AUDITOR'S REPORT Audit Completion Date: 06/10/2022 To The Secretary Financial Institutions Division Ministry of Finance Bangladesh Secretariat, Dhaka. Opinion status: Unqualified. We have audited the accompanying Financial Statements of "Bangladesh Insurance Sector Development Project, 5th floor, Jibon Bima Tower (front Side), 10, Dilkusha, Dhaka-1000" which comprise of the statement of cash receipts and expenditure, statement of comparison of budget and actual expenditure as at and for the year ended on 30' June 2021 and a summary of significant accounting policies and other explanatory notes. In our opinion, the project Financial Statements present fairly, in all material respects the cash and cash equivalents of the project as on 30"' June 2022 and the funds received and expenses incurred for the year then ended in accordance with the IPSAS financial reporting under the cash basis of accounting and the requirements of project accounting manual issued by the Finance Institutions Divison(FID), Ministry of Finance, Governient of Bangladesh as well as those of IDA guideline and agreement. Basis for opinion: We have conducted our audit in accordance with the 'Government Auditing Standards of Bangladesh' (GASB) issued by the Office of the Comptroller and Auditors General (OCAG) of Bangladesh which are based on the International Standards of Supreme Audit Institutions (ISSA[s) issued by International Organization of Supreme Audit Institutions (INTOSAI). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the Financial Statements section of our report. We are independent of the project in accordance with the 'Code of ethics' issued by the OCAG Bangladesh which is based on ISSAI 130- Code of Ethics (INTOSAI Code), and we have fulfilled our other ethical responsibilities in accordance with these ethical requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other Matter: This audit of the project financial statements has been conducted to comply with the specific requirements of the development partner as specified in the related loan/ Grant agreement. OCAG reserves all the rights to incorporate any audit observation from this report in the CAG's audit report for being laid before parliament to fulfill the constitutional responsibilities. Responsibilities of Management for the Financial Statements and internal Controls: Management of the project is responsible for the preparation and fair presentation of this special purpose financial statements in accordance with the International Public Sector Accounting Standard (IPSAS) financial reporting under the cash basis of accounting issued by the International Public Sector Accounting Standards board (the IPSASB) of the International Federation of Accountants (IFAC), the requirements of project accounting manual issued by the finance division MOF, GOB as well as those of the IDA guideline and agreement and for such internal control as management determines is necessary to enable the preparation of special purpose financial statements that are liee from material misstatements, whether due to fraud or error. Auditor's Responsibilities for the Audit of the Special Purpose Financial Statements: Our objectives are to obtain reasonable assurance about whether the financial statement is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is not a guarantee that an audit conducted in accordance with GASB which are based on ISSAI will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these special purpose financial statements. As part of an audit in accordance with the Government Auditing Standards of Bangladesh which are based on ISSAIs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatements of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieve fair presentation. Report on Requirements of the Development Partner: In accordance with the Project, Agreement was signed between IDA and Finance Institutions Divison (FID) on behalf of Govt. of Bangladesh on 10 April, 2018 we also report that: (a) In our opinion the funds were utilized for the purposes described in the Financing Agreements and agreed Project's annual work plans; (b) In our opinion projects expenditures disbursed and expenses claimed are in compliance with established proper procedures and according to the provisions of the financing agreements/ loan Disbursement handbook, and guidelines on financial management and analysis of project issued by the IDA. (c) The procurement of goods, services and civil works have been made in accordance with the financing agreements and IDA procurement regulations; (d) The PMU has complied with covenants specified in the Loan agreement. (Tasnim Ferdous) Deputy Director For Director General Foreign Aided Projects Audit Directorate Tel: 02-226663612. Financial Statement 1 7? Bangladesh Insurance Sector Development Project(BISDP) IDA credit no-5972-BD Financial Statement For the year ended 3D June,2022 Resources Note Cumulative Total Current Cumulative with prior period year current period Grant/Loan