Audited Project Financial Statements

Project Number: 40423-053 Loan Number: 3306 Period covered: 1 April 2017 to 31 March 2018

IND: Rural Connectivity Investment Program – Tranche 3 Prepared by Chhattisgarh Rural Road Development Agency, Government of Chhattisgarh

For the Asian Development Bank Date received by ADB: 23 October 2018 The audited project financial statements are documents owned by the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff. These documents are made publicly available in accordance with ADB’s Access to Information Policy and as agreed between ADB and Public Works Department, Government of Chhattisgarh.

M/SSCMAHANDRU&CO.CH ARTERED ACCO U NIAIV7S

PARK STREET 1, CHOUBEy COLONY RAtpUR (C.c.)PH.NO. (Ml e827977252

INDEPENDENT AUDITORS' REPORT

Report on the Financial Statements

We have audited the accompanying financial statements of Project - Chhattisgarh District Roadsll Sector Project (financed by Asian Development Bank under Loan No. 3306-lND),('CGRRDA-ADB') as implemented by Chhattisgarh Rural Road Devetopment Agency, Raipurwhich comprises of the Statement of Receipts and payments. Statement of Expenditure by Categoryand financer, the statement of disbursement and related notes for the period ended as in 31st March2018.

Management's Responsibility for the Financial Statements

The Agency's Management is responsible the preparation of these financial statements that give a

true and fair view of the financial position and financial performance of the project. This responsibilityincludes design. lmplementation and maintenance of adequate internal financial controls. Relevantto the preparation and presentation of the financial statements that give a true and fair view and arefree from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. Wehave conducted our audit in accordance with the Standards on Auditing issued by the lnstitute ofchartered Accountants of lndia. Those Standards require that we comply with ethical requirementsand plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free from material misstatement.

An audit involves performing procedures to obtain evidence about the amounts and the disclosuresin the financial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud oferror. ln Making those risk assessments, the auditor considers internal financial control relevant tothe Society's preparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on whether the Society has in place an adequate internal financial controls system overfinancial reporting and the operating effectiveness of such controls An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of the includesevaluating the appropriateness of the accounting policies used and the reasonableness of theaccounting estimates made by the management of Society, as well as evaluating the overallpresentation of the financial statements.

e,ffi1$\

Ff,FP-

&i

h

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

Opinion

ln our opinion and to the best of our information and according to the explanations given us, exceptfor the effects of the matter described in "Annexure-A", the aforesaid financial statement give theinformation in the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in lndia.

(a) ln the case of Receipts and Payments of the project, for the period ended on 31't March

2018: and

(b) ln the case of the statement of Expenditure, of the expenditure incurred on the project, for the

period ended on that date.

Report on Other Lega! and Regulatory Requirement

We also report that:

(a) We have sought and obtained all the information and explanations which to the best of our

knowledge and belief were necessary for the purpose of our examination.

(b) ln our opinion, reasonable books and records pertaining to CGRRDA-ADB LOAN NO. 3306-

IND have been kept by the Agency so far as it appears from our examination of those books

and records.

(c) The Receipts & Payments statement & Statement of Expenditure, dealt with by this Report

are in agreement with the records

Proceeds of the loan have been utilized for the purpose as per ADB Loan agreement.

Financial Covenants in the loan agreement no.3306-lND have been complied with.

The SOEs have been submitted to ADB in accordance with the loan agreement.

For, M/s S C Mahandru &Co.Chartered Accountants

(d)

(e)

(f)

i4

4fl

tr

I

t,4

Place: RAIPUR (C.G.)

Date: 15.10.2018

,:{iiititi-:,

I3I1 : c,i*'l \l\" i.ir ) i*" ,

I,i9', \.-\._-". ... --i',. r+. >$ ..' li

\, :'!^,'--. *--r'"..ntr'

:il,t:liiii9:;'

Firnl-rReOn No. 001 695C

[^iu,(CA Vikas Golchha)

PartnerM.No. 424451

b.

,q

t"lsl{

'q

'''An'r[Erute-A-

"n The eligible amount reflects only the amount spent other than retention Money deductedby the Agency and the amount of claim is equivalent to the 54o/o of the eligible amount ofexpenditure.

2. The Agency presently maintained accounts in both Online Management, Monitoring andAccounting System (OMMAS) as well as manual system, where both ADB and MORDfund flow statements were recorded. The fund received by the agency as ADB Loansalong with the fund disbursed by MORD. There is no account wise segregation of fundsreceived from the MORD. So, the agency record the fund received as ADB Loans, whichis equivalent to the fund utilized by the agency.

