. Financial Attest Audit Report on the Accounts of Sindh Irrigated Agriculture Productivity Enhancement Project (SIAPEP), Hyderabad IDA-assisted Loan No.5604-PK Agriculture, Supply & Prices Department . Government of Sindh For the Financial Year 2023-2024 AUDITOR-GENERAL OF PAKISTAN SERVING TIIE 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. Abbreviation and Acronyms Preface lll PART-I Project Overview 03 Auditor's Report to the Management (Audit Opinion) 05 Financial Statements 06 PART-II Management Letter 15 Executive Summary 19 1. INTRODUCTION 23 2. AUDIT OBJECTIVES 24 3. AUDIT SCOPE AND METHODOLOGY 24 4. AUDIT FINDINGS 25 4.1 Organization and Management 25 4.2 Financial Management 29 4.3 Procurement and Contract Management 33 4.4 Construction and works 36 4.5 Sustainability 39 4.6 Overall Assessment 39 5. Conclusion & Recommendations 41 PART-III Follow Up of Prior Audit Recommendations 45 Acknowledgement 47 Annexures 48 \I Abbreviations and Acronyms AWP Annual Work Plan AFS Annual Financial Statements AGP Auditor General of Pakistan DAO District Accounts Office DGAEWM Directorate General Agricultural Engineering & Water Management EA Environmental Assessment EAD Economic Affairs Division EIA Environmental Impact Assessment ERP Enterprise Resource Planning FOs Farmers Organizations FO Field Officer FY Financial Year GOS Government of Sindh GRM Grievance Redressal Mechanism HEIS High Efficiency Irrigation System '- IDA International Development Association IPSAS International Public Sector Accounting Standards IFR Interim financial Report IT Information Technology IUFRs Interim Unaudited Financial Reports MEC Monitoring and Evaluation Cell O&M Operation & Maintenance OFWM On Farm Water Management PAD Project Appraisal Document PCPL Precast Concrete Parabolic Lining PD Project Director PDMA Provincial Disaster Management Authority PIU Project Implementation Unit PSC Project Steering Committee PSIAC Project Supervision and Implementation Assistance Consultants SAP Systems, Applications and Products SIAPEP Sindh Irrigated Agriculture Productivity Enhancement Project SSC Supply & Services Companies SOPs Standard Operating Procedures TOR Terms of Reference USD United State Dollar WCA Water course Association WMO Water Management Officer WSIP Water Sector Improvement Project . PREFACE The Auditor General of Pakistan conducts audit subject to Articles 169 and 170 of the Constitution of the Islamic Republic of Pakistan 1973, read with section 8 and 12 of the Auditor General's (Functions, Powers and Terms and Conditions of Service) Ordinance 2001. The Audit of Sindh Irrigated Agriculture Productivity Enhancement Project Hyderabad (SIAPEP), International Development Association (IDA) assisted Project Loan Agreement No. Cr.5604 PK was carried out accordingly. The Directorate General Audit