AUDITOR'S REPORT Audit Completion Date: 05/12/2024 The Secretary Local Government Division Ministry of Local Government, Rural Development & Cooperatives Bangladesh Secretariat, Dhaka. Opinion status: Unqualified. We have audited the accompanying Financial Statements of "Local Government COVID-19 Response and Recovery project (LGCRRP) " Project IDA credit No-7033-BD, Hallmark Building(3rd floor), Begum Rokeya Sarani, West Kafrul, Taltola, Dhaka. 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 2024 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 2024 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 Division, Ministry of Finance, Government of Bangladesh as well as those of IDA guidelines 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 Auditor General (OCAG) of Bangladesh which are based on the International Standards of Supreme Audit Institutions (ISSAls) issued by International Organization of Supreme Audit Institutions (INTOSAl). Our responsibilities Under those standards are further described in the Auditor's responsibilities for the audit of the Financial Statement section of our report. We are independent of the project in accordance with the 'Code of Ethics' issued by OCAG Bangladesh which is based on ISSAI 130- Code of Ethics (INTOSAl 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 reC[uirements of the development partner as specilied in the related credit agreement. OCAG reserves all the rights to incorporate any audit observations From this report in the CAG's audit report for being laid before parliament to fulill the constitutional responsibilities. Responsibilities of Management for the Financial Statements and internal Controls: Management of the project is responsible for the preparation and Iair presentation of this special purpose financial statements in accordance with the Interiitional Public Sector Accounting Standard (IPSAS) financial reporting under the cash basis of accounting issued by the International Public Sector Accounting Standards Board (the I PSAXSB) of eth International Federation of Accountants (I[AC), the requirements of project accounting maIuial issLed by the I-nance division MOF, GOB as \\ell as those of the IDA guidelines and agreement and I'Or such internal control as management determ iies is necessary to enable the preparation ol special purpose hUnncial statemenits that are Iree frmn material In isstatements, whether due to fraud or CII0. 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 misstatements, 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 one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain 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 Economic Relation Division (ERD) on behalf of Govt. of Bangladesh on August, 2022, (a) Funds were utilized for the purposes described in the Financing Agreements and agreed Project's annual work plans; (b) In our opinion, the special account statement gives a true and fair view of the special accounts as at 30 June 2024, and the cash movements of these accounts of the period then ended, in accordance with the IDA guidelines, (c) Project 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 IDA. (d) The procurement of goods, services and civil works have been made in accordance with the financing agreements and IDA procurement regulations; (e) The PNU has complied with covenants specilied in the credit agreement ATM Iostallizur I ahman) Deputy Director For Director (eneral Forcign Aided ProjeCts Andit Direc to rule Eel: +880X2226663606 Local Government COVID-19 Response and Recovery Project .Depirtment of Local Government Engineering Department Project Financial Statement As of and the ended 30 June 2024 Project financial statements (GOB Approved Model) As of and for the years ended 30 June 2024 (Taka in Lakh) Closing balance ........ (Development Notes Opening balanceas For the year as at 30 June partner's) Grant/Loan at.1 July 2023 ended 30 June (Cumula(lve prior 2024 20t4 Resources period) (current period) (Cumulative current period) Government of Bangladesh 6 119.00 458.00 577.0 oan from lender/donor 7 44096.00 139052,66 183148.6 Other resources 8 Cash opening balance 5 Total resources 44215.00 139510.66 183725.66 Expenditure and Cash 1. Supply and Services 331.09 2039.42 2370.51 2. Maintenance 35.01 43.94 3. Wealth 39 50 394.18 . 433,68 4. Civil Work (Actual 2039.20 64190.11 64190.11 Expenditure Total 2444,80 66667.65 69112 4 Cash closing balance Balancewith ULGIs 34285,08 65940.47 100225.55 Inprest account Operating Accoun (RPA) 9 7421.5 6834.22 14255.7& Operating AccounLt (GOB)-Refuknd 6355 15.28218 83 Total Expenditure and Cash 4421500 139510.66 183725.66 The annexed notes 1 to 12 form an wegral carlt tese secal prposu fiFa stlmunts. .1' -．