Office of the Chief Project Director, Watershed Management Directorate, Indira Nagar Forest Colony, Dehradun (Uttarakhand) Phone No. 0135- 2768712, 2764244 Tele Fax no. 0135-2762939 www.wmduk.2ov.in, wmd-ua@&nic.in Letter No. 15 /3-7-1(PFS)/UDWDP(Phase -II) Dehradun Dated Q December,2021 To, Country Director-INDIA, The World Bank, International Bank for Reconstruction and Development International Development Association, Hindustan Times House, 18-20 K.G. Marg New Delhi- 110001. Sub:- Audit Certificate for Uttarakhand Decentralized Watershed Development Project, Phase-II financed under World Bank (IDA) Credit No.5369-IN for the financial year 2020-21. Dear Sir, Kindly find annexed the Audit Report along with project financial statement for Uttarakhand Decentralized Watershed Development Project Phase-II, (IDA Credit No. 5369-IN) for the financial year 2020-2021 issued by the Office of the Accountant General (Audit) Uttarakhand vide their dated 13th December, 2021. The audit certificate has been issued for INR 189.62 Crores for the project which is inclusive of beneficiary contribution as per the attached claims. Yos Sincerely, Enclosure- As above (Anand Bardhan) Chief Project Director, Watershed Management Directorate, Dehradun, Uttarakhand. LetterNo.j/ f /3-7-1(PFS)/UDWDP Dated. Copy forwarded to the following for information and necessary action:- 1- Mr. Ranjan Samantaray, Task Team Leader,(UDWDP-II), The World Bank 18-20 K.G. Marg, New Delhi. 2- Mr. S. Krishnamurthy, Senior Financial Management Specialist, The World Bank 70- Lodhi Estate, New Delhi-110003 3- Additional Secretary(FB) Department of Economic Affairs, Ministry Fisnce, Government of India, North Block, New Delhi-110001 Enclosure- As above (Anand Bardhan) Chief Project Director, Watershed Management Directorate, Dvhradun, Uttarakhand. OFFICE OTHACCOUNTA T E,R LAUL T3TARAKAU REPORT OF COMPTROLLER AND AUDITOR GENERAL OF INDIA REPORT ON PROJECT FINANCIAL STATEMENTS (PFS) We have audited the accompanied Financial Statements of the Uttarakhand Decentralised Watershed Development Project, Phase-Il (UDWDP-1l) financed under World Bank (IDA) Loan No. 53691N, which comprise the Statement of Sources and Application of Fund and the Reconciliation of claims to Total Application of Funds ifr the year ended 31 March 2021. These statements are the responsibility of the project's management. Our responsibility is to express an opinion on the accompanying financial statement based on our audit. We conducted audit in accordance with Auditing Standards promulgated by the Comptroller and Auditor General of India. Those standards require that we plan and perlorm the audit to obtain reasonable assurance about whether the financial statements are free ol material misstatement. Our Audit examines, on a test basis, evidence supporting the amounts and disclosure in the Financial Statement. It also includes, assessing of accounting principle, used and significant estimates made by management, as well as evaluating th overail statement presentation. We believe that our audit provides a reasonable basis for our opinion, In our opinion, the project financial statements present fairly, in all material respects, the sources and applications of funds of Uttarakhand Decentralised Watershed Development Project- Phase-l (UDWDP-Il) for the year ended 31 March 2021 in accordance with Government of India Accounting standards. In addition, in out opinion, (a) with respect to PFS, adequate supporting documentation has been maintained to support claims to the World Bank for reimbuisements of expenditures incurred; and (b) except for ineligible expenditures as detailed in the audit observations, if any, appended to this audit report. expenditures are eligible for financing a9under the loan/Credit Agreement. During the course of' the audit. SOEs/FMRs and the connecte d documents wvere examined, and these can be relied upon to support reinibursement under the Loan/Credit Agreement. This report is issued without prejudice to CAG's right to incorporate the a dit observations in the Report of CAG of India for being laid before Parliarneat/State or! UI1 Legislature. Date: December 2021 Principal Accountant Get dit) Uttarakhand. Dehradun Annexure-I DETAIL OF EXPENDITURE INCURRED UNDER UDWDP-II PROJECT (CREDIT NO. 