The Project Director.

IVVR Project, Phase -II

Bangladesh Power Development Board.(BPDB)
1 Abdul Gani Road
Dhaka-1000, Bangladesh

Subject: Draft Report on consultancy services for identification, physical verification,

valuation, recording and reporting of Fixed Assets of the office of Directorate of
Security & Invest. of BPDB as listed under of Package-C.

Dear Sir,

Pursuant to the contract signed on 11th September 2017 , we have completed the data collection
software according to the guidance of the office of Directorate of Security & Investment of
BPDB as listed under Lot- A.2 of Package-A, We are now pleased to place the draft report under
the following sections:

Section-01 Introduction
Section-02 Scope of the services
Section-03 General Rule of Data Collection
Section-04 Basic definition and concept of valuation
Section-05 Source of Information and Methodology
Section-06 Valuation Procedure;
Section-07 Summary of the Report of Assets
Section-08 Synopsis of the Assets
Section-09 Comments, Opinions and Suggestions
Section-10 Conclusion Remarks

It is mentioned here that the information contains in this report under section 1 to 10 shall
collectively be treated as a full-fledged report of Fixed Assets of the Directorate of Security &
Investment of BPDB as listed under Lot- A.2 of Package-A.

Thanking you Yours faithfully

Place: Dhaka Dewan Nazrul Islam & Co.

Date: 8th August, 2018 Chartered Accountant

1
 Draft Report on consultancy services for identification, physical verification, valuation,
recording and reporting of Fixed Assets of the office of Directorate of Security &
Investment of BPDB as listed under Lot- A.2 of Package-A.

Section-01: Introduction
1.1 Introduction:
Bangladesh Power Development Board is the biggest government owned organization, its capital
incentive and employment generation in power sector. The BPDB is responsible for major portion
of generation and distribution of electricity mainly in urban areas except Dhaka and West Zone of
the country. The Board is under the Power Division of the Ministry of Power, Energy and Mineral
Resources, Government of Bangladesh.
BPDB has taken a massive expansion plan to add about 11600 MW Generation capacities in next
5 years to achieve 24000 MW Capacity according to PSMP-2010 by 2021 with the aim to provide
quality and reliable electricity to all the people of country for desired economic and social
development. The power system has been expanded to keep pace with the fast growing demand.
Management of huge number of fixed assets and providing the financial information and support
to such a diverse organization made the management of Inventory and Fixed Assets by leveraging
modern technology is a burning need.
1.2 Background of the Project:
Bangladesh Power Development Board (BPDB) is a statutory body created in May 1, 1972, by
presidential Order No.59 after bifurcation of erstwhile Water and Power Development Authority,
WAPDA started its operation with installed generation capacity of only 200 MW. Installed
Generation capacity (December’2015) was increased to 12,129 MW.
In the financial year 1992-93 while approving the audited accounts of BPDB Board decided in its
614th general board meeting to maintain unit office wise Fixed Assets Register. Further to
encompasses tracking of data flow regarding fixed assets and inventory items of BPDB and to keep
the senior management up-to-date on the status of fixed assets and inventory at any point in time
and enable the management to implement appropriate control over the fixed assets and inventory
items. A separate project was formed in 742nd General Board meeting held in 1997 name
Identification. Verification, Valuation and Recording (IVVR) of Fixed Assets and Store of BPDB.
At 808th General Board meeting held in October 1998, the Board decide to engaged local consultant
in May 2000, as Operating Consultant for collection of data from 525 units offices under payment
jurisdiction of 26 Regional Accounting Office (RAO) of BPDB.
The project was completed on 31st December 2004. The completion report was approved by the
Board in its 1126th general board meeting held on 17/01/2005. With a decision to take-up second
phase of the project.

2
1.3 Objectives of the Project:
The tentative objectives from IVVR (Phase-II) project are furnished bellow:
a) All fixed asset and store of BPDB will be identified, classified, revaluated with existing
condition as of 30th June 2017;
b) Value of all fixed asset will be made as per International Accounting System (IAS)-16
considering the replacement value after adjustment of back lock depreciation ; and
c) All stores of all unit offices of BPDB will be verified with technical verification & valuation
for implementation of store accounting system to find out monthly, quarterly, half yearly &
annual consumption report & stores on hand.

