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Dakshin Haryana Bijli Vitran Nigam Limited, Multi Location
June, 15th 2018
                           BID DOCUMENTS

                                FOR

ASSIGNMENT OF AUDIT OF EXPENDITURE ACCOUNTS MAINTAINED AT VARIOUS
CIRCLES AND DIVISIONS UNDER OPERATION CIRCLE NARNAUL, REWARI, JIND,
SIRSA, BHIWANI, HISSAR, FATEHABAD , HEAD OFFICE AND OTHERS FOR THE
PERIOD 4/2016 to 3/2017 & 4/2017 to 3/2018 AND FURTHER EXTENDABLE FOR
ANOTHER ONE YEAR ON SUCCESSFUL COMPLETION TO THE SATISFACTION OF
DHBVN.



                            ISSUED BY:
                         CHIEF AUDITOR,
                 VIDYUT SADAN, VIDYUT NAGAR, HISAR
                          HARYANA-125005
                 DAKSHIN HARYANA BIJLI VITRAN NIGAM




                          BIDDING DOCUMENT



                       (BID NO: CA/WA/2017-18/03)




                                 FOR



ENGAGEMENT OF WELL ESTABLISHED, REPUTED AND EXPERIENCED AUDIT
FIRMS FOR CARRYING OUT THE AUDIT OF EXPNDITURE ACCOUNTS OF VARIOUS
CIRCLES AND DIVISIONS UNDER OPERATION, NARNAUL, REWARI, JIND, SIRSA,
BHIWANI, HISSAR, FATEHABAD , HEAD OFFICE AND OTHERS FOR THE PERIOD
4/2016 to 3/2017 & 4/2017 to 3/2018 AND FURTHER EXTENDABLE FOR ANOTHER
ONE YEAR ON SUCESSFULL COMPLETION TO THE SATISFACTION OF DHBVN




                                                CHIEF AUDITOR
                                            DHBVN, VIDYUT SADAN,
                                         VIDYUT NAGAR HISAR-125005
                                              PHONE: 01662-223128
                              INDEX




SECTION DESCRIPTION                             PAGE NO

   I.    INVITATION FOR BID                      05-13

  II.    INSTRUCTIONS TO BIDDERS                 15-24

  III.   TERMS AND CONDITIONS OF THE CONTRACT    25-34

  IV.    SCOPE OF WORK                           35-40

  V.     PARTICULARS OF THE BIDDER               41-42

  VI.    PRICE SCHEDULE                          44-45

  VII.   ANNEXURES                               46-218
    SECTION-I




INVITATION FOR BID




      (IFB)
                        DAKSHIN HARYANA BIJLI VITRAN NIGAM LTD.
                                    TENDER NOTICE
                               (BID NO: CA/WA/2017-18/02)
E-Tender is invited for engagement to carry out the audit of expenditure accounts from
approved/well established, reputed and experienced audit firms of Chartered Accountants/
CMA and group of retirees of UHBVN, DHBVN, HVPNL/ erstwhile HSEB headed by not
below the rank of Accounts Officer having at least 5 years experience of
Division/Circle/HO under DHBVN (details available in the tender documents) for the period
4/2016 to 3/2017 & 4/2017 to 3/2018 to be completed within a period of six months from
the date of allotment for each financial year, (further extendable for another one year on
the same terms and conditions on successful completion to the satisfaction of DHBVN ) in
single stage two cover system i.e. Request for Pre-Qualification Bid (online Bid under
PQQ Envelope) and Request for Financial Bid (comprising of price bid Proposal under
online available Commercial Envelope).

 Earnest Money Deposit                           Rs.4000/- per Auditee Office

 Cost of Tender Documents                        Rs. 2000/-+1000 e-service fees

 Period of downloading of tender documents
 and deposit of EMD                               25.05.2018 to 14.06.2018

 Closing date & time for submission of bid       15.06.2018 upto 13.00 hours
 Opening date & time of Pre-Qualification Bid    15.06.2018 at 15.00 hours
 Date & Time for opening of Price Bid            (to be notified later on)
 Date of submission of Original Documents        20.06.2018 upto 13.00 hours.
 Place of submission of bid
                                                  O/o Chief Auditor,
                                                  Vidyut Sadan, Vidyut Nagar
 Place for opening of bids                        Hisar-125005
                                                  Phone : 01662-223128
 Office inviting bids                             Mobile: 09812452565
                                                  (Chief Auditor, DHBVN)
                                                  8059960386 (SO/Works Audit)

Under this process, the Pre-qualification/ online bid Application as well as online Price Bid
shall be invited at single stage under two covers i.e. PQQ & Commercial Envelope.
The work shall be allotted as per the following eligibility criteria:

a)     The audit firm must have experience in the audit of Public Sector Undertaking.
b)     The audit firm must have been in existence for the last 5 years.
c)     The average annual turnover for the last 3 years must not be below Rs.20 lacs.
d)     However, the above criteria at a, b, & c, will only be applicable to the firms of
       Chartered Accountants.
e)     The audit firm must have adequate staff for carrying out the audit of expenditure
       accounts within the period of 6 months from the date of allotment.
f)       The audit work will be got done by the successful bidder from their regular
         employees and should not further be sublet the contract. However only one
         member in an audit team can be a retired employee of the DHBVN.
i)       Detailed terms and conditions can be seen in the tender documents.
ii)      The tender documents are available on the official website of DHBVN i.e.
         www.dhbvn.org.in and can be downloaded from there.

         The qualification of the Applicant will be first examined based on the details
         submitted online under first cover (PQQ) with respect to eligibility and qualification
         criteria prescribed in this Tender document. The Price Bid under the second cover
         shall be opened for only those Applicants whose PQQ Applications are responsive
         to eligibility and qualifications requirements as per Tender document.

1. The payment for Tender Document Fee and e-Service Fee shall be made by eligible
      bidders online directly through Debit Cards & Internet Banking Accounts and the
      payment for EMD can be made online directly through RTGS/NEFT or OTC Please refer
      to `Online Payment Guideline' available at the Single e-Procurement portal of GoH (Govt.
      of Haryana) and also mentioned under the Tender Document.
2. Intending bidders will be mandatorily required to online sign-up (create user account) on the
      website https://haryanaeprocurement.gov.in to be eligible to participate in the e-Tender.
      He/She will be required to make online payment of Rs.4000/- per unit/per auditee office
      towards EMD fee in due course of time. The intended bidder fails to pay EMD fee under
      the stipulated time frame shall not be allowed to submit the bids for the respective
      event / Tenders.
3. The interested bidders must remit the funds at least T+1 working day (Transaction day + One
      working Day) in advance i.e. on or before 14.06.2018 up to 05:00 PM); and make payment
      via RTGS /NEFT or OTC to the beneficiary account number specified under the online
      generated challan. The intended bidder / Agency thereafter will be able to successfully
      verify their payment online, and submit their bids on or before the expiry date & time of
      the respective events/Tenders at https://haryanaeprocurement.gov.in.
      The interested bidders shall have to pay mandatorily e-Service fee (under document fee ­ Non
      refundable) of Rs.1000/- (Rupee One Thousand Only) online by using the service of secure
      electronic gateway. The secure electronic payments gateway is an online interface between
      bidders & online payment authorization networks.

      The Payment for document fee/ e-Service fee can be made by eligible bidders online directly
      through Debit Cards & Internet Banking.The Bidders can submit their tender documents
      (Online) as per the dates mentioned in the key dates.




Important Note:
1) The Applicants/bidders have to complete `Application / Bid Preparation & Submission' stage on
   scheduled time as mentioned above. If any Applicant / bidder failed to complete his / her
   aforesaid stage in the stipulated online time schedule for this stage, his / her Application/bid
   status will be considered as `Applications / bids not submitted'.
2) Applicant/Bidder must confirm & check his/her Application/bid status after completion of his/her
   all activities for e-bidding.
3) Applicant/Bidder can rework on his/her bids even after completion of `Application/Bid
   Preparation & submission stage' (Application/Bidder Stage), subject to the condition that the
   rework must take place during the stipulated time frame of the Applicant/Bidder Stage.
4) In the first instance, the online payment details of tender document fee + e-Service and EMD &
   PQQ/Technical Envelope shall be opened. Henceforth financial bid quoted against each of the
   item by the shortlisted bidder/ Agency wherever required shall be opened online in the
   presence of such bidders/ Agency who either themselves or through their representatives
   choose to be present. The bidder can submit online their bids as per the dates mentioned in
   the schedule/ Key Dates above.
   The bids shall be submitted only through online in two separate envelopes:
   Envelope 1: Pre-qualification Bid
   The bidders shall upload the required eligibility & technical documents online in the Technical
   Bid.
   Envelope 2: Financial Bid
   The bidders shall quote the prices in price bid format under Commercial Bid.
                       Instructions to bidder on Electronic Tendering System

         These conditions will over-rule the conditions stated in the tender documents,
wherever relevant and applicable.

1.       Registration of bidders on e-Procurement Portal:-

All the bidders intending to participate in the tender process online are required to get registered on
the centralized e - Procurement Portal i.e. https://haryanaeprocurement.gov.in. Please visit the
website for more details.

2.       Obtaining a Digital Certificate:

     2.1 The Bids submitted online should be encrypted and signed electronically with a Digital
         Certificate to establish the identity of the bidder bidding online. These Digital Certificates are
         issued by an Approved Certifying Authority, by the Controller of Certifying Authorities,
         Government of India.

     2.2 A Digital Certificate is issued upon receipt of mandatory identity (i.e. Applicant's PAN Card)
         and Address proofs and verification form duly attested by the Bank Manager / Post Master /
         Gazetted Officer. Only upon the receipt of the required documents, a digital certificate can
         be issued. For more details please visit the website ­ https://haryanaeprocurement.gov.in.

     2.3 The bidders may obtain Class-II or III digital signature certificate from any Certifying
         Authority or Sub-certifying Authority authorized by the Controller of Certifying Authorities or
         may obtain information and application format and documents required for the issue of
         digital certificate form.

     2.4 The bidder must ensure that he/she comply by the online available important guidelines at
         the portal https://haryanaeprocurement.gov.in for Digital Signature Certificate (DSC)
         including the e-Token carrying DSCs.

     2.5 Bid for a particular tender must be submitted online using the digital certificate
         (Encryption & Signing), which is used to encrypt and sign the data during the stage of bid
         preparation. In case, during the process of a particular tender, the user loses his digital
         certificate (due to virus attack, hardware problem, operating system or any other problem)
         he will not be able to submit the bid online. Hence, the users are advised to keep a backup
         of the certificate and also keep the copies at safe place under proper security (for its use
         in case of emergencies).

     2.6 In case of online tendering, if the digital certificate issued to the authorized user of a firm is
         used for signing and submitting a bid, it will be considered equivalent to a no-objection
         certificate /power of attorney / lawful authorization to that User. The firm has to authorize a
         specific individual through an authorization certificate signed by all partners to use the
         digital certificate as per Indian Information Technology Act 2000. Unless the certificates are
         revoked, it will be assumed to represent adequate authority of the user to bid on behalf of
         the firm in the department tenders as per Information Technology Act 2000. The digital
         signature of this authorized user will be binding on the firm.

     2.7 In case of any change in the authorization, it shall be the responsibility of management /
         partners of the firm to inform the certifying authority about the change and to obtain the
         digital signatures of the new person / user on behalf of the firm / company. The procedure
         for application of a digital certificate however will remain the same for the new user.

     2.8 The same procedure holds true for the authorized users in a private/Public limited
         company. In this case, the authorization certificate will have to be signed by the directors of
         the company.

3.       Pre-requisites for online bidding:

        In order to operate on the electronic tender management system, a user's machine is
required to be set up. A help file on system setup/Pre-requisite can be obtained from Nextenders
(India) Pvt. Ltd. or downloaded from the home page of the website -
https://haryanaeprocurement.gov.in.. The link for downloading required java applet & DC setup are
also available on the Home page of the e-tendering Portal.

4.       Online Viewing of Detailed Notice Inviting Tenders:

        The bidders can view the detailed N.I.T and the time schedule (Key Dates) for all the
tenders floated through the single portal eProcurement system on the Home Page at
https://haryanaeprocurement.gov.in.

5.       Download of Tender Documents:

        The tender documents can be downloaded free of cost from the eProcurement portal
https://haryanaeprocurement.gov.in

6.       Key Dates:

        The bidders are strictly advised to follow dates and times as indicated in the online Notice
Inviting Tenders. The date and time shall be binding on all bidders. All online activities are time
tracked and the system enforces time locks that ensure that no activity or transaction can take
place outside the start and end dates and the time of the stage as defined in the online Notice
Inviting Tenders.

7.       Online Payment of Tender Document Fee, eService fee , EMD fees & Bid Preparation
         & Submission (PQQ/ Technical &     Commercial/Price Bid):

         i) Online Payment of Tender Document Fee + e-Service fee:

       The online payment for Tender document fee, eService Fee & EMD can be done using the
secure electronic payment gateway. The Payment for Tender Document Fee and eService Fee
shall be made by bidders/ Vendors online directly through Debit Cards & Internet Banking Accounts
and the Payment for EMD shall be made online directly through RTGS / NEFT & OTC.
The secure electronic payments gateway is an online interface between contractors and Debit card
/ online payment authorization networks.

      ii)     PREPARATION & SUBMISSION Of online APPLICATIONS/BIDS:

       (i)        Detailed Tender documents may be downloaded from e-procurement website
                  (https://haryanaeprocurement.gov.in) and tender mandatorily be submitted online.

       (ii) Scan copy of Documents to be submitted/uploaded for Prequalification or
             Technical bid under online PQQ/ Technical Envelope: The required documents
             (refer to DNIT) shall be prepared and scanned in different file formats (in PDF
             /JPEG/MS WORD format such that file size is not exceed more than 10 MB) and
             uploaded during the on-line submission of PQQ Envelope.
       (iii) FINANCIAL or Price Bid PROPOSAL shall be submitted mandatorily online
             under Commercial Envelope and original not to be submitted manually)

8.    ASSISTANCE TO THE BIDDERS:-
      In case of any query regarding process of e- t ender s and for undertaking training
purpose, the Intended bidder can also avail the following and can contact service provider as
per below:

            Office Timings of Help-desk support for Single e Procurement Portal of Government of
            Haryana- Technical Support Assistance will be available over telephone Monday to
            Friday (09:00 am. to 5:30 pm) & Training workshop will be conducted on every 1st, 2nd
            Friday (from 3:30 pm upto 6:00 pm) and 4th Saturday (from 11:30 am upto 3:00 pm) of
            each month.

            All   queries    would    require   to   be   registered   at    our    official  email-
            chandigarh@nextenders.com for on- time support (Only those queries which are sent
            through email along with appropriate screenshots or error description will be considered
            as registered with the Help-desk)

            Important Note:-

            (a)         Any intending bidder can contact the helpdesk on or before prior to 4
                        hours of the scheduled closing date & time of respective e-Auction/ Tender
                        event.
            (b)         For queries pertaining to e-Payment of EMD, please contact the helpdesk at least
                        2 business days prior to the closing date & time of e-Auction/Tender event.
            (c)         Help-desk support will remain closed during lunch break i.e. from 1:30 PM up to
                        2:15 PM on each working day.

            Schedule for Training:

              Training workshop will be held on 1st, 2nd Friday (from 3:30 pm to 6:00 pm) and
                   th
                  4 Saturday (from 11:30 am to 3:00 pm) of each month at following addresses:


             Nextenders (India) Pvt. Ltd           Nextenders (India)      Nextenders (India) Pvt. Ltd.,
               Municipal Corporation              Pvt.Ltd. Public Health     Nirman Sadan (PWD
                 Faridabad, Near                      Division No. 2                 B&R),
                B.K.Chowk, Opp.                  Hisar, Model Town Opp.    Plot No.- 01, Basement,
                B.K.Hospital, NIT,                 N.D Gupta Hospital,      Dakshin Marg, Sec- 33 A,
                   Faridabad                              Hisar               Chandigarh -160020
                    Contact no.                   Contact: 9034357793       For Support- 1800-180-
             8743042801 / 9310335475                                                2097,
                                                                            0172-2582008-
            For Support Call ­ 1800-180-2097                                     2009
        Haryana eProcurement Help Desk Office will remain closed on Saturday
        ( except 4th
        Saturday), Sunday and National Holidays

NOTE:-

(A)     Bidders participating in online tenders shall check the validity of his/her Digital
Signature Certificate before participating in the online Tenders at the portal
https://haryanaeprocurement.gov.in.

(B)     For help manual please refer to the `Home Page' of the e-Procurement website at
https://haryanaeprocurement.gov.in, and click on the available link `How to...?' to download the
file.



                         Guideline for Online Payments in e-tendering

                Post registration, bidder shall proceed for bidding by using both his digital
       certificates (one each for encryption and signing). Bidder shall proceed to select the tender
       he is interested in. On the respective Department's page in the e-tendering portal, the
       Bidder would have following options to make payment for tender document & EMD:

       A. Debit Card

       B. Net Banking

       C. RTGS/NEFT

       Operative Procedures for Bidder Payments

       A) Debit Card


       The procedure for paying through Debit Card will be as follows.

       (i) Bidder selects Debit Card option in e-Procurement portal.

       (ii) The e-Procurement portal displays the amount and the card charges to be paid by
       bidder. The portal also displays the total amount to be paid by the bidder.

       (iii) Bidder clicks on "Continue" button

       (iv) The e-Procurement portal takes the bidder to Debit Card payment gateway screen.

       (v) Bidder enters card credentials and confirms payment

       (vi) The gateway verifies the credentials and confirms with "successful" or "failure"
       message, which is confirmed back to e-Procurement portal.

       (vii) The page is automatically routed back to e-Procurement portal

       (viii) The status of the payment is displayed as "successful" in e-Procurement portal. The
       e-Procurement portal also generates a receipt for all successful transactions. The bidder
       can take a print out of the same,
(ix) The e-Procurement portal allows Bidder to process another payment attempt in case
payments are not successful for previous attempt.

B) Net Banking

The procedure for paying through Net Banking will be as follows.

(i) Bidder selects Net Banking option in e-Procurement portal.

(ii) The e-Procurement portal displays the amount to be paid by bidder.

(iii) Bidder clicks on "Continue" button

(iv) The e-Procurement portal takes the bidder to Net Banking payment gateway screen
displaying list of Banks

(v) Bidder chooses his / her Bank

(vi) The Net Banking gateway redirects Bidder to the Net Banking page of the selected
Bank

(vii) Bidder enters his account credentials and confirms payment

(viii) The Bank verifies the credentials and confirms with "successful" or "failure" message
to the Net Banking gateway which is confirmed back to e-Procurement portal.

(ix) The page is automatically routed back to e-Procurement portal

(x) The status of the payment is displayed as "successful" in e-Procurement portal.

       The e-Procurement portal also generates a receipt for all successful transactions.
The bidder can take a print out of the same. (xi) The e-Procurement portal allows Bidder to
process another payment attempt in case payments are not successful for previous
attempt.

C) RTGS/ NEFT

       The bidder shall have the option to make the EMD payment via RTGS/ NEFT.
Using this module, bidder would be able to pay from their existing Bank account through
RTGS/NEFT. This would offer a wide reach for more than 90,000 bank branches and
would enable the bidder to make the payment from almost any bank branch across India.

I. Bidder shall log into the client e-procurement portal using user id and password as per
existing process and selects the RTGS/NEFT payment option.

ii. Upon doing so, the e-procurement portal shall generate a pre-filled challan. The challan
will have all the details that is required by the bidder to make RTGS-NEFT payment.

iii. Each challan shall therefore include the following details that will be pre-populated:

   ·   Beneficiary account no: (unique alphanumeric code for e-tendering)
   ·   Beneficiary IFSC Code:
   ·   Amount:
   ·   Beneficiary bank branch:
   ·   Beneficiary name:
iv. The Bidder shall be required to take a print of this challan and make the RTGS/NEFT on
the basis of the details printed on the challan.

v. The bidder would remit the funds at least T + 1 day (Transaction + One day) in advance
to the last day and make the payment via RTGS / NEFT to the beneficiary account number
as mentioned in the challan.

vi. Post making the payment, the bidder would login to the e-Tendering portal and go to the
payment page. On clicking the RTGS / NEFT mode of payment, there would be a link for
real time validation. On clicking the same, system would do auto validation of the payment
made.

