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Financial Attest Audit Report on the Accounts of

National Social Protection Progranime

Credit No. IDA 5973-Pak

Benazir Income Support Program

For the Finincial Year 2017-18

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'TABLE OlF CONTENT'S

1,U ST O F Å A 131B R E-V l A T T 0 N S ............................-................ - --..............- - .. ..... -....- .-.

P R E F A C E .. ...... .. ,. -. -.......-I....- --...- -....... ..I......-.........- .. .. .1 1. .. ..... .... ... .. .. .. .. . i

P..A.R..T -.......... ........ ....... ........ ...- -. .... ...... -............. .....- -.............. -. .. ... --... ..

PROJECT OVERVIEW.I2

AL 'DITOR'S REPORT T O 'Fl IE MANAGENIENI .....3.., ...- .............. 3

VINANCIAL STATEM ENTS - .-...... - ...... ..- ....-...- ......... ...... 4

P A R T -II ... ... .. ..-. ... .... .. .. ..I.. ..................... .............. ..-- -.-... -........ ... ... .....- 5

COVERIN(i [ TTER TO THE1 NIANAGEMENT 1T E R . ..............- ........ 7

EXECUT'IVE SUM MARY ....... 8......... -..................... . .. 8

MANAGEM EN'T LETER ...-<.9............ - . . . .-............... 9

1. IN RO D U C T IO N -.(......... .......... ...............- .....- .. ....... .. 10

2. AUDFT OBJECTFIVIS .....-BJE..IV..1.......- .... -.......................... 10

3. AUDIT SCOPL AND NIM ET HODOL OGY -............. 1 .-- .-.... .... -- - -. --........

4. AUDIT FINDINGS AND RECOMMENEDADT1ONS.....-.. .......... ...... ........ 10

4.1 Financial N1imaemient ..................-..- ....... . . ............. 10

4.2 S ustainability ..- -... ..... -........ . ......... ..... .. .. ..........

4.3 O verall A ssessm ent ...................................................-........ I

5. C O N C LU SIO N ... ............- . . . . . . .I .....-... I ..- ..12

ACKNOWLDEDGV'MEN T.3....................-............. .- . . ... 13

LIST OF ABREVIAI iONS

AJP Auditor General olPakistan

AGiR \ecouitant General Pakistan Revenues

13 [S Benazir [neome Support Program

CGA Comroller (ieneral of Accounis

DLIs Disbursement Linked Indicators

DIRs Disbursement Linked R{esults

EAD Fconomic Aflirs Division

TR I edcral Trcasury Rules

(i FR General Financial Rules

GOP GiovernMenlt of Pakistan

l P General lPost Oftice

I1PSAS International Public Sector Accounting Standards

ISSAIs lnternational Standards ol' Supremie Audit Institutions

SEiR National Socio Economic Registrv

NoL No Objection [etter

PC-I Planning Commission-1

Rs. Rupees

SPP l' National Social Protection Programe

11S n I iited States Dollar

WB I World Uank

\\ T WIrld Trade Organization

P 1m

PREFACE

Auditor General of Pakistan conducts audits subject to the Articles 169 and 170(2) of theConstitution of the Islamic Republic of Pakistan, 1973 read with Sections 8 and 12 of theAuditor General's (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001.The audit of "National Social Protection Programme (NSPP)" under Benazir Income SupportProgram for the Financial Year 2017-18 funded by the International Development Association(IDA) was carried out accordingly.

Directorate General Audit (Federal Government) conducted audit of the project during October,2018 for the period 2017-18 with a view to reporting significant findings to stakeholders. Auditexamined the economy, efficiency, and effectiveness aspects of the project. In addition, auditalso assessed, on test check basis, whether the management complied with applicable laws, rulesand regulations in managing the project. The Audit Report indicates specific actions that, if

a. taken, will help the management to realize the objectives of the project.

The report consists of two parts; Part-I contains Auditor's Report (Audit Opinion) and FinancialStatcments; Part-Il contains Executive Summary, Management Letter and Audit Findings.

The report has been prepared for submission to the Intcrnational Development Association (IDA)in terms of Credit Agreement No. IDA-5973-PAK.

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. Dated: [O.12.2018 (MAQBOOL HMAD GONDAL)Place: Islamabad DIRECTO GENERAL

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1. IOJECT OVIll<VIVW

.2. AI:DiTOR'S REPORiT TO Tilic N1ANAGE flENTM

3. FINANCIAl. STAIINlEN'S

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PROJECT 'I OVELRV! EW

Name of Project: National Social lrotcetion Prograniie (NSPP)

Sponsoring Authority: International Development Asociation (IDA)

ixecuting Autlhority: 3lenazir lneome Support Program (81lSP)

Credit No: IDA5973-PAK

Projet Cost: Rs.210.727million

U SD 2.000 million

Ite fi Commencement: 30.03.2017

Aetual Date ofICommencment: 01.07.2017

Dale ot'Completion: 30.06.2021(As per agreelent)

L n losing Date: 30.06.2021

Expenditure: Rs.3,939.581 millionIRs.52.763 million iuiy 2017 to June 2018) by BISP|(Rs.3.880.918 million were directly transferred to GoP)

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AUDITOR'S REPORT TO THE MANAGEMENT

Mr. Omar Hamid Khan,Secretary to the Government of PakistanBenazir Income Support Program'F'-Block, Pak SecretariatIslamabad

Auditor's Report on the National Social Protection Programme (NSPP) FinancialStatements

We have audited the accompanying Financial Statements of National Social ProtectionProgramme (NSPP), IDA Credit 5973-PAK under Benazir Income Support Program thatcomprises Statement of Receipts and Payments together with the Notes forming part thereof forthe year ended June 30, 2018.

