Office of the

it r-enera o akSpecial Sectors Audit Wing

Constitution Avenue 6 c

Islamabad

No.PA/FAP/FG/SSA/F-13/ 1 Dated: 29 -12-2016

To,1. The Secretary,

Economic Affairs Division,

Government of Pakistan

Pak Secretariat, Block "C",Islamabad

2. The Country Director,

World Bank Resident Mission, 20-A, Shahrah-e-Jamhuriat

Sector G-5/1, Islamabad

Subject: FOREIGN AIDED PROJECTS (fAPs) AUDIT REPORTS

Financial Attest Audits of the following FAP Audit Reports has been conducted by

this office:

S.No Name of Projects Development

Partners

1 Governance Support Project-FATA MDTF

2. Institutional Capacity Building Ombudsman IDA

3, Tertiary Education Support Project IDA

4. Second Gen ICT Sec Policy & Legal World Bank

5. Social Safety Net Project IDA

6. Social Safety Net T/A , DA

7. Emergency Recovery Project TDPs of FATA IDA

8. Water Sector Capacity Building Indus-21 IDA

9. Economic Revitalization of KPK and FATA World Bank

2. Certificate/Financial Attest alongwith the Audit Report containing therein the

management letter (ML) on the same is attached herewith. The referred is hereby issued

simultaneously to the Government (EAD) and to the World Bank Resident Mission

Islamabad through EAD.

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Financial Attest Audit Report on the Accounts of

Additional Financing for Social Safety Net Project (AFSSNTP)

IDA Credit No. 5042 -PK (SF)

Benazir Income Support Program

for the Financial Year 2015-16

Auditor General of Pakistan Islamabad

TABLE OF CONTENTS

PREFACE ................ i

PART-I............................................................

PROJ ECTOVERVIEW ....................... 2........... ...... 2

AUDITOR'S REPORT TO THE MANAGEMENT (Audit Opinion) .................. 3

FINANCIAL STATEMENTS ............................................. 4

PART-I........... ................................................ 13

COVER LEITTER TO THE MANAGEMENT LETTER ............... ............ 14

EX]ECUTIVE SUMMARY .................................... .......... 16

MANAGEMENT LETTER.......................................... 17

I. INTRODUCTION ........................................... ..... 18

2. AUDIT OBJECTIVS ............................................. 18

3. AUDIT SCOPE AND MITIODOLOGY ............................... 18

4. AUDIT FINDINGS AND RECOMMENDATIONS .............................. 19

4.1 Financial Management ...................................... ..... 19

4.2 Overall Assessment .............................................

5 CONCLUSION................................................. 22

Abbreviations and Acronyms

AFSSNP Additional Financing for Social Protection Development Project

BISP Benazir Income Support Program.

CBAS Cash Basis of Accounting Standard

GPO General Post Office

INTOSAI International Organization of Supreme Audit Institutions

ISSAI International Standards of Supreme Audit Institutions

NBP National Bank of Pakistan

SDR Special Drawing Rights

PREFACE

She Auditor-General of Pakistan conducts audits subject to Articles 169 and 170 ofthe Constitution of the Islamic Republic of Pakistan, 1973 readx ith Sections 8 and 12 of theAuditor-General's (Functions, Powers and Terms and Conditions of Service) Ordinance,2001. The audit of the Additional Financing for Social Safety Net Project (AFSSNP) underBenazir Income Support Program (1ISP) IDA Loan No.5042-PK (SF) for the Financial Year2015-16 funded by the International Development Association (IDA) was carried outaccordingly.

The Directorate General Audit (Federal Government), Islamabad conducted audit ofthe AFSSNP in November, 2016 for the financial year 2015-16 with a view to reportingsignificant findings to stakeholders. Audit examined the economy, efficiency andeffectiveness aspects of the AFSSNP. In addition, Audit also assessed, on test check basis,whether the management complied with applicable laws, rules and regulations in managingthe AFSSNP. The Audit Report indicates specific actions that, if taken, will help themanagement realize the objectives of the AFSSNP.

The Report consists of two parts. Part-i contains Auditor's Report (Audit Opinion)and Financial Statements. Part-l contains Executive Summary. Management Letter andAudit Findings.

The report has been prepared for submission to the International Development

Association (IDA) in terms of Loan Agreement No.5042-PK (SF).

Dated:. )9. 12.2016 (MUHAMMAD AJMAL GONDAL)Place: Islamabad DIRECTOR GENERAL

PART-I

OVERVIEW

S REPORT TO THE MANAGEMENT (Audit Opinion)

STATEMENTS

1

PROJECTOVERVIEW

Name of Project: Additional Financing for Social Safety Net Project(AFSS-;1NP)

Sponsoring Authority International Development Association (IDA)

Executing Authority: Benazir Income Support Program

Loan No: 5042--PK (SF)

PC-I Cost Not Applicable

PC-I Cost: Not Applicable

Date of commencement: Not Applicable

Date of Completion (As per PC-1): Not Applicable

Date of Approval by LCNEC: Not Applicable

Loan Closing Date 31.12.2016

Loan utilization status in Rs. 5,342.936F.Y 2015-16:

Progressive ExpenditureUnto last F.Y 2014-15 Rs.6.,385,132,136

2

NoYasmeen M1asoodSecretary,Benazir Incone Support Program,F-Block Islamabad.

