1st September, 2015

BNNRC Action plan on Financial and Management audit report submitted by sub-committee of BoT. Area of review: SL i ii iii iv Iv

Issues

Comments of Chairperson

Flat purchase procedures, BoT meeting management, External audit appointment process Fixation process of CEO's salary and benefits, Other financial aspect

Action plan by BNNRC

1-A section in website: - Occasional Accounts Report - External Audit Report - BoT Account and Audit Report

N/A

Scope and Objective: Comments of Chairperson The main purpose of the visit was to review and examine the funds provided by different donors had been use exclusively for the purpose of concerned Project in compliance with the project agreement with BNNRC. The objective was to assess whether the internal control system for the use of fund established in the said organization were adequate, effective and consistently complied with and also to find out if there were any irregularities, discrepancies and weakness the above areas and to suggest necessary recommendations to eliminate that.

SL

Observations

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We observed that total 19 BoT meeting was held from the year 2000 (BNNRC formation year) to May 2015. While verifying the minutes, we observed that, i. Laxity of CEO found in respect of signing the board meeting minutes. Like, in some cases CEO and C-BoT did not sign the minutes. ii. CEO and C-BoT did sign in last page of minutes, rather than not in every page. iii. Attendance sheet not found most of the cases. Thus could not verify the attendance of other Trustees. iv. Details has been mentioned in ANNEX-1.

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BoT Meeting execution related i. We observed that since 2000 to 2015 there were total 19nos of BoT meeting has held, where it should be 48nos as per Deed of Trust. As per clause 4.7 of BoT deed, there should have at least 03 meetings in a calendar year

-BNNRC information policy including RTI;

Action plan by BNNRC disclosure

Already drafted and submitted

-Gender and sexual Policy

Recommendations by Audit team The minutes should be duly signed by the C-BoT and CEO-BNNRC in each page and also have to be ensured the attendance sheet where other members will be signed.

Recommendation s by Chairperson Why not all signature in all pages of minutes?

i The board members specially the CEO-BNNRC should be followed the rules of Deed of Trust. The clause4.7. The Board shall regulate the meeting in such a

Start number of each meeting minutes.

Action plan by BNNRC 1. We will ensure the signature of Chairperson and CEO in each page of current meeting minutes after finalization. 2. We will ensure the participant attendance during the meeting conducting time and will do attach with Meeting minutes; 3. We will ensure signature of Chairperson and CEO in all meeting minutes from the beginning.

1. CEO will ensure to continuation of BoT meeting in consultation with Chairperson 2. We will ensure to mention the number of BoT meeting chronologically in all relevant documents from now on.

and the CEO will be responsible for circulating and arranging the meeting. As this has not happened, so this is the gross violation of the Deed of Trust. Laxity of CEO has seen in this regard.

manner as it deems fit and proper. The CEO shall circulate and give reminder the Trustees with the approval of CBoT.

The present C-BoT while he was the Vice Chair of BoT, had informed the matter to the board and CEO through an email dated 14 April, 2015. Details has been mentioned in ANNEX-2.

ii. Board meeting number has to be mentioned in to every meeting minutes. Attendance sheet with signature must be ensured. The minutes also be signed by C-BoT and CEO in each page.

ii. We have verified some of BoT minutes where we did see any number is being mentioned in to the BoT meeting. As result it was not possible to understand actually how many meetings has been conducted since inception of the BNNRC. 3

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Observed that 1st BoT was formed on 20 April, 2000 and since then to March,2015 (about 15 years) the position of Trustees has not changed. As per clause 4.2 of Deed of Trust, the founder Trustees shall be changed every after two years from the date of first BoT meeting. So, this is the gross violation of Deed of Trust. Laxity of CEO has seen in this regard. The present C-BoT while he was the Vice Chair of BoT, had informed the matter to the board and CEO through an email dated 14 April, 2015.

The board members specially the CEO should be followed the rules of Deed of Trust carefully. The CEO shall be circulated and give reminder the matter to the Trustees and must be discussed in board meeting.

Violation of management position related

The Clause-4.8, 4.12 and 4.21 should be discussed in the Board for settling the role of CEO and PC for avoiding the violation of Deed of Trust.

As per Clause-4.8 and 4.12 that the position of "Chief Executive Officer (CEO)" is one of the position of Founder Trustees and its responsibility is to manage board meeting and to perform other works that will be assigned by the board. On the other hand, as per Clause-4.21 there has a position of "Program Coordinator (PC)" of which responsibility will be to execute the management functions of BNNRC and the position will be recruited by the Board and it is with pay system. Observed that since the beginning of BNNRC (April, 2000) the CEO has been managing all BNNRC activities in lieu of PC. And the CEO has been getting salary and other benefits though the appointment letter signed by the C-BoT, recommended by

----Let us postpone this clause quick change untill next meeting, positively with BoT deed revision.