Management's Responsibility

It is the responsibility of the project management to establish and maintain a system of intemalcontrols, and prepare and present the Statement of Receipts and Payments in conformity with therequirements of Cash Basis International Standards of Supreme Audit Institutions (IPSAS)

e. Financial Reporting under the Cash Basis of Accounting Standard.

Auditor's Responsibility

The responsibility of the auditor is to express an opinion on the financial statements based on theaudit conducted. We conducted audit in accordance with the International Standards of SupremeAudit Institutions (ISSAls). These standards require that we plan and perform the audit to obtainreasonable assurance whether the financial statements are free of material misstatements. Theaudit process includes examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statcmcnts. It also includes assessing the accounting principles usedand significant estimates made by the management, as well as evaluating the overall statementpresentation. We believe that our audit provide a reasonable basis for our audit opinion.

OpinionIn our opinion:

a) The Financial Statements present fairly, in all material respects, the cash receipts and

payments made by the project for the year ended June 30, 2018 in accordance with Cash

Basis IPSAS Financial Reporting under the Cash Basis of Accounting Standard.

b) The expenditure has been incurred in accordance with the requirements of legal

agreement.

(Maqbool Ahmbd Gondal)Director General

Directorate General Audit (Federal Government)Benevolent Fund Building, Zero Point, IslamabadDated: It.12.2018

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BENAZIR INCOME SUPPORI PROGRAMME

NATIONAL SOCIAL PROTECTION PROGRAMME - IDA CREDIT It 5973

Statement of Cash Receipts and Payments

For the year ended June 30,2018

FY-ZO17-2018

(Rupees in Wilion) (US$ In Million)

NOTES Receipts Payments by Receipts Payments Payments byPayments Third Parties CorarcHed by BISP Third Parves

Cofltrolled by BISP

RECEIPTStwo Receipt5 Irani IDA 210-727 2,000

o R by th r World Bank 3,886-918 35-100TOTAL RECEIPTS 4,097 645 37.100

PAYMENTS

11'roject Management 4-1 5 .663 0,500

IDirect Transferto GoP by the World Ba- - 6.918 35,100

TOTAL PAYMENTS 3,939.581 35.599

Net payatents 3,939,581 35.599

60 Net RVL(7 Pt , 4,097.645 37.100

In creasc/Deurea ,e in r. ash I

Cash at the begin-)ing of the Year

in cash 150.054 1.500

CASh ai the end of the year 1.50

N, Ma m1d K a(F.41 RISP

FWIS, BISP Direcdt I " (F-A)HISP

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POW' MAHMOODAHMADKHANgl'004 00 Oircctor( XA)

V vion Senazir income SUPPOrl ProgirarnmeWN .1e-t0fa ' 06"1 11% 'Govern men 11 of Pa k iS to n

Islamabad

BENAZIR INCOME SUPPORT PROGRAMMENATIONAL SOCIAL PROTECTION PROGRAMME - IDA CREDIT # 5973

Cash Flow StatementFor the Financial Year July 01, 2017 to June 30, 2018

FY-2017-18Rs. In Millions US$ In Millions

Cash inflow from Stakeholders Financing

Receipts of Technical Assitance (TA) 3 1 210.727 2.000

w Receipts as direct Tranfer to GOP by The World Bank -3-2 3,886.918 3'100TOTAL RECEIPTS 4,097.645 37. 100

Cash outflow from Operating Activities

Project Managemnent 4-1 52.663 0,500

Direct Transfer to GoP by the World Bank 4.2 3,886.918 35.100

TOTAL PAYMENTS 3,939.581 35.599

Increase/Decrease in cash 158.064 1.500Cash at the beginning of the Year -Cash at the end of the year 158.064 1.50

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BENAZIR INCOME SUPPORT PROGRAMMENATIONAL SOCIAL PROTECTION PROGRAMME - IDA CREDIT # 5973

NOTES TO THE FINANCIAL STATEMENTFOR THE PERIOD ENDED JUNE 30, 2018

. THE PROJECTThe World Bank vide their project namely National Social Protection Program (NSPP) signed on 30.03.2017 hascommitted US$ 100 million credit from IDA Scale-Up Facility (SUP). The Project aimed to support the Government ofPakistan through

a) Program for Results (PforR) in an amount of US$ 90 million by making disbursements against the key results aspart of the government's program

t b) An investment Project Financing (IPF) TA component in an amount of US$ 10 million to finance critical areas toachieve the Qualitv of results.

