Office of the

AI M

Special Sectors Audit WingConstitution Avenue tsl

Islamabad

No.PA/FAP/FG/SSA/F-13/ 6 Dated: 29 -12-2016

To,1. The Secretary,

Economic Affairs Division,

Government of PakistanPak Secretariat, Block "C",Islamabad

2. /The Country Director,World Bank Resident Mission, 20-A, Shahrah-e-Jamhuriat

Sector G-511, 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 IDA

Emergency Recovery Project TDPs of FATA IDA

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

Ombudsman IDF: Institutional Capacity Building

GrantNo.TF-012310

Federal Tax Ombudsman

For the Financial Year 2015-16

Auditor General of Pakistan Islamabad

TABLE OF CONTENTS

Abbreviations and Acronyms ............................................ i

PREFACE ..... 1..................................................

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

PROJECT OVERVIEW................................ 2

AUDITOR'S REPORT TO THE MANAGEMENT (AUDIT OPINION)...... ........ 3

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

PAR'l1 ...... ............ .................................................................. ...........

COVER LETTER TO THE MANAGEMENT LETTER............... .......... 6

EXECUTIVE SUMMARY..............................................8

MANAGEMENT LETTER.............................................8

1. INTRODUCTION.......................... .................... 10

1 AUDIT OBJECTIVES. ........................... ................ 10

3. AUDIT SCOPE AND METHODOLOGY..............................10

4, AUDIT FINDINGS AND RECOMMENDATIONS............ . ............ ?

4. Organization Management.....................................12

4.2 Financial Management........................................26

4.3 Monitoring and Eval nation.....................................27

4.4 Compliance with Loan/Grant Agreement...........................28

4.5 Sustainability... .......................... ................. 30

4.6 Overall Assessment.......................................... S

. CONCLUSION........................ . ........ 19

ACKNOWLEDGEMENT . ............................................. 20

Abbreviations and Acronyms

AGP Auditor General of Pakistan

AGPR Accountant General Pakistan Revenues

EAD Economic Affairs Division

FR) Federal Tax Ombudsman

GOP Government of Pakistan

1I)A International Development Association

IDF Institutional Development Fund

101 International Ombudsman Institute

IPSAS International Public Sector Accounting Standards

ISSAI International Standards of Supreme Audit Institutions

NOL No Objection Letter

PC-1 Planning Commission-I

Its. Rupees

USD United States Dollar

WB World Bank

PREFACE

The Auditor-General of Pakistan conducts audits subject to Articles 169 and 170 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 "Ombudsman IDF:InstitutionalCapacity Building" under Federal Tax OmbudsmanGrant No.TF-012310for the financial year 2015-16 funded by the International DevelopmentAssociation (IDA) was carried out accordingly.

The Directorate General Audit (Federal Government), Islamabad conducted audit of the"Ombudsman IDF: Institutional Capacity Building" in October, 2016 for the period 2015-16with a view to reporting significant findings to stakeholders. Audit examined the economy,efficiency, and effectiveness aspects of the "Ombudsman IDF: Institutional Capacity Building",In addition, audit also assessed, on test check basis, whether the management complied withapplicable laws, rules and regulations in managing the "Ombudsman IDF: Institutional CapacityBuilding". The Audit Report indicates specific actions that, if taken, will help the managementrealize the objectives of the "Ombudsman IDF: Institutional Capacity Building".

The Report consists of two parts. Part-I contains Auditor's Report (Audit Opinion) andFinancial Statements. Part-Il contains Executive Summary, Management Letter and AuditFindings.

The Report has been prepared for submission to the International DevelopmentAssociation (IDA) in terms of Grant No. TF-0123 10.

Dated: 28.12.2016 (MUHAMMAD AJMALGONDAL)Place: Islamabad DIRECTOR GENERAL

PART-I

1. PROJECT OVERVIEW

2. AUDITOR'S REPORT TO THE MANAGEMENT

3. FINANCIAL STATEMENTS

1

PROJECT OVERVIEW

Name of Project: Ombudsman IDF: Institutional Capacity Building

Sponsoring Authority: World Bank (International Development Association)

Executing Authority: Federal Tax Ombudsman (FTO)

Grant No: TF-012310

Project Cost: US$0.445million

Date of Commencement: 01.07.2012

Actual Date of Commencement: 01.07.2012

Date of Completion: 30.06.2016

Grant Closing Date: 10.09.2015

21

Syed Khalid Akhlaq GilaniSecretary to the Government of PakistanFederal Tax Ombudsman SecretariatIslamabad.