List of Net banking banks
1. Allahabad Bank
2. Axis Bank
3. Bank of Bahrain and Kuwait
4. Bank of Baroda
5. Bank of India
6. Bank of Maharashtra
7. Canara Bank
8. City Union Bank
9. Central Bank of India
10. Catholic Syrian Bank
11. Corporation Bank
12. Deutsche Bank
13. Development Credit Bank
14. Dhanlaxmi Bank
15. Federal Bank
16. HDFC Bank
17. ICICI Bank
18. IDBI Bank
19. Indian Bank
20. Indian Overseas Bank
21. Indusind Bank
22. ING Vysya Bank 23. J and K Bank
24. Karnataka Bank
25. Kotak Mahindra Bank
26. KarurVysys Bank
27. Punjab National Bank
28. Oriental Bank of Commerce
29. South Indian Bank
30. Standard Chartered Bank
31. State Bank Of Bikaner and Jaipur
32. State Bank of Hyderabad
33. State Bank of India
34. State Bank of Mysore
35. State Bank of Travencore
36. State Bank Of Patiala
37. Tamilnad Mercantile Bank
38. Union Bank of India
39. United Bank of India
40. Vijaya Bank
41. Yes Bank
                                                                        Chief Auditor
                                                              DHBVN, VIDYUT NAGAR
                                                            HISAR (HARYANA) -125005
            SECTION-II




     INSTRUCTIONS TO BIDDERS



              (ITB)




15
                         INSTRUCTIONS TO BIDDERS

                               CONTENTS

SR.                        DESCRIPTION             PAGE NO.
NO.
1.  SCOPE OF BID                                      17

2.    QUALIFATION OF THE BIDDER                       18

3.    CLARIFICATION ON BID DOCUMENTS                  19

4.    AMENDMENTS TO BID DOCUMENT                      20

5.    DEVIATION FROM BID DOCUMENTS                    20

6.    FILLING OF BIDS                                 20

7.    DOCUMENTS COMPARISING THE BID                   21

8.    SUBMISSION OF THE BIDS                          21

9.    BID VALIDITY                                    22

10.   EARNEST MONEY                                   22

11.   COST OF SPECIFICATION                           23

12.   LATE BIDS                                       23

13.   BID OPENING AND EVALUATION                      23

14.   REJECTION OF BID                                23

15.   CLARIFICATION OR MODIFICATION OF BIDS           24

16.   AWARD CRITERIA                                  24

17.   NOTIFICATION OF AWARD                           24

18.   GENERAL                                         24




 16
                              INSTRUCTIONS TO BIDDERS



1.     SCOPE OF BID


1.1    Dakshin Haryana Bijli Vitran Nigam Ltd. Here-in-after called DHBVN intends to
       engage well established, reputed and experienced Audit firms for carrying out the
       audit of expenditure accounts which includes audit of expenditure, upkeep and
       maintenance of record / accounts, being maintained at division level under
       Operation CIRCLE NARNAUL, REWARI, JIND,SIRSA,BHIWANI, HISSAR ,
       FATEHABAD, SE CIVIL WORKS HISSAR , HEAD OFFICE AND OTHERS FOR
       THE PERIOD 4/2016 to 3/2017 & 4/2017 to 3/2018. Initially the audit shall be
       assigned for a period of one year but on the successful completion of the work to
       the satisfaction of DHBVN the audit of one another year can be assigned on the
       same rates, terms and condition with mutual consent of both parties to the contract.
       Copy of the Works Audit Manual containing instructions for the checking of
       expenditure accounts; Risk Management System indentifying the risks involved and
       checklist to mitigate the identified risks (for the checking to be carried out) is
       available at Annexure-"D".
1.2    The jurisdiction of auditee office may be changed during the period of assigned
       audit because of restructuring process or due to other reason. ``
1.3    Estimated/ tentative man days required for auditing of expenditure accounts of each
       office are placed at Annexure-`C'. However, the actual mandays required for the
       completion of audit may differ depending upon the experience/efficiency of the audit
       personnel deployed by the audit firm. The bidders are therefore, advised in their
       own interest to assess the workload correctly for quoting the rates. DHBVN shall not
       take any responsibility for incorrect assessment of workload and no claim,
       whatsoever, in this regard shall be accepted.




1.4    The audit firm shall have to carry out the audit as per instruction as applicable from
       time to time and nothing extra shall be payable for the same, even if the audit firm


      17
        have to devote extra time for checking of compliance of the revised/newly
        introduced instructions.
1.5     The job shall be carried out at the headquarters of the auditee office where the
        record is being maintained and the report shall be submitted to the Chief Auditor,
        DHBVN, Hisar on the format prescribed for the same. Detailed instructions have
        been explained under Section-IV "Scope of Work".
2.       QUALIFICATION OF THE BIDDER:
     2.1 ELIGIBILITY CONDITIONS QUALIFYING THE AUDIT FIRM FOR SUBMISSION
         OF TENDER/BID:
         a)      The audit firm must have experience in the audit of Public Sector
                 Undertaking.
         b)      The audit firm must have experience of audit of 5 years at least.
         c)      The average annual turnover i.e. the audit fee for the last 3 years must not
                 be below Rs.20 lacs.
         d)      However, the above criteria at a, b & c will only be applicable to the firms of
                 Chartered Accountants.
         e)      The audit firm may enter into collaboration and agreement with other
                 associates for this purpose and in that case combined turnover of both the
                 parties to the agreement will be considered for the purpose of calculating the
                 qualifying turnover of Rs. 20 lacs. Provided that the turnover of the lead
                 partner i.e. in whose name tender is submitted must not be less than 60% of
                 the total required turnover. However, the agreement (in original) so made
                 along with the audited and certified copies of balance sheet of both parties to
                 the contract shall have to be submitted with the tender documents.

      2.2 The audit firm must have adequate staff for carrying out the work. The bidders
         shall have to submit an undertaking on NJSP to the effect that the audit firm have
         sufficient strength of the staff to carry out the audit in case work is allotted to the
         audit firm.    The audit work will be got done by the successful bidder from their
         regular employees, should not further sublet the contract, However only one
         member in an audit team can be a retired employee of the DHBVN.

     2.3 Each audit party shall consist of two/three members. Not more than one audit party
         or more than three persons shall be allowed to carry out the audit of one
         division/office at a time.   This implies that generally two and maximum three
         persons can be deputed simultaneously in a division/office for audit. The audit firm
         would have to deploy sufficient nos. of the audit parties, so as to complete
         the audit of expenditure accounts within 6 months from the date of allotment of
         work.



      18
     2.4 The firms/groups having retired employees of the erstwhile HSEB/HVPNL/
         DHBVN/UHBVNL/AG (Audit) Haryana headed by not below the rank of Accounts
         Officer having at least 5 years experience of audit of Expenditure Accounts, shall
         also be considered for assignment of the job.
     2.5 To be qualified for award, bidder shall provide evidence, satisfactory to DHBVN of
         their capacity and adequacy of resources to carry out the      contract    effectively.
         Bids shall include the following information:
         a)     Copies of the original documents defining the constitution or the legal status,
                place of registration and principal place of business, written power of
                attorney of the signatory of the Bid to commit the Bidder.
         b)     Description of the resources available with him to carry out the proposed job
                along with an undertaking to the effect that the audit firm has sufficient staff
                to carry out the audit for which it has submitted the bid and/or will be in a
                position to carry out the audit as per scope of audit and within the period
                prescribed for audit.
         c)     Qualification and experience of key personnel proposed for carrying out the
                work.
         d)     Information regarding any litigation, current or during the last two years, in
                which the Bidder is involved, the parties concerned and the dispute and the
                disputed amount.
3.       CLARIFICATION ON BID DOCUMENTS:
         The prospective Agency may obtain any clarification regarding the bid document by
         writing or emailing to: -

                        CHIEF AUDITOR
                        DAKSHIN HARYANA BIJLI VITRAN NIGAM LTD.
                        VIDYUT SADAN, VIDYUT NAGAR
                        HISAR ­125005
                        PHONE-01662-223128
                        Contact Person:-

                         Mr. Sandeep Kumar So/WA 8059960386
                        sraowachiefauditor@gmail.com



         The audit firm is advised in its own interest to examine the bid documents,
         instructions, forms, terms & general information before submission of bid. Failure
         to provide information, which is essential to evaluate the bid or to provide the timely

      19
      clarification or substantiation of the information supplied or submission of bid not
      substantially responsive to the bid document may result in disqualification.


4.    AMENDMENTS TO BID DOCUMENT:

      At any time prior to the date for submission of bid as well as upto opening of bids,
      DHBVN may for any reason, whether of its own or by way of clarification given at
      the request of prospective bidder, modify the bid document by issue of amendment
      (s) which shall form part of it.    The agenda shall be sent in writing to all the
      prospective bidders, who shall return one copy of it duly signed along with their bid.
      Extension in the due date, if considered necessary, may be made by the DHBVN.
5.    DEVIATION FROM BID DOCUMENTS:

      The bid offer must include a separate statement indicating all deviation from the bid
      documents as per format enclosed at Annexure-`A'. All such deviations shall be
      clearly mentioned in deviation sheet. Unless the deviations from the bid documents
      are specifically mentioned, it will be understood and agreed that the proposal is in
      strict conformity to DHBVN's specifications in all respect and it will be assumed that
      all terms & conditions are acceptable to the bidder. These deviations may or may
      not be accepted by DHBVN and in case the deviations as proposed by the bidder
      are not accepted by DHBVN the bidder will have the option either to withdraw the
      deviation or to withdraw the offer. In case the deviation proposed are not accepted
      by DHBVN and the same are not withdrawn by the bidder, the bidder shall be
      consider as `not qualified' for the bid and his price bid shall not be opened.
6.    FILLING OF BIDS:

     a.)     Bid shall be submitted in the forms attached hereto and all blanks in
             Section-V, VI and the Annexure-`A' of the specification shall be duly filled
             in. The complete Form & Annexures shall be considered as part of contract
             documents in the case of successful bid.
     b.)     No alteration should be made to Form of the tender specification and
             Annexure.     The bid must comply entirely with the specification and
             alternative proposals, if any, shall be clearly stated in the covering letter.
     c.)     The bid and all accompanying documents shall be in Hindi/English language
             and shall be signed by a responsible and authorized person. The name
             designation and authority of signatory shall be stated in the bid.

     20
      d.)       Tenders should be filled in only with ink or typed. No bid filled in by pencil
                or otherwise shall be considered.
      e.)       All additions, alterations and over writings in the bid must be clearly initialled
                by the signatory to the bid.
      f.)       The bidder should quote the prices strictly in the manner as indicated
                herein, failing which bid is liable for rejection. The rate/prices shall be in
                words as well as figures. This must not contain any additions, alternation,
                overwriting, cuttings over corrections and any other marking, which leave
                any room for doubt. In case of any deviation in words & figures, the rates
                favourable to the Nigam shall be considered.
      g.)       The contract awarding authority will not be responsible to accept any cost
                involved in the preparation and submission of the bids.
7.     DOCUMENTS COMPRISING THE BID:

       7.1      The bidder shall submit the following document/information with the bid.

              Covering letter i.e. Schedule-"C"
              Power of Attorney
              Documents required for eligibility criteria.
              Statement of deviations from the bid documents as per Annexure-`A'.
              Details in format given in Section-V.
              Copy of the agreement between the bidder and his collaborators or
                associates, if any.
              Earnest Money of Rs.4000/- per unit/Auditee office.
              Price schedule in Section-VI.
              Other details as called for in the bid documents or which the bidder may like
                to highlight.
       7.2      FORMATS AND SIGNING OF BID:
                The bidder shall submit one set of his bid, complete in all respect with
                enclosures. The bid shall be signed on each page by the authorized
                signatory and shall be stamped with seal of company/firm.
                The person or persons signing the bid shall initial all pages of the bid,
                including where entries or amendments have been made.

8.     SUBMISSION OF THE BIDS:

(C)    8.1     The interested bidder may send their proposal on or before 15/06/2018 upto 13:00 PM at
the portal https://haryanaeprocurement.gov.in.

     21
       8.2     The bid shall be submitted in the following manner:

              The Earnest money shall be deposited online by the CA/CMA firms through
                debit card or RTGS/NEFT on net banking.
              The QUALIFICATION BID AGAINST BID shall be taken as per E-tender
                online BID against BID No. CA/WA/17-18/03. This shall be as per
                section-V and its enclosed documents proving eligible criteria and all
                other documents (Excepting EDM online)
              Price schedule against BID No. CA/WA/17-18/03 should be as per e-
                tender online. Against tender no. CA/WA/17-18/03 to be opened on
                15/06/2018 at 15.00 hours as per e-tender online.
       8.3      Telegraphic quotations and also through Fax/ email will not be accepted.

9.     BID VALIDITY:

               Bid shall remain valid for acceptance for a period of 120 (One hundred
               twenty) days from the date of bid opening. DHBVN may request for suitable
               extension, if required.

10.    EARNEST MONEY:
       10.1    Before submitting the offer the Tenderer shall submit an amount of
               Rs.4000/- per Division /Auditee office through E-tender system online
               against BID NO: CA/WA-2017-18/02. No other mode of deposit shall be
               accepted.

       10.2    Any tender without earnest money shall be rejected and the tender will not
               be opened.

       10.3    In case of unsuccessful tenderers, the Earnest Money will be refundable on
               production of the original receipt within a fortnight after finalization of the
               tender.     In case of successful tenderers, the Earnest Money will be
               converted into the Security Deposit as referred in the Clause-3 of Section-
               III.
       10.4    Request for adjustments/proposals for acceptance of Earnest Money
               deposits, if any, already lying with DHBVN in connection with some other
               tenders/orders shall not be entertained.

      22
       10.5       No interest shall be payable on the amount of Earnest Money deposited with
                  DHBVN.
       10.6       DHBVN reserves the right to forfeit Earnest Money Deposit in full or a part
                  thereof in circumstances, which according to him indicate that the tenderer is
                  not interested in accepting/executing order placed under the specification.

11.    COST OF SPECIFICATION:
       Purchase of tender documents/ specification is essential for participation.          The
       specification containing terms & conditions and other information are available on
       the official website i.e. www.dhbvn.org.in and can be downloaded from there. The
       cost of Tender documents has been fixed Rs.2000/- +1000/-(Non-refundable) E-
       tender fees can also be deposited through RTGS/NEFT/NET Banking.
12.    LATE BIDS:

       Any bid received after the dead line for submission shall be liable for rejection.

13.    BID OPENING AND EVALUATION:
       DHBVN will open the bids in the office of CHIEF AUDITOR, DHBVN, Vidyut Sadan,
       Vidyut Nagar, as per E-tender system.
14.    REJECTION OF BID:
       DHBVN reserves the right to reject or accept any Bid without assigning any reason
       thereof. However, the bid as under shall not be accepted and such bids shall be
       rejected, if received: -

           i)      Bid submitted by the tenderers/firms/agencies, who have been black listed
                   or with whom business dealing have been suspended by any of the State
                   Electricity Boards/Electrical Undertakings/Power Utilities. The bidder shall
                   have to submit an undertaking in this regard.
           ii)     The offer/bid submitted by those who had not purchased/downloaded the
                   bid specification from DHBVN.
           iii)    The bid submitted by a person directly or indirectly connected with the
                   service under Government/ Local Authority/DHBVN.
           iv)     The bid not accompanied by the specified amount of earnest money and
                   the cost of tender documents.
           v)      The bid received after due date and time fixed for receiving the bid.



      23
           All out efforts would be made to make the payment within the prescribed period
           but in case of delay of payment DHBVNL shall not be liable to pay interest on the
           outstanding amount of the firm.


15.    CLARIFICATION OR MODIFICATION OF BIDS:
       To assist in examination, evaluation and comparison of bids, DHBVN may ask the
       Bidders individually for clarification in writing. No change in the substances of the
       bid shall be permitted except as required to confirm the correction of any
       typographical error.
16.    AWARD CRITERIA:
       DHBVN will award the contract for each Circle to the successful Bidder whose Bid
       is determined to be substantially responsive and is determined as the lowest
       evaluated Bid for the Circle as a whole concerned, provided further that the
       Bidder is determined to be qualified to perform the Contract satisfactorily. DHBVN
       shall be sole judge in this regard.
       Further, DHBVN reserves the right to award separate Contracts to two or more
       parties in line with the terms and conditions specified.
17.    NOTIFICATION OF AWARD:
       Prior to the expiration of the period of Bid validity and extended validity period, if
       any, DHBVN will notify the successful bidder in writing by registered letter or by
       cable or Telex or Fax that its Bid has been accepted. The issue of detailed work
       order will constitute the formation of award.
       DHBVN will promptly notify each unsuccessful Bidder and will discharge his
       earnest money.
18.    GENERAL:

       In case of ambiguous or contradictory terms and conditions mentioned in the bid,
       interpretations as may be advantageous to DHBVN may be taken, if satisfactory
       clarification is not furnished within the prescribed period.
       DHBVN will not be responsible for any cost or expenses incurred by the bidder in
       connection with preparation or delivery of bids.
       DHBVN reserves the right to amend the scope of the proposed contract, reject or
       accept any bid, cancel the bid process and reject all applications, vary the area.



      24
 DHBVN shall neither be liable for any action nor be under any obligation to inform
 the bidders of the grounds for any of the above actions.


                                  ************




                                SECTION ­III




                         TERMS AND CONDITIONS

                             OF THE CONTRACT




25
                    TERMS AND CONDITIONS OF THE CONTRACT

                                     CONTENTS

SR.        DESCRIPTION                                      PAGE NO.
NO.
  1.       PERIOD OF CONTRACT                                  28
  2.       COMMENCEMENT OF WORK                                28
  3.       SECURITY DEPOSIT                                    29
  4.       RULE AND REGULATIONS                                29
  5.       COMPLIANCE OF LAW                                   29
  6.       ACCIDENTS                                           29
  7.       RESPONSIBILITY FOR RECORD/DOCUMENTS                 30
  8.       CONDUCT OF STAFF OF AGENCY                          30
  9.       CONTRACT AGREEMENT                                  30
  10. PAYMENT                                                  30
  11. DELAY IN COMPLETION OF AUDIT WORK AND IMPOSING           30
           OF PENALTY THEREOF
  12. COMPLETION OF WORK AND PENALTY FOR UNATTENDED            31
           PART OF WORK
  13. RECOVERY OF THE LOSS SUSTAINED DUE TO FRAUDE/            31
           EMBZZLEMENT/ MISAPPROPRIATION OR NEGLIGENCE BY
           THE EMPLOYEES OF AUDIT FIRM.
  14. ALTERNATION/ADDITION                                     31
  15. ACCEPTANCE OF CONTRACT                                   31
  16. FALL BACK ARRANGEMENTS                                   32

  17. HANDING OVER ON TERMINATION                              32
  18. GOVERNING LAW AND JURISDICTION                           32
  19. LIEN                                                     32
  20. Corrupt of Fraudulent practices:                         32
  21. Settlement of disputes:                                  33
  22. Blacklisting of the Firms:                               33
  23. ARBITRATION                                              34




      26
                         Terms and conditions of the contract

The terms and conditions of the contract shall prevail and shall be binding on the Audit
firms and any change or variation expressed or impressed howsoever made shall be
inoperative unless expressly approved by DHBVN. The audit firm shall be deemed to
have fully informed himself and to have specific knowledge of the provisions of Terms and
Conditions of the contract mentioned hereunder: -
1.    PERIOD OF CONTRACT: The contract shall be made for the audit of expenditure
      accounts of Operation Circle NARNAUL, REWARI, JIND, SIRSA, BHIWANI,
      HISAR, FATEHABAD, SE CIVIL WORKS HISSAR , HEAD OFFICE AND OTHERS
      FOR THE PERIOD 4/2016 TO 3/2017 & 4/2017 TO 3/2018 AND FURTHER
      EXTENDABLE FOR ANOTHER ONE YEAR ON SUCCESSFUL COMPLETION TO
      THE SATISFACTION OF DHBVN. Initially the audit for the period of one year shall
      be allotted and the audit of next year shall only be allotted on successful completion
      of audit to the satisfaction of Cheif Auditor, DHBVN, Hisar with mutual consent of
      both parties. The performance of the audit firm shall be watched regularly and
      continuously by the office of the Chief Auditor, DHBVN, Hisar. The contract or the
      awarded work may be rescinded at any time if the performance regarding
      achievement of the objective and scope of work is not found satisfactory or the
      audit firm commits breach of any of the terms and conditions of the contract. No
      fee or compensation shall be payable in case the contract or the work awarded is
      rescinded on account of non-performance/unsatisfactory performance.               The
      DHBVN may advice the audit firm for improvement in case the performance made
      by the agency is not considered as satisfactory or up to the mark.
2.    COMMENCEMENT OF WORK: The commencement of the work shall take place
      immediately after issue of work order by the DHBVN. Any request of the successful
      bidder to defer the commencement of the work for a period of more than one month
      from the date of allotment of the work shall not be entertained. Further, where the
      request of the audit firm to defer the commencement of audit is accepted, the audit
      firm shall have to conduct the audit of expenditure accounts within next month but
      not later than the stipulated period as mentioned in the contract.




     27
      Provided further that if the audit of next year is assigned to the audit firm on the
      same terms and conditions, the audit firm will have to carry out the audit of next
      year on the same pattern.
3.    SECURITY DEPOSIT:           The earnest money of the successful Bidder shall be
      converted into security deposit. The security deposit shall be refundable after 3
      months of satisfactory completion of the contract after making recoveries, if any,
      under Clause-11, 12 & 13 of this Section or any amount payable by the audit firm
      under the provisions of the contract/agreement.       In the event of breach of the
      contract or any clause of the contract, in any manner, the security deposited by the
      contractor shall be liable to be forfeited by the DHBVN.
4.    RULE AND REGULATIONS: The assigned job shall be carried out under the rules
      and regulations of DHBVN in force and further guidelines/ instructions issued by the
      DHBVN from time to time in this regard. The DHBVN shall also have the right to
      modify such instructions/ guidelines and the audit firm shall abide by such
      instructions/ guidelines without any extra charges unless and otherwise specifically
      agreed for such extra charges.
5.    COMPLIANCE OF LAW:             The audit firm shall, in all matters arising in the
      performance of the contract, comply in all respects, will give all notices and pay all
      fees required by the provisions of any national or state statute, ordinance or other
      law or any regulation or by-law of any duly constituted authority.
      The contract shall in all respects be prepared and interpreted in accordance with
      the law in force in India including any such laws passed or made or coming into
      force during the period of the contract.
      The audit firm shall be responsible for carrying out all of its activities within the
      rules and laws in force. DHBVN shall not be responsible for any of the un-lawful
      activity committed by the audit firm or by the staff of audit firm. The audit firm shall
      be liable for and shall indemnify DHBVN against all losses, expenses or claim
      arising in connection with any unlawful activity committed by any person employed
      by the audit firm for the purpose of assigned job.
6.    ACCIDENTS: The audit firm shall be liable for and shall indemnify DHBVN against
      all losses, expenses or claim arising in connection with the death or injury to any
      person employed by the audit firm for the purpose of assigned job.
7.    RESPONSIBILITY FOR RECORD/ DOCUMENTS: The audit firm shall be fully
      responsible for upkeep, maintenance and safety of the record and documents

     28
       supplied by the DHBVN and also for the record/ documents generated by the audit
       firm. On completion of the contract/ job the audit firm will return all the documents
       supplied to it by the DHBVN and shall also hand over all the record/ documents
       generated by it for the purpose of completion of the assigned work. The audit firm
       shall also be responsible to make good the loss if suffered by DHBVN, due to act of
       the audit firm or firm's staff.
8.     CONDUCT OF STAFF OF AUDIT FIRM: If any of the staff of audit firm is found
       guilty of any misconduct or incompetence or negligence and then if so directed by
       the DHBVN, the audit firm shall at once remove such employee and replace him
       with a qualified and competent substitute.
9.     CONTRACT AGREEMENT:               The audit firm and DHBVN will enter into an
       agreement to be known as "Contract Agreement" setting out all terms and
       conditions thereof including those mentioned herewith, within 7 days from the date
       of placement of work order.
10.    PAYMENT:        Completion of contractual obligations/formalities by the audit firm
       would be an essential requirement for claiming any payment. The audit firm shall
       be entitled to get payment as under: -
       The payment of the audit fee shall be made by the AO /EAD, DHBVN, Hisar
       through cross cheque (Indian Currency) on 30th day of submission of bills by the
       audit firm, after the acceptance of the audit report and approval of the bills by the
       Chief Auditor DHBVN, Hisar.

