Financial Attest Audit Report . on the accounts of ,, Sindh Water and Agriculture Transformation (SWAT) Project Irrigation Department, Government of Sindh for the Financial Year 2023-24 World Bank Loan No.72550-PK AUDITOR-GENERAL OF PAKISTAN SERVING THE NATION BY PROMOTING ACCOUNTABILITY, TRANSPARENCY AND GOOD GOVERNANCE IN THE MANAGEMENT AND USE OF PUBLIC RESOURCES FOR THE CITIZENS OF PAKISTAN TABLE OF CONTENTS • Page No. List of Abbreviations Preface 11 PART-I 1 Project Overview 2 Auditor's Report to the Management (Audit Opinion) 3 Financial Statements 4-13 PART-II 14 COVERING LETTER TO THE MANAGEMENT LETTER 15 EXECUTIVE SUMMARY 16 MANAGEMENT LETTER 18 1. Introduction 19 2. Audit Objectives 20 3. Audit Scope & Methodology 20 4. AUDIT FINDINGS & RECOMMENDATIONS 21 4.1 Organization and Management 21 4.2 Financial Management 22 4.3 Procurement and Contract Management 24 4.4 Construction and Works 26 4.5 Asset Management 28 4.6 Compliance with Loan Covenants 29 4.7 Overall Assessment 30 5. CONCLUSION 31 ACKNOWLEDGEMENT 32 ANNEXES 33-36 ABBREVIATIONS & ACRONYMS AWB Area Water Board • DP Direct Payments FOs Farmer Organizations GIS Geographic Information Systems GoS Government of Sindh IDA International Development Association IPC Interim Payment Certificate IPSAS International Public Sector Accounting Standards ITRC Irrigation Training and Research Center (California, USA) M&E Monitoring and Evaluation O&M Operations and Maintenance PC-I Planning Commission-Proforma-I PC-II Planning Commission-Proforma-II PD Project Director PIU Project Implementing Unit POL Petrol, Oil & Lubricants PSU Project Support Unit SAGP Sindh Agricultural Growth Project SBIP Sindh Barrages Improvement Project SIAPEP Sindh Irrigated Agriculture Productivity Enhancement Project SID Sindh Irrigation Department, Government of Sindh SIDA Sindh Irrigation & Drainage Authority SWAT Sindh Water and Agriculture Transformation Project WCA Water Course Association WSIP Water Sector Improvement Proiect . PREFACE The Auditor-General of Pakistan conducts audit under Articles 169 and 170 (2) of the Constitution of the Islamic Republic of Pakistan, 1973 read with Sections 8 and 12 of the Auditor General's (Functions, Powers and Terms & Conditions of Service) Ordinance 2001. The audit of the Sindh Water and Agriculture Transformation (SWAT) Project, Government of Sindh (Component-2: Water Service Delivery), funded by the World Bank Loan No.72550-PK for the financial year 2023-2024 was carried out accordingly. The Directorate General Audit Works (Provincial) Sindh, Karachi, a Field Audit Office of the Auditor-General of Pakistan, conducted the audit of the Sindh Water and Agriculture Transformation (SWAT) Project during the month of August & September, 2024 for the period 2023-24 with a view to report significant findings to stakeholders. Audit examined the economy, efficiency and effectiveness aspects of the project. In addition, Audit also assessed, on a test check basis, whether the management complied with the applicable laws, rules and regulations in managing the project. The Audit Report indicates specific actions that, if taken, will help the management realize the objectives of the project. The Report consists of two parts. Part-I contains project overview, Auditor's report (Audit Opinion) and financial statements. Part-II covers executive summary, management letter and audit findings. The Report has been prepared for submission to the International Development Association (IDA)- World Bank in terms of Loan Agreement. ~r (Altaf Ahmed Shaikh) Dated:6? / / )-/2024 Director General Place: Karachi PART-I 1. PROJECT OVERVIEW 2. AUDITOR'S REPORT TO THE MANAGEMENT (Audit Opinion) 3. FINANCIAL STATEMENTS • Project Overview Sindh Water and Agriculture Transformation Name of the Project (SWAT) Project (Component-2: Water Service Delivery) Sponsoring Authority International Development Association -IDA Executing Authority Irrigation Department, Government of Sindh Loan/ Credit Account No. IDA-72550-PK Project ID P167596 PC-I Cost (original) Rs. 70,445.950 million($ 320.200 million) Irrigation Component Cost Rs. 27,940.75 million($ 127.00 million) Date of Commencement 01-01-2023 Actual Date of Commencement 10-01-2023 Date of Completion (as per PC-I) 31-12-2028 (72 months) Date of Approval by ECNEC 05-12-2022 Loan Closing Date 31-12-2028 (72 months) Loan Drawn Status in F.Y 2023-24 -Rs. 682.281 million (US$ 2.329 million) for IDA Loan Utilization Status in F.Y 2023-24 -Rs. 496.118 million (US$ 1.655 million) for IDA Progressive Expenditure upto last F.Y -Rs. 642.673 million (US$ 2.161 million) for IDA 2023-24 -Rs. 8.356 million (US$ 0.029 million) for DP Total Progressive Expenditure -Rs. 651.029 million (US$ 2.190 million) AUDITOR'S REPORT TO THE MANAGEMENT (Unqualified Opinion) This Directorate General Audit Works (Provincial), Sindh, audited the financial statements of the Sindh Water and Agriculture Transformation Project (Component-2: Water Service Delivery), which comprised the statements of receipts & payments for the year ended on 30th June, 2024, statement of cash flows, statement of budget and expenditure, statement of appropriation of grants and a summary of significant accounting policies. Audit was conducted in accordance with the auditing standards issued by the International Organization of Supreme Audit Institutions (ISSAis) and by the Department of the Auditor-General of Pakistan. These standards require that we plan and perform audit to obtain reasonable assurance that the financial statements are free from material misstatement. The audit examined, on a test check basis, the evidence supporting the amount and disclosure in the financial statements. It also included assessing the accounting principles and significant estimates made by the government and evaluating the overall financial statement presentation. We believe that the audit exercise provides a reasonable basis for our opinion. In our opinion; (a) These financial statements properly present, in all material respects, the financial position of the Sindh Water and Agriculture Transformation Project (Component-2: Water Service Delivery) for the year ended on 30th June, 2024. The results of the project's operations, cash flows, expenditure and receipts by appropriation for the relevant year have been kept in accordance with the prescribed accounting policies of the Government of Pakistan. (b) The amount spent has been applied in all material respects for the purpose authorized by the Parliament and has been booked to the relevant grants and appropriations. (c) The amounts contained in the financial statements, is in all material respects m agreement with the books of accounts and approved system of classification. Dated: t3 !I>- /2024 k-1~ (Altaf Ahmed Shaikh) Director General Place: Karachi FINANCIAL STATEMENTS • • Sindh Irrigation and Drainage Authority Left Bank Barrage Colony Hyderabad Financial Statements for the year 2023-24: Sindh Water and Agriculture Transformation Project (Component 2: Water Service Delivery) IDA Credit No.7255-PAK: I I i - -- - Slndh Water and Agriculture Transformation Project IDA Credit No. 7255-:-PAK ~!!ll!!!neat 2; ~ll!l[ ~!lo:l,!l f2!lllxta - ----- --- Statements of cash Receipts and Payments i ------- ----- For the Year ended June 30, 2024 -·i -,-·--·--- ------ -- - ' -- ~------ Note No. 2023•24 2022-23 Cumulative RECEIPTS ~~- ·- ------ -- ---- . . II>~ funds _jt~_INorld ~anl