53691N) DURING THE YEAR 2020-21 (Amount in Z) Particulars 2019-20 2020-21 Opening Balance (a) 70,00,569 1,23,00,000 Fund received from Govt. through budget (b) 113,89,38,031 178,65,16,753 Fund received directly by project implementing agency through external Nil Nil assistance(c) Beneficiary contribution, if as d) 4,55,48,300 10,22,67,000 Total receipts(eir(a)+(b)±c + d) 119,14,86,900 190,10,83,753 Expenditure incurred during financial year (f) 117,91,86,900 189,61,81,900 Closing Balance (g) = (e)-(f) 123,00,000 49,01,853 Ineligible expenditure (Staff Co 15,72,48, 000 15,63,17,200 Ineligible expenditure due to wrongpa.nent_ Nil 13,29,000 Eligible expenditure (i )= (f)-(h) 102,19,38,900 173,85,35,700 World bank shareo.) = 80% of (i) 81,75,51,120 139,08,28,560 (Yogesh Agrawal) Deputy Accountant General/AMG-II Audit Observations 1- Watershed development is a primary tool of the Government of India (Gol) to increase agricultural productivity and reduce rural poverty. Purpose of the scheme was to provide financial and social security to an individual who is below poverty line to prevent rural migration. As per clause no. 27 of the Project Appraisal Document (PAD), 3.3 percent beneficiary contribution was proposed for the component 2 of the project Watershed Treatment and Rainfed Area Development. It was noticed in audit that, total beneficiary contribution collected from the beneficiaries was Z 1022.67 lakh which was 8.77 percent of total expenditure of Z 11656.81 of the component 2. As per clause 27 of the PAD only 3.3 percent beneficiary contribution was to be collected from the beneficiaries by Watershed Management Directorate i.e., Z 384.67 lakh (3.3 percent of T 1022.67 lakh). Thus, extra beneficiary contribution of Rs. 638.00 lakh was collected from the beneficiaries, which was against the provisions of PAD. In reply, the management has accepted the audit observation. 2- As per point 11 of Appendix of Financing agreement of UDWDP II " Incremental Operating Costs means the reasonable costs of incremental expenditure incurred by Project Implementing Entity on account of Project implementation, management and monitoring, including, inter alia: (a) costs of incremental contractual staff salaries (other than consultants), excluding salaries of civil servants deputed to the Project; (b) dissemination of Project-related information; (c) office rental and leasing operation and maintenance of equipment; (d) office supplies and utilities; (e) travel and boarding/lodging allowances; (0 leasing, operation and maintenance of vehicles; (g) advertising and communication expenses; and (h) bank charges. Scrutiny of records revealed that entity has incurred an expenditure of Z 13.29 lakh on Watershed Management Directorate Building and staff quarters under minor construction work. The said expenditure was ineligible expenditure as it does not fall in the category of Incremental Operating Costs as per above referred provisions. Therefore, claiming of the same from World bank was not in order and should have been met out from State Government Budget. On this being pointed out, Project Director stated that the maintenance of existing building of WMD was included in the costs table of project under the head of upgrading WMD building for which provision of Z 11.10 crore was made. The reply of the management is not tenable as the expenditure related to upgradation of existing building does not fall in the incremental operating costs as stated above in the Financing Agreement of UDWDP II. Hence, this expenditure was ineligible for reimbursement. 3- As per para no. 33 of the Project Appraisal Document (PAD); in respect of internal control, it was stated that all financial controls applicable to routine GoUK expenditure would also apply to the expenditure under the project and each division should ensure that Gram Panchayats (GPs) advances are minimized at the financial year end. In this regard, it was observed that, an opening balance with GPs bank accounts was of Z 123 lakhs. While during the year Z 10000.00 lakh was disbursed and Rs. 10073.98 lakh was spent, leaving the closing balance of Z 49.02 lakh at the end of the year 2020-21 in the GPs bank accounts. Further, it was also observed that in five GPs, the closing balance was more than one lakh and in one