       All out efforts would be made to make the payment within the prescribed period but
       in case of delay of payment DHBVN shall not be liable to pay interest on the
       outstanding amount of the audit firm.

11.    DELAY IN COMPLETION OF AUDIT WORK AND PENALTY THEREOF:

       The audit firm shall have to complete the assigned work within a period of 6
       months from the date of issue of work order or within the period as is defined in the
       work order and submit the reports immediately thereafter. In case the audit firm
       fails to carry out the audit work within the stipulated period as above, penalty @ 2%
       per month or part thereof of the audit fee subject to maximum 10% shall be
       imposed and recovered from the audit fee. Since the audit fee is fixed for the
       division/auditee office, the same shall be termed as unit for this purpose.



      29
12.    COMPLETION OF WORK AND PENALTY FOR UNATTENDED PART OF
       WORK:

       In case the firm fails to carry out the audit of allotted work its security shall be
       forfeited besides recovery of liquidating damages (LD) @ 5% of the fee payable for
       the un-attended work.
       Further, in case the audit work carried out by the audit firm is not found satisfactory
       and the same is withdrawn, no audit fee shall be payable and the liquidating
       damages @ 5% of the audit fee shall be recovered from the dues payable or from
       the security deposit of the audit firm. Where no security is available, the audit firm
       shall have to deposit the liquidating damages with DHBVN.

       Besides recovery of liquidating damages, such audit firm can also be blacklisted for
       next 3 years.

13.    RECOVERY OF LOSS SUSTAINED TO DHBVN DUE TO FRAUD/
       EMBZZLEMENT/   MISAPPROPRIATION OR NEGLIGENCE BY THE
       EMPLOYEES OF AUDIT FIRM.


       In case any loss is sustained to the DHBVN due to fraud/embezzlement/
       misappropriation of revenue committed by the employees of the audit firm or the
       fraud/embezzlement/misappropriation of revenue committed in the expenditure
       accounts maintained in the Division which could have been detected during the
       normal course of audit, but remains undetected, the audit firm shall be liable to pay
       the same to DHBVN.

14.    ALTERNATION/ADDITION: No variation or modification or waiver of any of the
       terms and conditions or provisions of the contract shall be deemed valid unless
       mutually agreed upon in writing by both parties i.e. DHBVN and audit firm.
15.    ACCEPTANCE OF CONTRACT: The successful bidder will be forwarded two sets
       of Work Order one of which will be signed on each page by the authorized
       signatory of Bidder in token of acceptance of contract and shall be returned to the
       authority placing the order within 15 days of its issue failing which the Earnest
       Money Deposit shall liable to be forfeited.


      30
16.    FALL BACK ARRANGEMENTS: In the event of the failure of the audit firm to fulfill
       its obligations, duties and responsibilities as per the contract, DHBVN shall have
       the right at any time to resort to fall back arrangement. Under this plan, DHBVN
       shall take charge of all facilities and systems whether in operation or under
       execution, after giving suitable notice and can recover from the security deposit the
       losses suffered due to such failure. If the security deposit is un-sufficient, the audit
       firm shall have to pay the difference to DHBVN failing which DHBVN will have the
       right to recover the same through legal or other means. In such circumstances the
       DHBVN after taking the charge as above, shall have the right to manage the
       system itself or through any other audit firm as it may deem fit and no claim of audit
       firm for compensation in this respect shall be entertained.
17.    HANDING OVER ON TERMINATION:                    Immediately after termination of the
       contract agreement the audit firm will cooperate in handing over back all the
       facilities and record in good working order to DHBVN. Upon termination of the
       contract/agreement, the authority of the Agency to act as Agent of DHBVN in the
       area shall immediately cease.
18.    GOVERNING LAW AND JURISDICTION:                    The agreement shall be governed
       under Indian law.      Only appropriate courts at Hisar shall have exclusive court
       jurisdiction to deal with any matter arising out of or relating to the agreement or
       otherwise.
19.    LIEN: In case of any lien or claim pertaining to the work and responsibility of the
       audit firm for which DHBVN might have been made liable, the DHBVN shall have
       the right to recover such claim amount from the audit firm.
20.    Corrupt of Fraudulent practices: The Nigam requires that Tenderers/Service
       providers/Contractors observe the highest standard of ethics during the
       procurement and execution of Nigam contracts. In pursuance of this policy, the
       Nigam:-
            (a)   Defines, for the purposes of this provision, the terms set forth as follows:
                  (i)    Corrupt practice means the offering, giving, receiving or soliciting of
                         any thing of value to influence the action of a public official in the
                         procurement process or in contract execution and
                  (ii)   "Fraudulent practice" means a misrepresentation of facts in order to
                         influence a procurement process or the execution of a contract to

      31
                   the detriment of the Nigam, and includes collusive practice among
                   Tenderers (prior to or after tender submission) designed to establish
                   tender prices at artificial, non-competitive levels and to deprive the
                   Nigam of the benefits of free and open competition;
        (b)   Will reject a proposal for award if it determines that the Tenderer
              recommended for award has engaged in corrupt or fraudulent practices
              in competing for the contract in question;
        (c)   Will declare a firm ineligible, either indefinitely or for a stated period of
              time, to be awarded a Nigam contract if it at any time determines that the
              firm has engaged in corrupt or fraudulent practices in competing for, or in
              executing, a Nigam contract.
21. Settlement of disputes: If any dispute or difference of any kind whatsoever will
   arise between the service provider and the DHBVN in connection with or arising out
   of the contract, the parties will make every effort to resolve amicably such dispute
   or difference by mutual consultation.
   If, after thirty (30) days the parties have failed to resolve their dispute or difference
   by such mutual consultation, then either the service provider or DHBVN may give
   notice to the other party of its intention to commence arbitration, as hereinafter
   provided, as to the matter in dispute, and no arbitration in respect of the matter may
   be commenced unless such notice is given
22. Blacklisting of the Firms: As the work order becomes a valid contract between
   the service provider and DHBVN on the date of its issue, no further changes in the
   terms and conditions thereof are permissible and any request received in this
   regard from the service provider should be summarily rejected, making it clear to
   supply the services strictly in accordance with the terms and conditions of the
   contract. It should be noted that such a liability can be enforced on the service
   provider on if the work order does not contain any term or condition contrary to
   what had been quoted in the service tender. Once this is ensured, any attempt by
   the service provider to back out of his commitment should be taken a serious and
   his earnest money deposited be forfeited forthwith, without prejudice to any further
   legal remedies open to the Nigam under the relevant law. Where necessary, the
   case of service provider illegally backing out of the commitment, should also be put
   up to the Whole Time Directors for consideration and to decide for black-listing of
   the firm and damages, if any, to be recovered.

32
23.    ARBITRATION: All matter questions, disputes, differences and / or claims arising
       out of and/or concerning and /or in connection and /or consequences or relating to
       this contract whether or not obligations of either or both parties under this contract
       be subsisting at the time of such dispute and whether or not this contract has been
       terminated or purported to be terminated or completed, shall be referred to the sole
       Arbitration of the M.D.DHBVN or an officer appointed by the MD DHBVN as his
       nominee. The Award of the arbitration shall be final and binding on the parties to
       this contract. The objection that the arbitrator has to deal with the matters to which
       the contract relates in the course of his duties or he has expressed his views on
       any or all of the matters in dispute of difference, shall not be considered as a valid-
       objection. The Arbitrator may from time to time with the consent of parties to the
       contract enlarge the time for making the award. The venue of arbitration shall be
       the place from which the acceptance of offer is issued or such other place as the
       Arbitrator in his discretion may determine.
       The parties to the contract agree that cost of arbitration shall the as per the
       instructions of the Nigam issued/ prevalent on the date of appointment of arbitrate
       tribunal.
       Subject to aforementioned provision the provisions of the Arbitration & conciliation
       Act 1996 and the rules there under any statutory modifications thereof for the time
       being in force, shall be deemed to apply to the Arbitration proceedings under this
       clause.




      33
34
       SECTION-IV




     SCOPE OF WORK




35
                                    SCOPE OF WORK

                                       CONTENTS



SR.        DESCRIPTION                                                       PAGE
NO.                                                                           NO.



1.         Object of audit                                                    37

2.         Scope of work                                                      37

3.         Book of references                                                 37

4.         Procedure of audit                                                 38

5.         Sphere of audit                                                    38

6.         Intimation of visit:                                               38

7.         Distribution of duties amongst the members of the audit party      39

8.         Issue of audit observation/Audit notes                             39

9.         Submission of report of audit                                      39

10.        Supervision of audit work                                          39

11.        Checking of status of audit conducted by audit firm/audit party    40

12.        Watching of compliance of audit observations                       40

13.        Assistance                                                         40




      36
                                 Scope of work
1.   Object of audit:
     The object of audit of expenditure accounts being maintained by the Division/
     auditee office is complete and comprehensive checking of all financial
     transactions connected with expenditure accounts (and not just test audit) of
     Auditee office under the audit practices in vogue and the Standard Audit
     Practices (SAPs) issued by the Institute of Chartered Accountants of India.
     Another object is to carry out the audit as early as possible so that the mistakes
     and irregularities whichever committed be detected at the earliest and set right
     within the minimum possible time. In addition to the above, the audit firm is
     expected to educate the Divisional staff for proper upkeep & maintenance of
     expenditure accounts with a view to increase their efficiency in accounts works.

2.   Scope of work:
     The Divisions/ auditee offices under a Circle shall be a unit for allotment of audit
     to an audit firm and the successful audit firm will have to carry out the audit of
     expenditure accounts of the divisions. Initially the audit for the period of one
     year shall be allotted and the audit of next year shall only be allotted on
     successful completion of audit to the satisfaction of Chief Auditor, DHBVN,
     Hisar.   In case the audit firm to which the audit for the initial period was
     assigned declines to accept the audit for the next year, the audit can be
     assigned to the other audit firm which is conducting audit of any other division
     on the same rates, terms and conditions.
     The audit of expenditure account shall have to be carried out strictly in
     accordance with the instructions as laid down in "Manual of Audit for works
     audit" which is placed at Annexure-"D". The instructions as laid down in the
     manual may be modified, if required so, by DHBVN and in case instructions are
     modified, the audit firm will have to audit the accounts as per modified
     instruction without any extra charges/remuneration of any type.

3.   Book of references:
     All the reference Books will be arranged by the audit firm at his own level.




37
4.   Procedure of audit:
     Procedure of audit has been explained in Audit Manual ( Annexure-D). Further,
     clarification required, if any, will be issued by the Chief Auditor, DHBVN, Hisar.

5.   Sphere of audit:
     The audit firm shall have to carry out the audit of all the records connected
     directly or indirectly with the expenditure accounts being maintained at
     Division/Auditee office.    Detailed instructions have been laid-down under
     Annexure-"D." However, these instructions can be amended/modified with a
     view to make the audit more effective.
     Each item of the record checked by the audit party should invariably be ticked
     with permanent ink. The audit certificate shall be recorded by the Incharge of
     party under his dated signature and seal on all the record audited by the audit
     party. However, the audit certificate can also be recorded by other members (s)
     of audit party for the work done by him/them but all such certificates shall be
     counter-signed by the Incharge of party under his dated signatures and seal.

6.   Intimation of visit:
     Immediately after the allotment of work; the audit firm shall prepare the program
     for the audit of the auditee offices allotted to the audit firm and shall submit to
     the Chief Auditor for approval. The tour program shall be prepared well in
     advance (at least 10 days) so that advance intimation is given to the auditee
     office. The Chief Auditor shall approve the tour program and issue intimation of
     visit to the auditee office for making sitting arrangements and production of
     record. The Chief Auditor may ask the audit firm to make any change/deviation
     to the tour program for the cogent reasons and the audit firm/audit party shall
     abide by such change/deviation in the tour programme.
     The audit party will have no right to conduct the audit of any Auditee office
     without getting the tour programme approved form the office of Chief Auditor
     and the audit party shall not make any deviation to the tour programme
     approved by the Chief Auditor. In exceptional




38
      circumstances, the deviation in the tour programme may be made with the prior
      approval of Chief Auditor.




7.    Distribution of duties amongst the members of the audit party:
      The audit firm may distribute the duties among the party members keeping in
      view their efficiency. The audit firm, however, shall be responsible for the work
      done by all party members including Incharge of party.

8.    Issue of audit observations/ Audit Notes :
      Audit notes for all the mistakes/ irregularities and cases of loss of revenue etc.
      detected during the course of audit are to be prepared on the Half Margin Pads,
      to be provided by the O/o Chief Auditor, with carbon copy. The original will be
      handed over to the Head of Auditee Office on the same day or latest by next
      day and the carbon copy shall be retained intact in the HM Book/Pad. Further
      guidance/ clarification etc. can be obtained from the Chief Auditor DHBVN,
      Hisar.
9.    Submission of report of audit:
      The complete report of the audit of expenditure accounts along with half
      margins and audit check list (Annexure-E) duly signed will be submitted to the
      Chief Auditor, DHBVN, Hisar immediately after completion of audit inspection of
      an office. The report will be submitted on the format prescribed by the Chief
      Auditor, DHBVN, Hisar.       The format can be revised/amended/modified at any
      time without any notice to audit firm and the audit firm shall have to submit the
      report on such revised/amended/modified format without any extra charges.

10.   Supervision of audit work:
      The Chief Auditor, DHBVN, Hisar or any officer authorized by him may make
      surprise visit and check/supervise the work of audit at any time. Further, in the
      interest of the audit work, the work done by the Audit Party deputed by the audit
      firm can be supervised concurrently. Provided further that the audit shall be
      concluded after discussion by the officer deputed by the Chief Auditor, DHBVN,
      Hisar.


39
11.   Checking of status of audit conducted by audit firm/audit party:
      The test check of the audit work done by the audit firm and scrutiny of reports
      may be carried out by the office of the Chief Auditor, DHBVN, Hisar before
      acceptance of audit report. In case any deficiency/shortcoming in audit/audit
      report is noticed, the audit firm shall have to rectify the same even if the Audit
      Party has to re-depute its staff for the purpose. No charges shall be payable for
      such visit.

12.   Watching of compliance of audit observations:
      The audit party shall watch the compliance of observations raised during the
      previous visits and make a report to the Chief Auditor, DHBVN, Hisar in case
      the same are found un-attended by the concerned Xen of the Division office/
      auditee office.

13.   Assistance:
      At the request of the audit firm, an official can be deputed to the auditee office to
      make them familiar with the working & records of the Divisions.
                                        ******




40
             SECTION-V




     PARTICULARS OF THE BIDDER




41
                               PARTICULARS OF THE BIDDER




1.     Name of the audit firm.



2.     Postal address.




3.     Telephone No.


4.     Fax No.


5.     Email address.

                                      Sole proprietorship
6.     Type of organization:          Partnership
       (Tick )                        Joint Venture

7.     Date of commencement of
       business.
8.     Experience in the audit of
       Public Sector Undertakings, Copy placed at page______ to Page __________
       Also attach copy of the
       same.
9.     Name of proprietor/Partners/
       Directors and their detail        Page ______ to _______ page
       Bio-data.
10.    Details of offices other than
       H.O./Controlling office and       Page ______ to _______ page
       other            infrastructure
       available.
11.    Detailed        organizational
       structure with background of      Page ______ to _______ page
       key personnel.
12.    Type of service being
       offered.                          Page ______ to _______ page

13.    List of clients' along with
       their addresses and contact
       telephone. Fax Nos. and
       type of services offered
       and/or being offered to

      42
      them.                              Page ______ to _______ page
   a) Electricity        Companies/
      Board.
   b) Others.                            Page ______ to _______ page
14. Details of Empanelment
      accreditation        Electricity
      Board/Companies/other              Page ______ to _______ page
      Client               alongwith
      empanelment/accreditation
      letter.
15. Balance sheet and P&L
      Accounts of past 3 financial       Page ______ to _______ page
      years.
16. Letters/certificates           for
      successful completion of           Page ______ to _______ page
      work        from     Electricity
      Companies/Board/other.
17. Details            of        any
      collaboration/tie    up with       Page ______ to _______ page
      Indian/Overseas
      Agency/Organization.
18. Any         other      additional
      information/certificate.           Page ______ to _______ page

19.    Details of work force with the
       agency.                           Page ______ to _______ page

20.    Other documents       (to   be
       specified)                        Page ______ to _______ page




                                                Seal & signature




      43
                                               SECTION-VI
                                            PRICE SCHEDULE

Sr. No.     Name of Unit/Auditee office                          Amount
                                                    (Per year for each Auditee office
                                                    In Figures              In words
1.          SE/OP Circle, Hisar
1(a)        XEN (OP) Division No.1, Hisar
1(b)        XEN (OP) Division No.2, Hisar
1(c)        XEN (OP) Division, Hansi
            TOTAL QUOTED RATE FOR
            CIRCLE AS A WHOLE

2.          SE (OP) Circle, Bhiwani
2(a)        XEN (OP) Division, City Bhiwani
2(b)        XEN (OP) Division, S/U Bhiwani
2(c)        XEN (OP) Division, Ch.Dadri
            TOTAL QUOTED RATE FOR
            CIRCLE AS A WHOLE
3.          SE (OP) Circle, Sirsa
3(a)        XEN (OP) Division, City Sirsa
3(b)        XEN (OP) Division, S/U Sirsa
3(c)        XEN (OP) Division, Dabwali
            TOTAL QUOTED RATE FOR
            CIRCLE AS A WHOLE
4           SE (OP) Circle, Narnaul
4(a)        XEN (OP) Division, Narnaul
4(b)        XEN (OP) Division, Mohindergarh
            TOTAL QUOTED RATE FOR
            CIRCLE AS A WHOLE
5.          SE (OP) Circle, Rewari
5(a)        XEN (OP) Division, Rewari
5(b)        XEN (OP) Division, Kosli
5(c)        XEN (OP) Division, Daruhera
            TOTAL QUOTED RATE FOR
            CIRCLE AS A WHOLE
6.          SE Const. Circle Hisar
6(a)        XEN/Const. Hisar
6(b)        XEN/Const. Bhiwani
6(c)        XEN/Const. Sirsa
6 (e)       XEN/Const. Rewari
            TOTAL QUOTED RATE FOR
            CIRCLE AS A WHOLE
7.          SE/M&P Circle, Gururgram
7(a)        XEN/M&P, Gurugram
7(b)        XEN/M&P, Bhiwani
7(c)        XEN/M&P, Faridabad
       44
7(d)        XEN/M&P, Hisar
            TOTAL QUOTED RATE FOR
            CIRCLE AS A WHOLE
8.          SE (COS) Store Hisar
8(a)        XEN Central Store Hisar
8(b)        XEN Central Store Ballabgarh
            TOTAL QUOTED RATE FOR
            CIRCLE AS A WHOLE
9           SE (OP) Circle Jind
9(a)        XEN(OP) Division Jind
9(b)        XEN (OP) Division Narwana
9(c)        XEN(OP) Division Safido
            TOTAL QUOTED RATE FOR
            CIRCLE AS A WHOLE



10           SE OP Circle, Fatehbad
10(a)        XEN (OP) Division, Fatehabad
            TOTAL QUOTED RATE FOR HEAD
            OFFICE AS A WHOLE
  13        Head offices (at Hisar)
11(a)       CE/MM, Hisar Including FA (MM)
11(b)       CE/P&D, Hisar Including FA (PD)
11(c)       CE/Commercial, Hisar
11(d)       FA/HQ Hisar
11(e)       XEN T&S workshop, Hisar
11(f)       AO/EAD, Hisar
11(g)       Sr.AO/P&A, Hisar




10(b)        XEN (OP) Division, Tohana




       45
11(h)    XEN/IT, Hisar
11(i)    XEN/T&M, Hisar
11(j)    CE/HPPC, At Panchkula
         TOTAL QUOTED RATE          FOR
         CIRCLE AS A WHOLE
  12     SE Civil Works Hisar
 12(a)   XEN/Civil Works, Hisar
 12(b)   XEN Civil Works Gurugram



Note:
          1. The rates quoted are firm and inclusive of all charges including TA/DA and
             excluding GST.
          2. The GST will be paid extra as per applicable rate from time to time.
          3. The Statutory variation will be Nigam account.