Auditor's Report on the Additional Financing for Social Safety Net Project (AFSSNP)Financial Statements.We have audited the accompanying Additional Financing for Social Safety Net Project(AFSSNP),Benazir Income Support Program financed under the International DevelopmentAssociation (IDA) Loan No.5042-PK (SF)for the year ended 30"'June, 2016.

Management ResponsibilityIt is tie responsibility of the project management to establish and maintain a system ofinternal control, and prepare and present the Statement of Receipts and Payments inconformity with the requirements if Cash Basis IPSAS, Financial Reporting under the CashBasis of Accounting Standard.

Auditor's ResponsibilityThe responsibility of the auditor is to express an opinion on the accompanying statementsbased on our audit. We conducted our examination in accordance with the InternationalStandards on Auditing. These standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of materialmisstatement. Our audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. It also includes assessing the accountingprinciples used and significant estimates made by the management. a well as evaluating theoverall statement presentation. We believe that our audit provides a reasonable basis for ouropinion.

OpinionIn our opinion:

a) The financial statements present fairly, in all material respects. the cash receipts andpayments by the project for the year ended 30"' June, 20 16 in accordance with CashBasis IPSAS, Financial Reporting under the Cash Basis of Accounting Standard.

b) [he expenditure has been incurred in accordance with the requirements of legala0reements.

(MUHAMMAD AJMAL GONDAL)DIRECTOR GENERAL

Directorate General Audit (Federal Government),Benevolent Fund Building. Zero Point, Islamabad.

D)ated: . L 12.20 16

3

ADDITIONAL FINANCING FOR SOCIAL SAFETY NETPROJECT (AFSSNP)

FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR 2015-16

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Additional Financing for Social Safety Net Project - IDA CREDIT # 5042

NOTES TO THE FINANCIAL STATEMENTFOR THE PERIOD ENDED JUNE 30,2016

1..THE PROJECT1.1 To support the expansion and stregthen the administration and performance of the Social Safety Net Technical Assistance

Project focus on Benazair Income Support Programme, Government of Pakistan has entered into agreement for Additional

Financing with " International Development Association (IDA)" effective from May 28, 2012 with closing date of June 30, 2016.

-The Additional Financing would provide additional support to the original project Components 1, 2,3 and 4, which are as follows:

Component 1: Establishment of a National Targeting System

Component 2: Strengthening Safety Net Operations

Component 3: Enhance Safety Net Program, and Management Accountability and Evaluation

Component 4:Advancing the Social Protection Policy and Strategy Monitoring

- 1.2 In accordance with Development Credit Agreement IDA has sanctioned credit of Special Drawing Rights (SDR 40.2 Million)

a loan of US$ 60 million (original) + US$ 150 Million AF = US$210 million to GoP for the Project.

2. SIGNIFICANT ACCOUNTING POLICIES

Following accounting policies have been applied in dealing with items, which are considered material to Additional Financing of

Social Safety Net Technical Assistance Project financial statements

2.1 BASIS OF PREPARATION

The financial statement has been prepared in accordance with international Public Sector Accounting Standard (IPSAS) Cash

Basis.

2.2 ACCOUNTING CONVENTION

These financial statements have been prepared under the historical cost convention with cash basis of accounting. Accordingly,

- expenses are reccognized when paid rather incurred.

2.3 CURRENCY

The financial statements have been prepared in equivalent Pak Rupees. The receved foreign currency amounts were translated /converted into Pak. Rupees at the SBP Weighted Average Buying Rate of exchange rate prevailing on the date of transfer of funds

0y the donor and payments were translated notionally at the SBP rate of exchange at which the foreign currency was purchased

by the SBP ( date of reciept of funds from the donor in SBP). The financial statements have been prepared in Pak Rupees except a

Special Account Statement on prescribed format and a statement called SOE Withdrawal Schedule, which contains detail

information regarding replenishment of account.

2.4 GOODS / PHYSICAL ASSETS

Fixed Assets are stated at cost.

2.5 GOVERNMENT FUNDS & GRANTFunds allocated to Project from Government & Donor Agencies are not recognized till these have been accounted for by the State

Bank of Pakistan against the Special Account maintained with the National Bank of Pakistan, Civic Centre Branch, Islamabad.

No future related funding commitments have been recognized against any financing source.