Implemented partially in 11-20 April meeting resolution -6

1. CEO will try to convey the schedule of Conducting BoT Meeting during the review of the deed of Trust.

Treasurer. in to this appointment process, we did not get any engagement of other Trustees. This is also the violation of Clause4.8, 4.12 and 4.21.

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External Audit related (ToR, Appointment, BoT discussion etc: i. A special audit conducted by SF Ahed & Co for the period from 2005 to 31 Dec 2012. The issue was discussed in to the BoT meeting held on 07.06.13. But in that meeting the auditor was not selected even not the fee. The ToR was signed by Treasurer where fee is Tk.50,000/- and we did not get any board decision regarding vested authority to the Treasurer. Moreover, the report was not discussed in to the board though it was an special audit. Mentioned that, the present C-BoT as an Ex-vice Chairman of BoT, had expressed his concern to the board though an email dated 02 August, 2013. ii. BNNRC has appointed SF Ahmed & Co as an auditor for the year 2013 for conducting audit of its Operation, Welfare fund, Dev fund and Donors projects. The ToR was signed by Treasurer where fee is Tk.80,000/-. We did not find any board decision regarding vested authority to the Treasurer. The audit report was not discussed in to the board meeting. iii. BNNRC has appointed SF Ahmed & Co as an auditor for the year Jan'14 to May'15 for conducting audit for its Operation, Welfare fund, Development fund and other Donor projects. The ToR was signed by Treasurer where fee is Tk.2,50,000/-. We did not find any board decision regarding vested authority to the Treasurer. The audit report (those are submitted) was not discussed in to the board meeting. iv. Since inception of BNNRC, total 41nos of audit had been conducted for donor projects, Operation, welfare fund etc. But the these reports were not discussed in to the meeting. The present C-BoT while he was the Vice Chair of BoT, had informed

1. The audit ToR and fee should be discussed in to the Board and who will sign the appointment letter, should be discussed. Also should be discussed the all reports in to the board.

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Treasure need role all Audit ToR and Report approved in BoT; External Audit is not purview by CEO Treasurer should present a summary findings Latest audit external report should be discussed in BoT, BoT need discuss budget variance statement basis.

1. BNNRC secretariat will th convey the decision of 20 BoT meeting and address the recommendations of Chairperson accordantly.

the issue to the board and CEO though his email on 14 April, 2014.

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Salary and Benefit of CEO (ToR, Appointment, BoT discussion etc) The CEO-BNNRC has been receiving his salary and benefits as per following table since inception.

The salary and benefits and it's any changes should be discussed in to the Board meeting and based on this the CBoT should be given the salary and benefits related letter to the CEO.

Observed that the appointment letter of CEO, its salary fixation and increment process had not discussed in to the Board meeting. The appointment letter and salary fixation had given by the C-BoT in different periods based on the separate notes from Treasurer. The present C-BoT while he was the Vice Chair of BoT, had informed the issue to the board and CEO though his email on 14 April, 2014.

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Staff Welfare Fund i. There was a decision in to the BoT meeting held on 07.06.13 that the Staff welfare fund will be operated by the CEO, Treasurer and one staff of BNNRC and till to date no any staff has been included for its operation as a part of staff representative. ii. Approved policy of this fund was not found rather than a draft policy which was prepared by CEO on 25.07.13. In to this draft policy the C-BoT had putted a comment that the policy will be discussed in next BoT meeting. But till today it was not discussed and approved by the board. iii. End of June'15 the bank balance of this fund was Tk.21.78 lakh. The fund never been invested as FDR or as Savings certificate. It should be invested for generating more fund.

The welfare fund policy should be approved in BoT meeting and staff representative should be presence as signatory for operating this account. Also the fund should be invest as FDR or as Savings certificate in order to make it grow up .

1 Treasure must see and examine and explain - Fact - Why ups and down - Similarities & dissimilariti es with other organizatio n - Is BNNRC has a salary schedule ?? - It is urgent and before the next project - What is other facilities, need be discussed in BoT meeting

1. Policy needed in the present and must be discussed in next BoT meeting 2. Invest need in FDR 3. For future : What is must be change; meeting in BoT invest schedule must be discussed 4. Policy, Source of

1. CEO didn’t received any salary and benefits till March 2005. 2. Chairperson and Treasure of BOT have decided that all salary and benefit will be based on project budget. 3. BNNRC has drafted a salary schedule; it will be finalized in next BoT. 4. The present salary and facilities of CEO th has approved in 20 BoT meeting.