                                                                  Authorized Signatory
                                                                   (Seal/Rubber Stamp)




    46
     SECTION-VII




     ANNEXURES




47
                                  ANNEXURES



Annexure   DESCRIPTION                                                PAGE
                                                                       NO.



A.         Deviation Proposed                                           46

B.         Tender Form (Schedule-`C')                                  47-48

C.         Division-wise estimated man-days required for completion    49-52
           of audit of expenditure accounts for one year.
D.         Internal Audit Manual (Works Audit)                        53-209

E.         Summary of Check points (Check List)                       210-218




     48
                                                            Annexure-A



Sr.    Section no. of   Reference of   Deviation Proposed
          the bid        clause no.
No.     document




                                                   Authorized Signatory

                                                    (Seal/Rubber Stamp)


      49
                                                                              Annexure-`B'

                                     SCHEDULE- `C'

                  DAKSHIN HARYANA BIJLI VITRAN NIGAM LIMITED
                               TENDER FORM
From
             _______________________,
             _______________________,
             _______________________,
To
The Chief Auditor,
DHBVN, Hisar


             Offer No:                                        Dated :

Subject: -   Submission of tender against Notice Inviting Tender No. CA/WA-
             2017-18/03.
Dear Sir,

             With reference to your above mentioned notice inviting tender, I/We hereby
offer to carry out the audit of expenditure accounts maintained at various divisions under
(OP)   Circles,   DHBVN,       NARNAUL,     REWARI,JIND,SIRSA,BHIWANI,          HISSAR      ,
FATEHABAD, SE CIVIL WORKS HISSAR , HEAD OFFICES AND OTHERS FOR THE
PERIOD 4/2016 to 3/2017 & 4/2017 to 3/2018 and further extendable for another one year on
successful completion to the satisfaction of DHBVN, on the rates quoted in the Price Schedule
(Part-II) and shall execute the work truly and faithfully within the time specified and set
forth in the attached terms and conditions. The work done will be of the quality and
answerable in every respect with this tender. I/We shall be responsible for all complaints
as regards the quality of work and in case of dispute the decision of the Nigam will be final
and binding on me/us.

1.           A RTGS/NEFT/NET Banking transaction No. ______ dated ____________
for the prescribed amount of     Rs. __________ Rupees _________________________)
drawn in favour of AO/EAD, DHBVNL, Hisar is enclosed, as earnest money as desired. I
fully understand that in the event of my/our tender being accepted this earnest money



     50
shall be retained by you as security till the work is completed as per scope and terms and
conditions of NIT and to the entire satisfaction of DHBVN.
2.             I/We shall have no claim to the refund of the earnest money prescribed
against this tender in the event of my/our non-compliance of the purchase order provided
such order is placed within the period of validity of my/our tender as indicated in
paragraph 4 below.
         I further understand that my earnest money will stand forfeited even if I withdraw
my tender at any stage during the currency of the period of validity.
3.             My/Our tender shall remain valid for a period of 120 days from the last date
prescribed for submission of the tenders against the NIT.
4.             My/Our tender along with the terms and conditions with the relevant columns
and Annexures duly filled in under my/our attestation and with each page of the tender
papers (including the enclosed terms and conditions signed by me/us, (in the capacity of
sole owner/general or special attorney, in proof of which power of attorney is attached) is
submitted for your favourable consideration.
5.             I/We have carefully has/have examined the eligibility criteria and I/we qualify
the eligibility criteria fixed for tendering. The documents required to be submitted in this
regard are enclosed.
6.             I/We have read the enclosed terms and conditions carefully and have signed
the same in token of their absolute and unqualified acceptance. My/Our tender constitutes
a firm offer under the Indian Contract Act 1872 and is open to an acceptance in whole or
in parts. My/Our offer, if accepted on the attached terms and conditions will constitute a
legally binding contract and shall operate as a contract as defined in the Indian Contract
Act 1872.
               Thanking you.



DA/As per list attached.
                                                                            Yours faithfully,
Place:

Dated:
                                                       Name & Full Address of Tenderers


*Delete if not quoted.

     51
LIST OF DOCUMENTS ATTACHED

Sr.    Description of Documents attached                               Page No.
No.
                 Documents regarding eligibility criteria
1.     Registration with ICAI                                          Page ____ to ____
2.     Documents showing experience of audit in PSUs & Govt.
       accounts.                                                       Page ____ to ____
3.     Document showing the firm's existence for the last 5 years.
                                                                       Page ____ to ____
4.     Agreement in original for the joint venture/collaboration in
       case bid submitted under joint venture/collaboration.           Page ____ to ____
5.     Documents (certified copies of P & L Account) showing the
       turn over of the firm for last 5 years. (In case of collaboration,
       copies of P&L Accounts of all firms in collaboration be            Page ____ to ____
       supplied.)
6.     Undertaking on NJSP to the effect that the audit firm has
       sufficient strength of the staff to carry out the audit
       concurrently for in case work is allotted to the audit firm.       Page ____ to ____
                              Other Documents

7.     Copies of the original documents defining constitution or the
       legal status, place of registration and principal place of Page ____ to ____
       business.
8.     Declaration regarding any litigation, current or during last two
       years, in which bidder is involved, the parties concerned, Page ____ to ____
       dispute and the disputed amount.
9.     Power of attorney of authorized signatory.                      Page ____ to ____
10.    Statement of deviation (Annexure-`A')            Page ____ to ____
11.    Particulars of bidder                            Page ____ to ____
12.    Copy of the agreement between the bidder and his
       collaborators or associates, if any.             Page ____ to ____
13.    Bid documents dully stamped and signed on each page by
       the authorized signatory.                                       Page ____ to ____
14.     Qualification and experience of key personnel proposed for     Page ____ to ____
       carrying out the work
15.    Covering letter i.e. schedule-C                                 Page ____ to ____
16.    Details in format given in Section-V                            Page ____ to ____
17.    Copy of payment proof EMD of Rs. 4000/- per auditee office      Page ____ to ____
18.    Undertaking with regard to black listing, suspension of         Page ____ to ____
       workby any of the state electricity boards/electrical
       undertakings/power utilities/others.
19.    Pan No.                                                         Page ____ to ____
20.    GST reg.no.                                                     Page ____ to ____




      52
     Seal & Signature




53
                                                 ANNEXURE-`C'

DIVISION-WISE ESTIMATED/TENTATIVE NUMBERS OF MANDAYS REQUIRED FOR
            AUDIT OF EXPENDITURES ACCOUNTS FOR ONE YEAR

       SR.     NAME OF DIVN./AUDITEE OFFICE      ESTIMATED
       NO.                                       MANDAYS
                                                 REQUIRED FOR
                                                 AUDIT OF ONE
                                                 YEAR
       1.      SE/OP Circle, Hisar               24 Mandays
       1(a)    XEN (OP) Division No.1, Hisar     36 Mandays
       1(b)    XEN (OP) Division No.2, Hisar     36 Mandays
       1(c)    XEN (OP) Division, Hansi          36 Mandays
               SE (OP) Circle, Bhiwani           24 Mandays
       2.
       2(a)    XEN (OP) Division, City Bhiwani   36 Mandays
       2(b)    XEN (OP) Division, S/U Bhiwani    36 Mandays
       2(c)    XEN (OP) Division, Ch.Dadri       36 Mandays
       3.      SE (OP) Circle, Sirsa             24 Mandays
       3(a)    XEN (OP) Division, City Sirsa     36 Mandays
       3(b)    XEN (OP) Division, S/U Sirsa      36 Mandays
       3(c)    XEN (OP) Division, Dabwali        36 Mandays
       4       SE (OP) Circle, Narnaul           24 Mandays
       4(a)    XEN (OP) Division, Narnaul        36 Mandays
       4(b)    XEN (OP) Division, Mohindergarh   36 Mandays
       5.      SE (OP) Circle, Rewari            24 Mandays
       5(a)    XEN (OP) Division, Rewari         36 Mandays
       5(b)    XEN (OP) Division, Kosli          36 Mandays
       5(c)    XEN (OP) Division, Daruhera       36 Mandays
       6.      SE Const. Circle Hisar            24 Mandays
       6(a)    XEN/Const. Hisar                  36 Mandays
       6(b)    XEN/Const. Bhiwani                36 Mandays
       6(c)    XEN/Const. Sirsa                  36 Mandays
       6 (e)   XEN/Const. Rewari                 36 Mandays
       7.      SE/M&P Circle, Gurugram           24 Mandays
       7(a)    XEN/M&P, Gurugram                 36 Mandays
       7(b)    XEN/M&P, Bhiwani                  36 Mandays
       7(c)    XEN/M&P, Faridabad                36 Mandays


  54
     7(e)         XEN/M&P, Hisar                    36 Mandays
     8.           SE (COS) Store Hisar              24 Mandays
     8(a)         XEN Central Store Hisar           36 Mandays
     8(b)         XEN Central Store Ballabgarh      36 Mandays
     9            SE (OP) Circle Jind               24 Mandays
     9(a)         XEN(OP) Division Jind             36 Mandays
     9(b)         XEN (OP) Division Narwana         36 Mandays
     9(c)         XEN(OP) Division Safido           36 Mandays



           10     HEAD OFFICEs at HISAR

         10(a)    CE/MM, HISAR                      45 Mandays

         10(b)    CE/PD, HISAR                      45 Mandays

          10(c)   CE/COMMERCIAL                     30 Mandays

         10(d)    FA/Hqr, HISAR                     24 Mandays

         10(e)    XEN (T&S ) WORKSHOP DIVN. HISAR   24 Mandays

          10(f)   AO EAD HISAR                      24 Mandays

         10(g)    AO P&A HISAR                      15 Mandays

         10(h)    XEN IT HISAR                      15 Mandays

          10(i)   XEN T&M HISAR                     24 Mandays

          10(j)   XEN/HPPC (At Panchkula)           36 Mandays

           11     SE CIVIL WORKS HISAR              15 Mandays

         11(a)    XEN CIVIL WORKS GURUGRAM          36 Mandays

         11(b)    XEN CIVIL WORKS HISAR             24 Mandays

           12     SE OP Circle Fatehbad             15 Mandays

                  XEN (OP) Division, Fatehabad      36 Mandays
     12(a)
                  XEN (OP) Division, Tohana         36 Mandays
     12(b)




55
                        INTERNAL AUDIT MANUAL         ( annexure-D)


                           (WORKS AUDIT SECTION)
                              (FIRST EDITION-2009)




Instructions for the Works Audit Parties in connection with Expenditure Accounts
                                      etc.
                                     ******
                                 Published by:


                             THE CHEIF AUDITOR
                                DHBVN, HISAR




   56
1. INTRODUCTION

1.1    Internal Audit is an independent appraisal function within an organization for review
       of the system of control and quality of the performance as a service to the
       management. The necessity of having an internal audit system has also been
       recognized by the Companies Act, 1956, the Companies (Auditors' Report) Order,
       2003, vide clause 3, sub clause (vii), has made it obligatory for the auditors of all
       companies (including Government companies) with a paid-up capital and reserves
       in excess of Rs. 50 lakh at the commencement of the financial year concerned or
       having an average turnover exceeding Rs. 5 crore for a period of three consecutive
       years, to comment on whether the company has an internal audit system,
       commensurate with its size and nature of business.

1.2    Erstwhile Haryana State Electricity Board (HSEB) in recognition of the growing role
       and importance of Internal Audit in a commercial organization like HSEB (now
       DHBVN), decided to constitute the Internal Audit Wing as a separate Wing under
       the independent charge of Chief Auditor, now re-designated as Chief Auditor. The
       Internal Audit Wing is a tool for management which is responsible for checking of
       Revenue Accounts, Collection Accounts and Expenditure Accounts as well as for
       checking of Works Accounts of the Nigam.

1.3    The Works Audit wing of the Internal Audit Wing is responsible for the audit of
       expenditure accounts. The Works Audit Wing is headed by XEN/Audit (Sr.
       Accounts Officer) and the audit is got carried out through Works Audit Parties. The
       Works Audit Party forms a part of the staff of Internal Audit Wing and the audit
       works done by them is controlled by the Chief Auditor.

1.4    The Works Audit Parties (WAP) consists of a Manager/Audit and Assistant
       Managers/Audit and one UDC. The WAP is primarily responsible to carry out the
       audit of expenditure' accounts using various audit techniques and Standard Audit
       Practices (SAPs) issued by the Institute of Chartered Accountants of India and the
       Standing Orders/Executive Instructions issued by the Chief Auditor from time to
       time . The Work Audit party and the audit carried out by the WAP is supervised by
       the AO/Inspection. The audit inspection of an auditee unit is concluded by the
       AO/Inspection or XEN/Works Audit.



      57
1.5    Besides the WAPs are responsible for conducting Special Audit, wherever and
       whenever required and assigned by the Chief Auditor. The special audit is got
       carried out under the direct supervision of the AO/Inspection and concluded by the
       XEN/Works Audit. However, where the special audit is carried out without direct
       supervision of AO/Inspection, the audit is concluded by the AO/Inspection or by the
       XEN/Works Audit as directed by the Chief Auditor.

                                            ************




      58
2      FRAME WORK OF INTERNAL AUDIT

2.1    MISSION

2.1.1 The mission is to establish internal audit as independent management function.
       Internal audit involves an independent, continuous and critical appraisal of the
       functions of an entity with a view to suggest improvements thereto, add value to
       and strengthen the overall governance mechanism of the entity including strategic
       risk management and internal control system.

       Guiding principles for achieving the aforesaid mission

2.1.2 Working as an important tool in the hands of the management to help improve its
       decision-making process.






2.1.3 Improving good governance from the spate of legal and regulatory requirements.

2.1.4 Establishing strong internal audit system with continuous processes for its
       improvement.

2.1.5 Focussing the efforts in the area where there is a greater risk, thereby enhancing
       the overall efficiency of the process, and adding greater value with the same set of
       resources.

2.1.6 Focussing on the risk areas due to intensive use of the information technology (IT),
       emanating from increased threats of data theft or loss because of system failures or
       hacking/espionage, as well as the need to comply with the cyber laws.

2.1.7 Establishing adequate coordination with the audit committee and the management
       to achieve the overall objectives of the DHBVN.

2.1.8 Building the image of the internal auditor as a friend and guide to develop and
       motivate the professional staff.

2.1.9 Maintaining professional standards and relying upon his professional judgement.

2.2    OBJECTIVES OF INTERNAL AUDIT

2.2.1 The main objective of the internal audit is to help the organisation to achieve their
       stated objectives by using systematic methodology for analyzing business
       processes, procedures and activities in the goal of highlighting organisational
       problems and recommending solutions. The scope of internal auditing within an
       organisation is broad and may involve topics such as the efficacy of operations, the

      59
      reliability of financial reporting, deterring and investigating fraud, safeguarding
      assets, and compliance with laws and regulations. Internal auditing frequently
      involves measuring compliance with the entity's policies and procedures. However,
      the internal audit is not responsible for the executions of company's activities; but is
      responsible to advise the executive authorities, management and the Board of
      Directors regarding how to better execute their responsibilities.

2.2.2 The broad objectives of the Internal Audit are as under:

      a. To ensure that the accounting and financial management system are reliable
          and effective in design and to assess the extent to which they are being
          followed.

      b. To review the efficacy, adequacy, and application of accounting, financial and
          operating controls and thereby ensuring the accuracy of the books of accounts.

      c. To verify that the system of internal check/controls is effective in design and
          operation in order to ensure the prevention of and early detection of
          defalcations, frauds and misappropriations.

      d. To identify areas of significant in-efficiencies in existing systems and to suggest
          necessary remedial measures.

      e. To confirm the existence of financial propriety in all decisions and verify
          compliance to Government and Statutory requirements.

      f. To review the performance of various functions in the light of performance
          budgeting and to suggest cost reductions measures, if any.

2.2.3 The audit of expenditure' accounts of the offices by the Internal Audit Parties, as
      such, will be the complete audit using the established and approved audit
      techniques/skills, Standard Audit Practices issued by the Institute of the Chartered
      Accountant of India and Standing Orders/Executive Instructions issued by the
      Internal Audit Wing with a view to achieve all above objectives.

2.2.4 In addition to the above the Works Audit Parties are expected to educate the staff
      of the auditee office with a view to increase their efficiency in accounts work. Not
      only the record/books of the auditee office be audited, commented, got corrected
      and brought upto date but verbal instructions should also be imparted to the
      auditee staff in Works/accounts matters, pointing out the errors committed by them

    60
       and explaining the proper procedure to be followed. The instructions may be
       imparted with a view to minimize the mistakes and not to repeat in future. It is
       needless to say that minimization of the mistake will not only reduce the workload
       of staff posted in auditee office but also increase their efficiency and will facilitate
       them to give attention towards other areas of accounts/Works matters.

2.3    AUTHORITY OF INTERNAL AUDITOR
2.3.1 The internal auditor has the authority in deciding as to the activities to be subjected
       to internal audit, approach, methodology and the resource allocation as well as the
       frequency.
2.3.2 He should have an unrestricted access to all the DHBVN Wings, offices, activities,
       the records maintained and the personnel working thereat, for the purposes of
       internal audit.
2.3.3 He may also seek information and explanation from Heads of Wings and other
       concerned officials.
2.3.4 He may also ask for copies of various MIS reports and other relevant statements.
2.3.5 He may also ask for a written opinion of a specialist/professional, wherever he
       deems it necessary for the purposes of internal audit.
2.3.6 He should have a direct and unrestricted access to the chairman of the audit
       committee.

2.4    ACCOUNTABILITY OF INTERNAL AUDITOR

2.4.1 The internal auditor is responsible for reviewing the adequacy of the risk
       management, control and corporate governance framework instituted by the
       management in ensuring that the corporate objectives are achieved.

2.4.2 The internal auditor is expected to suggest improvements in the existing framework
       of risk management, internal control, and corporate governance.

2.5    ROLE OF INTERNAL AND STATUTORY AUDITORS

2.5.1 The role of the internal auditor is determined by the management and depends
       upon the size and structure of entity and requirement of management.

2.5.2 The internal auditor operates in various areas such as review of accounting system
       and internal control, examination of financial and operating information for the
       benefit of management, economy, efficiency and effectiveness of operations


      61
       including non financial control of various tangible assets, whereas the statutory
       auditor is concerned with accounts and documentation as per applicable law and
       established accounting principles and other accounting standards issued by the
       ICAI.

2.5.3 The prime objective of internal auditor differs from that of the statutory auditor who
       is appointed under the Companies Act, 1956 and has to report independently on
       financial information.

2.5.4 The statutory auditor should as a part of his audit evaluates the internal audit
       function to the extent he considers that it will be relevant in determining the nature,
       timing & extent of his compliance and substantive procedure. Depending upon such
       evaluations, the statutory auditor may be able to adopt less extensive procedures
       that would otherwise be required.

2.5.5 The work of the internal auditor can be assistance for the statutory audit. In
       consultation with statutory auditor, it is desirable to plan the timing of such work,
       extent of audit coverage, test level, and proposed method of sample selection
       documentation of work performed and reporting procedure.

2.6    CODE OF ETHICS AND INTEGRITY

2.6.1 The members of internal audit team should adopt self-regulatory measures that are
       recommendatory. During the course of audit, internal auditor should follow certain
       guidelines in respect of moral values and good behaviour.

2.6.2 Internal auditor should keep him/herself away from illegal practices/dishonest
       arrangement.

2.6.3 Internal auditor shall have an obligation to work objectively and diligently while
       performing his/her duties

2.6.4 The internal auditor should not accept anything from any employee, contractor,
       service provider, or business associate of the DHBVN without the consent of their
       senior management.

2.6.5 The internal audit staff should collect and keep the information only for carrying out
       his assignment. This should not be disclosed to or shared with any party unrelated
       to internal audit.



      62
2.6.6 The internal audit staff should not take advantage of information obtained for their
      personal profit or use information in a manner contradictory to their ethics set forth
      in this code.

2.6.7 Internal auditor, holding the trust of the DHBVN, shall show loyalty in all respects
      pertaining to the affairs of the DHBVN.

                                       **************




    63
3.0    SCOPES AND EXTENT OF COVERAGE
3.1    The auditor will lay emphasis on compliance of all the rules, regulations, policies,
       procedures, accounting standards, manuals, statutory obligations etc. The
       professional expertise and judgement of the auditors will have to be exercised in all
       areas. The Management/Audit Committee may add/delete/ modify the scope of
       work or may assign additional specific areas for audit. The scope of internal audit
       should include:
       Review of Internal Control System and Procedure

3.2.1 The internal auditor should determine whether the internal control system is in
       consonance with the organisational structure. As far as possible, control should be
       inbuilt in operating functions if they are to be cost effective.
3.2.2 Each control should be reviewed and analysed in terms of costs and benefits. It
       should also be seen whether internal controls were in use during the whole period
       of internal reliance. A breakdown in the internal controls for specific portion as
       intended reliance would need special attention.
       Review of Safeguarding of Assets

3.3    The internal auditor should review the control system to ensure that all assets are
       fully accounted for. He should also review the means used for safeguarding assets
       against losses, e.g., fire, improper or negligent activity, thefts and illegal acts, etc.
       Review of Compliance with Policies, Plans, Procedure and Regulations

3.4.1 The internal auditor should examine whether the management has a system by
       which its policies, plans, procedures and regulations are communicated to all
       concerned as per their responsibility and authority, so that the operations are
       carried out in a coordinated manner. Internal auditor should also point out specific
       weaknesses and suggest remedial actions.
3.4.2 The principal of audit i.e. "General is more important than particular" should be
       followed and where omission is found made/irregularity is found committed in
       general, the point should be taken up with the auditee staff and the same should be
       got set right. Such omissions/irregularities should not be ignored.
3.4.3 It should also be checked that the instructions issued by the Nigam are followed
       meticulously and timely. Non-compliance/non-observance of instructions should be
       taken seriously and should be dealt accordingly. Wherever required, a special


      64
       report should be made to headquarter as non-compliance/non-observance of
       instructions forfeits the very purpose of issue of instructions.
       Review of Transactions

3.5    The internal auditor should carry out the audit of transactions which involves
       examination of supporting documents and occurrence of transactions. He has to
       ensure that transactions are recorded in time after proper verification and under the
       appropriate Head of Account. All the transactions should be approved by the
       competent authority.
3.6    Extent of Checking
3.7    The internal auditor should select sample items in such a way that the sample can
       be expected to be representative of the population. Based on various factors, the
       sample size should be selected for various business processes/sub-processes. The
       sample size may be increased or decreased after discussion with the HoW,
       considering the audit location, project stage, volume of activities, etc. The
       following is the guiding factor in respect of detailed extent of checking.
       Sr.   Area                                                  Coverage

       No.

