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Financial Attest Audit Report Public Disclosure · PDF fileFinancial Attest Audit Report on the Accounts of Rehabilitation and Reconstruction of Earthquake Damaged Roads IBRD Loan

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  • Financial Attest Audit Report

    on the Accounts of

    Rehabilitation and Reconstruction of Earthquake Damaged Roads

    IBRD Loan 7341-Pak IDA Credit 4816-Pak

    National Highway Authority

    Ministry of Communications

    Government of Pakistan

    For the Financial Year 2013-14

    Auditor General of Pakistan Islamabad

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  • TABLE OF CONTENTS

    Abbreviations and Acronyms ................ 1..... ................... 1 Preface .... ....................................................... 2

    PART-I

    Project Overview .................................................. 3 Auditor's Report to the Management ................... 4.... ............ 4 Financial Statements .................... 6...........................6

    PART-II

    COVER LETTER TO THE MANAGEMENT LETTER...................... 14 EXECUTIVE SUMMARY........ ....... ........................... 16 MANAGEMENT LETTER ..................................... ..... 18

    1. Introduction ......................................... ......... 18 2. Audit Objectives ............................................... 22 3. Audit Scope and Methodology ....................... ..... ......... 22 4. AUDIT FINDINGS AND RECOMMENDATIONS ......... ............. 23

    4.1 Organization and Management ................................ 23 4.2 Financial Management............ ................... ...... 24 4.3 Procurement of Goods and Contracts Management/Administration........... 26 4.4 Construction and Works ........... . ................. ..... 26 4.5 Asset Management............ .................. ........... 27 4.6 Monitoring and Evaluation ................................... 29 4.7 Compliance with Loan Covenants ......................... ..... 29 4.8 Sustainability ............................................ 29 4.9 Overall Assessment .......................................... 29

    5. CONCLUSION .......................................... ........ 30

    ACKNOWLEDGEMENT ............................................... 31

  • Abbreviations and Acronyms

    AJ&K Azad Jammu & Kashmir

    AUD Australian Dollar

    ECNEC Executive Committee of the National Economic Council

    EMP Environment Management Plan

    EQDR Earthquake Damaged Roads

    ERRA Earthquake Reconstruction and Rehabilitation Authority

    FWO Frontier Works Organization

    GoP Government of Pakistan

    HRP Highway Rehabilitation Project

    IBRD International Bank Reconstruction & Development

    IDA International Development Association

    IPC Interim Payment Certificate

    ISSAI International Standards of Supreme Audit Institutions

    JVR Jhelum Valley Road (Muzaffarabad-Chakothi)

    km Kilometer

    KPK Khyber Pakhtunkhwa

    MOC Ministry of Communications

    N-15 National Highway-15 (Basian-Balakot-Naran Section)

    N-35 National Highway-35 (Battal-Batagram-Thakot Section of Karakoram Highway)

    NOC No Objection Certificate

    NHA National Highway Authority

    NHIP National Highway Improvement Programme

    OM Office Memorandum

    PEC Pakistan Engineering Council

    PC-I Planning Commission (Proforma-I)

    PPR Public Procurement Rules

    VO Variation Order

    I

  • PREFACE

    The Auditor General conducts audit subject to Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan, 1973 read with Section 7 of the Auditor General's (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001.

    The Financial Attest Audit of the Project 'Rehabilitation and Reconstruction of Earthquake Damaged Roads' financed by the World Bank, through Loan No. 7341-Pak & IDA Credit 4816-Pak, was carried out accordingly.

    The Directorate General, Audit Works (Federal), Islamabad, conducted Financial Attest Audit of the Project (Rehabilitation and Reconstruction of Earthquake Damaged Roads having total length of 128 km in the Northern Areas of Pakistan, N-35, N-15 and Jhelum Valley Road in Azad Jammu & Kashmir) during November, 2014 for the period 2013-14 with a view to expressing opinion on financial statements and reporting significant findings to the stakeholders. Audit examined the economy, efficiency, and effectiveness aspects of the project. In addition, Audit also assessed, on test check basis, whether the management complied with applicable laws, rules, and regulations in managing the Project. The Report indicates specific actions that, if taken, will help the management realize the objectives of the project.

    The Report consists of two parts. Part-I contains Auditor's Report (Audit Opinion) and Financial Statements. Part-II contains Management Letter comprising Executive Summary and Audit Findings.

