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I Financial Attest Audit Report on the
I Accounts of Financial Inclusion & Infrastructure Project (FHP)
Finance Division
I For the Financial Year 2019-20
I IDA Credit No.6101-PK & 5989-PK
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Auditor General of Pakistan Islamabad
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TABLE OF CONTENTS
[ List of Abbreviations ...................................................................................................................... i
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PART-1 ....................................................................................................................................... 1
I Project Overvicv.,r ............................................................................................................... 2
I Auditor's Report to the Management (Audit Opinion) ...................................................... 3
Financial Statements .......................................................................................................... 4
I PART-11 ...................................................................................................................................... 5
COVERING LETTER TO THE MANAGEMENT LETTER .......................................... 6
I EXECUTIVE SUMMARY ............................................................................................... 7
I MANAGEMENT LETTER ............................................................................................... 8
I. Introduction .................................................................................................................... 9
I 2. Audit O~jective .............................................................................................................. 9
I 3. Audit Scope and Methodology ...................................................................................... 9
4. AUDIT FINDINGS AND RECOMMENDATIONS .................................................. 10
I 4.1 Organization and Management ............................................................................. I 0
I 4.2 Sustainability ......................................................................................................... 12
4.3 Overall Assessment ............................................................................................... 12
I 5. CONCLUSION ............................................................................................................ I J
ACKNOWLEDGEMENT ............................................................................................... 14
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List of Abbreviations
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AFI Alliance for Financial Inclusion
I COD Customer due Diligence
CDNS Central Directorate of National Savings
I OTA Digital Transaction account
I EAD Economic Affairs Division
Executive Committee of National Economic Council
ECNEC
I GoP Government of Pakistan
I IDA
IPSAS
International Development Agency
International Public Sector Accounting Standards
I MNO Mobile Network Operator
Mof Ministry of Finance
I MSME Micro, Small & Medium Enterprise
I NFIS National Financial Inclusion Strategy
NPS National Payment System
I PC-I Planning Commission-I
I PD Project Director
PIU Project Implementation Unit
I SBP State Bank of Pakistan
I TOR Terms of Reference
World Bank
WB
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I PREFACE
Auditor General of Pakistan conducts audits in accordance with Articles 169 and 170(2) of the
I Constitution of Islamic Republic of Pakistan, 1973 read with Sections 8 and 12 of the Auditor
General's (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001. The audit
I of Financial Inclusion & Infrastructure Project, No.6101-PK & 5989-PK under Ministry of
Finance for the financial year 2019-20 funded by the International Development Association
I (IDA) was carried out accordingly.
I Directorate General Audit (Federal Government), Islamabad conducted audit of the project in
October, 2020 for the period 2019-20 with a view to reporting significant findings to
I 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
I applicable laws, rules and regulations in managing the project. The Audit Report indicates
specific actions that, if taken, will help the management to realize the objectives of the project.
I The Report consists of two parts. Part-I contains Auditors Report (Audit Opinion) and Financial
I Statements, while Part-II contains Executive Summary, Management Letter and Audit Findings.
The Report has been prepared for submission to the International Development Association
I (IDA) in terms of Loan Agreement No.6101-PK & 5989-PK.
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I Dated:1 .12.2020
Place: Islamabad
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PART-I
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I 1. PROJECT OVERVIEW
I 2. AUDITOR'S REPORT TO THE MANAGEMENT
I 3. FINANCIAL STATEMENTS
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I PROJECT OVERVIEW
Name: Financial Inclusion & Infrastructure Project, Finance
[ Division
Sponsoring Agency: IDA/World Bank
I Executing Agency: State Bank of Pakistan & Central Directorate of
National Savings, Finance Division
I Credit No: No.6101-PK & 5989-PK
I PC-I Cost:
Date of Commencement:
Rs.14, 318.18 million
November, 2017
I Date of Completion: December, 2022
Actual Date of Commencement: November, 2017
I Credit Closing Date: December, 2022
Total Project Cost: Rs.14, 318.18 million equal to US$ 137 million. 100%
I financing will be made by the donor and no
local/counterpart contribution from the GoP is
required.