It is advisable to the management to get the Loan wise statement of funds received fromthe MORD, so the financial statement shows the true & fair view of accounts.

3. The agency never recognized the Finance Charges & lnterest charges in their statementof accounts, as it is not known to them.

It is advisable to the management to know the exact amount of Finance Charges &lnterest charges on respective Loans, so the same is reflected in cost of projectexpenditure.

For, M/s S C Mahandru & Co.

Ghartered Accountants

Place: RAIPUR (C.c.)Date: 15.10.2018 Partner

M.No. 424451

\

t,,{

I

:

]c

h"4

/s#!&>', t''' R7n No oo16e5c

i+/"-----"''':}\ W,,:i i$&) j:j (cA vf,<is Gorchha)

Annexure -l

Executing Agency - Chhattisgarh Rural Road Developmgnt Agency

Rural Road Sector Investment Programme

Loan No.3306-IND

STATEMENT OF RECEIPTS AND PAYMENTS

REPORT FOR THE YBAR ENDED SIST MARCH.2OIB

Rs. In'000

ParticularNote

Reference

Due

Reference

During the

Current year

For 12 Month

Period

During the

Previous year

For 12 Month

Period

Cumulative

Project to date

As at (End of

Current Year)

Openins Balance (A) 0 0 0

Receipts

Funds received from Government

ADB Loan

ADB Grant

Co-Financier 1

Co-Financier 2

Beneficiary contribution (lF any)

Other receipts as Temporary fund interest

income sale from disposal of fixed assets, etc

4

6

6

7

8

9

10

245,084.80 822,381,.32 4,040,343.31

Total Receipts (B) 245.084.80 822,38r.32 4,040,343.37

Total (C=A+B) 24s,084.80 822,38 r.32 4,040,343.37

Pavments

lnvestment Cost

Civil Works

Mechanical and Equipment

Co nsu lta nts

a. Pronject Management

b. Ca pacity Development

Others (Service Tax & Project Development Expenses)

11

245,084.84 822,38L.32 4,040,343.37

Sub total (D) 245,084.80 822.381.32 4,040,343.37

Recurrent Costs

Sa laries

Accommodation

Equipment operation and Maintinence

Others

t2

Sub total (E)

Total Payments

Financing Charges During Implementation (F) r3

Total Project Cost (G=D+E+F) 245"084.80 822,38 r.32 4,040,343.3?

Closing Balance (C-G)

$1.,(Rakesh Ct rtrJ"ai;Chief Executive Officer

For Chhattisgarh Rural Road Development Agency As Per our report of even date attached

For M/s S C Mahandru & Co. -.-::'.. -.--.

Charrered Accounranrs. :;;'./-'i'-l.ai ,, ,Film Bten No.00l695Gi7 'i ,,'./ r

""Ji'

,']7i-l 'it:; t

li),!L r"*i iru,,squ ) io,!CA\litf. Golc'ha L?:,. '' -l.-*--" J --ly'e,.,,,",.

'$):-"--- ".lori\-'crrd A<{.J"'

M. No. 424451

Place : Raipur

Date:15.10.2018

'Director, FinanceAddit

Annexure -2

Executipg Agency - Chhattisgarh 4ur4!,Ro4d Developmpnt Agency

Rural Roqil Sector Inyestme+t Progra+mp

Loan IYq,3306-IND

STATEMEI{T OF RECEIPTS" AT"{D qAYMENTS

REPqRT FOR TIIE YEAR SNDED 3IST MARCH.2OTB

Rs. In'000

Particular

ADB Co- Financier Government

Total

Expeniliture B

Perecentage of

Actual

Expenditure

Actual

Expeniliture

Actual

Expeniliture

Financing

IAmount

2

%

3

Amount

4

% Amount

4

%

7

lnvestment Cost

Civil Works

Mechanical and Equipment

Consultants

a. Pronject Management

b. Capacity Development

C.Others (Service Tax & Project

Develooment Expenses)

t32,345.79 54 712,739.01. 46 245,084.80

iub total (A) t32,345.7t tr2,739.01 24s.084.8(

Recurrent Costs

Salaries

Accommodation

Equipment operation and Maintinence

Others

iu.b total (B) 0

Iotal Cost (C=A+B) r32,345.7c, I 12,739.0I 245.084.80

For Chhattisgarh Rural Road Development Agency

tutt

(Rakesh Chaturvedi)

Chief Executive Officer

Place : Raipur

Date : 15.10.2018

As Per our report of even date attached

ForM/sSCMahandru&Co.