       1     WORKS CONTRACTS

             Contracts with value more than Rs. 20 lakh                   100%

             Contracts between Rs.10 lakh to Rs. 20 lakh                  50%

             Contracts below Rs.10 lakh                                   25%

       2     PROCUREMENT

             Contracts with value more than Rs. 10 lakh                   100%

             Contracts between Rs. 5 lakh to Rs.10 lakh                   50%

             Contracts below Rs. 5 lakh                                   25%

       3     FINANCE & ACCOUNTS
             Vouching- Cash, bank & journal
                                                                   Apr,    Sep,
                                                                   Nov, Mar, any
                                                                   one     more
                                                                   month       in
             All other areas                                       each phase.


      65
                                          50%




 4    PERSONNEL & ADMINISTRATION          50%

 5    STORES                              50%

 6    COMMERCIAL                        Separate
                                            Audit

 7    CONSULTANCY SERVICES                50%

 8    IT & COMMUNICATION                  50%

 9    OPERATION AND MAINTENANCE           50%

 10   WORKSHOP AND TRANSPORT              50%

 11   OPERATING RESULTS                  100%

                           **********




66
4.0    AUDIT PROCESS

4.1    PLANNING

4.1.1 The internal audit team should take the following steps to carry out the internal
       audit effectively:
       Planning,
       Finalisation of Audit Check List,
       Audit Report,
       Follow-up and Compliance.

4.1.2 The internal audit team first identifies the locations/units to be audited. In case of
       audit by an external agency, a system for empanelment of outside firms based on
       predetermined qualification and experience criteria should be chalked out.

4.1.3 After appointment of internal audit agency, an appointment letter stating audit
       period, estimate of time (the number of working days) for completion of audit
       assignment, fees, etc. should be despatched within the scheduled time.

4.1.4 The Internal Audit Wing should estimate the time as stated in paragraph 4.1.3
       above, considering the factors like the size of audit unit, volume of transactions,
       schedule of other audit assignments (CAG, statutory audit).

4.2                    OPENING MEETING

4.2.1 The head of the audit team, along with team members, should have a meeting with
       the heads of projects/Wings at the beginning of the audit, keeping in view the
       following main objectives:

       a.     To discuss overall audit scope, objectives, and audit duration, etc.

       b.     To discuss the overall performance of the Wing/project and any new
              activities, systems undertaken, if any, during the period.

       c.     To finalise schedule with incharge of Auditee Office before taking up the
              audit.

       d.     To discuss any other point with the incharge of Auditee Office and note their
              suggestions, and revise his audit programme if deems it fit to do so.




      67
4.2.2 The internal auditor should gather relevant information and review various policy
       and procedure manuals.

4.2.3 He should also make a brief on various records/reports for the work performed by
       CAG auditors, statutory auditors, physical verification report on fixed assets,
       various MIS, etc.

4.2.4 He should also obtain statistical information such as number of contracts/work
       awarded during the period of audit, with value, especially work awarded through
       limited/single tender.

4.2.5 Study/assessment of key performance indicators will facilitate the auditor in
       chalking out the focused approach.

4.3                  FINALISATION OF AUDIT CHECKLISTS

4.3.1 After reviewing the relevant background information, the internal auditor should
       refer the checklist given in the manual. He should also decide whether some
       additional checkpoints are required to achieve the audit objectives, in consultation
       with the Internal Audit Wing.

4.3.2 After review of the internal control assessment, the internal auditor should
       determine the sample size for the audit, after obtaining information about the total
       population size, including factors such as value, volume etc. The internal auditor
       should review the sample size given in the para-3.7.

       Fieldwork

4.3.3 The fieldwork is the collection and analysis of information about the process under
       audit, which enables the formulation of audit conclusions. The internal auditor
       should determine whether the control identified during the preliminary review is
       operating properly and in the manner as described by the Wing/unit under audit.

4.3.4 Fieldwork consists of describing the process flow, breaking down the processes
       into various sub-processes, assigning risks ­ high, medium, low ­ to these
       processes, evaluating internal controls, and testing the key controls.

4.3.5 The fieldwork stage should conclude with a list of significant issues/observations.
       The internal auditor should prepare draft reports based upon the observations,
       which shall be discussed with heads of Wings/projects concerned.


      68
4.4                  REVIEW OF RECORDS, PROCESS AND SYSTEMS

4.4.1 The auditor should perform the procedure defined in the Audit Checklists. The
       internal auditor should examine on test check basis the accuracy and reliability of
       major internal controls and accuracy of transactions with reference to their
       conformity with the records and inclusion of all relevant information.

4.4.2 Instances of ineffective supervision, system failures, should be identified and listed
       in the shape of various observations.

4.4.3 After identifying and enlisting the audit observations/findings, the auditor should try
       to find out the main cause of the observations.

4.4.4 The identification of root cause will help the auditor to make a recommendation and
       suggest a corrective action and time plan thereof. The suggested corrective actions
       for improvement should be cost-effective and amenable to implementation.

4.4.5 The internal auditor should also consider a technique known as CAAT (computer
       aided audit technique) while reviewing the records, systems, processes of the
       Wings/units. The CAATs are efficient and thorough methods of analysing data to
       determine the effectiveness and compliance with internal controls.

4.5    EXIT MEETING

4.5.1 The audit team should have formal meeting with the location/unit head and head of
       finance to discuss audit issues/observations.

4.5.2 All the point of disagreement must be discussed during the exit meeting and an
       attempt to sort out the same should be made. However, the disputes not sorted out
       must be reported through a separate audit report.

4.5.3 It is recommended that audit team should prepare an exit-meeting note providing
       the details of discussions held with auditee office.




      69
5.0    SAMPLING TECHNIQUES

5.1    Sampling techniques in internal audit stand for the techniques for forming an
       opinion about a group of items based on examination of only a part of the items.
       Internal audit team is required to select appropriate sample size for conducting an
       audit.

5.2    Sampling techniques are used to determine the sample size considering sample
       risk, the tolerable error, and the expected error.

5.3    Some important statistical techniques are:

       (i)        Random sampling,

       (ii)       Stratified sampling,

       (iii)      Systematic sampling,

       (iv)       Judgement sampling.

5.4    In the case of random sampling, the units are selected independent of each other in
       such a way that each unit belongs to population has an equal chance of being part
       of the sample. Random sampling is very simple and effective method of drawing
       samples if the population is neither very large nor heterogeneous.

5.5    Under stratified sampling, the population is divided into a number of strata or sub-
       population. Each stratum is then sampled independently. The most expensive or
       significant item in population can be examined 100%. The result of several
       sampling from each of different strata may be combined into an overall estimate of
       the entire population.

5.6    Systematic-sampling scheme refers to a technique where the units constituting the
       sample are selected at regular intervals after selecting the first unit at random, with
       equal probability.

5.7    Purposive or judgement sampling is a non-statistical technique. This type of
       sampling is dependent solely on discretion of the auditor and he/she applies his
       own judgement in determining own sample size and method of sampling since the
       type of sampling is non-probabilistic. It is purely subjective and as such, varies from
       person to person.



      70
5.8    The auditor should first consider the specific audit objective to be achieved to
       enable him/her to determine the audit procedure or a combination of procedures,
       which is likely to be the best to achieve these objectives. For example, when
       performing compliance test of a company's procurement procedure, the auditor will
       be concerned with matters such as whether invoice was clerically checked and
       properly approved.

5.9    The auditor should also determine that the population, from which he draws the
       sample, is appropriate for specified audit objectives.




      71
6.0        MANAGEMENT INFORMATION REPORTS (MIR)

6.1     OBJECTIVES

6.1.1 To report the important information periodically to various officers responsible for
        internal audit function so that they can review, monitor and carry out the function
        efficiently and effectively.

6.1.2   To report the important information regarding the performance/ progress and
        observations of internal audit to the management periodically so that remedial
        action to correct any adverse trends/variations can be taken and decision making
        process can be facilitated.

6.1.3   To review the performance of the internal auditors regarding their efficiency and
        effectiveness.

6.2                   CONTENTS OF MIR

6.2.1 To report the status of various outstanding audit paras till date on half yearly
        /quarterly basis. The report will show the number of paras outstanding at the
        beginning of the period, raised during the period, settled during the period and at
        the close of the period including age-wise analysis showing number of paras
        outstanding for less than six months, between six months to one year, between one
        year to two years and more than two years.

6.2.2 To submit the significant findings made during the audit and impact of the same, if
        any, on half yearly / quarterly basis to all the Directors.

6.2.3 To report the sanctioned v/s actual strength of internal audit staff.




      72
7.0    FORMATS

7.1    In order to carry out internal audit function efficiently, effectively and to submit a
       report regarding various observations/suggestions, it is essential to ensure that all
       the      relevant   information/details   have   been    collected   so    that   the
       observation/suggestions pointed out in the report can be understood properly.
       However, before submission of the report, it is very essential to ensure that each
       and every observation/suggestion/para has been discussed with the incharge of
       auditee office concerned and to maintain a proper record for the same in order to
       avoid any reverse comment at a later stage. The following is the format in respect
       of "Discussion on observations/suggestions":

       Discussion on observations/suggestions

       Name of the Unit / Office


       Period of the Audit


       Name of the Wing


       Observation No.


       Date


       Audit observation


       Nature of observation

       (Very Imp. / Imp. / Less Imp.)


       Comments of Head of Auditee
       Office

           (a) If agrees

           (b) If does not agree




      73
               Signature of Auditor      Signature of Head of Auditee Office


7.2    The compliance of outstanding paras and other issues should also be reviewed and
       discussed and recorded in the following format :

       Status of Compliance


           Name of the Unit / Office

           Period of the Audit

           Name of the Wing

           Outstanding    Brief         Compliance steps taken /         Status
           Para No.       Observation   comments




                Signature of Auditor      Signature of Head of Auditee Office

7.3    In order to assess the efficiency of the audit team in completing the audit
       assignment within the estimated / budged man days and the cooperation extended
       / lack of cooperation from the Auditee Office concerned to get the audit assignment
       completed within the estimated / budged man days and to know the reasons for
       variances including the lack of cooperation extended by the Auditee Office
       concerned, the following format is required to be filled up on conclusion of the
       internal audit of each phase so that necessary action can be taken in future
       accordingly :

       Assessment of actual days vs. Budged


           Auditee         Budged /         Actual            Variance
           Office          Estimated




      74
                   Prepared by                          Reviewed by

7.4    These are some of the formats as a guiding factor. The internal auditor may
       maintain more formats in order to carry out the function efficiently and effectively
       and to ensure that all the relevant information / details have been collected and all
       the observations / suggestions / paras have been discussed.




      75
8.0    AUDIT PROCEDURE

8.1    Intimation of visit:    The tour programme of each Works Audit Party shall be
       prepared and issued by the Chief Auditor. Immediately after the tour programme of
       a party is approved, the intimation shall be given to the auditee office with a request
       to make proper sitting arrangements for the Audit Party and arrange to produce all
       the records relating to the period of audit. Since the records being maintained at
       Sub Divisions and even being maintained by the executive incharge of the works,
       will also be audited by the Works Audit Party; the intimation must be sent well in
       advance and preferly at least 15 days in advance excepting in cases where
       surprise checking is to be carried out or special audit is to be carried out. In case
       any change in the tour programme is necessitated because of any cogent
       reasons/circumstances, the request should be submitted to the headquarters well in
       time so that the same is considered and the tour programme is revised, if request
       found genuine.

8.2    While submitting the intimation of visit the incharge of Auditee office should be
       asked to keep ready all the record which was not produced during previous visit of
       the Auditee office. The list of all outstanding audit para and observations should
       also be submitted to the Auditee Office with the advice that the same shall be
       reviewed during the visit, as such should be kept ready and put up to the Audit
       Party.

8.3    Ordinarily the actual movements should be in accordance with the tour programme;
       but if in any case, a change is anticipated, the approval should be obtained from
       headquarter and on receipt of approval or in anticipation of approval the change
       should be notified to all the concerned well in time. If the halt at any place is
       estimated to exceed the time prescribed by the Headquarter, the prior approval of
       the Chief Auditor should be obtained.

       With a view to effect economy in Travelling Allowances the tour programme for the
       months, in which there is a spell of holidays exceeding three days, should be so
       arranged that these holidays are spent at the headquarters and not at outstations,
       except that when the Audit Party, just before the holidays, is at a station, returning
       from which to headquarters involves travelling allowance exceeding the amount of
       daily allowance for the number of holidays.


      76
8.4     Distribution of duties amongst the members of Audit Party: The Audit Party is
        supposed to work as a team but for better control and efficient working, even
        distribution of work is made between all the party members.

8.4.1                         The work as under is entrusted to the members of Works Audit
                              Party:
           Sr.   Party                            Work/duty assigned
           No.  Member
           1.  Manager/          i.   Analysis of work.
                Incharge        ii.   Purchase/Work orders including approval of
                of      the           proposal, preparation/approval of estimate,
                WAP                   fixation and evaluation of PQRs, evaluation of
                                      bids and awarding of contract etc.
                               iii.   Adjustment books and register of Liabilities.
                               iv.    Checking of case of theft of material,
                                      accidents,        embezzlements/misappropriation
                                      of revenue.
                                v.    Objection            Book         of        Assistant
                                      manager/Accounts.
                               vi.    Review       of     Inspection    Reports     issued
                                      previously.
                              vii.    Review of Inspection Reports issued by the
                                      AG/ Audit, Haryana and CE/SE office.
                              viii.   Inspections        Reports   of    Sub      Divisions
                                      conducted by the Division office/Circle Office.
                               ix.    Checking of special points entrusted, if any.
                                x.    Examination of contingent charges.
                               xi.    Over all supervision of the work of other party
                                      members.
                              xii.    Other issues of importance incorporated in
                                      the scope of audit which cannot be assigned
                                      to other party members.
           2.   Assistant        i.   Checking of all suspense schedules viz. 25.5,
                Manager/              26.5, 28.401, 28.870, 28.872, 42.2. 42.3,
                Audit                 46.919, 47.301, 47.311, Contractor Ledgers

      77
                          and Register of Misc. Recoveries etc. etc.
                    ii.   Checking of schedules of Civil Advances viz.
                          GH-27.101, 102, 104, 108, 27.201, 202 &
                          28.350 etc
                   iii.   Detailed checking of Lorry Log Books and
                          Maintenance Registers of the Vehicles.
                   iv.    Accounts       of    Imprest     and   temporary
                          Advances.
                    v.    Register of Works (PW-27), Works Abstract,
                          Certification of Material at Site Form DFR
                          (PW)-31, Disposal of balance material Form
                          DFR(PW)-32 and other works accounts.
                   vi.    Register of appropriations and sanctions.
                  vii.    Files    connected        with   the   damaged
                          transformers        and    the    shortages   in
                          transformers etc.
                  viii.   Checking on any other points as assigned by
                          the incharge of the Party.
     3.   UDC/       i.   Checking of Service Books, Pay Roll Ledgers,
          Audit           TA and other allowances paid to staff.
          Clerk      ii. Registers of Rents of Building and Lands
                          including the register for watching recovery
                          and revision of rents.
                     iii. Fixed Assets Register, Register of Property,
                          Register of Plant & Machinery and T&P and
                          T&P Returns.
                     iv. Register of Securities, Stamps, Stationery
                          and issue of measurement books, census of
                          measurement books and Abstract Book.
                     v. Visitor Register of Rest Houses.
                     vi. Register of receipt and issue of cheque
                          books.
                     vii. Checking on any other points as assigned by


78
                                    the incharge of the Party.

8.4.2 The above distribution of duties is not intended in any way to be exhaustive. The
       Incharge of the Audit Party/Inspecting Officer is at liberty to examine any other
       record/point which may consider necessary. In case of inspection of the Circle
       Office or any other Direction Office, allocation of duties will be made to suit the local
       requirement keeping in view the above broad frame work.

8.4.3 It should be clearly understood that the distribution of these duties, does not, in any
       way, diminish the responsibility of the inspecting officer for the supervision of the
       inspection as whole. In case he feels that any further checking is required, he may
       order for the same and assign the same to any party member. He is particularly
       expected to carry out the checking of following item of work personally.

       i)       Detailed checking of cash book in respect of the selected month's account
                and physical verification of the cash in the chest.

       ii)      Review of the Objection Book of the Assistant Manager/Accounts.

       iii)     Review     of    the   Inspection   Reports      of   CE/SE    and    Assistant
                Manager/Accounts.

       iv)      Review of the irregularities noticed during the previous inspections and
                which remained un-remedied.

       v)       Review of the extent to which instructions and observation previously issued
                and noted for compliance are being observed in practice.

       vi)      Drafting of final report and discussing it with XEN/SE concerned.
       The duties as above shall be performed by the Incharge of the party in addition to
       his own duties, where no inspecting officer is deputed to supervise the Works Audit
       party.

8.4.4 Further for the better control, a unique number is assigned to each WAP.

8.5    Permission to leave temporarily the station of duty or grant of casual leave to
       the audit staff:         All matter regarding leave, leaving the station, change in
       programme, etc., should invariably be referred to the Head Office in time and prior
       sanction should be obtained.
       In case of extreme urgency of private nature, however, incharge of Audit Party may
       leave the station on a holiday in anticipation of the approval of the Headquarter,

      79
       which should be applied for at once. In the case of other audit party members
       intending to leave the headquarter on the holidays, the incharge of Audit Party may
       grant the permission and inform the Headquarter of his having done so. Incharge of
       Audit Party may also grant casual leave not exceeding two days to the other audit
       party members in case of urgency subject to the approval of the Headquarter,
       which should be obtained in due course.

8.6    Books of Reference:        In additions to the ordinary books of references viz.,
       Account Code Volume-III, Departmental Financial Rules, Punjab Financial Rules,
       Banking Instructions, Punjab Public Works Department Code, Civil Service Rules
       Volume I,II,III ,Manual of instructions, Manual of Orders Delegation of Power,
       DHBVN Procurement Manual, Haryana Schedule Rates etc., the Audit Party should
       have copies of Standard Auditing Practices issued by the ICAI, Standing
       Orders/Executive Instructions issued by the Internal Audit Wing, Register of special
       points to be checked and instructions issued/ adopted by Nigam from time to time.
       Since the Audit Party shall have to review the old outstanding paras and shall have
       to verify the facts on which para, if any, was dropped, the Audit party should collect
       all these details from the headquarter before proceeding to the Auditee Office.




      80
9.0    Procedure of audit: Immediately after his arrival in the Auditee office the Works
       Audit Party should carry out a casual audit of the expenditure' accounts of the
       auditee office to see and ensure that internal control over the upkeep and
       maintenance of expenditure accounts exists and the same are maintained strictly in
       accordance with the instructions laid down for the same. The Audit Parties should
       also check and ensure that the checks prescribed for the supervisory staff/officers
       are being carried out by the supervisory staff/officers meticulously and that the
       checking being carried by them is reliable and effective.
       In case the incharge of the auditee office happens to be on leave or out of station,
       the above formalities will be observed on the 1st day of returning of the incharge of
       the auditee office to his office.