휴「J튄” Statement of uses of funds by Proje,,t acilvily and compafison to budget As o( and for the yeats ended 30 Ajne 2023 . ......... (Development pýýner's) n GrangLoan For the year Cumulativeas Fortho curnulativeas ended30 year of 30 Of 30 June June 2023 ended 30 June 2024 2023 June 2024 Civil Works. or ;3s per DCA (Actual 203920 64190.11 66229.31 Expenditure) -Wórks or is per DCA 100225,55 Category 1: a) Civil 34285,08 65940.47 Cillegory 2: Equiprnen[ of as per DCA Calegory 3: Instruclors or as per DCA Category 4: Fellmships or as per DCA category 5: Local Da'ming or as per DCA Category 6: Internatýonal Consultint or as per OCA Calegory 7: Unallocated er as per DGÅ 405ý51 2477,53 2883,04 Caleg" 8: or as per DCA Total Project expenses 36729.89 132608AI 169338,00 Total Thc annexed noles I to 12 forin an integral part of these spocd p't)(posp financial sla(etnents, Pwiect Dimetor AI Statement on cash flow on Cash limprest accounts As of and for the year ended 30 June 2024 Balance as of 01 July 2023 7421,56 Add: Receipt from Govemment 458.00 Receipt from Dovelopment Partner 139052.66 Exchange rate difference Total 139510.66 Less: Arnount of eligible Aclual expenses 66667.64 Amount of eligible Advance 65940.47 Refund of GOB 155.28 Exchange rate difierence Total Balance as of 30 June 2024 6834.22 The annexed notes 1 to 12 form an integral part of these special purpose financial satenents. Pojeci Dflector Chief Accountant Note: Statement o cash flow may be prepared separately based on bank accouffi. Ný' k> Notes to the financial statements 1. General Information The following information may be added: A summary of the Project is to be given including Loan/Grant date agreement of between Govemment and development partners. A brief of the objective of the project and its components, Expected closing date for the project. The total number of staffs involved. The approval date and authority of these financial statements. 2, Significant Accounting policies Basis of preparation The financial statements of the Project have been prepared in accordance with IPSAS Financial Reporting Under the Cash Basis of Accounting, and comply with the Project Accounting Manual issued by the Finance Division, Ministry of Finance, Government of Bangladesh as well as (development partners requirements) and the covenants of the .... (Loan/Grant). These special purpose financial statements reflect the data for the year ended 30 June 2023. Under this basis of accounting, financing is recognized when received rather than when earned and expenses are recognized when paid rather than when incurred. Expenses are resources directed for the payment of works, goods and services, recognized in the financial statements in the period when they are paid. Financing The disbursement procedures need to be described briefly. The amounts of Government financing are recognized as such and included in the special purpose financial statements when the funds are transmitted to the Proiect Current account (the 'Government financing account"). 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 curroncy 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 BDT/USD, Income and expenses denominated in BDT are conveded into USD applying the exchange rate set out by the Bangladesh Bank on the date of the transaclion Account balances denominated in BDT are convered into USD applying the exchange rate set out by the Bangladesh Bank at the reporting date. As of 30 June 2022, the exchange rate is xxxx. 3. Taxation According to the Loan/Grant Agreement. the loan and grant amounis should not be used to pay any taxes and dulies. 4. Fixed Assets Fixed assets of the Project include.office equipment, vehicles and furniture procured for prqject implementation. 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 inventory sheets. Considering non-commercial status of the Project and cash basis of accounting, depreciation for the fixed assets is not accrued. 5. Cash and bank balances / Cash and cash equivalents The Project maintains xx number of bank accounts, an imprest bank account or revolving fund, which is kept at xxx Bank to hold funds advanced!received from Donor and an operating account at xxx Bank to hold funds advanced/received from GOB as well as funds transferred from the imprest bank account. Year-end cash balances were as follows: Opening balance as at For the year Closing balance as 30 June, 2023 ended 30 at 30 June 2024 (inception to 30 June 2023) June 2024 (inception to 30 June 2024) Imprest account Operating account (RPA) 7421.56 139052.66 6834.22 Operating account (GOB) 458,00 000 Total 139510.66 6834,22 6. Funding received from Government of Bangladesh Funds are allocated by the Government of Bangladesh to cover GOB's share of eligible project expenditures, as specified in the project manual and in annual development programmed for each of the Project. Any allocaied 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 and for the year are as follows: Opening balance as at 30 For the year ended Closing balance as at 30 June 2022 (inception to 30 30 June 2024 June 2023 (inception to JU-ne 2023) 30 June 2023) Disbursement by GOB 580C 45800 Less: Refund to GOB I 155.28 155.28 Total 302.7 302.72 7. Funding received from Development Partners (loans from lenderidonor) The IDA has provided funds to the Project to cover its share of eligible project expenditure. These funds, which must be repaid to the IDA after the conclusion of the Project, have been drawn by the Project in accordance with the following withdrawal procedures: Opening balance For the year Closing as at 30 June 2023 ended 30 June balance as at 30 (inception 2024 June 2024 to 30 June 2023) (inception to 30 June 2024) SOE Procedures Direct paymients Imprest account replenishments 7421.56 139052.66 139052.66 Total 2-1 . 