I Expenditure during 2019-20: Rs. I 6.111 million
I Progressive Expenditure
upto2019-20:
Rs. 9,128.840 million
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E AUDITOR'S REPORT TO THE MANAGEMENT (Audit Opinion)
Mr. Asim Shahryar
[ Project Director
Financial Inclusion & Infrastructure Project
Finance Division
E Islamabad
Auditor's Report on the Financial Inclusion & Infrastructure Project Financial
I Statements
We have audited the accompanying Financial Statements of Financial Inclusion & Infrastructure
I Project, IDA Credit No.6101-PK & 5989-PK under Ministry of Finance that comprise
Statement of Receipts and Payments together with Notes forming part thereof for the year ended
June JO, 2020.
I Management Responsibility
I It is the responsibility of the Project Management to establish and maintain a system of internal
controls and prepare and present the Statement of Receipts and Payments in conformity with the
requirement of Cash Basis IPSAS Financial Reporting under the Cash Basis of Accounting
I Standard (CBAS).
Auditor's Responsibility
I The responsibility of the Auditor is to express an opinion on the financial statements based on
the audit conducted. We conducted our audit in accordance with the International Standards of
I Supreme Audit Institutions (ISSAls). These standards require that we plan and perform the audit
to obtain reasonable assurance whether the financial statements are free of material
misstatement. The audit process includes examining, on a test basis, evidence supporting the
I amounts and disclosures in the financial statements. It also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
I statement presentation. We believe that our audit provide a reasonable basis for our audit
opmton.
[ Opinion
In our opinion:
I a. The financial statements present fairly, in all material respects, the cash receipts and
payments by the project for the year ended June 30, 2020 in accordance with Cash Basis
IPSAS Financial Reporting under the Cash Basis of Accounting Standard.
I b. The expenditure has been incurred in accordance with the requirements of legal agreements.
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[ Dir tor General
D' ectorate General Audit (Federal Government)
Benevolent Fund Building, Zero Point, Islamabad
r Dated: 07.12.2020
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I FINANCIAL STATEMENTS
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FINANCE DIVISION - INTERNAL FINANCE WING
PROJECT IMPLEMENTATION UNIT
FINANCIAL INCLUSION & INFRASTRUCTURE PROJECT
Statement of Financial Position
I As at June 30, 2020
I 2019-20
Rupees
2018-19
Rupees
Assets
I Current Assets
Cash & Bank
I World Bank Assignment Account - 6101
World Bank Assignment Account - 5989 51,408,693 37,287,376
I World Bank Assignment Account - 5989 4,522,937
55,931,630
7,448,994
44,736,370
Equity & Liabilities
I Equity
Accumulated reserves 55,931,630 44,736,370
I Liabilities
Payables
I 55,931,630 44,736,370
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Project Director
I Financial Inclusion & Financial Inclusion
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SHAHZAD AFZAL
,.Audit 01/ic'!r
I Dir1;1ctorate Gener;it Audit
Federal Gov~rnment of Pakistan
Islamabad
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E FINANCE DIVISION - INTERNAL FINANCE WING
PROJECT IMPLEMENTATION UNIT
FINANCIAL INCLUSION & INFRASTRUCTURE PROJECT
Statement of Financial Performance
E For the Period ended on June 30, 2020
2019-20 2018-19
I Receipts
Rupees Rupees
I Loan Receipts
World Ba11k Receipts - 6101-PK
World Ba11k Receipts - 5989-PK
(component 3a)
(component 1) 27,306,515 42,532,410
World Bank Receipts - 5989-PK (component 2) 7,448,994
I 27,306,516 49,981,404
Less: Expenditures
I Expenditures from World Bank
World Bank Receipts - 6101-PK (component 3a)
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I Line of credit for microf1nancing 9,101,4s6,600
9,107,486,600
World Bank Receipts - 5989-PK (component 1)
I Project Implementation Unit
SBP procurements
13,185,1991
13,185,199
5,245,03~
5,245,034
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I World Bank Receipts - 5989-PK
Project Implementation Unit
CDNS procurements
(component 2)
2,926,0571
2,926,057
I Net Surplus/(Deficit) 11,195,260 (9,062,750,230)
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I Infrastructure Project
Project Director
Financial Inclusion &
Infrastructure Project
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I SHAHZAD AFZAL
Audit Oflic'!r
Direcl"c,rate Gener.ii Audit
Fede, al Government 1;1f Pakistan
I Islamabad
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[ FINANCE DIVISION - INTERNAL FINANCE WING
PROJECT IMPLEMENTATION UNIT
FINANCIAL INCLUSION & INFRASTRUCTURE PROJECT
Statement of Changes in Equity
I For the Period ended on June 30, 2020
I 2019-20 2018-19
I Rupees Rupees
Balance as on 1July 44,736,370 9,107,486,500
I Net Surplus/{Deficit) for the year 11,195,260 (9,062,750,230)
I Balance as on 30 June 55,931,630 44,736,370
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~,.,.,.:.