- ~ Auditor's Report on the Ombudsman IDF: Institutional Capacity Building FinancialStatements

We have audited the accompanying financial statements of "Ombudsman IDF: InstitutionalCapacity Building" under Federal Tax Ombudsman IDF Grant No. TF-012310 that comprisesStatement of Receipts and Payments together with the Notes forming part thereof for the yearended 3 0 th June, 2016.

Management Responsibility

It is the responsibility of the project management to establish and maintain a system of internalcontrols, and prepare and present the Statement of Receipts and Payments in conformity with therequirements of Cash Basis IPSAS, Financial Reporting under the Cash Basis of AccountingStandard.

Auditor's Responsibility

The responsibility of the auditor is to express an opinion on the financial statements based on theaudit conducted. We conducted our audit in accordance with the International Standards ofSupreme Audit Institutions. 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 statements. 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 provides a reasonable basis for our opinion.

Opinion

In our opinion:

a) The financial statements present fairly, in all material respects, the cash receipts andpayments by the project for the year ended 30'h June, 2016 in accordance with Cash BasisIPSAS, Financial Reporting under the Cash Basis of Accounting Standard.

b) The expenditure has been incurred in accordance with the requirements of legalagreeme t.

(MUHAM AJMALGONDAL)DIRECTOR GENERALDirectorate General Audit (Federal Government),Benevolent Fund Building, Zero Point, IslamabadDated: 28.12.2016

3 Z

OMBUDSMAN IDF: INSTITUTIONAL CAPACITY BUILDING

GRANT NO.TF-012310

FEDERAL TAX OMBUDSMAN

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30TH JUNE, 2016

4|

Ombudsman IDF: Institutional Capacity BuildingFINANCIAL STATEMENT

CREDIT NO .TF-12310STATEMENT OF FINANCIAL AFFAIRS

FOR THE PERIOD 01.07.2015 TO 30.06.2016

A-Cash In-flowDescription Notes 2015-16 2014-15 Cumulative

Amount in Amount in Amount inRs Rs Rs.

Cash & Cash equivalents at the 3 7,350.326 0year beginning 4,655,156

Released from The World Bank 3 2,710,675 10,979.546 36,661 A1 9Direct Payments by the World 1,091,998 0 1,091.998

BankGOP share 0 0 0

Total Cash In-flow 11,152,999 15,634,702 37,753,417

B-Cash Out-flow

Others expenditureConsultant Services 4 6,668,825 5.638,083 17,661.171

Goods 5 3,353,810 2,646,293 6,004.903Training & Capability Building 6 1,130,364 0 14,087.343

Cash Utilization in Other 0 0 0Expenditure

Total Cash Out-flow 11,152,999 8,284,376 37,753,417

Cash and Cash Equivalents at 0 7,350,326he close of the financial year

~~j rector

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Ombudsman IDF: Institutional Capacity buildingFINANCIAL STATEMENT

CREDIT NO .TF-12310NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR 30"' JUNE 2016

1. THE PROJECT1.1 The" Ombudsman IDF: Institutional Capacity Building is a project of'

Government of Pakistan and is effective from 1/7/2012 with the closing date of

30/6/2016. Government of Pakistan (GOP) has entered into an agreement with "The

World Bank" for arranging finance for implementation of Ombudsman IDF:

Institutional Capacity Building.

In accordance with the grant agreement, The World Bank has sanctioned credit of

US$ 445,000 to GOP for the project. The project is being financed in the ratio of

100 percent of total cost by the World Bank. .

2. SIGNIFICANT ACCOUNTING POLICIESAccounting procedure approved (vide) Finance Division letter number [.2(1) BR-

11/2007-88 dated 17/1/201 26/1/2012 and. F.2(l) BR-l1/2007-949 dated 2/08/2013.

2.1 BASIS OF PREPARATION

The financial statements have been prepared under the IPSAS on cash basis.

2.2 ACCOUNTING CONVENTIONS

'he financial statements have been prepared under historical cost convention with cash

basis of accounting when expense are physically incurred and paid.