1.2 The Project was signed on 30.03.2017 but no receipt was received and no expenditure was incurred prior to01.07.2017. All transactions were incurred in FY 2017-18

2. SIGNIFICANT ACCOUNTING POLICIES

a Following accounting policies have been applied in dealing with items, which are considered material for financialstatements of National Social Protection Program (NSPP)

2.1 BASIS OF PREPARATION

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

a 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

i translated / converted into Pak. Rupees at the SBP Weighted Average Buying Rate of exchange rate prevailing on thedate of transfer of funds by the donor and payments were translated notionally at the SBP rate of exchange at whichthe foreign currency was purchased by the SBP ( date of reciept of funds from the donor in SBP). The financialstatemenis have been prepared in Pak Rupees except a Specia4 Account Statement on prescribed format and a

so 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

a by the State Bank of Pakistan against the Special Account maintained with the National Bank of Pakistan, Civic CentreBranch, Islamabad.No future related funding commitments have been recognized against any financing source.

- 2.6 FOREIGN EXCHANGE TRANSACTIONSTransaction in local and foreign currencies is accounted for in compliance with the Finance Division O.M. No.F.2. (1) - B.R-ll/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 OFFSETTINGNeither assets-liabilities nor fund flow & expenditure h qe been set off in the financi tements.

1k,4IF Direc F.A

Of TMAHMOODAHM DKHANDirector (F A)

Beenazir income SupPD ProgrammeGovernenit of Pakistan

-9:5 Islamabad

BENAZIR INCOME SUPPORT PROGRAMMENATIONAL SOCIAL PROTECTION PROGRAMME - IDA CREDIT # 5973NOTES TO THE FINANCIAL STATEMENTFOR THE PERIOD ENDED JUNE 30 2018

FY-2017-2018

Rs. USDin Million) (in Mllion)

ReceiptsNote 3-1 Receipts øf Technical Assitomnce AJL

Withdrawal Application No I etter Nu. BKG U

10(ICA)/20782/827-2017 210.727 2,OGO

210.727 2.000

Note 3-2 Receipts as direct Tronfer to GOP by The World Bank

25°% Advance Againts DLIs through WA # 2 2,460.419 23.35425°, Advanœe Againts DLIs through WA # 4 after adjustment of

0Lle A 4 and A-5 aginst earlier advavre 1,426.499 11,746

3,886.918 35.100

Total Receipt 4,097645 37.100

FMS, BISP Dir A) BISP

MAHMOODAHM DKHANç tBenazi incorm iUpp ri Programme

Government of Pakistan

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BENAZIR INCOME SUPPORT PROGRAMMENATIONAL SOCIAL PROTECTION PROGRAMME - IDA CREDIT ft 5973Detail of ExpendituresFor the year ended June 30, 2018

NOTE-4.1 PKR) FY 2017-18

Testin and StrengtheningTesting and Monitoring and 'I*Fiduciary and

Innovations (Dynamic .oioigaj Capacity Building Fiuiarand Project ManagementHead of Accounts Total Amount INSER update) Evaluation Environmental Social

ConLrols

Component 1 Component 2 Component 3 Component 4 Component 5

AJ3770 -Consultancy and Contractual Work 51,43267-00 - 51.843,267.00

A03105 -Travelling Allowance 819,804,00 819,804.00

Total Expense 52,663,077000 52,683,071000

NOTE-4.2 (PKR)

Direct Transfer to GoP by The World Bank Amount

25% Advance Againts DLIs through WA # 2 2,460,419,001.000

25% Advance Againts DLls through WA # 4 1,426,499,031.000

Total 3,886,918,032.000

FMS, BISP Director (F.A) BISP

MAHMOODAHMAD KHANDirector (FJA)

Senazir Income Suppdrt ProgrammeGovernmewnt Pakistan

Wsfamabad

rg g gr r r F

BENAZIR INCOME SUPPORT PROGRAMMENATIONAL SOCIAL PROTECTION PROGRAMME - IDA CREDIT ig 5973

Detail of ExpendituresFor the yearended June 30. 2018

NOTE-4.1 (USD) FY 2017-18

Testing and StrengtheningIetn n Monitoring and Fiduciary andInovations (Dynamic Moioigad Capacity Building FdcayndProject Management

Head of Accounts Total Amount NSER update) Evaluation Environmental Soc[alControls

Component 1 Component 2 Component 3 Component 4 Component 5

AD3770 - Consultancy and Contractual Work 492 041.06 1 492,041.06

AD3W5 Travelling Allowance 7,78071 7,780.71

Total Expense 499,821.770 499,821.770

NOTE-4.2 (USD)

Direct Transfer to GaP by The World Bank Amount

25% Advance Againts Lls through WA # 2 23,354,070.000

25% Advance Againts Otis through WA # 4 11,745,576.00

Total 35,099,646.000

F4,BIP Director (F.A) BISP

MAHMOOD AA9)trec torJ($A)

Senazilncom5u a\labr Prograr'I""L" Of Pakistan

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