9.1    The actual cash in hand with the cash balances of the Cash Book shall be checked
       on the 1st day of visit by the incharge of the Audit Party. Occasional checking of
       cash during the visit shall also be conducted by the incharge of the Audit Party.
9.2    Issue of Half Margin:           Each and every observation on checking of the
       accounts/record including excess payment, omission, irregularities and non-
       observations of instructions should be pointed out through Half Margin.
       However, cases of petty observation of Works arising in a routine manner and not
       involving any important aspect or interpretation of rule etc, should not be taken up
       through half-margin. These should be brought to notice of the incharge of the
       auditee office concerned and got compliance.
       The WAP's are required to prepare and issue the Half Margins on the printed Half
       Margin Pads supplied by the headquarter. Issue of half margin on the blank
       papers or local printing/purchase of half margins is not allowed.              These
       instructions should be followed strictly and meticulously.
9.3    The Half-margin should be prepared in duplicate by using carbon paper and the
       original half-margin should be handed over to the incharge of Auditee office. The
       duplicate half margin shall remain in the Half Margin Pad/Book.
9.4    The WAP's will maintain a register of issue of half margin on the prescribed
       Register and in accordance with the instructions as printed on the Half Margin
       Register.    The WAP shall prepare the half margins on the daily basis and shall
       hand over the same to the incharge of Auditee office or his authorized
       representative on the same day or latest by the next morning. The incharge of

      81
       Auditee office shall also ensure that no delay in receipt of the half margin is caused
       by him or by his authorized nominee. The inspecting officers while conducting the
       checking of Auditee office will also scrutinize the Register of Half Margins and shall
       ensure that there is no delay in issue and handing over the half-margins. Non-
       issue of half-margins on daily basis shall attract disciplinary action.
9.5    All the half margins issued by the Audit Party shall be first entered in the prescribed
       Half Margin Register and then shall be handed over to the concerned incharge of
       Auditee office. Acknowledgement of the receipt of the half margin shall be given by
       the incharge of Auditee office himself in the appropriate column of the Half Margin
       Register. However, the incharge of Auditee office can issue an Office Order to
       effect that the half margins will be received by any other official (Name &
       Designation to be mentioned) on his behalf but in such case he would have to
       endorse the copy of the same to the concerned WAP. In case he (Incharge of
       Auditee office) issues such order, he would be held responsible for the disposal of
       HM, as if he had personally received the HMs.
9.6    On the closing day of audit, the WAP shall prepare, a list of all the half-margins
       issued during the visit showing their disposal by the Auditee office. This list shall be
       signed by the XEN/AO Audit as well as by the incharge of the Auditee Office or his
       authorized nominee and a copy of the same shall be placed in the Audit Report.
       The observations as raised in the half-margin shall be incorporated in the audit
       report, in case half-margin is not returned on the closing day.               However, reply
       submitted by the Auditee Office before issue of the inspection report can be
       considered at headquarter.
9.7    Disposal of Half-Margins by Auditee Office: The observations made by the
       Works Audit through Half Margin Memorandum should be scrutinized by the
       incharge of auditee office and in case the observations are found in order,
       immediate compliance should be made and reported to audit otherwise the half
       margin   should      be     returned   duly     replied   and    supporting   with   relevant
       instruction/record        for   verification.     The     half    margins      asking    any
       information/data/record etc. should also be disposed-off immediately by expediting
       the information asked for or by complying the observations as made in the half
       margin. The importance of the half margin should not be assessed on the basis of
       involvement/non-involvement of the excess payment and all the half margins issued
       by audit should be disposed off immediately. Where any verification of record etc.

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      is involved the half margin should be returned within 7 days of its issue but before
      the close of audit inspection.

9.7.1 Where the observations raised by the Audit Party is not found correct or the amount
      pointed out is not found recoverable, the half margin should be returned to the
      Audit Party after recording the detailed reply/justifying the reasons and quoting the
      instructions under which the half margin is not accepted. The half margins not
      involving any excess payment should also be disposed off accordingly.


9.7.2 The XEN/AO Audit or incharge of Audit Party shall examine the reply submitted by
      the incharge of auditee office for non-acceptance of half margin and shall drop the
      half margin in case the same is found justified/in order. In case the reply submitted
      by the incharge of auditee office is not found/considered as in order or justified, the
      para should be incorporated in the Inspection report and the complete case
      (incorporating the opinion of Auditee Office) should be put up to the Chief Auditor
      for final decision.

9.7.3 The Chief Auditor shall review the case and where he upholds the view of the
      Internal Audit; he will issue the audit para and take up the matter with the General
      Manager and Chief General Manager concerned and ensures its settlement within
      stipulated period from the date of first reference.

9.7.4 On the closing day of the audit, the inspecting officer will again discuss with the
      incharge of the Auditee office on all the important issues, including the general
      irregularities noticed in the upkeep and maintenance of accounts, if any, suggesting
      further action to be taken by the Auditee office. A joint discussion note of the
      discussion held will be prepared on the half margin and will be signed by both. The
      details of the records not produced to the audit shall also be recorded on the Half
      Margin itself.

9.7.5 The WAP's are required to submit their report on the prescribed Performa, within 10
      days of close of audit. The submission of Audit Report within the stipulated period
      shall be ensured by the WAPs. The WAPs shall also enclose all the half margins
      issued and returned by the Auditee Office and Draft Audit Report along with the
      copies of the half-margins issued but not returned till close of audit and the
      Halfmargins issued on the 1st day and closing day of the audit.


    83
9.8    Maintenance of Daily Progress Register: Incharge of Works Audit Party should
       maintain a diary to show the daily work done by audit party members. All members
       of the party should sign the diary daily. The diary should be maintained in a register
       duly binded and page numbered. This register is to be got issued from the office of
       Chief Auditor. The pages should be numbered before the register is brought to use.
       Particulars of the work done by each member of the audit party from day to day
       should be briefly written up in the Progress Register. The daily progress recorded
       by the Assistant Manager/Audit should be countersigned by the incharge of the
       works audit party i.e Manager/Audit on daily basis. However, maintenance of
       Daily Progress Register shall not be mandatory to the Audit parties deputed
       by the Private Audit Firms for the audit assigned to them.

9.8.1 For all outgoing and in-coming letters, Dispatch and Receipt Registers (foolscap
       size) should be maintained by the audit clerk in each audit party.

9.9    Register of Special Points: A register of special points shall be maintained at
       headquarter in Works Audit Section. All the points referred to Internal Audit Wing
       for special investigation by the higher authorities or management shall be entered
       in this register. Further, the Works audit wing shall also be responsible to enlist and
       post all the point for special investigation/checking based on the reports received
       from field offices, complaints and the circulars/instructions issued by the Nigam
       from time to time in the said register. Separate pages may be allotted keeping in
       view the gravity of points of investigation and types of points. These points shall be
       reviewed from time to time and shall be conveyed to the Works Audit Parties or
       Special Audit Parties being deputed for audit. The compliance by the audit parties
       in this regard shall also be watched and reviewed from time to time.
                                            ******




      84
10     AUDIT REPORT

10.1   Form of Audit Report: The Audit Report should be prepared on the Approved
       Format in annotated form. The Audit Party should make a copy of Audit Report of
       the format before preparation of report. So that copy of the format is always
       available with the party and the same is not overwritten.

10.2   The Audit report has been designed in such a way that all the information on the
       audit conducted by the Audit Party is reported to headquarter. As such it is desired
       from the Audit Parties that all the information is filled in correctly and no column is
       kept blank. In case any column of the Audit report is kept blank, it will constitute
       non-checking on the related point by the Audit Party and action shall be taken
       accordingly.

10.3   Whenever deemed necessary, confidential reports of irregularities of serious and
       important nature should be sent to the Headquarter addressed to the Chief Auditor
       or Deputy General Manager/Works Audit by name.

10.4   All the half-margins issued during the audit and returned by the Auditee office
       should be incorporated in the Audit report. The Half margins dropped on the reply
       of the Auditee office should not be incorporated in the Audit Report but should be
       submitted to headquarters for scrutiny and record. The Audit Report of all the half-
       margins of difference of opinion between audit and Auditee office should be
       prepared and submitted to headquarter along with audit report for scrutiny and
       further action. The Audit Report should be prepared with care so as to avoid further
       correspondence and decide the issue at the earliest. The observations made by the
       audit, reply submitted by the Auditee office on the observations raised by the audit
       and the point of disagreement dully supported with facts/instructions should be
       clearly mentioned/incorporated in the audit report.         Wherever required, the
       supporting documents should also be annexed to the Audit Report.

10.5   Points of little or no importance should not be included in the Audit Report.

10.6   The Audit Note will be written from the half margin concerned embodying the
       original objection, the reply of Auditee office and further remarks by the Incharge of
       Audit Party.




     85
10.7   At the completion of the audit, the Audit Note should be delivered to the Incharge of
       Auditee Office and his acknowledgement, stating the total number of items and
       pages, obtained. Compliance of Audit Note should be verified during next visit and
       further action viz. Dropping of Audit Note or incorporation of the same in the Audit
       Report should be taken on the outcome of the reply/verification.

10.8   The Audit Report together with all the half margins and the acknowledgement
       referred to in the preceding sub-paras should be submitted to the Headquarter for
       further disposal. The report should be written neatly in a polite language so as to
       avoid any offence to the incharge of Auditee office, the gist of his reply should also
       be embodied in it. It should be arranged under suitable headings. The real
       underlying idea is that the audit reports should be so brief as to involve the
       minimum amount of additional work on the staff of the Auditee office. The report
       should be written in such a manner as to prove instructive and educative, without
       any offence to the staff. This aim can be achieved only by the goodwill and mutual
       co-operation between the auditors and the staff of the Auditee Office. Every body
       connected with the work should, therefore, develop in himself a sense of such a co-
       operation.

10.9   The efficiency of the Works Audit party would be judged as much by the improved
       standard of the accounts work done by the clerical staff employed in the Auditee
       office, which they inspect, as any other thing. The ultimate aim of every Audit Party
       should be to educate the Auditee office staff in such a manner as to improve the
       standard of efficiency of their accounts so that in due course of time it should be
       possible for the audit party to state in their report that the accounts have been
       audited and every thing has been found correct and in order. The incharge of
       Auditee office should, therefore, afford every facility to the Audit Parties, in carrying
       out their work, and full co-operation should be shown to enable them to complete
       their audit satisfactorily within the limited time at their disposal.
                                              ******




   86
11     AUDIT FOLLOW-UP PROCESS

11.1   Action to be taken at headquarter: On receipt of the Audit Report from the Audit
       Party the same shall be scrutinized at the Headquarter and the report of findings
       relating to the office audited will be prepared. The report shall be put up to the
       XEN/Works Audit duly commented and highlighting the excess payment detected
       & got accepted, details of half margins pending with the office audited & excess
       payment     involved therein, status of upkeep and maintenance of expenditure'
       accounts and Works accounts, irregularities/omissions found committed and
       existence of Internal Control in the auditee office. The XEN/Works Audit shall pass
       orders    regarding   action   to   be   taken      on   each   point   and    also   obtain
       approval/concurrence of the Chief Auditor wherever required.

11.2   The Draft Audit Report submitted, if any, shall also be scrutinized and the
       observations raised by the audit through half margin, the reply submitted by the
       Auditee office and further observations made by the audit party shall be examined
       and submitted to the XEN/Works Audit dully commented. The XEN/Works Audit
       may pass orders to take further action or submit the case to Chief Auditor for
       concurrence/approval of his orders. The Chief Auditor after careful consideration of
       the case may concur the orders passed by the XEN/Works Audit or record his own
       orders.

11.3   Further action on the Draft Audit Report shall be taken by the office as per orders
       recorded by the XEN/WA or Chief Auditor as the case may be and the follow up
       action shall be taken till the case is finalized.

11.4   The irregularities/omissions/shortcomings as reported by the audit party shall be
       conveyed to the concerned incharge of Auditee office with a copy to CE/SE
       concerned, asking to set right all the omissions/shortcomings/ irregularities and
       submit the compliance report within a stipulated period.                      In case the
       irregularities/omissions etc. are not discontinued and are repeated in the Auditee
       office, a report of the same shall be prepared and put up to Chief Auditor for taking
       up the matter with higher authorities or to report the facts to management.

11.5   The Objection Book of all the Works audit Paras shall be maintained at the
       headquarter. Where any item is placed in the Objection Book of Paras of Serious
       Nature; the name of the officer/official involved in the Para as well as extent of his

     87
        responsibility shall also be recorded in the Objection Book and vigorous pursuance
        shall be made till the finalization.   The withdrawal of Paras shall be watched
        regularly and the vigorous pursuance shall be made till recoveries/settlement of
        Para.

11.6    The amount got accepted by the audit cannot be withdrawal without concurrence of
        audit. In case after accepting of the amount of any account, it is noticed that the
        amount is not acceptable, the incharge of the Auditee office concerned shall
        prepare a detailed case along with the documentary evidence on the basis of which
        the amount is not found acceptable and shall submit to the Chief Auditor for
        approval of withdrawal of Para from the Objection Book.

11.7    There may be certain cases in which the amount charged to the officer/ official
        concerned account on the behest of audit is objected by the officer/official on one
        pretext or the other.   In such case the Incharge of the office concerned shall
        prepare a detailed case quoting the instruction as well as his comments as why the
        amount in question is not recoverable and submit the same to the CE/ Audit for
        approval for withdrawal of para. The case shall be examined at headquarter and
        shall be submitted to Chief Auditor for decision through XEN/WA.
                                           *******




       88
12     ROLE     OF       INTERNAL      AUDIT     IN       STRENGTHENING     CORPORATE
       GOVERNANCE

12.1   Internal audit can help maximising the benefits from the corporate governance
       policies. Internal audit involves critical appraisal of the functioning of the DHBVN
       with a view to suggest improvements thereto and add value to and strengthen the
       overall governance mechanism of the DHBVN, including the DHBVN's strategic risk
       management and internal control system.

12.2   Following are some of the measures by which internal audit contributes to sound
       corporate governance:

          a) Understanding and assessing the risks and evaluate the adequacies of the
              prevalent internal controls.

          b) Identifying areas for systems improvement and strengthening controls.

          c) Ensuring optimum utilisation of the resources of the DHBVN, for example,
              human resources, physical resources, etc.

          d) Ensuring proper and timely identification of liabilities, including contingent
              liabilities of the DHBVN.

          e) Ensuring compliance with internal and external guidelines and policies of the
              DHBVN as well as the applicable statutory and regulatory requirements.

          f) Safeguarding the assets of the DHBVN.

          g) Reviewing and ensuring adequacy of information systems security and
              control.

                                               ********




     89
     PART-II




90
13        RISK ASSESSMENTS

13.1      After obtaining an understanding in respect of laid down policies and procedures,
          accounting systems and internal control systems, the internal auditor should make
          a preliminary assessment of control risk at assertion level for each activity and
          class of transactions.

13.2      The preliminary assessment of controlled risk is based on the assumption that
          controls operate generally as described and they operate effectively throughout the
          period of intended reliance. There will always be a controlled risk because of
          inherent limitations of any human weakness.

13.3      Ignorance of risk assessment shall result in wastage of corporate resources, frauds,
          financial losses to the DHBVN and unnecessary delays in projects.

13.4      The following are the expected risks:
     S.                Item                                         Risk
  No.

1.0         WORKS CONTRACT

1.1         Pre-award

1.1.1       Approval of Proposal         Non-compliance      of     laid    down     policies   and
                                         procedures    in    respect       of   approval/budgetary
                                         provisions shall result in delay in the issue of Letter
                                         of Award and unnecessary financial losses to the
                                         DHBVN.

1.1.2       Preparation              of Preparation     of   cost    estimates      on   irrelevant
            Estimate      and        its information including preparation of estimate on a
            Approval                     single tender basis.

1.2         Tender Invitation Process

1.2.1       Fixation               and If the tender documents are not complete in
            Evaluation     of   Pre- respect of commercial and other clauses, it will
            qualification Criteria       create confusion with bidders and lead to quoting
                                         of irrelevant prices and putting irrelevant terms and


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  S.                Item                                         Risk
 No.

                                    conditions.

                                    Deposit of statutory dues may not be recovered
                                    from the contractor or construction labour etc.

                                    Imposition    of   penalty for      non-compliance   of
                                    statutory provisions of applicable Acts viz. Contract
                                    Labour Regulation and Abolition Act, Provident
                                    Fund Act, Minimum Wages Act, ESI Act, Income
                                    Tax Act, Sales Tax Act, Service Tax Act, VAT,
                                    Works Contract Tax etc.

1.2.2      Circulation of Notice Restriction on availing of better prices and other
           Inviting Tender          terms and conditions due to the limited circulation
                                    of NIT and non-updating of the list of approved
                                    contractors on a regular basis.

1.2.3      Preparation,      Vetting Chances of non-incorporation of all relevant
           and    Issuance       of commercial/non commercial clauses in tender
           Tender Documents         document i.e. Performance Guarantee, EMD,
                                    Statutory Provisions, Price Variations, Scope of
                                    Work,    Issuance       of     Departmental   Material,
                                    Compliance of Labour Law and Inspection of
                                    Stores etc.

                                    Chances of issuance of tender documents without
                                    proper vetting by Legal/Finance Wing may lead to
                                    dispute with bidders.

                                    Chances of issuance of tender documents to
                                    parties not fulfilling pre-qualification criteria where
                                    as such are decided.

1.3        Receipt and Evaluation of Tender Bids


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  S.                 Item                                       Risk
 No.

1.3.1      Receipt     of   Tender Inconsistency in proper constitution of Tender
           Bids                     Evaluation Committee.

1.3.2      Tender Bids Opening Chances of opening of tender in the absence of
           and Earnest Money tender committee and bidders.
           Deposit
                                    Non receipt of EMD.

1.3.3      Tender Evaluation        Rejection of the lowest bidder without proper
                                    justification because of whims and fancies of some
                                    officials.

1.4        Selection of Suitable Party and Contract Awarding

1.4.1      Comparative              Contract may be awarded at higher rates with an
           Statement                undue favour to the contractor.

                                    Undue favour to a specific party without any
                                    credentials.

                                    Non-consideration of relevant parameters viz.
                                    technical, financial etc.

1.4.2      Awarding of Contract     The absence of compliance of relevant clauses,
                                    like   Performance     Bank        Guarantee,   Payment
                                    Terms, Liquidated Damages etc. shall lead to
                                    ambiguity and result in delay in awarding of the
                                    contract.

                                    This will also lead to unnecessary litigation with the
                                    contractors.

1.5        Execution




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  S.               Item                                      Risk
 No.

1.5.1   Advance to Contractor Furnishing of insufficient security against advance
                                    released.

                                    His bill will be passed at a higher rate without
                                    deduction of advances, security deposits, retention
                                    money, recovery on account of additional facilities,
                                    viz. accommodation, electricity supply, equipment
                                    hiring charges and supply of material.

1.5.2   Processing        of   Bills Release of escalated payment to the contractor
        and        Release       of even in the case of a fixed price contract,
        Payments                    consideration of a different price index in his
                                    favour.

                                    Attracting penal provisions of tax legislation, that is,
                                    payment without making statutory deduction from
                                    payment to the contractor.

                                    Release of payment without approval from the
                                    competent authority.

1.5.3   Insurance Coverage          Inadequate risk coverage in the insurance policy.

                                    Delay in renewal of the policy.

                                    All the required policies with relevant clauses to
                                    safeguard the interest of the DHBVN may not be
                                    taken by the contractor.

                                    Financial loss to the DHBVN due to the inability to
                                    protect against the occurrence of any mishap.

1.5.4   Material     Issued      to · Receiving material under an incorrect party
        Contractors                  account and an incorrect quantity.
                                    · Incorrect monitoring over actual consumption of


   94
  S.                  Item                                    Risk
 No.

                                     the material.
                                    · No control over generation and handover of
                                     scrap.
                                    · Non-recovery of material/equipment issue on
                                     loan/returnable basis.
                                    · Delay in recovery of material from the contractor.
1.5.5      Material at Site         · Incorrect accounting of material issued to the
                                     contractor.
                                    · Incorrect monitoring over actual consumption of
                                     the material.
1.5.6      Monitoring           of · Delay in completion of the project and the cost
           Progress                  overrun of the project.
                                    · Recording of a fictitious date of completion,
                                     though work incomplete.
                                    · Seeking grant of extension of time by contractor
                                     on flimsy grounds.
                                    · Liquidated damages may not be charged from
                                     the contractor as per the terms of the contract.
                                    · Incorrect recording of entries in MB in respect of
                                     measurement details.
1.5.7      Full       and     Final · Full and final payment will be released to the
           Payment to Contractor     contractor without adjusting various recoveries,
                                     viz. material issued, advances given, charges for
                                     facilities, hire of equipment/vehicles, liquidated
                                     damages, etc.
                                    · Financial loss to the DHBVN.
1.6        Bank Guarantees Received from Contractor

1.6.1      Validity                 · Furnishing of BG for an inadequate amount.
                                    · There may be financial risk to the DHBVN due to
                                     non-recovery of amount from contractor for want

      95
  S.                Item                                     Risk
 No.

                                    of BG
                                  · There may be theft/misplacement of BG in
                                    absence of security measures for keeping and
                                    maintaining of BG.
1.6.2      Renewals               · No timely renewal of BGs being expired.

1.7        Insurance of Plant · Non-adherence         to     the    corporate   policy   of
           and Machinery            insurance may result in heavy financial losses on
                                    the happening of undesirable circumstances.
                                  · Assets have been insured for either inadequate
                                    amount or exaggerated sum without the relevant
                                    risk.
                                  · Overpayment/wrong calculation of the insurance
                                    premium.
                                  · There may be delay in submission of claim to the
                                    insurers.
                                  · There may be wrong estimation of claims lodged
                                    and lack of follow-up.
                                  · Financial loss due to faulty claim management.
                                  · There may be a lack of clarity in respect of
                                    insuring risk amount, taking an inadequate risk
                                    cover, and submission of claims to insurers.
2.0        PROCUREMENT

2.1        Indent   /   Purchase · Approval of PR from an incompetent authority is
           Requisition (PR)         in violation of provisions prescribed in the DOP.
                                  · Higher procurement cost due to an inadequate
                                    system of estimation, lack of objectivity in the
                                    estimation and non-consideration of all the cost
                                    factors for the same.
                                  · Blocking of funds of the DHBVN due to


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  S.               Item                               Risk
 No.

                               procurement of excess material, procuring on
                               emergency grounds without justifiable reasons,
                               without taking non-availability certificate from the
                               stores.
                              · There may be awarding of purchase order to
                               some specific service providers at a higher rate
                               by giving undue favour to some parties.
                              · Loss due to non-availing of the advantage of bulk
                               purchases       by    taking     better    discounts,
                               concessions on better terms and conditions.
                              · Circulation of tender to a limited number of
                               parties, resulting in restrictions on competition,
                               and availing of a competitive price.
                              · Tender issued to specific parties for giving undue
                               advantage or based on a list that is not updated
                               on a regular basis.
2.2        Vendor Selection   · There may be a selection of parties without
                               assessing their credentials or past performance
                               which results in financial and other quality-related
                               losses to the DHBVN.
                              · Non-compliance of policies or procedures for
                               evaluation of bids by incompetent authorities,
                               non-constitution of Tender Evaluation Committee
                               (TEC).
                              · There    may    be   a   risk   of    post-tendering
                               negotiations by single person or by incompetent
                               official/authority in place of TEC.
                              · There may be ignorance on all relevant clauses
                               in the purchases or awarding of the contract
                               namely, Clauses Pertaining to Performance BG,
                               Period, Termination of Order, Defect Liability,

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  S.                  Item                                        Risk
 No.