from development 3 726,188,052 331,441,214 331,441,214 1,057,629,265 Government of Bangladesh 4 65,325,205 29,610,548 29,610,548 94,935,753 Other sources {Direct Payment) 0 90,621o020 90,621,020 90,621,020 Cash and Bank opening balance 5 375,061,479 375,061,479 Total resources 791,143,257 29,610,54B 797,123,713 826,734,261 1,243,186,039 Economic Expenditure 3111101 Pay to Offer9,598,012 5,031,480 - CP5031,480 14,629,492 3111201 Pay to staff 4,601,625 1,681,071 1,661,071 6,262,696 3111338 Festival allowance 1,348,563 586,442 - 586,442 1,935,005 3211129 office rent 25,274,240 12,904,192 - 12,904,192 38,178,432 3221108 Bank charge 46,988 - 692 692 47,580 3211125 Advertising and publicity 3,195,344 962,427 - 962,427 4,157,771 3231301 Training 50,532,854 66o000 1,580,014 1,646,014 52,178,868 3255105 Stationery 2,245,776 714,966 - 714,966 2,960,742 3211107 Transportation. 10,548,586 4,474,850 - 4,474,850 15,023,436 3111325 Travelling allowance 368,812 150,811 - 150,811 519,623 3211113 Electrecity 492,872 768,986 - 768,986 1,261,958 3111332 1Hororarium/ftees/remuneration 79,013,133 1,061,810 32,812,101 33,873,911 112,887,044 3257101 Consultancy 74,794,264 - 127,277,083 127;277,083 202,071,347 3257306 Data maintenance Expense 12,500,000 12,500,000 12,500,000 3911112 Other expenses 3,168,186 830,912 - 830,912 3,999,099 3258103 Repairs & Maintenance 669,575 356,282 - 356,282 1,025,857 4112202 Computers and Accessories 70,824,279 - 156,434,254 156434254 227,258,533 4113301 Computer Software 192,343 - - - 792,343 ,/4112201 ICT Equipment's 71,849,679 - 139,197,90 139,197,902 211,047,581 4112310 Office eqipment 4,985,037 25,588 - 15,588 5,000,65 4112314 Furniture& Fixture 2,701,610 24,731 24,731 2,726,341 Total Expenditure for the year 416,451,778 29,610,548 469,802,046 499,412,594 915,864,3172 Cash closing balance . Janata Bank CD A/C(RPA part) 375,061,479 327,31,667 327,321,667 327,321,667 Janata Bank CD A/C(GOB part) Cash (RPA) Total expenditure and (ash 791,513,257 29 0,54 797,123,71a 826,734,261 1,243,186,039 #,far 1'~za-s Nftwfett Bangladesh Insurance Sector Development Project(BISDP) Notes to the Accounts IDA credit no-5972-8D 1 Project D)escription The Project Bangladesh Insurance Sector Development Project (BISDP) was approved by the Board of International Development Association (IDA) on 20-March 2017 .The Development Project Proposal (DPP) has duly been approved by ECNEC on 27-02-2018.The Credit Agreement No.5972 sD between the Government of Bangladesh(GoB) and IDA has been signed on 10-April ,2018.The Implementation period of the Project is from January 2018 to August 2022,The Implementation agency is the Insurance Development and Regularity Authority (IDRA). The Executive Agency is the Ministry of Financial institutional Division (MFID). A Project Agreement between the IDA and the IDRA has been signed on 10-April 20 18 for implementaion of the Project. A subsidiary Grant Agreement was also signed between the Ministry of Finance and the IDRA for passing on the credit as Grant to IDRA on 10, April 2018 The objectives of the Project is to strengthen the instutional capacity of the Regulator and state owned insurance corpotlons and increase the coverge of insurance in Bangladesh- 2 Significant Accounting policies The financial statements of the Project have been prepared in accordance with Generally Accepted Accounting Priciples, as applicable in Bangladesh. These refer to the cash basis of accounting applied with due regards to Inter- alia the General Financial Rules and similar financial rules and codes as are in effect and applicable to the operation of the Project. The financial statements have been prepared to ensure maximum alignment with the priciples of cash -basis International Public Sector Standars (IPSAS). Financingi A CONTASA A/C is opened with the Janata Bank Limited, Nawab Abdul Gani Road, Corporate Branch A/C -0100144163839 for retaining RPA portion of the amount received from the world Bank. The CONTASA A/C Is maintained and operated as per Attachment-16 is issued by the Ministry of Finance, Finance Division, Development wing. An initial Amount of BDT 40 Crore was advance to CONTASA as celling as per Finance agreement. Withdrawal Application for Docu nentation & advance submitted to the World Bank through Client Connection of the WB submitted SOE on Monthly basis. Expenses: ConsIstent with the cash basis of accounting, the Project expenses are recognized and included in the special purpose financial statements when the payment is actually made to suppliers of goods, works and/or services as opposed to when goods are received/ services are rendered. Functional and presentation currency: BDT Is the national currency of the Government of Bangladesh. The special purpose financial statements of the Project are presented in BDT/USD (presentation currency) and rounded to the nearest integer of BODT/USD. Income and expenses denominated in BDT are converted into USD applying the exchange rate set out by the Bangladesh Bank on the date of the transaction. 