OFFICE OF THE PRINCIPAL DIRECTOR OF AUDIT (CENTRAL),

Cblllfcill >rCIR ~~~1¢ J)'8j1q~e:rr (~). ~ m. LUCKNOW

BRANCH OFFICE: ALLAHABAD m'8ll Cblllfcill : ~m

~: ~ocro (~o)/"CT.m.™/2015-16 / 327 ~: t' .12.2015

,, I ' .-~ ,. .. . ;/ /'

. ~ -: . ~5-~-.. ··,_ • r /: ,,, ,., ' r - . ', \

\ .. " ) ( . '

~ ~ r . ;i;.( •',, .. • ' 1•1. .... ,

•\ '\

\ :·· ·, ' \ I ~ t .. 1,. ~ ..... Y"'H:. ~

·r

-- - . > ,' .. • ......... , - ~ ... . ~ ;

~: ~ 2014-15 ~ ~ ~ ~ flt::lllR'la qRlJ1\J1'113IT ct c>l ·~1q~e:rr >P1fUT 1f5r frrfu ~ vrR ct~ lf I

~.

\3Ygcrn fc1cp:~¢ ~ Cbllllcill cfi ~: 1010 /<1lfr.~.\ff.\ff.i:lt. /2015- 16

~ 28.10.2015 ~ cpq it ~ 2014-15 cf; Re; ~ ~ fH$1llR'ICi YRlll\JF113TI° Cf)f

fl '011 q ~!ITT w=rruT 1f'5r ~ Cb I 4CJ I g) 8J ~ ~ fcr<:Tr '\J1T ffl ~ I

7:l'1_; tT?f ~tTR ~~~1¢, fl'8llY~!ITT (~) cfi 0lj'il~'1 cfi \3Yxhi f.1rfcr fcn<rr '\J1T m ~I

~: ~oCTo (~o)/"CT.m.™/2015-16/ ~: .12.2015

qfaf"Mfq: ~. Fctrn Jio;;i1C"\ll, ~ ~ cnr fcr.wT. ~ flxCb1x . 5 err ~. m fct<T. \J1'1Y"~

~. ~ ~-110001 cpl- ~cl~ 011CJ~llCb Cbl4CJl6°1 8J ~I

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

To

OFFICE OF THE PRINCIPAL DIRECTOR OF AUDIT (CENTRAL),

<P1~rC'1~ m:TR r:t~~1<P c>i'{Sl1q~an (~). ~ m. LUCKNOW

C'l '{Sl '"113?

BRANCH OFFICE: ALLAHABAD ~ <Pl~fC'l~ : ~C'lll51~1C:

Report of the Comptroller and Auditor General of India

The Project Director,

UP Health Systems Strengthening Project,

Block-C, Indira Nagar,

Lucknow.

Report on the Project Financial Statements

We have audited the accompanying financial statement of the U.P. Health

Systems Strengthening Project financed under World Bank Credit No. 5033-IN which

comprise the statement of sources and applications of funds and the reconciliation of

claims to total applications of funds for the financial year 20 l 4-15 . These statements

are the responsibility of the project's management. Our responsibility is to express an

opinion on the accompanying financial statements based on our audit.

We conducted our audit in accordance with the auditing standards

promulgated by the Comptroller and Auditor General of India. These standards

require that we plan and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatements. Our audit

examines, on a test basis, evidence supporting the amount 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, the financial statements present fairly in all material respects,

the sources and applications of funds of UP Health Systems. Strengthening Project for

the year ended 2014-15 in accordance with Government of India accounting

standards.

In addition, in our opinion,

(a) with respect to SOEs, adequate supporting documentations has been maintained

to support claims to the World Bank for reimbursements of expenditures incurred;

and,

(b) except fo r ineligible expenditures as detailed in the audit certifi cate to thi s audit

report, expenditures, are eligible for fin ancing under the credit agreement 5033-fN.

During the course of audit, statement of expenditure and the connected documents

were examined and these can be relied upon to suppo1i reimbursement under the

aforesaid credit agreement.

(Zin million)

S!. No. Application No. Total Expenditure Reimbursable

1. Rf 8/890/17.11.2014 25.115 15.748

2. RF9/36l/O1.05.201 5 92.942 93.288

Total 118.057 I 09.036

This report is issued without prejudice to CAG's ri ght to incorporate the audi t

observations in the report of the CAG of India for being laid before Parliament/State

or UT Legislature.

Audit observation

I. During the year 2014-15, Z505.00 million was provided by the World Bank

(WB) for executing different works relating to the Project, but the project

authorities could spend onl y Zl 18.06 million which was 23.3 8 per cent of the

total budget released by the WB. The poor pace of expenditure of the Project

was attributable to the frequent transfers of the Proj ect Directors and delay in

,

finalisation of tenders. As a result, the unit ultimately had to surrender 76.62

per cent of the budget. Non-utilisation of a sizable proportion of the budget

reflected poor financial management.

2. Under the head 16- Professional and Special Services, the unit incurred

~0.10 million for making payments to the arbitrators/advocates for

pursuing cases not covered by the project period. Since the cases were

very old and pertained to the previous project, this amount of~ 0.10

million is not eligible expenditure for reimbursement by the World

Bank.

3. Physical verification of the fixed Assets and Dead Stocks had not been

carried out since inception of the Project. As such, current status of the

stores and stocks and fixed Assets could not be ascertained in the audit.

4. The unit incurred ~ 0.0 10 million towards payment of bonus to gazetted

employees. Since gazetted employs were not entitled to bonus, this amount of

~0.010 million does not qualify for the reimbursement by the World Bank.

5. As per provisions of the Financial Management Manual (FMM), the Internal

Audit of the Project was to be undertaken by a firm of Chartered Accountant

on quarterly basis. However, no report was made available to the audit and

compliance with provisions of the FMM could not be verified in Audit.

6. The project incurred ~12.24 million under the head '46-Computers and

Hardwares/Softwares'. However the unit did not produce the adjustment

vouchers of~ 12.24 million. Hence expenditure incurred on the purchase of

computers and Hardwares amounting to ~12.24 million does not qualify for

reimbursement by the World Bank.

7. The unit (Project) released ~0.97 million under the head 'Cleaning and

Gardening to District Hospital (Male), Mirzapur'. However, no adjustment

vouchers were made available for verification of expenditure. As such ~ 0.97

million does not qualify for the reimbursement by the World Bank.

8. As per Notification No. 30/2012-ST, dated 20.06.2012 issued by Ministry of

Finance, in the case of supply of manpower for any purpose or security

service, 75 per cent of total service tax payable is to be paid by the person

receiving the service and 25 per cent by person providing the service. The

unit, however, paid full service tax resulting in overpayment payment of tax of

'{ 0.045 million.

9. Service Tax has been paid on reimbursable portion of the bill of the consultant

Mis Ecorys Nederland BY towards technical ass istance provider consultancy.

However, as per judgement of Delhi High Cou1i in the case of Mis

Intercontinental Consultants and Technocrates Pvt. Ltd., reimbursement

portion is not liable to service tax. Hence '{0.032 million does not qualify for

reimbursement by the World Bank.

(Nishi Kant Gautam)

Dy. Director of Audit (CE)