Audit completion date: 22.11.2017 Secretary Local Government Division, Ministry of Local Government, Rural Development and Co-operatives, Bangladesh Secretariat, Dhaka. I. We have audited the accompanying financial statement of "Municipal Governance and Services Project (MGSP)" financed by IDA Credit No. 5339 BD as of 30th June, 2017 and for the year then ended. Preparation of financial statement is the responsibility of management. Our responsibility is to express an opinion on the financial statement based on our audit. II. We conducted our audit in accordance with International Standers on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of materials misstatement. An audit includes examining on a test basis, evidences supporting the amounts and disclosures made in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. III. In our opinion, the Financial Statement gives a fair view in all material aspects of the financial position of "Municipal Governance and Services Project (MGSP)" as af 30h June, 2017 and the results of its operations and cash flows for the year then ended in accordance with the cash basis of accounting followed by the Government of Bangladesh . IV. Opinion status: Un-qualified. (Mohammad A mimtl Elisan Kabir) Deputy Director For Director General Foreign Aided Projects Audit Directorate Phone: 9361788. Municipal Governance and Services Project (IDA Cr. 5339-BD) Financial Statement 30th June '2017 (Figure in Lakh) Taka) Resources Notes Cumulative Current Period Cumulative Prior period current period Government of Bangladesh 1 3,802.60 2,602.14 6,404,74 Lender/Doner 2 33,248.10 23,064.30 56,312.40 Other resources 3 Cash Opening Balance 4 - 7,948.18 Total Resources 37,050.70 33,614.62 62,717.14 Expenditure and Cash 5 1 1 (a) Provision of Financial Support to 26 12,240.20 9,841.30 22,081.50 Pre-selected ULBs (IDA Part) Provision of Financial Support to 26 Pre- 1,377.40 2,029.97 3,407.37 Selected. ULBs (GOB Part). Sub-Total: 13,617.60 11,871.27 25,488.87 2 1(b) Financial Support for Operation & 6,277.70 2,375.64 8,653.34 Maintenance (O&M) IDA Part Sub-Total : 6,277.70 2,375.64 8,653.34 4 3 (a) Capacity Building and TA Support for 6,778.20 3,687.00 10,465,20 LGED and ULBs supported by LGED Sub-Total : .. 6,778.20 3,687.00 10,465.20 6 3(c) Provision of support to LGD for Third 3.82 3:82 party monitoring of the GAAP Sub-Total : 3.82 - 3.82 1 Govt. Staff Salary & Allowances (GOB) 427.20 312.44 739.64 CD-VAT . 1,998.00 11.70 2,009.70 Land Acquisition - 248.03 248.03 Sub-Total: 2,425.20 572.17 2,997.37 Total Expenditure 29,102.52 18,506.08 47,608.60 Cash Closing Balance Special Account 1,899.10 9,708.60 9,708.60 Project Operating Account - - - Operating Account of 26 Field offeces 6,028.28 5,399.94 5,399.94 Operating Account of 1.1 MSU offices 20.80 - Total Expenditure & Cash 37,050.70 33,614.62 62,717.14 Financial Statement.xls J Municipal Governance and Services Proe t (IDA Cr. No. 5339-BD) NOTES TO THE FINANCIAL STATEMENT 30th June, 2017 I GOVERNMENT OF BANGLADESH Funds are allocated by the Government of Bangladesh to cover GOB's share of eligible project expenditures, as specified in the Development Project Proforma and in the Annual Development Programme for each 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 contribution to the project since inception are as follows (in Lakh Taka) Inception to 30th For the year Inception to 30th I_June 2016 2016-2017 June 2017 Disbursements by GOB 4061.00 2749.70 6810.70 Less: Refund to GOB 258.40 147.56 406.96 Total: 1 3802.60 2612A4 6404;74 2 LOA FROM LENDERIDONOR The.IDA has providedfunds 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, have been drawn by the project in accordance with the following withdrawal procedures (In Lakh Taka) Inception to 30th For the year