Chartered Accountants

Firm $qgn No. 001695C

(R. )Addi I Director, Finance

,6@en\*pi""*',,'f ig6)'ffiN.42445,

Rural Road Sector Investment programme

Loan No.BB06-IND

STATBMENT OF DISBURSEMENTDetails of disbursement by method are given below:

Annexure -3

Rs. In'000

Statement of Disbursemenr Note Current Year Previous YearCumulative

Project ot dateADB Fund Claimed during the year

Reimbursment

lmprest Fund

Direct Fund

Commitment Letter

6,1

6.2

6.3

6.4

132,345.79 444,085.92 2,t81,785.42

iub total (A) L32,345.79 444,085.92 2,1,81,,785.42

Total Expenditure made during the year

Less

Expenditure not yet Clamed

Borrower's Share

(B)

(c)

(D)

24s,084.8A

0

7t2,739.01

822,387.32

0

378,29s.40

4,040,343.37

0

1,858,s57.9sTotal Eilgibal Expenditure claimed (B-C-D=E=A) (E) t32,34s.79 444,085.92 2,781,785.42

For Chhattisgarh Rural Road

IU.L

/(RaLesh Charun edi)

Chief Executive Officer

Place : Raipur

Date : 15.10.2018

Development Agency

A.ddit

As Per our report ofeven date attached

For M/s S C Mahandru & Co*_-.". -

Chartcrerl A."^".r,-d r. il fi ;.l r'-'.chartered a""o" "r

g^r($r?{ Ji {,ri,,: .Firyo Reen No. 00/69B?- -t,{'Fir4 Resn N.. oo$dry

*"o:tl,$',,

Shukla)

Annexure - 4

Name of the Gountry - INDIA

Executing Agency - Govt. of Chhattisgarh & Chhattisgarh Rural Road Development Agency

lmplementing Agency - Chhattisgarh Rural Road Development AgencyProject - Rural Connectivity lnvestment Programme Tranche-3Loan No.3306-lND

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31.t MARCH, 2018

1 PROJECT NATURE AND ACTIVITIES

1.1 Description of the project - To develop more efficient and sustainable transport

operations on the rural road network.

Nature of activities- Construction of new road and up gradation of the rural road under

PMGSY, ADB RCIP Tranche-3, Loan No. 3306-lND.

Gommencement and expected com pletion date s- 1 1 I A21201 4 and 31 I 121201 I

Location- Rural Roads at Bemetara, Balodabazar, Bilaspur, Gariaband, Janjgir-Champa,

Jashpur, Kawardha, Korba, Koria, Mahasamund, Mungeli, Raigarh & Raipur districts of the

Chhattisgarh state.

Brief Nature of the project outputs More efficient and sustainable transport

operations on the Major District Road.

Give legislative framework - Not Applicable

STATEMENT OF COMPLIANCE

These financial statement have been prepared in accordance with terms of reference (TOR)

conveyed by Government of lndia/Ministry of Finance/ Department of Economic Affairs vide

their letter No. 3/4/2009-ADB-|l dated 1410512015. This refers to the cash basis of accounting

applied with due regard to the General Financial Rules, PWD Codes, Treasury Codes, and

similar rules and codes as are in effect and applicable to the operation of the project.

SIGNIFICANT OF ACGOUNTING POLICY

Financial Statement

This comprises of the Statement of Receipts and Payments, the Statements of Expenditure

by Category and Financier, The statement of Disbursement and related notes appendices to

the Financial Statements. ./jm^

l*.P-'".--..r r1*17,,;-;-r tr$\

i*t lffii i'I\*\, 1-*--: J:l\-s".)**-,'"#'({tiii'1;}7

1.2

2.

3.

3.1

3.2 Basic of Measurement

Financial Statement have beencash basis of accounting.

prepared under the historical cost convention and on

3.3 Change of accounting policiesThere is no change in accounting policy as compare to the previous year. Thesefinancial statement have been prepared in accordance with terms of reference (ToR)conveyed by Government of lndia/Ministry of Finance/ Department of Economic Affairs videtheir letter no. 3t4t2OOg-ADB-il dated i4tOSt2O1S.

3.4 Fund Flow Mechanism

Describe the fund flow mechanism, in particular, whether the IA/EA controtfunds or whether all payments are centralized- Fund flow Mechanism are controlledby EA and all payments are centralized.

3.5 Advance and other receivables

Describe treatment of advance against expenditures- Advances as and when paidare considered as expenditure in the SoE & enclosed annexure and any recovery in theinterim payment certificate, the net amount paid after recovery are considered asexpenditure.