2.6 FOREIGN EXCHANGE TRANSACTIONS

Transaction in local and foreign currencies is accounted for in compliance with the Finance Division O.M. No. F.2. (1) -

B.R-1l/2007-949 dated 2nd August,2013.

2.7 PROVISIONSDue to cash basis of accounting, no provision is recognized in the financial statements, However, if there is any event

which may have a legal or other obligation with contingent financial implications, then it is identified by a separate

disclosure in the notes to the financial statements.

2.8 OFFSETTING

Neither assets-liabilities nor fund flow & expenditure have been set off in the financial statements.

AASMA NOMAN, A MED B, MUHAMMADAKMAL KHAN,

Financial Management Specialist-I, Financial M eme Specialist-[I, ctor (Finance and Accounts)

13sP. MuhammSD BIsp.

BENAZIR INCOME SUPPORT PROGRAMME

Additional Financing for Social Safety Net Project - IDA CREDIT # 5042NOTES TO THE FINANCIAL STATEMENTFor the year ended June 30. 2016

FY-2015-2016 FY-2014-2015

Pak Rs. U5D Pak Rs. USID

ReceiptsNote 3 Receipts from IDA - AF

First installment 467,368,887.00 4,4S7,8S3-00 97,089,823.64 985,817560

Second installment 2,360,849,174 00 22,555,48-75 923,538,419.00 9,084_11E.50

Tnird installment 1,534,265,925-00 14,654,768.00 1,847,076,83800 18,168,231.00

Total IDA Receipts 4,362,483,986.00 41,668,109.75 2,867,705,081 28,238,164

AASMA NOMAN, AH AtOB, MUHAMMAD AKMAL KHAN,

Financial Management Specialist-1, Financial Manage nt Specialist-Il, eC Finance and Accounts)

BsP. B P- Muhamma slam BiSF.

Audit Of icorD.G. Audit (F. Govt)

BENAZIR INCOME SUPPORT PROGRAMME

Additional Financing for Social Safety Net Project - IDA CREDIT # 5042NOTES TO THE FINANCIAL STATEMENTFor the year ended June 30. 2016

Note - 4

FY-2015-2016 FY-2014-2015(Rupees) CUSS) (Rupees) (Us$)

4-1 CommissionBank Al Falah 127,343,649 1,216,630.97 112,985,280 1,147,839,59

United Bank Ltd 6,634,770 63,388,41 83,500,000 848,32931

Habib Bank Ltd 135,715,195 1,296,607.04

Post Office 1,236,020 11,858.66 28,718,370 282,479.85

Summit Bank 1,646,430 15,726.13

Tameer Bank 5,543,190 52,959.49

Sindh Bank 1,432,719 13,688.16 4,994,730 50,744-65

279,551,973 2,670,858.86 230,198,380 2,329,443.90

4-2 Cash Transfer (Phase-Il)

4-2-1 Benazir Debit Card (BDC)M/5 UBL Islamabad 42,038,500 401,619.14 67,500,000 685,775.59

M/s Summit Bank 1,093,747,100 10,757,073.19 47,250,000 480,042,9

M/S Sindh Bank 180,757,300 1,726,95C.32 173,160,000 1,759,242.99

M/S Bank Al Falah 10,152,000 96,968.40 67,500,000 685,775.59

M/s HBL Islamabad - 67,500,000 685,37243

M/s Tameer Bank 27,246,000 260,244.39 67,500,000 685,775.59

Cheif Post Master GPO Is[amabad 1,568,051,600 14.981,122.31 400,918,500 3,944,340.00

2,921,992,500 28,223,977.75 891,328,500 8,926,325

4-2-2 Phone to Phone (P to P)M/S UBL Islamabad _ 226,665,000 2,3028344A

M/s Summit Bank

M/S Sindh BankM/S Bank Al Falah

M/s HBL Islamabad 303,934,900 2,903,785,76

M/s Tameer Bank

Cheif Post Master GPO Islamabad303,934,900 2,903,785.76 226,665,000 2,302,834.44

4-3 Waseela-e-Taleem

M/s UBL Islamabad 562,306,500 5,530,963.40 43,055,400 433,782.83

M/s Summit Bank 153,154,200 1,482,99611

M/5 Sindh Bank

M/S Bank Al Falah 243,072,750 2,366,850,76 26,501,400 267.123,21

M/s HBL Islamabad 426,507,900 4,119,591.T

M/s Tameer Bank 422,959,200 4,112,907.18 2,040,000 20,302.0

Cheif Post Master GPO Islamabad 29,456,466 284,353.46 156,000 1,533 9

1,837,457,016 17,897,662.63 71,752,800 722,792.04

Total Expenditure 5,342,936,389 51,696,285.00 1,419,944,680 14,281,395

AASMA NO AN, A D MUHAMMAD AKMAL KHAN,

Financial Management Specialist-I, Financial Managem Sp list-Il, Director (Finance and Accounts)

BISP. B[SP. BISP_

MA~uhaimml d saam