Inception to 30th June 2016 2016-2017 June 2017 On the basis of IUFR 33,248.10 23,064.30 56,312.40 Total 33,248.10 23,064.30 56,312.40 3 OTHER R1SOURCES Other resources consist of the following: Inception to 30th For the year Inception to 301h June 2016 2016-2017 June 2017 Project Revenues Accrued Bank Interest _____________________ _________ Unspent Balance Receipt ________ ____________________ Total ________ 4 CASH At*present the Project maintained one bank account (CONTASA) which is kept at Sonali Bank Ltd. Dilkusha Corporate Branch, Dhaka and an operating account, which is kept at a commercial bank to deposit those cheque issued from CAO 's Office. Year end cash balance was as follows (In Lakh Taka) Inception to 30th For the year Inception to 30th June 2016 2016-2017 June 2017 Special Account 1,899.10 9,708.60 9,708.60 Operating Account of 26 Field offices 6,028.28 5,399.94 5,399.94 Operating Account of 1 MSU offices 20.80 - - Operating Account (GOB) ._I Total 7,948.18 15,108.54 15,108.54 Muupl (9f Ser P Prob (M.I 1GS P F:),Amotints offierW)RA 1. We have audited the Designated Account (CONTASA) of "Municipal Governance and Services Project (MGSP)" financed under IDA Credit No-5339 BD for the year 2016- 2017. 2. Our audit was carried out following International Auditing Guidelines. Accordingly, our audit included such review of systems of internal control tests of accounting records & supporting documentation, verification of account balance and other auditing procedures that are considered important under the circumstances. 3. The accompanying Designated Account Statement was prepared on the basis of cash deposit & withdrawals for the purpose of complying with the Loan Agreements. 4. In our opinion the receipts are properly accounted for and withdrawals were made for the purpose of the project in accordance with the Loan Agreement and the Special Account Statement gives a fair view of the beginning and ending balances and the account activity for the year ended June 30, 2017 are on the basis of cash deposits & withdrawals. (Mohammad Atimal Ehsan Kabir) Deputy Director For Director General Foreign Aided Projects Audit Directorate Phone: 9361788. Inicipal Governance and Services Project IDA Credit No.5339- BD jik:I- SAccout A94,000ty ýiingB~alance as on 01-07-2016 79,48,i8,000.00 apouni deposited by World Ba - : 230,64,30,000.00 (AS per lUFR) Total iliterest arnings if deposited in account Total amount r,-funded to cover ineligible expenditure Dedact Tota amount withdrawn : 159,03,94,000.00 Total service charges if not included above in amount withdrawn Ending balance on 30-06-2017 151,08,54,000.00 PART-B ACCOUNT RECONCILIATION 1. Amount advanced by the World Bank : 230,64,30,000.00 2. Less: Total amount recovered by the World Bank 3. Equal: Present outstanding anoun advanced to the Specia. Account at : 230,64,30,000.00 fiscal year. ended 30-06-2017 4. Ending balance of Special Account at fiseal year ended 30.-06-2017 151,08,54,000.00 5. Plus: Amount clained and not yet credited at fiseal year end 30-06-2017 Application No. Amount 6. Plus: Amount withdr-awn nd not vet clied 7. Less: Interest (if ineluding Special Account) 8. Plus: Service charges (if not included in line 5 & 6 above) 9. Equal: Total advance to Sp,cial Account accounted for at fiscal year 23 0,64,30,000.00 ended 30-06-2017 .(Shaikh Muvzakka'f Zaher) Project Director Tele : 9113446 e-mnail: pd.nospf g v.bd-~~ Notes:Ex!i 1. Explain and discrepancy between iotals appearing on lines 3 and 9 above (e.g. amount due to be refunded to cover ineligible expenditures pald from the Special Account) 2. Indicate if amounts appearing on line 6 are eligible for financlng by the World Bank and provide reasons for not claiming the expenditures. F:\Accounls o,\NGSP\udit\Notes to FS.dc