1.4 Appointment of the Firm:

M/S Dewan Nazrul Islam & Co., Chartered Accountants has been appointed for Identification,
Verification, Valuation and Reporting of Fixed Assets and Stores of all offices as listed in lot A.1
vide a contract signed on 11th September 2017.

Section-02: Scope of the services

2.1 The scope of work of the consultants shall not be limited to the followings:
Package-A: Physical verification, valuation Recording and Reporting:
a) Identify the location of all fixed assets & store items with necessary supporting using image
& Geographical position (GPS) capturing by mobile apps developed for data collection.
b) i ) Identification , verification and valuation of unrecorded or disputed land.
ii ) Verification, valuation and recording of land already acquired for constructing or to be
constructed of public or private power plants (joint venture, public and IPP, Rental power
plants).
c) Verify the present conditions of all other fixed assets reconcile with their existing data the
same as per IAS-16
d) Review and validate the present status and the value of all fixed Assets by the unit head and
issue an Acceptance Certificate for the same.
e) Valuation of all individual fixed assets & stores in accordance with International
Accounting Standard (IAS-16 & IAS-2).
f) Processing of accumulated data by using web based application developed for data
collection.
g) Incorporation of the revalued amount of fixed assets and stores in the Financial Statement
with the approval of the Board.

Section-03: General Rule of Data Collection

3
3.1 The identification, verification and valuation of the fixed or tangible assets are followed by
some general rules and guidelines that are prepared by consultants and approved by BPDB.
The general rules and guidelines related to the identification, verification and valuation of fixed
assets are furnished below:

1. Use metric system for all kinds of measurement.

2. For fixed assets, all monetary amount should be expressed in thousands. For stock and
stores, use actual amount rounded up to nearest Taka.
3. Use only Taka as unit of monetary value. Convert US dollar value at 1 US$= Tk. 81
4. If any fixed asset is obsolete/condemned/unserviceable then the evaluated value will be
its scrap value. Scrap value can be negative.
5. For all depreciation estimation use straight-line method.
6. To obtain the necessary information, operating consultants, effort should be limited
within the BPDB offices. If necessary, they will obtain information from other sources
like Ministry, local bodies, and general public. Wherever required, source of
information is to be written in the format.
7. If exact date of construction/ commissioning of some assets is not readily available a
good assumption may be made on the basis of the statement of the retired/ senior
employees/& local inhabitants. Keep reference.
8. If original cost of construction/procurement is not available a good assumption may be
applied by local enquiry. Keep reference.
9. Procure data in such a manner that management & other reports can be complied easily.
10. All dates should be recorded in British format (dd/mm/yyyy)
11. If, after all reasonable effort, any specific piece of information is not available mark the
information as U/A.
12. These formats are all generalized to suit all perceived situation. Pieces of information
may not be applicable for one particular situation or other. For example, the pole
number for a pole mounted sub-station will not be available for a sub-station which is
not yet installed or which is undergoing a repair/overhauling. In such a situation, please
mark the information as N/A.
13. If consultants would like to include any additional information in the format. Please
incorporate those in separate sheets.
14. The Engineering consultant must sign on every form, where the opinion of Engineering
Specialist is required, irrespective of the fact there is no specific indication.
15. The consultants should ensure the proper utilization of expert knowledge of their
Engineering Specialist, Financial Management Specialist, and Management &
Reporting Specialist in filling up the formats and preparation of reports.
16. For the Thana code and district codes list please refer to the attached Codes of Division,
District and Thana.
17. RAO code and Unit office Code will be taken from the annexure in the deed document
(Appendix 5). The deed document column titled “CT” has to be used.
18. For the valuation of fixed assets, the following methods should be used with priority:
a. Historical Cost

4
 b. Replacement Value
c. Fair value
19. For the valuation of stores, specific identification method, as per IAS-2, has to be
followed.
20. Estimated cost may be calculated on the basis of historical data. If the historical cost is
not available, estimated cost should be calculated either on replacement cost or fair
value. The basis of valuation must be indicated while filling up the forms.
21. Estimated Depreciation is to be calculated on the straight-line –method based on the
life of the respective assets.
22. Evaluated value is to be arrived from Estimated Cost minus Estimated backlog
Depreciation.
23. Suggested rate of Depreciation is to be determined on the best judgment of the operating
consultants, considering the condition of the asset and prevailing rate of depreciation
on the similar type of asset.