Sindh Karachi conducted audit of the Sindh Irrigated Agriculture Productivity Enhancement Project Hyderabad (SIAPEP) Agriculture Supply & Price Department; Government of Sindh funded by IDA Credit loan No.5604-PK during September 2024 for the Financial Year 2023-2024 with a view to report significant findings to stakeholders. Audit examined the economy, efficiency, and effectiveness aspects of the Sindh Irrigated Agriculture Productivity Enhancement Project Hyderabad (SIAPEP). In addition, Audit also assessed, on test check basis whether the management complied with 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. The audit observations included in this report have been finalized in the light of discussion with project Authorities management in exit meeting. The Report consists of three parts. Part-I contains Project Overview, Auditor's Report (Audit Opinion) and Financial Statements. Part-II contains Management Letter, Executive Summary, Audit Findings, Conclusion and Recommendations. Part-III contains Follow-up of Prior Audit Recommendations, Acknowledgement and Annexures. The Report has been prepared for submission to the International Development Association in terms of Loan Agreement IDA Credit# 5604-PK. Dated: b5",.. 12,. 2024 Place: Karachi 111 PART-I 1. PROJECT OVERVIEW 2. AUDITOR'S REPORT TO THE MANAGEMENT 3. FINANCIAL STATEMENTS 1 PROJECT OVERVIEW Name of Project Sindh Irrigated Agriculture Productivity Enhancement Project Hyderabad. Sponsoring Authority International Development Association (IDA) Agriculture & Supply Department, Government of Sindh (GoS) Executing Authority Director General Agriculture Engineering and Water Management Hyderabad Loan No. 5604-PK Total Project Cost as per (PAD) USD 242.20 Million IDA-Loan No. 5604-PK USD 187.00 Million Date of Commencement. 21.08.2015 Actual Date of Commencement 21.08.2015 Date of Approval 20.03.2015 Loan Closing Date 31.12.2022 Date of completion (as per PC-I) 31.12.2022 Extended for the period 30-09-2023 Expenditure during financial PKR 1,179.271 Million Year 2023-2024 Progressive Expenditure PKR 32,355.000 Million up to 30th September 2023 3 ,. AUDITOR'S REPORT The Project Director, Sindh Irrigated Agriculture Productivity Enhancement Project (SIAPEP) Hyderabad Auditor's Report to the Management We have audited the financial statements of Sindh Irrigated Agriculture Productivity Enhancement Project (SIAPEP) that comprises Statement of Receipts and Payments for the Period from 1st July 2023 to 30th September, 2023. Management Responsibility: It is the responsibility of project management to establish and maintain a system of internal controls, prepare and present the Statement of Receipts and Payments in conformity with the requirements of Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standards. Auditor's Responsibility: . 