GP, it was more than five lakh. 4- As per section 51 (1) of Goods and Service Tax Act, 2017 a TDS equivalent to two percent (1% CGST+i%SGST) should havc been deducted from payment made to suppliers or contractors where total value of such supply, under a contract, exceeds Z 2.50 lakh. During scrutiny of vouchers, it was observed that TDS of Z 1.08 lakh was not deducted from the contractors/suppliers as detailed below: Name of Supplier/Contractor/Work Bill Amount Amount of GST TDS (@2%) SBW Agrobioponics Private Limited 10,98,000 21,960 SAl Biotech World 7,44,550 14,891 Saransh Agro Solution 10,68,000 21,360 Growth Center, Rudraprayag 19,00,000 38,000 Growth Center, Debradun 6,12,000 12,240 Total 54,22,550 1,08,451 On being pointed out, entity has accepted the audit observation. However, the fact remains that the responsibility to deduct and deposit all statutory dues rest with the management. 5- As per "The Building and Other Construction workers' Welfare Cess Act, 1996", Labour Cess at the rate of one percent of the construction cost of the project is to be deducted from all the running bills of the contractors and the same is to be deposited in favour of Secretary, Uttarakhand Buildings and Other Construction Workers' Welfare Board through bank draft/Cheque or by online mode. During the Scrutiny of bills of constructions of growth centre at Rudraprayag and Dehradun, it was observed that labour cess amounting to Z 25120 was not deducted from the running bills of the contractor, which was violation of the referred Act. Management accepted the audit observation. However, the fact remains that all statutory dues should have been deducted on time and as per norms, in this regard, which was not done. 6- As per Project Appraisal Document, Clause V-Key Risk and Mitigation Measure, Point B- Overall Risk Rating Explanation, "Gramya II would also strengthen the 27 Farmer Federations (FFs) formed under Gramya I in their transformation into viable business and established an Agri Business Support Model". During the scrutiny of records, it was revealed that out of 27 FFs which were established in Grarnya-I, only 19 Federations were running at the end of project and working for value addition, shorting etc. like activities. But, in Gramya-1l, only 13 FFs were active and running their business. However, all the FFs which were established under Gramya-l scheme were not sustained during Gramya-1l scheme as the numbers of FFs falls from 27 to 13, which indicates that all the FFs constituted under Gramya-l were not transformed into viable business model. (Yogesh AgrawalY Deputy Accountant General/AMG-II Uttarakhand Decentralised Watershed Development Project-Gramya-II Indira Nagar, Forest Colony Dehradun, Uttarakhand Project Financial Statement for the period 01.04.2020 to 31.03.2021 (Financed under IDA Credit No.5369-IN Particulars Sch. Amount (Rs.) Amount (Rs.) Current Year Previous Year (A) Sources of Funds Opening Balance 308 Advances with GPs 12,300,000 7,000,261 World Bank 1,391,891,800 817,551,400 State Government 394,624,953 321,386,631 Beneficiaries Contribution 102,267,000 45,548,300 Total 1,901,083,753 1,191,486,900 (B) Utilisation of Funds Expenditures during the period by component A 1,896,181,900 1,179,186,900 by disbursment category B Total 1,896,181,900 1,179,186,900 LQ Balance Represented by Current Assets Cash in Hand C Project Bank Balance Stock in Hand Advances with disbusers Advances with GPs _D 4,901,853 12,300,000 Total 4,901,853 1200,000 (1) Schedule of Fixed Assets E (2) Significant Accounting Policies F (3) Notes on Accounts G The Schedules referred to above form an integaral part of the Project Financial Statements. As per our separate annual review report of even date attached, Goyal Parul C - On behalf he Wate shid Management Vec orate Chartere Wnts Dayanand Del Fimane Controller Project Dir tor Chief Project PartnerChfPojdDrTO M.N . 518811 M Watshed Mana tDitora UDIN-21518811AAAA Place: Dehradun Date: 21.09.2021 �� "� ��__..�ак .�..w. � `� � `'�,,, � �_---,,, ,�, � . ��,.,��...- ._, � _ _ �, _ р ,�� ` Г�� � � � °оМ о о о°о о � о о �. � ..,..-�-��"'° }; v а у с� и й и � и � � оо �о - v�„� .-� г� а- оо оо и а- � сй � � � �о � с� н о и и н й б..; й �� о °�v � `и° й р� `° � и� о� а� � � '" � � О � и cv г+ г, н с� с0 н °к�„ о .