill has not been depositedwith in due date of deposit for which

discount of Rs 98.60 not availed by theproject.Due date of deposit 29/12/2014Actual date of deposit 13/01/2015

03/03/15 3888 78,880 1% TDS has been deducted on Rs

78,880 i.e. Rs 788 , paid towardshiring charges of two number ofvehicle to Galaxy Tours and Travels

under sec 194C of income tax act

,1961.

However 2% TDS should have beendeducted instead of 1% as per section1941 because Vehicle falls underdefinition of Machinery as perincomeTax Act.

16/03/15 3949 71,80,120 An advance amount of 10% of thecontract amount was paid toConsultants Mukesh& Associates forthe consultancy work towards projectmanagement, Supervision and qualitycontrol in the PIU based in Berhampurand PMU based in Bhubaneswar.As per Section 194J of income tax act,1961, tax shall be deducted at thetime of credit of such sum to theaccount of the payee or at the time ofpayment thereof in cash or by issue ofa cheque or draft or by any othermode, whichever is earlier.However it is observed thatTDScompliance has not been madeat the time of payment of advance toConsultant Mukesh& Associates.

23/03/15 4087 19,800 Payment made to Sri Sisir KumarSwain for supplying , fitting and fixingof sign board including labour and T&P with fabrication , welding chargesetc.Bill is given by the Contractor in letterpad without mentioning VAT Regd.noand service tax regd no.

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

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

2. 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 was still not adjustedat the end of audit period i.e. as on 31/03/2015.

3. Professional Tax Deducted on the salary of employee

Rs 600 and Rs 1500 deducted from salary on 07/01/2015 and 16/03/2015was not deposited as on 31/03/2015.

4.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.

5. VAT Payable Rs 1,000

During the sale of tender paper , the project had collected Rs 1,000 on05/03/2015 towards VAT. The same had not been deposited till at theend of the year i.e. as on 31/03/2015.

6. 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 managerhad not beenappointed during the period of audit. The Chief Financial Officer ofBeMC in addition to his own assignment has been in charge formaintaining 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-2

Detailed Project Description in Project Appraisal Documents (PAD )issued by the World Bank in connection to Odisha Disaster Recovery

Project in the matter of accounting " BeMC needs to maintain separate

books of accounts for this project."

However the PIU is not maintaining the separate cash and bank book for

this project. The financial transactions of this project was maintained in

BeMC cash and bank book.

Steps should be taken to maintain the books of account preferably in

Tally accounting software as maintained by OSDMA which is adequate

for recording financial transactions and forgenerating reports for

financial disclosure requirements.

c. Financial Reporting -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 of

financial reporting ,BeMC will submit separate quarterly IUFR providing

the financial progress against the project components, within 45 days

from the end of each calendar quarter. IUFRs will be prepared on the

basis of actual expenditure information received from the field divisions

and actual expenditure incurred at the PIU and reconciled with the bank

accounts. The form and content of the IFRs are under preparation and

will be agreed with GoO during negotiations.

It is observed that IUFR for the quarter for the financial year 2014-15

had not been submitted to world bank by PIU , ODRP Berhampur in

schedule time i.e. with in 45 days from the end of quarter.

lUFR for quarter ending Due Date of submission Actual Date ofsubmission

30th Sep'2014 15 1h Nov' 2014 04/07/2015

31 st Dec' 2014 1 5 th Feb' 2015 04/07/2015

31st Mar'2015 15th May'2015 IUFR for the period 1 'tJanuary 2015 to 16thMarch 2015 wassubmitted on

04/07/2015 and from

17/03/2015 to31/03/2015 was on18/11/2015.