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 Supreme Audit Institutions. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. The audit process includes examining, on a test check basis, evidence supporting the 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 statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion: a) The financial statements present fairly, in all material respects, the cash receipts and payments by the project for the year ended 30 th June, 2024 in accordance with Cash Basis IPSAS, Financial Reporting under the Cash Basis of Accounting Standards. b) The expenditure has been incurred in accordance with the requirements of legal agreements. Dated: OS:- 12 -2024 mi) Place: Karachi Director General 5 . ANNUAL PROJECT FINANCIAL STATEMENTS For the Financial Year Ended 30 th September, 2023 7 Slndh Irrigated Agriculture Productivity Enhancement Project (SIAPEP) IDA Crtdli No, 560!,PK Slalem1nt OI Cuh RtetlpU and Paymenll For lho Ym Ended Seplember 30, 2023 Commul1l1-/1 RmlpW IP1ym,n~) l'lymon~ by Third Rml~~ (P1ymonlll P1ymon11 by Third R,c,lpili IP1ym1011J P1ym1n11 by Third Gond ToUI ConilollldbyPro~cl Pirt\11 C0nlrdl1db)'P~)1cl Plrtl11 Contr0ll1dhyPrnj1c\ P1rli11 RECEIPTS Not11 External Asslslal'(e • IDA World Bani 352,550,650 26,421,158,463 25,427,158,463 GOS (Salaries lo Sia~ I I &-0.000.~o I 2,869,639,000 6,676,454,656 6,GIG,454,056 TOTAL RECEIPTS,A 500,000,000 352,550,610 2,869,639,000 26,427,758,463 6,676,454,856 33,104,213,319 LESS: PAYMENTS CMIWoil:l 65,100,217 ZB68,463,306 16,012,514,090 18,022,524.098 Goods 381,83a,301 989,235,833 3,429,068,047 3,429,068,047 Consullall()' Se~lm 81,505,161 340,400,296 2,212,314,606 2,212,314,608 Trainings 10 23,482,612 77,162,550 386,699,713 386,699,713 lnetemental Operalino Cos! 11 127,3Ja,605 499,999,925 499,854,105 2,841,511,,000 2,377,151,699 5,927,242,809 8,304394,508 TOTAL PAYMENTS 679,210,912 499,999,921 4,775,116,090 2,841,514,000 26,427,758,165 6,927,242,809 32,355,000,974 -----=--~ (671,270,912) 75 (!.422,565,440) 28,121,000 298 149,212,047 749,212,345 lncruse/ (01crm1) In Cash (671,210,912) 71 (4,422,565,440) 28,125,000 298 749,212,047 149,212,345 Funds lap11d In GOS share Cash it Beginning of Ym 679,271,210 5,101,836,650 Balance surr1ndmdlLap11d, GOS ~SJ (28,125,000) (749,l12,047) (749,212,047) Cash II End of Ym 12 298 679,171,210 298 296 Th• 1"'"1p1fl)ing 00111 lonn an m111ol p,rt 01~,11 lnir.cial ,111,m011il. Pro PIU,$1 I B·J CamScanner 9 Sindh Irrigated Agricultur~ Productivity Enhancement Project (SIAPEP) IDA Credit No. 5604~PK Statemant of Comp1rl10n of Budgeted and Atlual Amount For the Year Ended September 30, 2023 Aniount In Pak Rupoea Amount In P:ill RupaP.s Amount In Fak Rupees Not(!$, -~---'-"'-''-''-"""·'cc'---- -~----'-""'"'-""""-'"''----- --~~-c"C"'ome.cme,,""l,""tl-'-'"'---- A.ii~ouu~~~~g-, 1 Actual Amounl An~vu!