1. BNNRC secretariat has drafted a staff welfare fund operational guideline which initially approved by Chairperson; 2. The drafted policy will present in next BoT meeting as part of HR policy.

fund, Expenditur e and participatio n of staff must.

iv. Tk.15.00 lakh was given as loan to FPU account as on 29.03.15 with an approval of Treasurer and C-BoT and it was not discussed in to the BoT meeting. Later on the amount was refunded to the welfare fund account as on May 2015.

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Flat Purchase Flat Payment related

SL

Observations Total Tk 37.00 lakh was paid from Operation (CD-878) and Dev fund (SB4859) as loan which is receivable from FPU-EU. Out of this amount FPU-EU has refunded Tk 16.50 lakh (Tk 14.50 lakh on 11.08.14 and Tk 2.00 lakh on 01.03.15) to Operational account. Thus net receivable from SPU-EU stood Tk 20.50 lakh till May 31, 2015. Ref: SL-8 : Tk.6.45 lakh was paid as Loan from Operational A/C CD-878. The loan was approved by C-BoT, but no engagement of other Trustees specially the Treasurer.

Ref: SL- 9 & 10: Tk.50,000 (on 10.10.13) and Tk 50,000 (on 19.11.13) was given to developer through open CQ instead of A/C payee CQ. Observed that,

Recommendations

Recommendations by Chairperson When it will be refunded?

Action plan by BNNRC Al ready refunded the amount Tk. 16.5 Lac and rest amount Tk. 20.50 Lac will be adjusted till December 2015

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Policy for micro project loan need to be approved by BoT meeting

BNNRC secretariat will ensure to include a policy in Financial policy to get approval of this short time loan internal project. BNNRC secretariat will take necessary steps on urgent basis to change its financial policy and the draft policy has been submitted to BoT members.

The clause-6.2.8 of Financial manual should be reviewed by the Board since in what circumstances and up to what amount the CEO will be allowed to pay the open CQ to the third party.

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Only ensure in finance policy Finance Policy have to be reviewed immediately

a) Paid as Loan. Loan approval not taken from Board.

. In respect of loan receive from other account (other than FPU project), should be discussed in Bot meeting or with the involvement of Treasurer and CBoT. Also needs the recommendation from the flat purchase committee.

Finance policy should be approved as authentic document.

BNNRC will follow the instruction in future in this regard.

b) Based on the application by the developer, the CEO has issued open CQ instead of A/C payee CQ as per clause 6.2.8 of Financial policy. The policy said, the CEO has been authorized to pay any amount of

. In respect of interior work and open space payment, it should be pre-approved from Board. The

Finance policy should be approved as authentic document -TA/DA include in the policy; -No open cheque

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money though open CQ if deemed necessary. But we did not find any limit of this open CQ. Mentioned that the Chairperson-BoT/ Treasurer did not sign in each page of the manual. The question is whether this manual will accepted or not?

work order in respect of interior work has to be given by the CEO by following the approve procurement policy.

c) We did not find any justification of this open CQ payment and such kind of payment creates doubt. What is procurement policy??

Ref: Sl-12 : Tk.2.45 lakh was paid as Loan from Development Fund as partly payment of interior decoration. Observed that, a) Work Order (WO) was given by the CEO as on 30.03.2014 of which value was Tk 4,17,375. from this amount Tk.2.45lakh was given to developer. b) No decision was made from BoT regarding loan payment from Dev Fund A/C, even the selection of developer as interior work. c) The WO was made without maintaining any procurement policy like quotation collection, comparative analysis, approval from flat committee or C-BoT. d) Negligence of CEO and Accountant has found in this regard.

What is the justification and what rd has been made for 3 party verification?

Ref: Sl-13 : Tk 15.00 lakh was paid as on 20.07.2014 as last installment to the developer (Flat : Tk 4.25 lakh, Car Parking : Tk 3.00 lakh, Utility: Tk 1.50 lakh and Extra Space : Tk 6.25 lakh). Observed that, a) We did not found any decision regarding the payment of excess Tk.6.25 lakh as extra space. We also did not get any justification of this payment against this excess measurement. Also observed that BNNRC has engaged an engineer to verify the excess measurement against what the developer has demanded. But the engineer did not provide any productive report on it and without the report the payment had made.

1. BNNRC has a draft procurement policy which is followed during the any procurement. 2. In this case the developer has selected as a one vendor for interim decoration of Flat through a meeting. For that reason we didn’t make a separate comparative sheet.