5-6 130052.661 8. Funding from other resources Other resources consist of the following Opening balance For the year Closing as at 30 June 2022 ended 30 June balance as at 30 (inception 2023 June 2024 to 30 June 2022) (inception to4 30 June 2024) Project revenues Exchange gain and loss Less: TDSon interest and other lees[ _ [Total I 9. Cash Closing Balance Total Closing Balance (June 2024) 6834.22 Lakh. (Balance 6747.25 + Bank Interes 86.97) 10. Expenses from Government fund in{(currencyj __._._... Actual Budget Difference For the period Cumulative For the period Cumulative For the period Cumulative ended 30 June as of30 June ended 30 June as of30June ended 30 as of 30 2024 2024 2024 2024 June { June 2024 -2024 Ca eory1: Cw Wrssor as per DC A egry uipmn o, as .er DCA o3 :nstrurs nr as er DCA -agr a Fl: sn"ps or as per DCA- ___ ________ ________ _V ia:Oie'd trans or as per a¯g r :Jr¯ e%r as pr K -A 302.72 302.72! 458.0Q 458.0 155_28 155.28 Ca!.ay o- as cer DcA Total Pro eet expns' ¯¯¯s 302.72 302.72 45800 458.0 155.28 155.28 11. Expenses from Development partners n currency) Actual Budget Difference For the period Cumulative as of For the period Cumulative as of For the period Cumulative as ended 30 June 30 June ended 30 June 30 June ended 30 June of 30 June 2024 2024 2024 2024 2024 2024 Categary 1: Civil Works or as per DCA 130130.58 130130.58 130133.47 130133.47 2.89 2.89 yActual Expenditure: 64190.11+Advance: 65940.47) 2:teor: Equimento as per OCA 198.62 198.62 198.98 198.98 0.3 0.36 eo 3nstru:tors o as per DCA_ ateor 4: Fellowships or as per DCA ateg-or5 LcaI Training or as er DCA Itegory 6nteratona! Cansultar or as per DCA 7r 7: Unalocated nr as per DCA 19719 1919 1980.55 1980.55 4.36 s1e, ry Q: or 2s per DKA o:f erIe 132305.39 132305.39 132313.00 132313.0Q 7.611 7.6 1! 11.1Reconciliation of expenses by funding methods ature of expense claim Category 1 Category 2 Category 3 Category 4 Category 5 Category 6 Catagory 7 Category 8 Amount Amount Difference Received Claimed SCE i rec:, -a,"rner t rmprest account ý3030L58 198.62 1976.19 139052,66 Toia expenses ciamed coé3'iSesur r,-Iwd aed at *æar-onc __ _________ ______ Le UncolimedII Toa erk,¯¯ i3 6Š4.44 11'2Summar of Withdrawa Aplcation (SOE) SOEDate 1 egory Caey 2 Category 3 Category 4 Category 5 Catgory 6 Categ 7 Category 8 Anount Amount Dfference NoReceived Claimed Total I-_ _ _-_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ l 1,3Sumrmary of Wthdrawal Applications tmprest Account Replenishment) No Date Category I Category 2 Category 3 Category 4 Category 5 Ca tegory 7 Category 8 Amount lAmount DUfference Received Claiýmed T -----ta------ 11.4Summary of Withdrawal Applications (Direct Payment) No Date Category I Category 2 Category 3 Category 4 Category 5 Category 6 1 Category 7 Category 8 Amountf Amount IDifference Received Claimed 12. Expenses from other resources n (currency) Actual Budget Difference For the period Cumulative as of For the period Cumulative asof For the period Cumulative as fI ended 30 June 2024 30June 2024 ended 30 June 30 June 2024 ended 30 June 30 June 2024 2024 2024 Consuliant fee ToaProcienX_enses Note Accordno to PSAs 1.7.8 (c) an explanation is required about tNe material difference between the budget and actual amount. 13, Project implementation As of 30 June 2024, overall 52.00% of Grant/Loan. has been implemented in the framework of the Grant/Loan Agreement 7033-BO. The project expenses by categories are presented in the tables below: Loan/ Grant Expenses as Budget as Budgeted Total Project Of 30 June 2024 in ot expenses Project implemfentation currency unit 30 June as o[ 30 Budget as of 30 June 2024 m June 2024 in 2024 currency (in Currency (in percentage) unit percentage) unit Woefr sCivil u 64190.11 130133.47 99,99% 244004.00 53.33% Worksor asperDCA__ _Advance 65940,41 Category 2: Equipment 198.62 198.98 99,81% 323.00 61.60% Or as per DCA ___ Categoy 3: Insiructors Or as per DCA Category 4: Fellowships Or as per OCA Category 5: Lecal Training oras per DCA Category 6: Internalionai Censult ant or 33 per DCA Category 7: Unalicated 1976.19 1980.55 99.78% 10073,00 19.66% or as per DCA Category 8: or as per OCA Total Project expenses: Tk. 132305.39 ...% . ...