Section-04: Basic Definition and Concept of Valuation

The identification, verification and valuation of the fixed or tangible assets are generally depended
on few definitions and concepts that are guided by the Bangladesh Accounting Standards -16 & 13

5
and also regional practice and procedures. The important definition related to the identification,
verification and valuation of fixed assets are furnished below:
4.1 Fixed assets:
Fixed assets means
a. The fixed assets are those assets which provides services more than three years
(Paragraph 6 of BAS-16) and
b. In convention the value of the assets is not less than taka one thousand.
4.2 Cost of Fixed assets:
The cost of fixed assets is the amount of the cash or cash equivalents paid or incurred or to be
paid or to be incurred or the fair value of other consideration given to acquire and assets at the
time of its acquisition or construction.(Paragraph 6 of BAS-16)
4.3 Depreciation:
Depreciation is the systematic allocation of the depreciable amount of an assets over its useful
live.(Paragraph 6 of BAS-16)
4.4 Depreciation Method:
Straight Line Method will be applied to systematic allocation of market value over the
estimated useful life of an asset.
4.5 Depreciable amount:
The depreciable amount is the cost of an asset or other amounts substituted for cost less its
residual value.(Paragraph 6 of BAS-16)
4.6 Back log depreciation:
Back log depreciation is the systematic allocation of the depreciable amounts of an asset over
its useful lives, expired or used.
4.7 Useful live:
Useful live is the period over which an asset is expected to be available for use by the entity.
The useful life is to be ascertained by adding expected further life with life already enjoyed by
the entity.(Paragraph 6 of BAS-16)
4.8 Market Value or Price:
Market value of an assets means by which similar type of assets and brand can be replaced with
testing and commissioning cost and value. The market value of an asset is to be ascertained
with following cost component:

SL # Class of Assets Cost Elements of Components

Government declared value or sales value or purchase price-

1 Land
whichever is higher.
2 Plot Details Not Applicable
Value as per PWD rate or average selling rate- whichever is
3 Building higher.

6
SL # Class of Assets Cost Elements of Components

Civil work (Except Value as per PWD rate or tender cost or historical cost or
4
building) construction cost- whichever is higher.
Estimated plant cost plus Commissioning cost and testing cost
5 Generation Plan and expenses.

Generation Plan
Component cost plus Commissioning cost and testing cost and
6 (Component Cost Work
expenses.
Sheet)
Ex-factory price plus VAT and Tax, Commissioning cost and
7 Sub-Station (Generation)
testing cost and expenses.
Generation Ex-factory price plus Govt. duty plus Commissioning cost plus
/Transformers/
8 Testing cost plus procurement cost or Latest tender price-
Distribution power
Transformers whichever is higher.

Generation Ex-factory price plus Govt. duty plus Commissioning cost plus
/Transformers/
9 Testing cost plus procurement cost or Latest tender price-
Distribution circuit
Breakers whichever is higher.

Miscellaneous Power Estimated plant cost plus Commissioning cost and testing cost
10
Plant Structures and expenses.
Ex-factory price plus Govt. duty plus Commissioning cost plus
Transmission Sub-
11 Testing cost plus procurement cost or Latest tender price-
Station
whichever is higher.
Ex-factory price plus Govt. duty plus Commissioning cost plus
12 Transmission Lines Testing cost plus procurement cost or Latest tender price-
whichever is higher.

13 Projects in Progress Historical cost

Ex-factory price plus Govt. duty plus Commissioning cost plus
14 Distribution Sub-Station Testing cost plus procurement cost or Latest tender price-
whichever is higher.

