Hydrology Project-II Funded by World Bank

1. Hydrology Project-IIFunded by World Bank A presentation by Controller of Accounts Union Ministry of water resources

2. Strategic Context & Rationale • Water Resources Management : key issues • Floods, drought, scarcity, quality • Calls for comprehensive planning, paradigm shift • from isolated to comprehensive planning and management • in a river basin context. • Requires sound Hydrological Information System

3. Strategic Context & Rationale HIS: Integrated water information system • Hydrological and meteorological data • reliable, comprehensive, timely • Scientific, hydrological, meteorological observation networks • Data processing and storage facilities • Reliable data communication arrangements • Trained manpower for HIS operations

4. HP-I (‘95-03; Rs 605.28 Cr) helped create Associated improved facilities for HIS Standardized procedure and inter-agency protocol for data collection, collation, processing and exchange A movement for improved water resource management HP-I failed to overcome ‘Rigidities of insular culture’ Data ownership and information sharing issues HIS still deficient in Geographic coverage Analytical usage, as envisaged Strategic Context & Rationale

5. Organization • National Level Steering Committee (NLSC) Secretary- MOWR (chair), central agencies chiefs, SLSC chiefs, states’ secretaries • Three HIS Management Groups (HISMGs) • Data use and Dissemination (DD) • Institutional Strengthening/ Training (IS) • Technical (T) • HIS Coordination Secretariat, assisted by • Management consultants • Technical consultants • Other national consultants

6. Organization • 13 Participating States: • 9 old : Andhra Pradesh, Chattisgarh, Gujarat, Maharashtra, Karnataka, Kerala, Madhya Pradesh,, Orissa, Tamil Nadu. • 4 new : Himachal Pradesh, Goa, Pondicherry and Punjab • 8 Central Agencies: • MoWR, CWC, CGWB, NIH, CWPRS, IMD, CPCB, BBMB.

7. Organization • 13 Participating States: • 9 old : Andhra Pradesh, Chattisgarh, Gujarat, Maharashtra, Karnataka, Kerala, Madhya Pradesh,, Orissa, Tamil Nadu. • 4 new : Himachal Pradesh, Goa, Pondicherry and Punjab • 8 Central Agencies: • MoWR, CWC, CGWB, NIH, CWPRS, IMD, CPCB, BBMB.

8. Project Design & Costs

9. Project Design & Costs (mn US$) IBRD Disbursement (US$ in mn)

10. Project Design & Costs (Cr Rs)

11. Project Design & Costs

12. Project Design & Costs

13. Central Agencies:Cost Break-up

14. HP-I vs. HP-II

15. Financial Management • Dedicated Financial Management for HP-II under IFD • Financial Management Manual prepared by IFD (CA) • to standardize policies, procedures, reporting formats • Central coordination with all implementing agencies • Central coordination for all audit matters • Web enabled financial management software • to be developed, in two states as pilot

16. Financial Monitoring

17. Why Financial Monitoring ? • Scarcity of resources - The resources are limited and tend to decrease with the consumption, so FM is required; • Agency role – It is of paramount importance to have a close watch over the financial health of the project to keep it in right track; • Value for money – The wastage of Funds accorded in the Project ceases to be outflow in absence of FM, hence it is required

18. Objectives • Efficient use of available resources • Compliance of applicable laws and regulations • Utilization of funds for the purpose for which it is provided • Establishment of Accountability and responsibility • To flag the probable time and cost escalation. • Enable decision making to ensure timely completion of project

19. Features • Budgeting process • Funds flow mechanism • Accounting policies • Maintenance of books of accounts • Documentation

20. Estimates Executive and Finance Budgeting Finance and accounts Execution Executive, Finance and Accounts Review Executive Finance and Accounts Role of Various Agencies

21. Thrust Area • Execution on the ground • Directed towards output to be achieved • Using given resources • Optimization of output

22. Monitoring Agencies • Dedicated Finance Desk • HISCS in the Union Ministry of Water Resources • Accounts Branch • attached to State HIS Coordination Committee. • Basis : Information on monthly basis • From all units and IAs in the formats prescribed

23. Project financial statements • A summary of funds • received by the implementing agency • showing the World Bank and counterpart funds separately • A summary of expenditures • shown under the main project components / sub-components / disbursement categories • both for the current fiscal year and accumulated to date; and

24. PFS : Attachments • Schedule • listing individual withdrawal applications • by specific reference number, date, period & amount. • Reconciliation between expenditure • incurred during the financial year • Reconciliation statement • between the amounts claimed and expenditure incurred.

25. IT orientation • All the centre's of HP to be computerized & fully connected by a network, • All reports should be electronically transmitted • Enhance the current system of recording and reporting expenditure • Software will be web-enabled and will link the state finance unit with the Finance wing of MOWR

26. Internal Audit

27. Why Internal Audit ? • Internal auditing is an objective, independent, assurance activity • Designed to – • add value • improve an organization's operations. • It helps an organization accomplish its objectives by bringing a systematic, disciplined approach • Evaluate & improve effectiveness of risk management, control & governance processes.

28. Mandate • Internal audit of HP-II is institutional responsibility of CA – MoWR • Three responsibility dimensions: • direct internal audit responsibility for MoWR agencies dealing with HP-II funds; • constructive responsibility for appropriateness of internal controls and internal audit of other central and inter-state agencies; • constructive responsibility for appropriateness of internal controls and internal audit of states.

29. Mandate • Financial Audit • Audit of budgetary & financial systems • with compliance tests • assessment of effectiveness of accounting • reporting system • Performance Audit: ‘Value for money’ audit • covers the extent to which objectives & programme of the agency has been achieved • It may also cover specific analysis of staff resources

30. Audit Points • How far the physical & financial targets have been achieved • How far social & economic objectives have been realized • Whether the operations are conducted economically • Whether there are any case of losses, overpayment, extravagance, overstaffing delays in completion of projects, infructuous expenditure

31. Protective Role Compliance with laid down procedures Asset Projection Information accuracy Assisting fraud detection Constructive Role Suggestions for improvement Reduced costs Process change Increase in revenue Scope & Role

32. Management Letter • Ineligible expenditures identified • Degree of the compliance with financial covenants of the financing agreements • Matters with significant impact on the implementation of the project • Any other matters that the auditors consider pertinent. • Methods for improving weak controls or for creating them where there are none

33. Management Letter • An assessment of compliance with provisions of the financing agreements (IBRD Loan Agreement; Project Agreements) • particularly those relating to financial matters would be prepared. • That funds have been used with due regard to economy, efficiency and effectiveness and for the purposes they were provided

34. Thank You