3 Taxation As oer Finance Aereement oercentaRe of Exoenditure to be incurred 100% inclusive Taxes 4 Fixed Assets Fixed assets of the Project include office equipment, vehicles and furniture procured for project irnplementation.Cost of fixed assets includes the cost of procurement and other related expenditures. Due to the cash basis of accounting, the fixed assets procured under the Project are measured on the basis of cost of procurement and reflected in the special purpose financial statement as expenditures Instead of capitalization in balance sheet. The record of fixed assets is maintained in Fixed Assets Register. Considering non-commercial status of the Project and cash basis of accounting, depreciation for the fixed assets is not accrued. 5 Cash The project maintains two bank accounts, a CONTASA Styled SND -0100144163839 and for GOB fund Styled GOB 5ND-010014416525 with the Janata Bank Limited, Nawab Abdul Ganl Road, Bidhut Bhavan , Chaka-1000 to hold funds advanced by IDA Credit-5972-BD and time to time instalments received from from GoB . Year end cash in hand /cash at bank balances were as follows: Particular Inception to 30 June 2021 For the year 2021-2022 Inception to 30 June 2022 Imprest Account Operating account(RPA/PA) 375,061,479 327,321,667 327,321,67 Operating accunt(GOB) - - Total 375,061,47 327,321,667 327,321,667 6 Fund from Government of Bangladesh Fund is allocated by the Government of Bangladesh to cover GOB's share of eligible project expenditures as specified in the project proforma and in the ADP for each financial year of the project. Any allocated funds that have not been expended by the end of a fiscal year lapse and must be returned to GOB. GOB fund disbursed to project and refund to GOS since inception are as follows: Particular Inception to 30 June 2021 For the year 2021-2022 Inception to30 June 2022 Disbursement by GOB 141,575,000 43,300,000 184,875,000 Less: Refund to GOB 76,249,795 13,689,452 89,939,247 Total 65,325,205 29,610,548 94,935,753 7 Loan from development partner The IDA Credit No-5972-BD has provided to the project to cover it's share of eligible project expenditures. These funds, which must be repaid to IDA after the conclusion of the project. Funds have been drawn by the project in accordance with the following withdrawal procedures: Particular Inception to 30 June 2021 For the year 2021-2022 Inception to 30 June 2022 Initial deposit(Advance) 400000,000 400,000,00 RPA(SOE Procedure) 326,188,052 331,441,214 657,629,266 RPA(Non SOE Procedure) Others/ Prior year'adjustment Tota I Without Direct Payment 726,18[,052 331,441,214 1,057,629,266 DPA(Direct payment) 90,621,020 90,621,020 Total 726,188,052 422,062,234 1,148,250,286 8 Fund received from Other Resources Project have no any fund from other sources el1 TO'O -,N A0 This part for Grant based project/Special Account Auditor's Report on Special Account 1. We have audited the accompanying Special Account statements of the "Bangladesh Insurance Sector Development Project) financed by IDA Credit No. 5972-BD as of 30"' June 2022) for the year 2021-2022 2. Our audit was carried out in accordance with the Government Auditing Standards of Bangladesh and International Standards of Supreme Audit Institutions (ISSAI). Our audit included such review of systems of internal controls, tests of the accounting records and supporting documentation, verification of account balances and other auditing procedures that were considered necessary under the circumstances. 3. The accompanying Special Account Statements were prepared on the basis of cash deposits and withdrawals for the purpose of complying of the above grant procedures. 4. In our opinion, the Special Account Statements gives a fair view of the account for the year ended 30'h June, 2022 on the basis of cash deposit and withdrawals. Opinion status: Unqualified. (Tasim Ferdous) Deputy Director For Director General Foreign Aided Projects Audit Directorate Tel: 02-226663612 AUDIT OPINION ON IUFR We have audited the Statement of Expenditure (SOE) on the accounts of "Bangladesh Insurance Sector Development Project" financed by IDA Credit No. 5972-BD as of 30h June 2022) for the year 2021-2022. The Audit was conducted following the Government Auditing Standards of Bangladesh and International Standards of Supreme Audit Institutions (ISSAl). Accordingly, it included such tests of the accounting records and supporting documentation, review of existing systems of internal controls, so far exists and adopting necessary auditing procedures that we considered essential under the circumstances. In our opinion, the Interim Unaudited Financial Report (IUFR) can be relied upon to support the applications for grant disbursements by the IDA for expenditure incurred for the purposes of the project as specified in the particulars of Withdrawal Applications. Opinion status: Unqualified. (Tasnim Ferdous) Deputy Director For Director General Foreign Aided Projects Audit Directorate Tel: 02-226663612