    The Report has been prepared for submission to the World Bank (International Bank for Reconstruction and Development) in terms of its Loan Agreement with the Government of Islamic Republic of Pakistan.

    Dated: 5th January, 2015 ( anz or Akhtar Malik) Islamabad Director General Audit Works (Federal)

    2

  • PART-I

    1. PROJECT OVERVIEW

    2. AUDITOR'S REPORT TO MANAGEMENT

    3. FINANCIAL STATEMENTS

  • PROJECT OVERVIEW

    Name of the Project/Program: Earthquake Damaged Roads Project N-35 (Battal-Batagram-Thakot Section of Karakoram Highway) N- 15 (Basian-Balakot-Naran Section) JVR (Jhelum Valley Road Muzaffarabad-Chakothi)

    Sponsoring Authority: World Bank (International Bank for Reconstruction and Development)

    Executing Authority: National Highway Authority

    Loan No. IBRD-7341-Pak & IDA Credit 4816

    PC-I Cost: Rs 6,000.000 million (Original) Rs 14,788.815 million (Revised)

    Date of Commencement: 2006-07

    Actual Date of Commencement: 4" May, 2007

    Date of Completion (as per PC-I): 2008-09 (36 months)

    Date of Approval by ECNEC: 7h March, 2007 (Original) 2 9h July, 2011 (Revised)

    Loan Closing Date: 3 0th June, 2009 (Original) 30th June, 2012 (Revised)

    Loan Utilization Status in FY 2013-14:

    i. IBRD/IDA share: Rs 889.404 million ii. Government of Pakistan share: Rs 91.486 million

    Total amount for the year: Rs 980.890 million

    Expenditure upto June 2014: Rs 16,275.838 million

    3

  • AUDITOR'S REPORT TO THE MANAGEMENT

    The Directorate General Audit Works (Federal), Islamabad, has audited the

    accompanying Financial Statements of the Project 'Rehabilitation and Reconstruction of Earthquake Damaged Roads' that comprise of Statement of Receipts and Payments, Statement of Comparison of Budget and Actual together with the notes forming part thereof for the year ended 30th June, 2014 financed by the World Bank, through IBRD Loan No. 7341-Pak & IDA Credit 4816-Pak.

    It is the responsibility of project management to establish and maintain a system of internal control, and prepare and present the Statement of Receipts and Payments in conformity with the requirements of Cash Basis International Public Sector Accounting Standards (IPSAS), Financial Reporting under the Cash Basis of Accounting Standard.

    The responsibility of the Auditor is to express an opinion on the Financial Statements based on the audit conducted. Audit was conducted in accordance with the International Standards of Supreme Audit Institutions. These standards require the Audit to obtain reasonable assurance that the Financial Statements are free of material misstatements. The audit process includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements. It also includes assessing the accounting principles used and significant estimates made by the management, as well as, evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion.

    In our opinion:

    a) The Financial Statements presents fairly, in all material respects, the cash receipts and payments by the project for the year ended 30th June, 2014 in accordance with Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standard.

    b) The expenditure has been incurred in accordance with the requirements of legal agreements.

    In addition:

    a) The Imprest Account gives a true and fair view of the receipts and payments made during the year ended 30th June, 2014.

    4

  • b) An amount of Rs 889.404 million was transferred from Imprest Account of IDA Credit No. 4816 and utilized. Expenditure incurred is eligible for liquidation.

    c) The receipts and payments support Imprest Account liquidation during the year.

    Dated: 5h January, 2015 anor Akhtar Malik) Islamabad Director General Audit Works (Federal)

    5

  • FINANCIAL STATEMENTS

    REHABILITATION AND RECONSTRUCTION OF EARTHQUAKE DAMAGED ROADS

    IBRD LOAN 7341-PAK IDA CREDIT 4816-PAK

    (NATIONAL HIGHWAY AUTHORITY)

    FOR THE YEAR ENDED 3 0 th JUNE, 2014

    6

  • FINANCIAL STATEMENTS

    REHABILITATION AND RECONSTRUCTION OF EARTHQUAKE DAMAGED ROADS

    IBRD LOAN 7341-PAK

    IDA CREDIT 4816-PAK

    FOR THE YEAR ENDED 30t JUNE, 2014

    Page No.

    Statement of Cash Receipts and Payments 8

    Statement

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