                                        Liquidated Damages etc.
                                       · There may be a delay in awarding an order.
                                       · There may be a threat to the overall interests of
                                        the DHBVN.
2.3        Annual Rate Contract        · There may be a lack of system of vendors'
                                        standardisation.
                                       · Huge   wastage      of   resources   due   to     non-
                                        compliance of procurement procedure.
                                       · Possibilities of irregularities in revision of annual
                                        contracts.
                                       · Finalisation of annual rate contract at higher rate
                                        for giving undue favour to specific parties.
2.4        Receipt     of    Material · In absence of proper monitoring system of
           and      Monitoring    of    pending orders, there may be a delay in receipts
           Pending          Purchase    of material required on emergency basis.
           Orders                      · Financial loss due to non-charging of penalty on
                                        late deliveries.
2.5        Service providers' Bills · Release of payment at higher rate/unauthorised
                                        bill passing.
                                       · Chances of faulty bill payment.
                                       · Delay in payment to service providers results in
                                        loss of goodwill and levy of interest/penalties.
2.6        Spot/Cash/Local             · Financial loss to the DHBVN due to procurement
           Purchase                     at uneconomical rates and non-availing of
                                        quantity discount.
3.0        FINANCE AND ACCOUNTS

3.1        Cash Transactions

3.1.1      Cash Payments and · Absence/non-compliance                    of   policies     and
           Receipts                     procedures of the DHBVN may lead to frauds and


      98
  S.            Item                                              Risk
 No.

                                  misappropriations.
                                 · Payment without an approval from the competent
                                  authority.
                                 · Chances of double payment against the same
                                  bill.
                                 · Payment in contravention of provisions of the
                                  Income Tax Act, 1961.
                                 · No proper system for safe custody of cash.
                                 · Inadequate           insurance        cover       for    cash      in
                                  hand/transit.
                                 · Receiving cash without official cash receipt,
                                  resulting        in     incorrect      accounting         of     cash
                                  transaction.
3.1.2   Bank Transactions        · Delay in deposit of cheques in bank and incorrect
                                  accounting.
3.1.3   Cash        Withdrawals · Chances of cash withdrawals without an approval
        from Bank                 from the competent authority.
                                 · Chances         of      withdrawal         of     cash        without
                                  requirement & mis-utilisation of cash.
3.1.4   Bank Reconciliation      · Delay      in        preparation      of        periodical      bank
                                  reconciliation statements.
3.1.5   Journal Vouching         · Risk of booking of vouchers wrongly in respect of
                                  rectification entries.
                                 · Making      of        wrong     provisions          resulting      in
                                  under/over-booking of               expenses,            leading to
                                  incorrect financial results.
                                 · Wrong      entries       for    various          provisions      and
                                  reserves, resulting in wrong presentation of true
                                  and fair view of financial disclosures.
                                 · Passing of wrong closing entries.


   99
  S.               Item                                         Risk
 No.

3.1.6   Fund/Limit        Transfers · Delay in adjustment of unreconciled items/inter-
        to       Units,       Fund    unit fund balances.
        Transfer              from · Situation of surplus/idle funds.
        Collection Centres

3.2     Fixed Assets

3.2.1   Procurement of Fixed · Procurement of fixed assets without an approval
        Assets                        of competent authority and without complying
                                      with the policies and procedures in this regard.
                                     · Assets procured may not be of the required
                                      quality/specification.
                                     · Capital expenditure       may be in       excess of
                                      sanctioned expenditure.
3.2.2   Capital            work-in- · There are chances that assets may have not
        progress                      have been booked under the proper a/c head as
                                      per nature of the assets.
3.2.3   Incidental Expenditure · Incorrect apportionment of                overhead during
        during      Construction      construction period.
        Period

3.2.4   Interest             during · There       are   chances     that    interest   during
        Construction Period           construction period may not have charged to
                                      various      items   of    capital   work-in-progress
                                      properly.



3.2.5   Accounting             and · Incorrect classification of capitalisation of fixed
        Capitalisation of Fixed       assets and accounting in the wrong Head of
        Assets (Fixed Assets          Account.
        Register)                    · Non-capitalisation of all the cost related to fixed
                                      assets.



 100
  S.               Item                                   Risk
 No.

                                  · Chances of booking of revenue expenditure as
                                   capital expenditure and vice versa.
3.2.6   Sale/Disposal      and · Unauthorised sale of useful assets and that too at
        Transfer     of   Fixed    non-competitive price.
        Assets                    · No proper identification and following up of
                                   procedure for sale of obsolete/surplus assets.
3.2.7   Depreciation              · Charging of depreciation at incorrect rate.
        /Amortisation             · Charging of depreciation after the date of
                                   declaration of assets as surplus/obsolete/sold.
3.3      Investments              · No approval for purchase/sale of investment.
                                  · No   proper    investment     policies   resulting   in
                                   improper investment decisions.
                                  · Lack of safe custody measures for original
                                   documents        may    lead      the     chances     of
                                   fraud/misappropriation.
                                  · Incorrect     accounting    of    investment/income
                                   thereon.
3.4     Loans              and · Raising funds without an approval of competent
        Borrowings                 authority.
                                  · Funds at higher interest rates or on such terms
                                   and conditions which are prejudicial to the
                                   interests of the DHBVN.
                                  · Incorrect accounting of interests and other
                                   charges, delay in drawing of funds / repayment of
                                   instalments.
                                  · Imposition of penalty due to the non-compliance.
3.5     Payables                  · Non existence of internal control system for
                                   passing of bills.
                                  · Release of payment without proper scrutiny i.e.
                                   Documentary evidence, wrong calculation & non-


 101
  S.             Item                                   Risk
 No.

                               adjustment of recoverable.
                              · Non-availing of Early Payment Rebate.
                              · Non-reconciliation of related Account Books.
3.6    Budgeting              · Adoption of different bases by various Wings for
                               preparation of budget resulting in a wrong
                               assessment of fund requirements.
                              · Delay in submission of budget from various
                               Wings resulting in late circulation of approved
                               budget and delayed execution of activities.
                              · Incurrence of expenses in excess of budgeted
                               amount.
                              · Finding out/analyses of variances shall not be
                               proper.
                              · Absence of interim monitoring of budget with
                               actuals.
                              · Lack of meeting funds flow requirement.
3.7    Scrutiny           of · Booking of expenses without the approval of the
       Expenses                competent authority.
                              · Booking of expenses under wrong heads.
                              · Booking of expenses for a period other than the
                               accounting period under reference, resulting in
                               disallowances under the Income Tax Act.
                              · Chances of wrong allocation of expenses to cost
                               centres.
3.8    Review      of   Sub- · Wrong recovery against an advance made.
       ledgers                · Non-recovery of advances from contractors given
                               against material, equipment, etc.
                              · Non-recovery of expenses from contractors in
                               respect    of   rent,   electricity,   water   charges,
                               equipment hire charges, etc.


 102
  S.            Item                                     Risk
 No.

                               · Danger of long-lying outstanding balances, both
                                in employees' and contractors' sub-ledgers.
                               · Chances of non-reconciliation of sub-ledgers and
                                general ledger.
                               · Inadequate provisioning for expenses.
                               · Non-scrutiny of various items of expenses for
                                long.
                               · Booking of expenses inconsistently with the
                                stated    accounting        policies     and    accounting
                                standards.
                               · Non-scrutiny of expenses from the point of view
                                of disclosure requirements under the Companies
                                Act or any other Act in force.
                               · Non-adherence of the normal cut-off procedure
                                followed for matching revenue with expenses.
3.9    Inter-Unit Account      · Non-reconciliation of inter-unit accounts may
                                result in long outstanding balances, leading to
                                wrong financial results.
                               · It will also affect profitability of units working as
                                independent cost centres.
                               · Non-verification      of       credit        notes    with
                                corresponding debit notes issued by the units
                                concerned.
                               · Non-disclosure of discrepancies to the top
                                management.
3.10   Salary Section

3.10.1 Preparation of Salary   · Chances of non-compliance of corporate policies
                                and procedures in respect of preparation of
                                salaries and its disbursements.
                               · Chances     of     non-updating         or    unauthorised

 103
 S.              Item                                  Risk
 No.

                                 updating of employees' master records.
                               · Incorrect    calculation     of     salaries   and
                                 statutory/other deductions, other benefits, etc.,
                                 may lead to dissatisfaction in the employee and
                                 lowering of morale, resulting in loss to the
                                 DHBVN.
                               · This may lead to imposition of unnecessary
                                 statutory penalties and interest.
3.10.2 Salary Disbursement     · Chances of delay in forwarding salary statements
                                 to banks.
                               · Chances of non-raising of inter-unit advice in
                                 respect of salary of employees, transferred from
                                 other units, wherever applicable.
3.10.3 Payment of Arrears      · Wrong computation of payment of arrears, based
                                 upon wage revisions, promotion orders, etc.
                               · Wrong computation of relief u/s 89 of the Income
                                 Tax Act on payment of arrears.
3.10.4 Leave Encashment        · Chances of payment of non-encashable leaves.
                               · Non-updating of earned leave registers on
                                 regular basis.
3.10.5 Shift Duty Allowance    · Chances of payment of night shift allowances
                                 without the prior approval of the controlling
                                 officer.
                               · Chances of payment of night shift allowances to
                                 the specified category of employees by giving
                                 undue favour.
3.10.6 Payment     of   Lease · Non-updating of lease master on regular basis.
       Accommodation      and · Non-recovery of lease amount paid in excess of
       its Recovery              entitlement from the employees.
                               · Chances of payment of lease amount in respect


 104
 S.               Item                                      Risk
 No.

                                   of employees transferred to another unit beyond
                                   the period of extension granted by the controlling
                                   officer.
                                  · Non-generation of inter-unit debit advices in case
                                   of employees transferred to another unit.
                                  · Non-deduction of tax as per prescribed rates and
                                   deposit with the governmental authorities within
                                   the stipulated time limit.
                                  · Chances of no timely renewal of lease before due
                                   date.
3.10.7 Payment        of    Staff · Release of advances without the approval of the
       Advances            HBA,    competent authority.
       Computer,        Furniture, · Release of advances to employees without
       Conveyance, etc., and       adequate securities / required documents.
       its Recovery               · Release of advances without the settlement of
                                   earlier advances.
                                  · Sanction of advances over and above the
                                   entitlement / repayment capacity of employees.
3.10.8 ESI,       PF,       TDS · Non-provision for gratuity, and leave encashment
       Deduction and Timely        as per the accounting policies at the year-end.
       Deposit.                   · Wrong deduction / late deposit of statutory and
                                   other dues resulting in imposition of penalties and
                                   interest.
3.10.9 Remunerations          & · Grant of remuneration without proper sanctions
       other benefits              and authority.
                                  · Allowing of remuneration without justification.
                                  · Non-making of budget provision.
3.11   Other Issues Relating to Employees

3.11.1 LTC    Advance       and · Non-compliance       of    corporate   policies     and
                                   procedures.

 105
  S.             Item                                     Risk
 No.

3.11.2 Claim                    · Chances of incorrect calculation of entitlement.
                                · Chances of passing of bills without adequate
3.11.3 Tour    Advance    and
                                 supporting.
       Claim
                                · Release of advance without settlement of earlier
       Medical Advance and       advances.
       Claim                    · Chances of non-updating of employees' records.
                                · Chances of advance pending for a long period.
                                · Chances of non-returning of unspent money
                                 immediately.
3.12   Review of Sales & · Sale without proper approval of competent
       Other Income.             authority and on the lower rates.
                                · Not proper recording in accounts
3.13   Stores Accounts

3.13.1 Maintenance of Price · No timely reconciliation of stock records with the
       Stores Ledger             quantity appearing in the price stores ledger
                                 (PSL).
                                · Lack of control over inventory, misappropriation
                                 of inventory, negative balance appearing in the
                                 PSL.
                                · Lack    of   control    over   purchases   without
                                 issuances.
                                · Chances of under/excess valuation of inventory.
3.13.2 Valuation    and   Bill · Non-adherence       of    the   DoP,   leading      to
       Passing                   unauthorised bill passing.
                                · Chances of excess/duplicate bill payments.
                                · Chances of pre-payment of bills without availing
                                 agreed discounts.
                                · Chances of delay in making payment after due
                                 date, resulting in levy of penalty and interest, and
                                 financial loss to the DHBVN.

 106
  S.            Item                                    Risk
 No.

                              · Chances of over/under-valuation of stores in
                                contravention of AS-2 issued by the ICAI.
3.14    Audit      of   Final · Chances of not representing a true and fair view
        Accounts                of assets and liabilities.
                              · Non-compliance         of      generally         accepted
                                accounting principles and accounting standards,
                                issued by the ICAI and provisions of the
                                Companies Act/other relevant Acts.
                              · Chances      of   adverse    qualifications       by   the
                                auditors.
                              · Chances of over/under-statement of revenue and
                                expenses.
3.15    Cost Audit            · Chances      of    non-compliance          of     statutory
                                provisions    prescribed     in     Cost        Accounting
                                Records (Electricity Industry) Rules, 2001.
                              · Chances of penal proceedings as per Companies
                                Act, 1956, and other relevant Acts for non-
                                compliance of statutory provisions.
4.0     PERSONNEL AND ADMINISTRATION

4.1     Manpower Planning

4.1.1   Preparation        of · Chances of wrong assessment of manpower,
        Manpower                resulting in over/under-staffing.
        Requirement           · Chances of non-adherence of budgetary limits
                                and regulatory guidelines.
                              · Recruitment of manpower without approval of
                                competent authority.
                              · Imbalance in manpower requirement will result in
                                financial loss and badly affect the operational
                                efficiency of the DHBVN.


 107
  S.               Item                                        Risk
 No.

4.1.2   Monitoring of Actual · Posting of more staff persons for the same job
        vs.          Sanctioned      than required.
        Strength                    · Absence of formal reporting system from units in
                                     respect of manpower surplus/shortage.
                                    · Imbalance in manpower requirement shall affect
                                     the operational efficiency of the DHBVN.
                                    · Chances of imbalance between higher level and
                                     lower level staff.
4.2     Recruitment

4.2.1   Receipt and Approval · Chances             of     unauthorised      recruitment    of
        of           Manpower        personnel.
        Requirement                 · Delay in receipt and approval of manpower
                                     requirement.
4.2.2   Advertisement           for · Chances of less detail in advertisement for
        Inviting Applications        inviting   applications     and     limited   circulation
                                     resulting in incomplete information from the
                                     applicants.
4.2.3   Receipt and Scrutiny · In absence of a proper system for collection of
        of Applications              applications, there may be a chance of non-
                                     receipt/misplacement of applications.
                                    · Selection of candidates not meeting the pre-
                                     defined criteria.
                                    · Delay in recruitment of employees resulting in
                                     adverse effect on operational efficiency.
4.2.4   Conducting        Written · There       may be      chances of       non-receipt    of
        Test                         information for attending written test by the short
                                     listed candidates.
                                    · Chances of using unscientific/arbitrary methods
                                     for conducting a written test.
                                    · Chances of leakage of question papers, resulting

 108
  S.             Item                                          Risk
 No.

                                   in selection of incapable candidates, unsuitable
                                   for the job.
4.2.5   Short     listing     of · Chances of short listing the candidates ignoring
        Candidates                 the pre-determined criteria.

4.2.6   Interviewing        the · For      want   of   proper     procedure       for     calling
        Candidates                 candidates to appear for interview, the short
                                   listed candidates may not be able to attend the
                                   interview.
                                  · There may be chances to call the candidates for
                                   an interview who have not qualified the written
                                   test.
                                  · Chances of improper composition of the interview
                                   panel,    resulting    in     selection   of    incapable
                                   candidates.
4.2.7   Selection and Issue of · Selection        of   candidates      through          personal
        Appointment Letters        references, not meeting the pre-defined selection
                                   criteria, resulting in appointment of incapable
                                   candidates.
                                  · Delay in sending appointment letters to selected
                                   candidates.
                                  · Issuance of appointment letters without clearly
                                   stating the terms and conditions, pay scales as
                                   approved by the competent authority.
4.2.8   Induction, Assignment · No clarity for job profiles assigned to inducted
        of   Designation    and    candidate,      resulting     in   suffering     of     work
        Job Profile                performance.
                                  · Chances of unclear authority and responsibility.
4.2.9   Exit Interviews           · In absence of a reasonable system of taking
                                   interview at the time of relieving of an employee,
                                   the DHBVN will not be able to know the reasons

 109
  S.              Item                                  Risk
 No.

                                 of employee turnover.
4.3     Time Office

4.3.1   Attendance              · Inaccurate records of attendance resulting in
                                 incorrect salary preparation.
                                · Chances of fake attendance or proxy.
                                · Financial loss to the DHBVN.
4.3.2   Leave Management        · Chances of non-existence of well defined leave
                                 policy in the DHBVN.
                                · Chances of incorrect recording of leave and that
                                 too on irregular basis.
                                · Availing leave without any formal sanction.
                                · Incorrect accounting of leave may result in
                                 payment of higher salary or other benefits.
4.3.3   Late      Coming   and · Non-adherence of office timing strictly and
        Early Going              adverse effects on operational efficiency.
                                · No deductions, though prescribed by rules.
4.4     Payroll

4.4.1   Pay    Fixation    and · Pay scales are not authorised by the competent
        Maintenance/Updating     authority.
        of Employees' Master · Non-compliance of the corporate policies and
        Records                  procedures for pay fixation, preparation and
                                 disbursement of salary.
                                · Not updating of master records on a regular
                                 basis.
4.4.2   Promotion/Transfer of · Issuance of transfer order by HR not duly
        Employees                authorized by the competent authority.
                                · Chances for not issuing Last Pay Certificate
                                 (LPC) timely and not containing all necessary
                                 details.


 110
  S.              Item                                    Risk
 No.

                              · Non deduction of advances for want of recovery
                               schedules of advances issued by transferor unit.
                              · Promotion of employees without following the
                               DHBVN's policies and procedures made in this
                               respect.
                              · Dissatisfaction in the employees.
 4.5    LEGAL

4.5.1   Empanelment of        · Selection of incompetent lawyers due to non-
        Lawyers                adherence of the provisions of DOP / circulars /
                               officer orders in this regard.
                              · No well-defined qualification/experience criteria
                               for empanelment of lawyers.
                              · Chances of empanelment of large number of
                               lawyers.
                              · No regular updation of empanelment.
4.5.2   Fixation of Fees      · Fixation of fees without considering the relevant
                               factors    i.e.   prevailing   rates,     experience   of
                               lawyers, specialisation etc. may result in fixation
                               of fees structure on the higher side.
                              · Payment of incidental expenditure i.e. boarding
                               and lodging, travelling expenses in excess of the
                               limit fixed in this regard.
4.5.3   Control on            · No monitoring over legal expenditure, direct as
        Expenditure            well as indirect, incurred on various cases.
                              · No   submission      of    detail   of    expenses    to
                               appropriate authority for appraisal and review.
4.6     Hospitals/Health Centres/Dispensaries

4.6.1   Medicines/Consumabl   · Chances of purchase of medicines not duly
        es                     approved by the competent authority.


 111
  S.               Item                                     Risk
 No.

                                    · Chances of purchase of sub-standard medicines
                                     and in excess quantity whose expiry date is near.
                                    · Non-maintenance of various records with regard
                                     to patients' medicines, consumables, surgical
                                     equipment and apparatus.
4.6.2   Medical     Consultation · Chances of availing of hospital facilities by
        and       Hospitalisation    patients who are not entitled.
        Services                    · Chances of not charging of necessary fee as per
                                     prescribed rates.
                                    · Non-receipt of necessary charges from the
                                     outside patients resulting in financial loss to the
                                     DHBVN.
4.7     Township

4.7.1   Allotment                   · Lack of proper guidelines for allotment of
                                     premises     may     result      in   out   of   turn
                                     allotment/allotment to person not entitled.
                                    · Non-maintenance of records on a regular basis
                                     may lead to incorrect recovery of various
                                     charges.
                                    · Unauthorised occupation of allotted premises
                                     after the expiry of allotment period.
                                    · Chances of no agreement with outside parties for
                                     allotment of premises.
4.7.2   Recoveries                  · Incorrect recovery of various charges against the
                                     laid down rules and terms and conditions of
                                     agreement, resulting in financial loss to the
                                     DHBVN.
                                    · Statement of outstanding recoveries is not made,
                                     so no follow up action.



 112
  S.               Item                                        Risk
 No.

4.7.3   Vacation                     · Chances of not verifying the premises at the time
                                      of vacation resulting in misuse of fittings and
                                      furnishing at the premises.
                                     · No dues certificate is issued without verifying the
                                      records.
                                     · Records are not updated after vacation.
4.8     Guest                        · Chances of non maintenance of various records.
        Houses/Transit               · Misuse of guest house facilities for want of follow
        Hostels           /Transit    up or guidelines for allotment of guest house.
        Camps                        · Chances    of   incorrect   changes   resulting   in
                                      revenue loss to the DHBVN.
                                     · No proper record of assets may result in transfer
                                      of assets without approval.
                                     · No periodic physical verification of assets.
                                     · Wastage and misuse of eatables/consumables.
4.9     Other Issues

4.9.1   Leave              Travel · Chances of paying LTC advances and other
        Concession and Claim          claims more than the entitlement of employees.
                                     · Tendency of settlement of advances over a long
                                      period.
                                     · Delay in recovery of advances not utilised within
                                      prescribed time limit.
                                     · Non recovery of penal interest at prescribed
                                      rates.
4.9.2   Staff      loan       and · Sanction of excess loan that of admissible.
        advances      ­     HBA, · Not obtaining of required documents.
        Computer,     Furniture, · Not starting of recovery of the loan as per ruled.
        conveyance etc. And · Omission in regular recovery and not intimation to
        its recovery          next office in case of transfer.
                                     · Incorrect calculation of interest.