Ex-factory price plus Govt. duty plus Commissioning cost plus

Pole mounted Sub-
15 Testing cost plus procurement cost or Latest tender price-
Station
whichever is higher.
Ex-factory price plus Govt. duty plus Commissioning cost plus
16 Distribution Lines Testing cost plus procurement cost or Latest tender price-
whichever is higher.

7
 SL # Class of Assets Cost Elements of Components

Ex-factory price plus Govt. duty plus Commissioning cost

Distribution service
17 plus Testing cost plus procurement cost or Latest tender price-
drops and meters
whichever is higher.

Computer/Printer/UPS/ Latest tender price or declared price of Dell, HP, Canon,

18 Samsung etc. subject to model and capacity- whichever is
Stabilizer higher.

19 Latest tender price or declared price of different

Office Equipment
manufacturer- whichever is higher.
20 Latest tender price or declared price of Akhter Furniture,
Furniture & Fixture Otobi Furniture, Hatil, Partex subject to model- whichever is
higher.
21 Latest tender price or declared price of Pragati industries Ltd.
Transport/ vehicle/Water
or different manufacturer subject to model and capacity-
Crafts/Fork Lift/Crane
whichever is higher.
22 Service, Testing, Lab,
Latest tender price or declared price of different Manufacturer
Field And Other
subject to model and capacity- whichever is higher.
Equipment
23 Latest tender price or declared price of different Manufacturer
Generation Stores
subject to model and capacity- whichever is higher.
24 Latest tender price or declared price of different Manufacturer
Other Stores
subject to model and capacity- whichever is higher.

Reported cost of manufacture or latest sales price whichever

PC Pole Stores
25 is higher

4.9 Fair value of assets:

Fair market value is the value and price that would be receipt to sell and assets or paid to transfer
a liability in an orderly transaction between market participants at the measurement date.
(Paragraph 6 of BAS-16)
In simply fair market price is calculated deducting back log depreciation from expected
replacement cost of an asset.

Section -05: Source of Information and Methodology

5.1 Source of Information :
It is mentioned here that all fixed assets of this unit office have been identified and verified on
territorial concept. After identification and collection of proper and requisite information, we have

8
made discussion with the head of the Unit and other responsible officers for documentary
information and validation. The assets class wise source of information are tabulated below:

SL# Class of Assets Source of Data

Physical identification and verification, Unit head and
responsible officials of the unit, permanent Record , CS RS
1 Land AND SA Parcha and rent receipt etc, Record form Balam
Books of District Collector , Land, Record of local
Settlement /thashil office.
Physical identification and verification, Unit head and
responsible officials of the unit, permanent Record , CS RS
2 Plot Details AND SA Parcha and rent receipt etc, Record form Balam
Books of District Collector , Land, Record of local
Settlement / thashil office.
Direct or physical identification and verification, Project
Completion Report or Work Completion Reports or Project
Close Up Report, Unit head and responsible officials of this
3 Building
unit for documentary information and authentication and
office records for comparison, reconciliation, validation and
confirmation.
Direct or physical identification and verification, Project
Completion Report or Work Completion Reports or Project
Close Up Report, Unit head and responsible officials of this
4 Civil work (Except building)
unit for documentary information and authentication and
office records for comparison, reconciliation, validation and
confirmation.
Direct or physical identification and verification, Project
Completion Report or Work Completion Reports or Project
Close Up Report, Operational Manual Unit head and
5 Generation Plan
responsible officials of this unit for documentary information
and authentication and office records for comparison,
reconciliation, validation and confirmation.
Generation Plan (Component As Mentioned above
6
Cost Work Sheet)
7 Sub-Station (Generation) As Mentioned above

Generation /Transformers/ As Mentioned above

8 Distribution power
Transformers
Generation /Transformers/ As Mentioned above
9
Distribution circuit Breakers
Miscellaneous Power Plant As Mentioned above
10
Structures

9
 SL# Class of Assets Source of Data
11 Transmission Sub-Station As Mentioned above

12 Transmission Lines As Mentioned above

13 Projects in Progress As Mentioned above

14 Distribution Sub-Station As Mentioned above

15 Pole mounted Sub-Station As Mentioned above

16 Distribution Lines As Mentioned above

Distribution service drops and As Mentioned above

17
meters
Direct physical identification and verification, Unit head and
Computer/Printer/UPS/ responsible officials of the unit for documentary information
18
Stabilizer and authentication and Office records for comparison,
reconciliation, validation and confirmation.
19 Office Equipment As Mentioned above.