н ., л �. Я � н ., и. � а � �� н � о С� ~ 46' �� а � О О О О О р о О О р г '�✓' О О О О О р о О О р �`- �+ N IЛ с'') L� N � •-' с0 О р� �.�Q (б �� tЛ о О� О� � н N б� � н � �уΡ- (°1�.rY �'„^ � �i � ,-Nч lo с'') �О М � О М N � �14 'Rз' � 1^ 00 И О И �U N � N ы,Gд U �� �'-' �U l о� и � О б� О � f'и_ � ,� ^ N ,-i ,-. � �t с� и +s .r, и � ,� н о � � н н а" oN �V � � w„ о �-, i�. 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NAME Amount (Rs.) Amount (Rs.) Current Year Previous Year PD Kumaon 2 Almora 3 Pithoragarh - 4 lBageshwar - 5 PD Garhwal - 6 Dehradun (Vikashnagar - 7 Pouri - 9 D.P. Baluni 9 Tikam Singh Tomar 9 Nirala 10 Raghu Nath 8 Tehri 9 CPD Directorate Grand Total ij -5 TU4 vrRm 1MRIOU's, '.'"'`�} ,. , ' �: � � и, s "о. - _А � о � � � c�v � � о й _ , .: 1� ,уΡ уΡ�Г�1� � �, 1 � t � V V �1l l� � � � � 1 _ 'г.; � c�i � � `'� о cN м ^� _: � � - � . ~.� � � Г - ,ti •� � о и �о � � � •_ � и с� ,--� cv '' ' =, ` .� � � д' х. � � й V pq '' - Т l� l� О l� N °� � � � М � ® N N N � °� (`') � �� ы N О О t� с0 l� �О и с� .-� ам } б� с7 и �О О� и и д' �0 � ' [� и с� [� б� г� О �' � � � � �ti;� � � N и и � о, г� �r � �,� t.; с, _ г� ,� р,� 00 _� N СО д' � ('� д' �О г, l '� ,�, � � � .� � � О �О и �t' д' о �, а i,_,, Г+�} �, W � �� � � `� � � � сб _ � С7 '� � N � V � N л N ' N О � � � [� � и Й � � о N о, и д- с� �о � � �о г� р� t. � а N о --� со оо со N со и � �-+ р� � у'' М � .-� � �N й � сс � � 0 � � N � О � � оо о� cv о� t� о с� � t� р. _о '� М '' о � � '-' ;� о � и д д�- ,�`_�, � '� � .�r О Сб � н н � 4 � Ci �'. 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Ф � с� О �О О О О О О б� � �.....�...-�`r с�б сб 'б t+" 4� U О О И О О О� О О� � � � '�'' ь�„ � V1 � L� � � � О �О и �' д' Q� � н � .� а � Г� ,--i ,--i г+ � .�-ч .-i � о Q' 'б О� � � А о о � н � iч ,у у,� сб � � а U � � О О �U N б� и � и N о А �� д� о � м � д�- � � `г�° о v� � о � � о � � д�- � � � с� � о � о� о � а � V l� N N N t� о� � и О � � ,� .-� гг, N �-, м � � � � � � � О � � � � А а А � �, �, � � � � � � � � О � � � � � й � н а� � �б � � � '" � ° ь°д ,� � � Z � � а. 3 Q Е°- а- д Сд о: Е� о Z � cv с� � и � t� � в� й Schedule -'E' Uttarakhand Decentralised Watershed Development Project-Gramya-II Indira Nagar, Forest Colony Dehradun, Uttarakhand Schdule of Fixed Assets (Forming part of PIPS for the financial year 2020-2021) SL.No Particulars Opening During the Closing balance as Balance year202O- I on 31- 3-2021 I Office Furnitures & Equipments 6,167,132 594,537 6,761,669 2 Computers and other Accessories 168,800 199,854 368,654 Purchase of office equipment ( Photho copier,Fax Machine,Ac.etc.) Machine 12,383,540 1,956,635 14,340,175 Equimpment. Pho ho Echnteq 12,383 '5'40 Purchase of office equipments (Computer, 2 0 878,833 20,878,833 3,520,233 24,399,066 laptop, shoftware,Ups &, other peripherals) /1 1 t6Q 5 Purchase of office Vehicle 6,974,860 r- 11171 Or-O Total 461573J65 52,8444424 watershed A/7,-.! t1arakha 6, De Kaft Uttarakhand Decentralised Watershed Development Project - Gramya II Indira Nagar, Forest Colony Dehradun, Uttarakhand SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS A. Significant Accounting Policies: 1. General: (a) The accounts are prepared under the historical cost convention following the cash system of accounting (b) Accounting policies not specially referred to are consistent and in consonance with generally accepted accounting principles. (c) Expenses to the extent paid are accounted for on cash basis. 2. Fixed Assets: - Fixed assets are stated at Cost. No accounting is being done for Depreciation on any of Fixed Assets. 3. Grant Accounting: - When the fund is transferred to the WWMCs for project activities it is treated as Grant in Aid and adjusted as per actual expenditure incurred at that level, which is also the amount claimed as reimbursement from CAAA. The project financial statements reflects the opening and closing balance with WWMCs. 4. Notes on Accounts: 1. There is no contingent liability in respect of claims against the project not acknowledged as debt. 2. The Current assets are stated at an amount, which is in opinion of the management, are not in excess of their recoverable value. 3. Previous year figures have been regrouped and rearranged Tthen 6anparable with current year figures wherever considered necessary. 'er