It has been observed that expenditure incurred /advance paid for theperiod 17/03/2015 to 31/03/2015 in IUFR submitted to world bank is nil.However following expenditure /advance has been incurred/paid duringthe above period-

Date Nature of expenditure Amount in Rs23/03/2015 Telephone Expenses 1,174.0023/03/2015 Sign Board 19,800.0027/03/2015 Advertisement expenses 21,489.0027/03/2015 Advertisement expenses 1,78,200.0027/03/2015 Advertisement expenses 53,460.0027/03/2015 Advertisement expenses 27,027.00

Total 3,01,150.00

d. Banking arrangements: As per clause no 19 under FinancialManagement , Disbursement and procurement in annexue-2 DetailedProject Description in Project Appraisal Documents (PAD ) issued by theWorld Bank in connection to Odisha Disaster Recovery Project in thematter Banking arrangements of BeMC will also open a separate bankaccount to receive funds from H&UD as per thework plan requirements.

It is observed that a separate Saving Bankaccount in Bank of Baroda hadbeen opened by PIU ,ODRP Berhampur on 17/10/2014.

e. Internal Controls and Internal Audit: As per clause no 19 under FinancialManagement , Disbursement and procurement in annexue-2 DetailedProject Description in Project Appraisal Documents (PAD ) issued by theWorld Bank in connection to Odisha Disaster Recovery Project in thematter Internal Controls and Internal Audit " Since funds will betransferred to separate Bank accounts; reconciliation of bank book withthe bank statement will be an essential control mechanism in the

project."

e)

Bank reconciliation of bank book with the bank statement has beendone upto 31st March,2015. Bank Reconciliation Statement as on31.03.2015 is given below:-

Amount in Rs.Bank Reconciliation Statement as on 31.03.2015

Name of Bank:- Bank of BarodaBank Account No:-51300100001111

Bank Balance as per Bank Book as on 31.03.2015 19,05,80,201.00 Dr.Add Cheque issued but not presented in Bank

Date of Issue Cheque No To whom Amountissued

16/03/2015 000037 Bennett 1,78,200.00Colomen& Co

16/03/2015 000038 M/s Kasturi& 53,460.00Sons

16/03/2015 000039 H.T Media Ltd 27,027.0016/03/2015 000040 CBTD (income 3,626.00

Tax)Total 2,62,313.00 Dr.

Bank Balance as per Bank Statement as on 31.03.2015 19,08,42,514.00 Cr.

7 .Maintenance of other subsidiary Registers

PlU had not maintained following subsidiary register for the financial year2014-15 for internal reference.

a. Advance Register for Staff advance and outsiders.b. Security Deposit Registerc. Fixed Assets Registerd. Printing and Stationery Registere. Tax deduction Register i.e. TDS,WCT and Service Tax.f. Salary Registerg. Professional Tax Deduction Registerh. Journal registeri. Fixed assets Registerj. Vehicle Log Bookk. Telephone Log Book

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

4eMORA

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 2015

Receipts Amount Payments Amount

in Rs. in Rs.

To Opening Balance By Programme & Training Expenses

Cash in Hand - ILI -PPG Training Expenses 1,10,112.00

Cash at Bank - Workshop Expenses 42,080.00

To Grant from State Govt. 20,00,00,000.00 By Employees Cost

Salary & Allowances 11,53,344.00

To Bank interest 3,28,767.00

By Establishment Expenses

To Sale of Tender Paper 20,000.00 Advertisement Expenses 5,57,201.00

Travelling Expenses 1,26,307.00

To VAT Collected on Sale Repair & Maintenance 19,800.00

of Tender Paper 1,000.00 Telephone Charges 7,138.00

Bank Charges 56.00

By Project & Other Advances

Advances to Mukesh Associates 71,80,120.00

TA Advance 30,000.00

By Fixed Assets Purchased

Computer-Desktop 1,00,872.00

Furniture 4,42,536.00

By Closing Balance

Cash in Hand

Cash at Bank 19,05,80,201.00

Total 20,03,49,767.00 Total 20,03,49,767.00

Place: Berhampur For B.N. MSRA & CGDate : 31/12/2016 ChademdAccou 13

.S. UATRAPARTNER

\y al.No-08 fef9

Accounts Officer ( Project D

ODRP-cum-BeMC, Berhampur ODRP-cum-M icipal Commissioner, Berhampur

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 2015

Receipts Amount Payments Amountin Rs. in Rs.