20 Furniture & Fixture As Mentioned above.

LOG Book. Direct physical identification and verification,
Unit head and responsible officials of the unit for
Transport/ vehicle/Water
21 documentary information and authentication and Office
Crafts/Fork Lift/Crane
records for comparison, reconciliation, validation and
confirmation.
Direct physical identification and verification, Unit head and
Service, Testing, Lab, Field responsible officials of the unit for documentary information
22
And Other Equipment and authentication and Office records for comparison,
reconciliation, validation and confirmation.
Direct physical identification and verification and store
23 Generation Stores
ledger of the unit office.
Direct physical identification and verification and store
24 Other Stores
ledger of the unit office.
Direct physical identification and verification and store
25 PC Pole Stores
ledger of the unit office.

5.2 Methodology:
5.2.1. Formation of Team for Identification, Verification and Valuation:
As per Technical Proposal, a team headed by a Chartered Accountant was formed for the
identification, verification and valuation of fixed assets, at this office consisting the following
consultants:

10
 a) Chartered Accountant;
b) Electrical Engineer;
c) Cost and Management Accountant;
d) Civil Engineer;
e) Mechanical Engineer;
f) Management Specialist; and
g) Property Valuation Specialist.

This team has executed and implemented the tasks taking help and assistance of engineers as well
as experienced Property Physical Identification and Verification Experts. This Team was
responsible for identification, verification and valuation of fixed asset within stipulated time frame
visiting each every offices and surveying, identifying and verifying the asset physically. This team
has completed their tasks in accordance with policy guidelines formulated and framed by the
consortium. For the completion of tasks, the team has also considered the Principles and
information of the following document:

a. International Accounting Standard-16 (IAS-16);

b. International Accounting Standard-13 (IAS-13);
c. International Accounting Standard-2 (IAS-2)
d. Income Tax Ordinance 1984 (Relevant sections for depreciation);
e. PWD’S Rates for Valuation;
f. Close up Report of the Development Projects;
g. The Electricity Act 1938;
h. BPDB’s Procurement Procedures; and
i. Relevant Purchase Documents of BPDB.

5.2.2. Methodology of work Execution and Implementation :

Our approach Methodology is participatory in nature. We have completed our assignment with
team spirit. Our Teams have visited each and every office with physical inventory sheets approved
by the BPDB.

The Consultants designed 25 (Twenty Five) formats for data collection through physical
verification. The designed formats were approved by the BPDB. Our Teams commenced their tasks
with these approved formats.

5.2.3. Identification of Assets:

Our team visited each and every office with (as per list of the BPDB) inventory sheet to take
physical inventory of the fixed assets of the respective offices. They have collected required
information i.e. location, size, condition, existing identification number, Technical number, year of
procurement, cost of purchase, expected future life, life already enjoyed by BPDB. We found that

11
no any register of fixed assets was available for our verification. We have physical counted the
fixed assets “as is where is’’ concept within respective offices. We have determined ownership of
the property on territorial concept and we have filed in all formats (as are applicable) in accordance
with guidelines for filling up Forms. We have also strictly followed the guidelines. We never change
the contents and layout the formats in any circumstance. It may be mentioned here that after
completion of physical inventory of an office the Unit Head or designated officials of the respective
offices has signed the physical inventory sheets for confirmation, authentication and Validation.
After completion of the physical verification, our Team approached for valuation and reconciliation
of fixed assets. No any Fixed Assets Register in offices was available for reconciliation of the
quantity and value of the assets.

Section-06: Valuation procedure

6.1In consideration of definition, basic concept and general rule as mentioned in section 4 & 5 our
consultants complete the valuation or the fixed assets as per rule of Ministry of Finance, IAS-
16, BAS-16 , BAS-13 and BFRS. They will also determine the replacement cost of the
respective assets. Our consultants consider the higher value of market replacement value.

