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

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

Some Basic Information 3 SourceTotal In Million USD GoI and States500 International Development Association (IDA) 500 Total:1000

Disbursement Categories 4 Category Amount of the Financing Allocated (Million SDR) Amount of the Financing Allocated (Million US$) Percentage of Expenditures to be Financed (Inclusive of Taxes) IDA Goods, works, consultants’ services, training and Operating Costs under Parts A, B, and C of the Project % Goods, works, consultants’ services, training and Operating Costs under Part D of the Project 00100%

Some Basic Information Borrower to pay for IDA credit Service Charge on principal amount 0.75% p.a. Interest payable on withdrawn credit 1.25% p.a. Maximum commitment charges payable on un- withdrawn 0.50% p.a. 5

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 Name of Accounting Center LevelNos.ConsolidationUnits to be ConsolidatedIUFRs to be submitted to Frequency of submission of IUFRs NPMUCentre1Yes4 SPMUsWorld BankQuarterly SPMU AssamState1Yes7 DWSCsNPMUQuarterly SPMU BiharState1Yes10 DWSCsNPMUQuarterly SPMU JharkhandState1Yes5 DWSCsNPMUQuarterly SPMU Uttar Pradesh State1Yes10 DWSCsNPMUQuarterly DWSCAssamDistrict7YesGP-WSCs/MV-WSCsSPMUQuarterly DWSC BiharDistrict10YesGP-WSCs/MV-WSCsSPMUQuarterly DWSC Jharkhand District6YesGP-WSCs/MV-WSCsSPMUQuarterly DWSC Uttar Pradesh District10YesGP-WSCs/MV-WSCsSPMUQuarterly Total 38

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

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

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

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

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

19 That’s all !