To Programme & Training Expenses

ILI -PPG Training Expenses 1,10,112.00 By Grant from State Govt. 20,70,527.00

Workshop Expenses 42,080.00

By Sale of Tender Paper 20,000.00

To Employees Cost

Salary & Allowances 11,55,444.00

To Establishment Expenses

Advertisement Expenses 5,57,201.00

Travelling Expenses 1,26,307.00

Repair & Maintenance 19,800.00

Telephone Charges 7,138.00

Bank Charges 56.00

To Depreciation

On Furniture 22,127.00

On Computer 30,262.00

TO Excess of income over Exp. 20,000.00

Total 20,90,527.00 Total 20,90,527.00

Place: BerhampurDate: 31/12/2016 Fr BN. WISRA & CG

Chartered Accou nts

S.S. Ib PAT?PARTNER

41.No-08l19

Accounts OffiCer Project orODRP-cum-BeMC, Bqern' pur DRP-cu! nicipal Commissioner, Berhampur

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

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

Balance Sheet as at 31st March 2015

Liablities Amount Amount Assets Amount AmountIn Rs. In Rs. in Rs. In Rs.

Corpus Fund Fixed Assets

Opening Balance - Furnitures & Fixtures

Add Excess of Income Opening Balance

over Expenditure 20,000.00 20,000.00 Add : Addition during the Year 4,42,536,00

Total 4,42,536.00

Grant Fund Less Depreciation 22,127.00 4.20,409.00

Grant from State Govt. 20,00,00,000.00 Computers

Less Grant utilesd during Opening Balance

Financial Year 2014-15 20,70,527.00 19,79,29,473.00 Add : Addition during the Year 1,00,872.00

Total 1,00,872.00

Interest received Out of Grant Fund 3,28,767.00 Less Depreciation 30,262.00 70,610.00

Current Liablities & Provs Current Assets

Professional Tax Payable 2,100.00 Loans & Advances

VAT Payable 1,000.00 Advances to Mukesh Associates 71,80,120.00

TA Advances 30,000,00

Cash and Bank Balance

Cash in Hand

Cash at Bank-BOB 19,05,80,201.00

Total 19,82,81,340.00 Total 19,82,81,340.00

Place: Berhampur r-or B.N. MISRA & CC.,Date : 31/12/2016 Chartered Accoun =

S.S. AfoHA TRAPARTNER

48.No-0 119

Accounts Officer Project DIODRP-cum-BeMC , Brnampur ODRP-c um- nicipal Commissioner, Berhampur

Schedule to Financial Statement as on 31/03/2015.

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.

Significant Accounting Principles:

1. Basis of Accounting:

i) These Financial 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 .

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.

43

Reconciliation for the F.Y. 2014-15(Amount in INR)

Sri No. Particulars Total

Year to date Cumulative to dateA. AMOUNT OF REPORTED EXPENDITURE

i Total project Expenditure as per PFS 97,69,566.00 97,69,566.00ii Less: In-eligible expenditure

iii Net Project expenditure as per PFS (i-fi) 97,69,566.00 97,69,566.00

iv Net reimbursable from World Bank 68,38,696.00 68,38,696.00

v Reimbursable expendirures as reported in IUFRs** 64,49,488.00 64,49,488.00

B DIFFERENCE iv-vT 3,89,208.00 3,89,208.00

CIAMOUNT OF WB FUNDS RECEIVED I

vilTotal funds received from the Bank as per PFS 14,00,00,000.00 14,00,00,000.00

viilTotal Funds disbursed as per the World Bank * 14,00,00,000.00 14,00,00,000.00

DIDIFFERENCE (vi-vlii

EJEXCESS/ 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

oSA

, tb0