6.2Our consultants ascertain back log depreciation allocation the depreciable amount of the assets
over the expired life used and then fair market value will be determine deducting back log
depreciation from expected replacement cost of an assets.

6.3It is noted that, the fair market values so calculated are to be treated as a revaluation of the
respective assets.

Section-07: Summary of the Report of Assets

7.1.Fixed Assets and Depreciation:
As per clause-18 of the General Guidelines, any one method of the following methods has been
followed for the valuation of fixed assets and stores.

12
 (a) Replacement value.
(b) Fair value.
We have ascertained estimated cost on the basis of historical cost. We have ascertained replacement
cost or fair value of the fixed assets where historical cost is not available. In case of scrap, we have
valued them ay applying fair market value as on 30 June 2017. We have also followed guidelines
of International Accounting Standard-16 (IAS-16) & BAS-13 for the valuation of the fixed assets.
According to IAS-16, we have considered the following points:
(a) Condition of the assets and its utilization;
(b) The life of the assets. We have assessed the total life of the respective assets considering
the life already enjoyed by the BPDB plus expected future life of residual life of the same
property; and
(c) Existing status whether respective asset is serviceable or unserviceable or scrap.

7.2. Depreciation Method:

As per clause-5 of the General Guidelines, we have always followed Straight Line Method (SLM)
for the computation of depreciation and to find out the estimated evaluated value of respective fixed
asset as of 30th June 2017 in place of existing policy of ascertainment of depreciation on fixed assets
by applying the Reducing Balance Method. We have ascertained average life of individual assets
for the computerization of backlog depreciation to find out fair value of the individual asset on 30th
June 2017. The average life and rate of depreciation of the individual type or class of assets have
cited in Valuation Plan.

Section-08: Synopsis of the Assets

8.1 The synopses of the value of the fixed assets of BPDB as at 30th June 2017 are furnished below:

(All figures are in thousand Tk.)

13
 Measu
Estimated Estimated Evaluated
Sl Unit Office rement Volume
Cost Depreciation Value
# Unit
1 Land Acrs
2 Plot Details SQMT
3
Building SQMT

4 Civil work (Except

SQMT
building)
5
Generation Plan Pcs

6 Generation Plan
(Component Cost Work Pcs
Sheet)
7 Sub-Station (Generation) Km
8 Generation /Transformers/
Distribution power Pcs
Transformers
9 Generation /Transformers/
Distribution circuit Pcs
Breakers
10 Miscellaneous Power Plant
Pcs
Structures
11
Transmission Sub-Station Pcs

12 Transmission Lines Km
13 Projects in Progress Pcs
14
Distribution Sub-Station Pcs

15 Pole mounted Sub-Station Pcs

16
Distribution Lines Km

17 Distribution service drops

Pcs
and meters
Computer/Printer/UPS/
18 Pcs
Stabilizer
19 Office Equipment Pcs

20 Furniture & Fixture Pcs

14
 Transport/ vehicle/Water
21 Pcs
Crafts/Fork Lift/Crane
Service, Testing, Lab,
22 Field And Other Pcs
Equipment

Total Value

8.1 (a) The list of the assets under this office is shown in FAR-3.
(b) The Conditions and Summery of the class wise of the assets under this office are shown in FAR-
2.
(c) The detailed information of the fixed assets is furnished in FAD-1 enclosed herewith.

Section-09: Comments, Opinions and Suggestions

9.1We would like to point out few comments and suggestions for the safeguard and proper
maintenance of the fixed assets:
a. Fixed Assets Register is to be updated regularly.
b. Repairing and overhauling are to be done in time.
c. Affix Code number in the body of the assets.
d. The assets related all documents must be kept in separate file.

Section-10: Conclusion Remarks

10.1We would like to thanks to all officials and staff of this unit office, Project Director, Director
(Finance), Controller(Accounts& Finance), Member(Finance), Secretary and Chairman of
BPDB for extending whole hearted cooperation and help in implementation and executing of
consulting service for Identification, comprehensive listing, valuation/revaluation and
recording of Fixed Assets of BPDB.

The End

15