As per deed of developer company, Decision of Flat purchase committee and through the Approval of BoT meeting we have paid the all installment to the flat developers company.

b) Rest amount Tk 8.75 lakh was paid to the developer though there was a decision that until completion of registration the final payment will not be paid to the developer, but paid (Flat committee meeting on 18.03.14 9

Observation-9: (Flat Agreement related)

Without taking concern from Board

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It is gross irregularities

After choice of location and

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The deed of Flat purchasing was made on 12.08.2012 in between BNNRC and Continental Dev. Ltd. Observed that the 1st payment was made on 12.04.2012 before making agreement. The payment was made on the basis of the application by the developer to the CEO and the payment was made where the CEO and the accountant had made the signature in to the invoice / application. We did not find any signature of BoT member in there, even no any resolution or recommendation from flat purchase committee member.

or designated committee, this initiatives is completely negligence of duty of CEO an Accountant.

10. Flat Agreement related

Without taking concern from Board or designated committee, these initiatives is completely negligence of duty of CEO an Accountant.

Regarding flat purchase, the 1st meeting was held as on 13.12.2011 and the 2nd meeting was held on 14.07.2012. But from both of these meeting, we did not get any decision regarding delegation of power to the CEO-BNNRC in order to sign in the deed. But we observed that the CEO had signed the deed where the Accountant had signed as witness. We did not get any signature of BoT member or any signature of flat purchase committee in there.

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Deed first or payment first?

It should keep resolution in BoT Meeting (Gross irregularities)

finalization of flat; the developer’s requested to give booking money before signature of deed. We have taken an approval from purchase committee before payment.

CEO will discuss these issues in next BoT meeting.

ii. The deed of Flat purchasing was made on 12.08.2012 in between BNNRC and Continental Dev. Ltd. Observed that the 1st payment was made on 12.04.2012 before making agreement. The payment was made on the basis of the application by the developer to the CEO and the payment was made where the CEO and the accountant had made the signature in to the invoice / application. We did not find any signature of BoT member in there, even no any resolution or recommendation from flat purchase committee member. 11

Observation-11: (Flat Committee related) A payment of Tk.18,00,000/- was made on 31.03.2014 to the developer. And there were two committee had been formed for this flat purchase purpose. i. One is "Housing Establishment Committee" formed on 13.12.2011 and the members were Rezaul Karim Chowdhury (Convener), Md. Arifur Rahman (Member) and AHM Bazlur Rahman (Member). And other one is, ii. "Flat Purchase Committee" formed on 14.07.2012 and the members were Md. Zahurul Haque Bali (Convener), AHM Shamsul Islam (Member) and AHM Bazlur Rahman (Member). Observed that the payment was made

Why there were two committee operations; it is not accepted.

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After formation of 2 committee one transaction was done through approval of Chairperson. th

The 16 BoT meeting dated 7 June 2013 nd has drafted the 2 purchase committee. From 7 June 2013 nd the 2 committee was not functional.

based on the resolution of "Housing Establishment Committee" as on 18.03.2013 without any engagement (no signature and attendance) of "Flat Purchase Committee" in spite of its existence. As the CEO-BNNRC is the member of both committee so his signature has seen in to invoice rather than other BoT members. Therefore there might have some contradictions about the role of these two committees. 12

i. Tk. 2,99,400/- was paid to Mr. Syed Tamjid ur Rahman, CEO-Change Maker : Society for Social and Economic Development for conducting baseline study (for consultancy, field visit, report writing and others) under the project Free Press Unlimited-EU. The payment was made in the name of Mr. Syed Tamjid ur Rahman in lieu of the organization "Change Maker" in spite of agreement made with the organization.

The payment should be paid in the name of organization since the agreement was made with the organization for consulting activities. The CEO should be more careful on it.

Gross irregularities -No agreement with organization -No payment to organization

ii. Tk. 3,45,000/- was paid to Mr. Ranjan Karmaker, Executive Director - Steps Towards Development-Knowledge Center for conducting ToT and other training purpose under the project FPUEU. The payment was made in the name of Mr. Ranjan Karmaker in lieu of the organization "Steps Towards Development-Knowledge Center" in spite of agreement made with the organization. Justification or basis of the appointment/MoU did not found.

i. We have made a contract with Mr. Syed Tamjid ur Rahman and isuued account payee cheque to Mr. Syed Tamjid ur Rahman according to agreement. . According to our record we see that we have contract with Steps Towards DevelopmentKnowledge Center and Mr.Ranjan Karmaker signed on behalf of Steps Towards DevelopmentKnowledge Center. All payment were made through account payee chequee to Steps Towards DevelopmentKnowledge Center . .

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Observed that as per flat management meeting held on 19.07.14, there was a decision thta the develper will be bound to pay monthly Tk.50,000/- as house rent if the company is failed to handover the flat on 01 October, 2014. but till to date the company did not give such kind of payment to BNNRC. The management of VBNNRC did not take any actions or further decision in board meeting in this regard.

This is the gross violation of meeting decision. The CEO should be more careful on it

Any non compliance of developers should be discussed in BOT meeting

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