~~~~- 11 Acwal Amount An~ouud!~~~-i) Aclua!Amount f,J;S;;EIPTS [:,,\cmal ;•. s,st.;nr, . 10;, VV01!t.l R,,·11 I sa.o~o.ooo 352,550.650 23,62i,967,9B6 26,427,758 463 V>; o'S;1:·1r <2~ tc li•s Rt:!qular Staff) lOf/l.L RECEIPTS - A 6 ~! ----~~= ~ ,00.000 ~o, I 500,0,9_~.Q,Q_Q_ 50,000,000 2,869,G39.000 3 222 189,650 4,000,009,752 27,627,977,738 S.676,454,85F. 33,104_~)_:t'!...9-. LESS; PAYMENTS l 85,10!3,217 33,0D0,000 2,868.463,306 13,041,354,070 18,022,52◄ ,098 ! 38Ul38,307 7,SJ0,000 089,235,833 5. 148,129,670 3, 42~. 068. 04 7 e~.sos,161 3,500,000 340.400,296 1,543,798,246 2,217.,31'1,608 23,482,622 2,SC:0,000 77,162,550 1.837,725.498 386,699,713 127,335.605 3,500,000 499,854,105 6,050,900,249 3,S3G,$60,S7S TOTAL PAYMENTS· 8 679,270,912 60,000,000 4,776,116,090 27,627,977,738 27,987,167,041 R:1l;"t11co- Swrnndorad/Lap<;,ed- GOS mcrC",lSl'I (llr,r,r,•,t<;r>) tn t.:ilSI) {/\· ----------~= --------~l'~•~.1~"~·0~0=01 --------~11~•9=,2~1~'·~'•~1~1 □) (179,270,987) (1,581,051,440) 41367,834,231 Sindh Irrigated Agricullure Productivity Enhancement Project (SIAPEP) IOA Credit No. 5604-PK Notes to the Financial Statoments For the- Year Endod S0ptember 30, 2023 1 R•portfng Entity: fh• F!l'l.am»! St,n.menll are far Sincln Jrng1ledAgric1>1IU111 P~1ty Enl'l1n.::emtnt Proiecl (SIA?F.Pf Tne 1ir11111c:iat statvnenrs enr:amp;inus u,11 r11p0ft1119 1111111y :.~ ~~fo,.:c :n 1/111 FtnJ'l~"·'• Aaroemenls Ollt...een th■ Islamic Ril:,11b1lc ol Pilk,&l.an 4mf lh.:t World Bank for lhe SIA?E?. The Fm:inc,ng iglttm.nl (IDA Cred1l t~o. ~ p ( J (!! ':.,per-•~I [Jt;iwinc: Hlfol!15 (~l:H) 1~:-. 1JU J'JJ ,,.J::; si111t.:i onJutyo-,. 20,s 1ni:l ll'MI d01,ng d1te II J1sl □ ~c 1022. ,. C11rtifica1ion by ProJect Management on AppUc1tlon of Fund• : u 1, Cl'l1•1i~!l lhflt funds lliJD.in31 CMdit I-Jc SBO ◄ ·PK ho.vi orJy been ubl<1cd let !h11 pfO;acl purposes a~ tM\ned ln lho llnancin',I o1;ire11m•nt. 3 Accountlnu Convenlinn .ind Statcmont orcnmpl!anco: Tia F1111naal SIJl#m..nta cfSl.:.PEP h,a,,e been rrep1~d1~ 11ccoro1rice ~In ln1em~t1!ll'lal P,1~lw::!'.,11.,1Au.1,.untino Suir,Qa.rd~ (IPf,MO), Ffnnn.-Jnl R~pc:11~•11 unrJc \t;u Cush tL~I~ .ii ,\c.::'-'~r\Ut,9 Tne~e r,nnno:,I st:1lel'l!11nlS hllvti oeen prll)'ltltduting CoiSh tasll ol ilCCOlltl~IIQ where lr;1nH:tiCt>$ .llti! only l~lliUd whllfl 131h 11 ft:Cl'iV•tl llr 1)41~ • Slgnificanl Accounting Policlee : lh, ltgrwf,,::1111 ,l(C;)\i'l\1111, pdtdu •~l,•d in l!\e prtp.1,e!,c.n c.f 11'>01!! llnlilt\Qal llllCl\11!!1'111 ue HI 0:,,1 b~l!N,r ,., Foroii;in Currency TranHcllon : Cuh r11~•P" •111lpay,YWnt.s arising from uansactlons ,n l,1,,·c,;;in CUl'N!IIOes,ra recor:led 111 Pi:all RupeH b/llpplf'llQ kl lhu lcr~ign E:"Jri11ncyar11111.mt uu, 11~~rJ"" ;,• aJJ. •'-" (SEP) /or t.,morting ri:irvi~n c.urrtr\,::/ il1tg P•~ Ru;,r,es fol' lh• tr•nchw it 111• \111'11 !II r,;c••P1 of l1,1r.1!