2.3 CURRENCYThe financial statements have been prepared in Pak Rivees on the exchange rate of the

date on which the payments have actually been made and the notional exchange rate on

the date the fund were released to the State bank of Pakistan from the World Bank.

2.4 FIXED ASSETS

Certified that a set of Video Conferencing costing Rs.2.756,555 and 26 laptops, 26

laeser printers 10 scanners ,12 Fax machines and 10 photocopiers(Total cost

Rs.3,353,810) . have been acquired under the Project.. The assets have been supplied to

the I member offices of Forum of Pakistan Ombudsmen.

GOVFRNNINET FUNDS AND CREDVFS

Funds allocated to project from Donor Agency are not recognized till these have been

credited in the Assignment Account No.00175 maintained with the National Bank of

Pakistan, Main Branch, Islamabad .

2.5 PROVISIONS

Due to cash basis of accounting, no provision is recognized in the financial statements.

However, if there is any event, which may have legal or other obligations with contingent

financial implications. then it is noticed by a separate disclosure in the note to the

financial statement.

2.6 OFFSETTING

Neither assets-liabilities nor fund flow & expenditure have been set off in the lineial

.statements.

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Ombudsman IDF: Institutional Capacity Building

NOTES TO FINANCIAL STATEMENTS FOR THIE YEAR ENDED 30" JUNE 2016.

Note---3 Receipts & Payments against financing resources

Note---3.1 Receipts during the year 01.07.2015 TO 30.06.2016

PKR

Description The World Bank Goverument Beneficiary Total

of Pakistan

1 s Pak Rupees Pak Rupees pak Pak Rupecs

Rupees

- Opning BaaInce j73,384 7,350,326 0 0 7. 350.326 _

26,616 2,710,675 0 0 2,710,675

Second Quarter 0 0 0 0 0

hilrd Quarter 10,340 1,091.998 0 0 1.09 1 99

Lu¯th Quarter 0 0 0 0 0--

Appreciation <an 0 0 0 0 1total 110,340 11,152,999 0 0 1 152,999

'e--2 Payments during the year 01.07.2015 TO 30.06.2016

Description National Bank of Pakistan Government Beneficiary Total

Jslamabad. of Pakistan

U SS Pak Rupees Pak Rupees Pak Pak RupeesRupees

l Quarter 33,881 3,478,174 0 0 3,478,174

Second Quartcr 64,595 6,582.827 0 0 6,82.827

Iiirc Quarter 10,340 1,091.998 0 0 1.091.98

fouth Quarter 0 0 0 0 0

Total 108,816 11,152,999 0 0 11,152,999

Closing Balance 1,524 10

rj2ect Director

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Note 4 EXPENDITURE ON ACCOUNT OF CONSULTANT SERVICES.

The expenditure on consultant services is covered under Category-I Of the grant

agreement. An amount of Rs.6,668,825/- has been utilized during financial year 2015-16.

)escri tion of activity Amount

Consultant Services 6,668,825

Total 6,668,825

Note_5 EXPENDITURE ON ACCOUNT OF TRANING & WORKSHOP.

The expenditure on purchase of goods is covered under category-2 of the grant agreement, The

expenditure incurred under the project is Rs.1,130,364 during financial year 2015-16.

Description of Activity Amount

Training and Workshop. 1.130.364

Total 1,130,364

Note_6 EXPENDITURE ON ACCOUNT OF PURCHASE OF GOODS.

The expenditure on purchase of goods is covered under category-3 of the grant agreement fhe

expenditure incurred under the project is Rs.3,353.810 during financial year 2015-16.

Description of Activity Amount

-ProjIect Management Unit. Islarnabad. 3,3)5 3, 81

Total 133

Director

Ombudsman IDF: Institutional Capacity Building

SCHEDULE OF WITHDRAWAL APPLICATIONS (REPLENISHED)

FINANCIAL YEAR 01.07.2015 TO 30.06.2016

GRANT NUMBER TF-12310

W/ Amount Claimed Amount Received Difference Period for Date ofS Receip

App Expenditur tiAp U5D PKR USD PKR USD PKR Exeniu t inD e NBP

1/07/152 1/08/

1 07 26,616 2,710,675 26,616 2,710,675 0 0 to

31/12/15 2015

,Project Director

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