3.6 Cash and cash equivalents

Cash equivalents comprise [define components of cash] Explain if the entitycontrols unspent advances, only petty cash, or has a nil batance, asapplicable- All payments are made through Bank only. No cash balance is maintained.

3.7 Accrued and other Liabilities

Disclose any major liabilities which have not been accrued under the cashbasis policy- Nit

3.8lncome

i) Describe nature of different types of tncome and how they are recognized,for example Grants, sale of proceeds of fixed assets, interest income onbank accounts etc. - There is no income to be recognized.

ii) [included if applicable] Free of cost office space, Electricity and certainother services provided by {insert name} are not vatued and accordingly,are not recognized in the these financia! statements as income of theproject. -NA

3.9 Foreign currency transaction and translation(a) Function and presentation currency

Items included in the financial statements of the project are measure using the currencyof the primary economic environment in which the entity operates (the functionalcurrency), which is the lndian Rupee {lNR}

(b) Transactions and balances- No transactions in foreign currency.

3.10 Allocation of common Costs

No common costs are allocated to different outpuuactivities.

3.11 lnterest Expenses and Financial Charges

No financial charges & interest have been allocated to the project by the borrower.

4. FUNDS RECEIVED FROM THE GOVERNMENT

Government of Chhattisgarh & Central Government provides funds to ChhattisgarhRural Road Development Agency based on executing program submitted throughbudgetary support.

Details of fund provided are as under :-

(Rs. ln 000)

5. Date of Authorization

These financial statements have been authorized for issue by the management ofChhattisgarh Rural Road Development Agency on 12.10.2019

For Chhattisgarh Rural Road Devetopment Agency

IUl, I

(Rakesh Chatufrvedi)

As attacher

Co.

Chief Executive Officer

Place: Raipur

Date: 15.10.2018

. Shukla)

Director, Finance

CurrentYear

PreviousYear

Cumulative yearto date

Government Counterpartfunding amount reimbursableto Government

245084.80 822381.32 4040343.37

(R.

Annexure-S

arh Rural Road

6. FUNDS RECEIVED FROM ADB (Rs. in'000)

Annexure-6ADB LOAN & GRANT

NOT APPLICABLE

Annexure-7

DISBURSEMENT CLAIMED UNDER STATEMENT OF EXPENDITURE (SOE) PROCEDURE

As per Appendix 1

Annexure-8

NOTES TO FINANGIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2018Note Reference 7

Co-Financer 1

NOT APPLICABLE

Note Reference 8

Go-Financer 2

NOT APPLICABLE

lrnplementinq Aqencv - chhattisqarh Rural Road Development AqencvLoan No. 3306-lND

ADB Source of Funds-Method ofWithdrawal

NoteReference

During theCurrent

Year

During thePrevious

Year

CumulativeProject to

DateADB Loan- By Reimbursement Method 6.1 161548.89 722270.55 2045589.1 6

By lmprest Account 6.2- Bv Direct Pavment 6.3- By Commitment Procedure 6.4ADB Loan Total '161548.89 722270.55 2045589 16ADB GrantADB Loan and Grant Total

-,,5'@-,s=+'

,;'*Y'C;*l'):i\* \ \-.kl--..-

,,' ,::i\ r:\ -[- ,/ .,1 ,j

oE!

5tr

ESE:8

+t.ilo\

Oroq

@+LNel(oFl

oFl

d@r-{co<frl

x>r: ?EE9€)'';iE o o

l!:E

t-

O)oq

@slLNFl(or-l*

orldooricf)slFl

o=oEo9El

=-OF]z,

16x$

coqNNN(oOl

66

6{Nb-

o\

+IJtr

CA ED;^tr 16

o\sl'lr)

>Rstrn

<dd

H

O)o)lr)Flrtoir\d

o\o\Ui

o\1..

ao

O

6A

-v.

o

=.zU

-v.L

o

=E.(J

(!

(JOJ

P(E

=

oU

OJ

(!(Evt

.9P(oEoEEoo(-)

E(JoV)

c

(oE!boo.tsE>'=o

lJ.l

E(!

.9 or

E:Or qJ

OCOr=r.EC(oCJ-E1'=

t!

E,i

fr(d

3

aFl (\t r-l (\l ao F{ (\l

oO9c

E,

t{nH

DI IokIN(J

E?&trra$)

$J iH<l -av

EI HBAltE-l !