• kl l;i!)P 110m Wo1ld U.,r;I. U Reporting Curr•ncy : /,mouri\i In lh• fin;,nc,al 1tat1nwn11 lift in Polk Rupcu. •U Rovonuo Roeognlllon: Re~-.n,;t is rvcognii,i:l on !h• dlllt ol rec,' lh~ O~I!: o~, WhlUI a c~e".:.Li~ or payme.il ;id,-,ce •~ iucied "4.5 Fl:cod A&&ots: fY !.1023•24 FY 2022.:D Transport Cornpuler:; & IT Equipments O«lee & Field Equipments FumHure & nxturo, 5 l:;xtarnal AS$1Slinco • IDA World Elank: E•t11rr:a1 ;1"1,t;rnot wll! t;i ntc.ilpllnlllt form gl C:r•i:111 frorr, l~.e to.A World O.i,1lo:. un:ltrftniacin11 il;rv,111111l dil1id ::ig.o;.1015 b•t~nn 1t-,1 World e,r.k aO;:i.,,,1~n (!,"J:->; rrr, r pur;i-ote olthe S1APEr:>, Tha fo.lov.iog 1moun1wu rocel~ud bt Ihm model rop:i]'"l•ng p!lr,c>dTnta lundwos tr111rnlr111d i,,10 1h11 o.,~i~noll~d A~nk Aer.1l1,nl (,\,e If .:o:;G:?:ll2011 ,re ~3i) t:01ng rr,1 ,,1,. l~,1~11n:.il !3.im, i.1 f11t~:1L,m F,~n1.1 J,n,ut, Ro.Id l1~d11rab1J FY2023-24 FY 2022-23 Dato of Amount Corw4lrtlon Rate Amount Cti'Hlllod Amm1nl Cor,l'ort,on R.110 Amount Crcd1t11d Rocl1pt {US$) used Into NBP jPKR) (US$} used Into tJBP (PKn) 1.326151 1,::i:w,1!:i1 6 GOS {S.:illir!os to Slaff}: n,.. p~,::ui:ar~r.e ,1cm rapruo1.r.11 se11nH 111111<1 Oc1.emm11nt stalf, 11tl.'1!J !r-1 pn;,:•~1 ;,,,,n Ill 0,,111;..\J ,Ut1 c:;,mponi:mlw,11 ind.1de tn,r-1ermr.bil,,a\-cn. rcm••hon • ,11,) •~ ,•.-,c~1) ,,11n I~•<"'" f<"'<1,•lr;,1,cn, J,' • ,J',Trr,•d r., f? ~a r,•,r:~111•,!HrJ1was I.is.! )'C~r c,1,~110:11,iro ~f R, 2 F.Sil 4(i 111,;k,n ih• prc111!:I m.ina11omen1 complC!',(.,I .::: ,~e'1~·~ e1! 1h·~~ 1ype, •II tne ,e,~r'I mo11 ~ulMr•blc dl110,11 in Cho 1.-n:,atcd nreuol Sln:i"I :a l;1cra;lit1 !h.ciffllt1lltlnc11 IOWJhU 1111.:ite~ d,1..utua 11.~1 ~i; llgo~'i•i~ and ,, .,! ,J •.1 .<.,r,:, .. d,~•l .~ 'I l,c iJ,q~lj ~ .. :.,:, UI ,o,i,r,,~n fy .,_.,,,,j l,11,il lo:11:•l•il !"l IIQil-~..,~y·t,t· ~1'11a,, l)f•le11111y11n ls,!jhtl ground 0ri,. eenllruttac, lr'.C~ IMl'Ul W!li ~ :rnri~lened 'IO \he , ,~tr•· 1.•.1M7emtn1 ;,,,•,-,r· ly (l',.;/,';,1 on1 Uie•r ,1t!',u1~~ ,1 ,,.e (;IJCtl:! lrve! fer o~erotion~ a11:I mn1nt,111>ijnce, ,~,rniwlH t,o 11,u(J ror to'1l 11unity ~11\',t,~i CJtl ;,\,tt1r,11 l::nc:111ks f-arrn Rc:scr~1or (NCH{)- C111U Wor!<. 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''.,~.,,e.J ~,,,:, 1,~l Is 12 ' Consultancy Servleu Fellowing ccnsullanci~s are covor~ unU1:r Iha proj1:1ct FY 2023-2.1 _F)'._2_02~-?} Payments Poymcnl::; Con1rollod by ControUel.l by Pro" ct ii~~~:;~~ I Prcted Supervision and tmph:menlaUon Asslstanee Consul1an1, (PSIACI Monilonna & Evaluallon Consullanls Tcchnicnl Assislance & Tu1lninq Consullants (TATC) -i !n1e11ectual lnout tor Ellab!ishment ol Natural Enemies' Field Reservolts i,V)t:.0.4&~ !lldlvlual Consultants 7.!lC:U771 J,.211.,rn !nternatAuallS-Coo•pCrl•fll 02 pro,,,e,,o tuppo)l"J IOI In.I ,:)r~JIC\ lmpl"/ll"llt).l!