Rural Water Supply and Sanitation Project for Low Income States March 20, 2014

1. Rural Water Supply and Sanitation Project for Low Income StatesMarch 20, 2014

2. Some Basic Information • Financing Agreements signed on February 7, 2014 • Implementation Period : 6 Years • Closing Date: March 31, 2020

3. Some Basic Information

4. Disbursement Categories

5. Some Basic Information Borrower to pay for IDA credit • Service Charge on principal amount drawn @ 0.75% p.a. • Interest payable on withdrawn credit balance @ 1.25% p.a. • Maximum commitment charges payable on un-withdrawn credit @ 0.50% p.a.

6. Important Documents • Financing Agreements • Project Agreement • Project Appraisal Document (PAD) • Project Implementation Plan (PIP)/Ops Manual • Financial Management Manual (FMM) • Procurement Manual

7. Financial Management In Bank-financed Projects • Borrower and implementing agencies to maintain adequate financial management systems to ensure proper financial accountability for the use of project resources.

8. Financial Covenants • Maintain a financial management system including records and accounts; prepare financial statements as per sound accounting practices; • Ensure that all records are retained until at least 1 year after the Bank has received the last audit report for the project.

9. Financial Covenants • Enable Bank’s representatives to examine such records • Have the records and financial statements for each fiscal year audited by auditors acceptable to the Bank • Furnish to the Bank not later than six months after the close of each fiscal year audited financial statements and auditor’s report thereon.

10. Financial Covenants • Furnish to the Bank consolidated quarterly Interim Unaudited Financial Reports (IUFRs) in agreed formats no later than 45 days after the end of each Quarter • Release of funds by the Bank is based on expenditures reported in IUFRs

11. Non-submission of audit reports • If audit reports are 4 months overdue, reimbursement of claims may be discontinued

12. Fund Flow Structure

13. Accounting Centers

14. Key Features of Accounting System • Double entry cash based accounting system • Uniform chart of accounts for all spending units • Accounts to be maintained on Tally at SPMUs, DPMUs • Accounting at GPWSCs manual and basic

15. Eligibility for Reimbursement • Only paid expenditures. Not Advances • Secured mobilization advances • Retention money/security deposits when paid • All taxes deducted and paid

16. Expenditures that the Bank will not finance • Expenditures outside the scope of the Approved Annual Work Plan • Goods works or services not procured in accordance with procurement guidelines of the World Bank. • Land acquisition costs

17. Internal Controls: FM perspective • Internal Control framework • No schemes can be undertaken unless approved by SLSSC • Annual Financial Audit by Chartered Accountant Firms • Biannual internal audit

18. Contract Management • Direct Confirmation from Banks on bank guarantees • Variation in contracts to be approved by appropriate authority • No objection by Bank for variation in prior review contracts beyond 15% threshold • Contract ledger to be maintained for all contractors. • Timely payment to contractors

19. That’s all !