+ H E Ei]arllzE] EI il Bn^{ sxql -l 6l ,:E<l Fl 2l -, E=l :l i-il

= rJ

EI EI EI H2trl gl El EHEl il ':l o=FJEI

=I ;H

frl "Hl

3E#EIEI EEit ;l E a

!l'El e adb 6=at24A Z e6l =ual ;a

;=FAFN,9t2=

H

H

L-

oH

X

tX

oq(E-o(u

.E

E(o(u

J

.9o

o!o.g

(u

ELftE

'o)

cfoE

c)

oz*

_{

-

o

6

oo

.Ecd

E

Xri

o

H

d,*G

Fio

a

o

o

6p

U

N

ao

o

E6i

(d

oU

oQ

O

ag

doF

H

EO

d

Ohn

d

h

o

6ao

o

.d

o

U

o

ga 6

o

od(r)

I

NX

E]

FFa

a

zzi-.^i

-El e

2l

Fll tr

Fz2ti3Fa

"r I

Note Reference 9

Beneficiary Contribution

As per Appendix 2

Note Reference 10

DETAILS OF OTHER RECEIPTS AS PER NOTE REFERENCE 1O

For Ghhattisgarh Rural Road Development Agency

/lt/,

w/(Rakesh Chaturvedi)

Chief Executive Officer

Place: Raipur

Date: 15.10.2018

Annexure-9

(Rs. ln 000)

As Per our repod of even date attachet

ForM/sSCMahandru&Co.Chartered Accountants

ffiM:^:'".*i;;::r#lt&r*rl blflM. No. 424451

Partner

Particulars Current Year Previous Year Cumulative projectto date

Total

MANAGEMENT LETTER

Date: October f 5, 20i8The Chief Executive Officer,Chhattisgarh Rura! Road Development Agency,Pradhan Mantri Gram Sadak yojana,

Vikas Bhawan, Civil Lines, Raipur,Chhattisqarh.

Sir,

Statutorv Audit of ADB Loan No. -3306-lND for the vear ended 31"1 March 201g

we have conducted the audit of the financial statements of ADB LoAN No. 3306-lND of pradhanMantri Gram Sadak Yojana under Chhattisgarh Rural Road Development Agency as at 31't March2018. We familiarized ourselves with project documents, the internal guidelines and circularsapplicable during this period under review. We also reviewed the business of the project andevaluated the accounting systems and related controls of the project in order to plan and perform ouraudit.

Our audit was conducted in accordance with the Standards on auditing issued by the lnstitute ofChartered Accountants of lndia. Those Standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of materialmisstatements. An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financialstatement presentation.

The responsibility of the management, inter alia, includes the maintenance of adequate accountingrecords and internal controls for safeguarding of the assets of the Organization and for preventingand detecting fraud or other irregularities.

ln terms of "standards on Auditing SA 265 "Communicating deficiencies in internal control to thosecharged with governance and management" issued by the lnstitute of Chartered Accountants oflndia, the purpose of this letter is to communicate appropriately with those charged with governanceand management deficiencies in internal control that we have identified during our audit and that inour professionaljudgment, are of sufficient importance and merit their respective attentions.

I

,/*6IS${G..e"\-7 \ r'l/ ,..- 1*\ \6

fil

Our Audit Observations:

1' During the course of audit we observed that, presently the agency maintained accounts in bothonline Management, Monitoring and Accounting System (OMMAS) as well as manual system. Butas informed to us at present there is no provision given in OMMAS for preparation ofdisbursement sheet for calculation of total expenditure, eligible expenditure & amount claimed.hence these data's are prepared manually.

2. During the course of audit we observed that, the Agency usually gets the funds against ADBLoans along with the MORD contributions from MORD. So, there is no segregation of Loan wisefunds received from the ADB. They assume that the total amount claimed is equal to the fundreceived as MORD Loan.

3. During the course of audit we observed that, the agency never booked Finance Charges &lnterest Charges against the Loan No. -3306-lND. The management said that they will collect theinformation from the State Government or MORD, who will give proper information on this, sofrom the Financial Year 2018-19 onwards. The same may be charged to the cost of projects.

4' During the course of audit we found that most of the PIU's are not taking GST invoice fromcontractors.

5. During the course of audit we found that most of the PIU's are either not taking lnsurance papersor having incomplete insurance paper from contractors for many packages.

SOME SUGGESTION/ IMPROVEMENT NEEDED

It is advisable to the management to get the Loan wise fund received statement from the MORD,so the actual amount of fund received from the Loan No. 3306-lND booked in the books properly.

As it is maintained in OMMAS software, so it is advisable to develop the software so that thesoftware itself generate separate eligible amount of expenditure.

For, M/s S C Mahandru & Co.

Place: RAIPUR (C.G.)

Date: 15.10.2018

1

2.