I Project Director
Financial Inclusion &
I Infrastructure Project Infrastructure Project
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I SHAHZAD AFZAL
,._Audit Oflic"!r .
Oirectr,rate Generill Aucht
I Fede, al Government of P11kistan
Islamabad
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I FINANCE DIVISION - INTERNAL FINANCE WING
PROJECT IMPLEMENTATION UNIT
FINANCIAL INCLUSION & INFRASTRUCTURE PROJECT
I Cash Flow Statement
For the Period ended on June 30, 2020
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2019-20 2018-19
I Rupees Rupees
Net Surplus/(Deficit) for the year 11,195,260 (9,062,750,230)
I Adjustment for non cash items
I /NIL)
I Net Increase in cash and cash equivalent 11,195,260 (9,062,750,230)
I Cash and cash equivalent at beginning of the year
44,736,370 9,107,486,600
I Cash & cash equivalent at the end of the year
55,931,630 44,736,370
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Project Director
I Infrastructure Project
Financial Inclusion &
Infrastructure Project
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FINANCE DIVISION - INTERNAL FINANCE WING
I PROJECT IMPLEMENTATION UNIT
FINANCIAL INCLUSION & INFRASTRUCTURE PROJECT
[ Notes to the Financial Statements
For the Period ended on 30th June 2020
I 1 Legal Status and Operations
Establishment of Project Management Unit (PMU) Financial Inclusion & Infrastructure Project (FIIP) was
approved at the time of signing of Financing Agreement by Federal Government with World Bank on 3rd
August, 2017. Operations of PMU are governed under approved Operational Manual of the project.
I 2 Basis of Preparation
2.1 Basis of Measurement
I Financial Statements have been prepared on Cash Basis of Accounting. Receipts are recognized in period
when received and expenditure is recorded upon issuance of cheque to Payment service providers against
reimbursement claims.
I 2.2 Functional and Presentation currency
Financial Statements have been prepared in Pakistani Rupees (PKR} which is functional currency of this
project.
I 2.3 Statement of Compliance
These Financial Statements have been prepared in accordance with International Public Sector Accounting
Standards (IPSAS).
I 3
3.1
Types of Loans
Credit Number 6101-PK
I 3.2
$75 million for SB P's Line of Credit for microfinancing. Rupee equivalent was 9,107,486,600.
Credit Number 5989-PK
This component under the Credit Number 5989-Pk, is for the support investment that drive financial access
I points and integrating more diverse and efficient access points across Pakistan. The reforms include end to
end automation and modernization of CONS and NSS system. The expenditure incurred pertains to the
Project lmpelementation Unit, operating expenditure setup at the CONS.
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4 Period of Financial Statements
I Period of Financial Statements is from July 01, 2019 till 30th June 2020.
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SHAHZAD AFZAL
I _.Audit 01!1r."r .
Oirectc-rat~ G~•i.:•r;ii Aud11
Fede,<11 Govcmmc1,1 ul Pi-ikistar>
lslamauaa
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