 113
  S.             Item                                   Risk
 No.

4.9.3   Leased                · Not updating of lease masters/contracts
        accommodations

5.0     STORES AND TRANSFORMER REPAIR WORKSHOPS

5.1     Receipt of Material   · Non-checking of material on receipt for quality,
                               quantity,     damaged         condition     or   proper
                               documentation would result in excess/shortages
                               in inventory and loss to the Company.
                              · Buying without any real need would result in
                               blocked funds, which could have been better
                               utilised for productive uses.
                              · Chances of misappropriation of inventory.
                              · Improper recording and accounting of inventory
                               may badly impact information on stock position,
                               reordering quantity and time, bill passing etc.
5.2     Issue of Material     · Issuing    material    without    authorisation   and
                               approval of the competent authority increases the
                               risk of misappropriation of inventory.
                              · Irregular recording and accounting of issuances
                               makes monitoring of inventory very difficult.
                              · Allocating costs to different Wings and processes
                               on approximate basis which cannot be relied
                               upon.
5.3     Inventory             · Chances of not fixing of inventory levels ­
        Management             minimum, maximum and reorder levels, or of
                               revising the same at the right time.
                              · Embarrassing out of stock positions of critical
                               spares or equipment, and the accumulation of
                               surplus/obsolete inventory at the same time.
                              · Inadequate    review    of     slow   or   non-moving


 114
  S.               Item                                         Risk
 No.

                                         inventory position or its circulation to concerned
                                         Wings or to the higher management.
5.4    Return of Damaged · Chances of not proper checking of shortage of
       Transformers                in    transformer oil and parts visible outside at the
       Stores/ Workshops.                time of receipt and non-accounting of the same in
                                         accounts.
                                        · Chances of non-recording of shortages in the
                                         shortage book and recording of measurement of
                                         the available parts in the measurement book
                                         noticed at the time of receipt.
                                        · Chances    of    non-accounting       of   cost   of
                                         transformers including transformer oil & parts in
                                         monthly accounts and non-affording of credit to
                                         the office from where transformer was received.
5.5    Accounting                 of · Chances of non-accounting of transformer oil as
       transformer        oil   and      contained in the damaged transformer vis-a-vis
       checking          of      the     entry into dirty transformer oil card, ascertaining
       transformer        for    the     and accounting of sludge, accounting of de-
       purpose      of        repair/    hydrated oil.
       disposal.                        · Chances of delay in checking or non-checking of
                                         the damaged transformer (after opening) and
                                         taking of decision regarding repair/disposal based
                                         on the condition of the transformer.
                                        · Chances of non-accounting and non-affording of
                                         credit of the cost of HV/LV coils etc. after opening
                                         of the transformer.
5.6    Custody of         Material · Inadequate care in providing storage space for
       and Physical Control              different kinds of material in accordance with
                                         requirement.
                                        · Avoidable wastage of time in locating and


 115
  S.            Item                                     Risk
 No.

                                identifying items while issuing material from
                                stores.
                              · Theft/pilferage/misappropriation of material.
5.7    Scrap Disposal         · Insufficient reporting of surplus/obsolete stock of
                                material to the corporate office.
                              · Lacunae in reconciling scrap handed back by the
                                contractor i.e. standard wastage, actual wastage
                                and actual quantity returned.
                              · Misappropriation of scrap by the contractor.
                              · Non-disposal of scrap thorough auction as per
                                policy of DHBVN resulting into blockage of funds,
                                and financial loss.
6.0    COMMERCIAL             · Not in scope of Expenditure/Works Audit but
                                related to Revenue Audit
7.0    Consultancy Services

7.1    Cost Assessment        · Absence    of   adequate    policy   guidelines   for
       and Price Fixation      computing the assignment cost may result in
                               under/ over costing of assignment.
                              · Resource requirement may have been determined
                               without considering detailed scope of work,
                               required skill set etc.
                              · There may be chances of wrong calculation of
                               other costs also in case all relevant cost factors
                               such as basic pay, reimbursement and perquisites
                               allowed to employees, overhead cost etc have not
                               been considered properly.
                              · Non-approval of assignment's costing and pricing
                               from the competent authority as prescribed in
                               DOP.
                              · Chances of low profit margin due to inadequate

 116
S.            Item                                          Risk
No.

                               system of pricing resulting in revenue loss to the
                               DHBVN.
                              · Inadequate system of pricing may also lead to
                               losing of assignment due to non-competitiveness.
7.2   Execution               · Financial   loss    to     the   DHBVN      due   to    the
                               deployment of excessive staff/ resources.
                              · Delay in execution of project resulting in non-
                               receipt of payment and levy of penalty.
                              · Chances of deployment of incompetent manpower
                               resulting in negative effect on goodwill of the
                               DHBVN.
                              · Chances of inadequate monitoring system on
                               regular basis.
7.3   Billing, Recovery and   · Financial loss to the DHBVN due to non-
      Follow up                adherence of terms and condition of the contract.
                              · Chances of billing at incorrect rates and delay in
                               raising bills.
                              · Non-approval       of    bills   and   credit   notes   by
                               competent authority.
                              · Lack of proper follow up system in respect of old
                               outstanding.
7.4   Assessment and          · Absence of proper feedback from the clients may
      Feedback System          result in negative affect on brand image and
                               goodwill of the DHBVN.
                              · Chances of no proper analysis of root cause and
                               action plan for improvement based on feedback
                               from the client resulting in no corrective action in
                               time.
                              · Lack of reporting on profitability of assignment to
                               higher authorities.


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S.               Item                                 Risk
No.

7.5   Business              · Non-tapping of potential clients due to lack of
      Development            proper development strategy.
      Process               · Lack of adequate budgetary control system to
                             monitor and control the performance of Wing
                             resulting in opportunity loss to the DHBVN.
                            · Lack of analysis of variances between actual
                             result and budgeted amount resulting in non-
                             implementation      of    action    plan        timely   for
                             improvement.
8.0   IT & COMMUNICATION

8.1   Software              · In the absence of adequate system for assessing
      Development Process     and analyzing needs of computerization including
                              development of software either by in house
                              technical staff or by outside agencies, there is a
                              chance of inadequate computerized system
                              resulting into wastage of resources.
                            · Chances      of    commencement           of     software
                              development programmes including modification /
                              changes in     the existing system without taking
                              approval from the competent authority.
                            · Chances of selection of incompetent outside
                              agency based on weak credentials resulting in
                              time and cost overrun in software development
                              process.
                            · In the absence of proper support of user manual
                              and required training may lead to operational
                              inefficiency of the staff.
                            · Non-adherence of prescribed tendering process
                              for selection of outside agency.
8.2   Maintenance of        · Chances of hindrances in work due to the system


118
S.               Item                                    Risk
No.

      Hardware and            failure     in   absence        of    annual     maintenance
      Software                contract.
                             · The data may be lost due to non-adherence of
                              maintenance system.
                             · No hardware / software can be maintained
                              properly in the absence of proper training and
                              extending proper consultation for solving the day
                              to day problems of the system users.
8.3   Information Security   · In   the    absence       of        any   policy   regarding
      and Controls            information      security,      there      are   chances   of
                              improper awareness to employees for security
                              and control measures.
                             · No proper policy regarding password specifying
                              minimum length of password, compulsory change
                              of password, locking of Id after prescribed no. of
                              consecutive login failure, use of login ID of ex-
                              employees, etc.
9.0   OPERATION AND MAINTENANCE

9.1   Schedule of            · In the absence of preventive maintenance system
      Preventive              there is a chance of frequent break down
      Maintenance             resulting in decrease of operational efficiency.

9.2   Breakdown Analysis     · No system to carry out break down analysis in
                              depth and plan for remedial action will result in
                              loss to the DHBVN due to frequent breakdowns.
9.3   Budgetary Control      · No budgetary control in respect of repair and
                              maintenance expenditure.
                             · No variance analysis to take remedial action for
                              controlling the excessive expenditure.
9.4   Critical Spares        · Non-maintaining adequate inventory for critical


119
 S.              Item                                        Risk
No.

                                   spares and non-availability of the same may
                                   result in loss to the DHBVN due to loss of
                                   generation.
9.5    Maintenance of             · Non maintenance / updation of machines' history
       History                     cards, may result in non availability of useful data
       Sheet/Cards/Logbook         on expenditure on repair and maintenance,
       s                           machine life, breakdown hours etc.

10.0   TRANSPORT

10.1   Hiring of Vehicles/        · No approval from competent authority resulting in
       Equipments                  hiring of excess vehicles.
                                  · Non-compliance      of    tendering   procedure   in
                                   selection of transporters / contractors resulting in
                                   selection     of   incompetent    parties   even   at
                                   uneconomical rates.
                                  · The absence of clarity in the terms and conditions
                                   of the contract may result in unnecessary
                                   disputes with the parties.
                                  · Chances of renewal of contract for undue long
                                   period without proper approval for extension by
                                   the competent authority.
                                  · Chances of hiring of vehicles without any
                                   contract.
10.2   Utilisation of Vehicles/   · Chances for allotment/ allocation of vehicles
       Equipments                  without approval of competent authority which
                                   may not be as per entitlement of the employees.
                                  · Chances of no recovery/ less recovery from the
                                   out side parties using the vehicle i.e. contractor
                                   etc.
                                  · Non-maintenance of vehicle log/history book on


120
 S.             Item                                       Risk
No.

                                regular basis resulting in mis-utilisation and
                                excessive expenditure.
                               · No    control      over   tracking    of   maintenance
                                expenditure,        uneconomical       performance     of
                                vehicle etc.
                               · Chances of non compliance of the requirements
                                of Motor Vehicle Act in respect of renewal of
                                drivers' licenses, pollution certificate etc. resulting
                                in    levy     of   penalty   for     not   adhering   to
                                statutory/legal requirements.
10.3   Repair and              · Lack of approval from competent authority
       Maintenance of           resulting in excessive expenditure and mis-
       Vehicles/Equipments      utilisation.
                               · No proper system for getting the vehicles /
                                equipments repaired from the out side parties.
                               · No monitoring and control over running cost of
                                vehicles.
                               · No analysis of heavy expenditure on a particular
                                vehicle.
10.4   Disposal of Vehicles/   · Accumulation of obsolete vehicles in absence of
       Equipments               proper identification process regarding surplus /
                                old vehicles resulting in blockage of fund.
                               · Chances of disposal of good and usable vehicles
                                identified on unjustifiable grounds.
                               · Disposal of vehicles at lower rates without inviting
                                competitive offers resulting in financial loss to the
                                company.
                               · No regular reporting to the corporate office.
10.5   Compliance of           · In the absence of proper and clear guidelines
       Company Vehicle          there may be chances of mis­utilisation of


121
S.            Item                          Risk
No.

      Rules           vehicles.
                     · Use of vehicle for more than the entitlement in
                      respect of personal use of vehicles.




122
      PART-III




123
1.0       WORKS CONTRACT (INCLUDING CIVIL, ELECTRO-MECHANICAL, AND
          O&M CONTRACTS)

1.1       Pre-Award

1.1.1     Approval of Proposal

1.1.1.1   Enquire with the process owners and check that the policy guidelines             in
          respect of sanction and approval are in place.

1.1.1.2   Check whether technical and administrative sanctions of the proposal           have
          been obtained from the competent authority as per the DoP.

1.1.1.3   Ascertain whether reasonability is established before award of the contract.

1.1.1.4   Examine that in case of excess of cost estimates over the DPR/annual plan,
          reasons for variations have been analysed and presented to the approving
          authority for appraisal.

1.1.1.5   Ascertain in detail the time involved in the whole of the approval      process.
          Highlight the instances of undue delays and enquire the reasons thereof.

1.1.2     Preparation of Estimate and its Approval

1.1.2.1   Examine whether administrative and expenditure sanction of the proposal has
          been obtained from the competent authority as per the Delegation of Powers.
          Accordingly cost estimates have been properly made out and award values
          compared with estimates.

1.1.2.2   Enquire with the process owners about the basis for calculating the            cost
          estimates ­ market rates, Schedule of rates or previous rates. Verify that the
          basis taken was adequate and justifiable.

1.1.2.3   If the cost estimates are prepared on the basis of scheduled rates, ensure the
          following:

          Estimates have been prepared on the basis of updated/latest scheduled rates.
          If scheduled rates for particular items/work are not available, adequate loading
          for differential factors/circumstances have been duly considered and proper



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          Analysis of Rate for that item has been made and got approved from the
          competent authority.

          Loading on account of inflation (wage rates, diesel and other cost factors) is
          reasonable and within prevailing wage rates of the state/market rates etc.
          Estimates have been prepared on the basis of scheduled rates of the same
          items/scope of work and if scheduled rates for the same scope of work are not
          available, then adequate adjustments have been carried out and the Analysis of
          Rates has been made correctly/justifiably.

1.1.2.4   In case cost estimates are prepared on the basis of the previous                          purchase
          rates, ensure the following:

          The latest purchase base should be taken considering the inflation factor if the
          time         gap            of         purchase       order            is          too        long.
          There should be justification for not inviting new quotations for obtaining fresh
          estimates.

          The item specification/make/location of the previous supplies is similar to
          current requirements.

1.1.2.5   Ensure the reasonableness of the estimates in case any other                             method of
          costing was adopted, by considering the facts and circumstances of the case.

1.1.2.6   Besides      the     basis       of    costing,   examine      the      following        as   well:
          All the cost parameters such as basic cost, transportation, loading and
          unloading,         duties        and     taxes    have        been          duly     considered.
          Provision for overhead and administrative expenses, as also incidental
          expenses, has been made.

          Provision for contingencies has been taken as per the normal norms.
          Approval from the competent authority is required in case there is an element of
          foreign exchange in the cost.

          Estimate      is       free       from      arithmetical      errors         and         omissions.
          Reasonable profit margin has been considered in preparation of the estimates.




  125
1.1.2.7   Ensure that the estimates have been duly approved by the competent authority
          as per the DOP.

1.1.2.8   Also ensure that the expenditure incurred has remained within the prescribed
          limit and if exceeded revised estimate has been prepared on actual basis and
          got approved from the competent authority as per DOP.




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1.2        TENDER INVITATION PROCESS

1.2.1      Fixation and Evaluation of Pre-Qualification (PQ) Criteria

1.2.1.1    Enquire whether written policy/guidelines stating the detailed procedure for
           fixing the qualification criteria are followed. The criteria are defined in clear and
           understandable terms. It should be properly documented. Check that pre-
           qualification criteria have not been changed/modified after receipt of tender.

1.2.1.2    Ascertain whether pre-qualification bids have been evaluated on the basis of
           minimum qualifying criteria stated in PQ document.

1.2.1.3    Examine whether all parties selected for tendering hold valid labours licence
           and     applicable     registration   in   respect   of   Income   Tax/PF/ESI/Sales
           Tax/VAT/Service Tax/Works Contract Tax, etc., where it is specifically
           mentioned in the bid documents.

1.2.1.4    Ascertain in case of first-time bidders (with DHBVN) whether detailed
           assessment of their technical/financial capabilities has been done by the bid
           evaluation committee as per terms and conditions laid down in the bid
           documents and its report considered by the competent authority. The award of
           contract has to be made to financially sound and capable parties.

1.2.2      Circulation of Notice Inviting Tender (NIT)

1.2.2.1    Examine whether an approved list of contractors has been drawn up and
           updated as per the guidelines / procedure in this regard.

1.2.2.2.   A summary of the contracts awarded with values, with full classification, should
           be included in the list, for each of the modes:
           a. open tender,
           b. limited tender,
           c.    single tender.

1.2.2.3    Analyse and comment on the reasonableness of the justification in single/limited
           tender cases. Check that no preference has been given in selection of parties.

1.2.2.4    Ensure that proper sanction and approval has been taken from the competent
           authority as per the Delegations of Powers.

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1.2.2.5   Ensure that bid specifications, i.e., description of items, tender number, address
          for communication, opening and closing dates, Earnest Money Deposit (EMD),
          etc., are clear, unambiguous and consistent with approved needs.
1.2.2.6   Check the NIT-circulation documents and ensure that the tender has been
          circulated to all the parties which fulfil the pre-qualification criteria.

1.2.2.7   Ensure that adequate time has been given to parties for receiving of tender
          document and submission of bids.

1.2.2.8   Check that necessary fee for tender document and EMD for tender has been
          fixed as per relevant circular of DHBVN.

1.2.2.9   Ensure that there is no change in the tender requirement and if there is some, it
          is as per the Delegation of Powers.

1.2.3     Preparation, Vetting & Issuance of Tender Documents

1.2.3.1   Ensure that the tender document is prepared after considering all provisions
          and guidelines of the Procurement Manual and proper sanction from the
          competent authority regarding the same has been received.

1.2.3.2   Ensure that tender document should contain all relevant clauses such as
          performance Bank Guarantee, statutory provision, price variation (admissible or
          not), work schedule, EMD, list of relevant documents to be submitted by the
          contractors,    charges     for   providing     various    services,    i.e.   electricity,
          accommodation etc.

1.2.3.3   Generally eligibility of the bidders is examined on the basis of documents
          submitted by the bidder along with his bid but there may be some cases where it
          is decided by the competent authority that the tender documents be issued only
          to those parties which qualify the eligibility criteria. In such cases, ensure that
          tender document is issued to pre qualified parties on receipt of prescribed fees
          after obtaining approval from competent authority.

1.2.3.4   Ensure that the tender document before opening to the general public is duly
          vetted by the legal and finance Wings and if there is any deviation it must be
          duly considered by the competent authority.



  128
1.3       RECEIPTS AND EVALUATION OF TENDER BIDS

1.3.1     Receipts of Tender Bids

1.3.1.1   Ensure that there is a proper system for receipt and recording of tender
          documents.

1.3.1.2   Check that all the tenders are received within given time frame and ensure that
          bidders fulfil all the requirements of the tender and those which do not satisfy
          the criteria are rejected.

1.3.1.3   Verify that the system for the safe custody of bid/offer is well explained.

1.3.2     Tender Bid Opening and Earnest Money Deposit

1.3.2.1   Ensure that tender is opened in the presence of tender committee and
          representative of bidders who choose to be present at the time of tender
          opening.

1.3.2.2   Ensure that proper recording is done in the tender register immediately after the
          opening of the tenders.

1.3.2.3   Check and ensure that EMD received on tenders is correct and properly
          recorded in the register. Waiver off of EMD has been allowed by competent
          authority as per Delegation of Powers.

1.3.2.4   Technical bids are opened only for those bidders who have given valid and
          requisite amount of EMD.

1.3.2.5   In case of bid document are received from less than three bidders, the
          competent authority should be informed for its decision and are processed
          further only after having approval of competent authority.

1.3.3     Tender Evaluation

1.3.3.1   Ensure that the composition of the Tender Evaluation Committee (TEC) has
          been duly approved by the competent authority as required under DHBVN
          Procurement Manual.




  129
1.3.3.2   Ensure that persons involved in receiving tenders are not included in the TEC
          while carrying out the process of evaluation.

1.3.3.3   Ensure that related parties such as associated firms/partners have not joined
          hands by submitting the offer in different names.

1.3.3.4   Check that due weightage has been given to various factors like difference in
          payment terms, delivery, make of items, etc.

1.3.3.5   Ascertain whether all tendering procedures, like approval of tendering, invitation
          for bids, requirement of EMD/bid security, specifying bid-opening dates in the
          IFB, maintenance of tender box, minutes of the bid- opening and formation of
          the TEC have been followed in all cases.

1.3.3.6   Verify whether the finance Wing has given its concurrence.

1.3.3.7   Review the recommendations of the TEC and verify the approval of the
          competent authority.

1.4       SELECTION OF SUITABLE PARTY AND CONTRACT AWARDING

1.4.1     Comparative Statement

1.4.1.1   Verify whether the comparative statement, which shows the evaluation of
          tenders, has been drawn up correctly considering all the relevant facts, viz.,
          basic cost, taxes and duties, transportation cost, various discounts (cash/trade),
          etc.

1.4.1.2   Check whether the comparative statement is duly approved by the competent
          authority.

1.4.1.3   Check whether DGS&D rates have been obtained and compared wherever
          relevant.

1.4.1.4   Examine the cases where the lowest evaluated commercially and technically
          responsive tenders have been overlooked and whether the same are justifiable.
          Highlight cases where the same are not considered reasonably.

1.4.1.5   Ensure that cost estimates have been revised considering the prevailing
          competitive market price not just to match with the cost of the lowest bidders.

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1.4.1.6   Ensure that price preference to PSU, if any, has been given in accordance with
          the applicable government directives/policies/guidelines.

1.4.1.7   Check the records of negotiations, if held by SHPPC / HPPC as per guidelines
          of the CVC, and ensure the process adequacy by verifying the following points:

          Negotiated rates higher than the schedule of rates/market rates have not been
          allowed.

          Negotiations were not held without getting/ensuring the price reasonableness of
          the price quoted by the party.

          Special consideration on high and low rates items, e.g., during negotiations
          heavy reduction in low rate items as compared to high rate items.

1.4.1.8   Check the comparative statement and contract documents and ensure that the
          contract has been awarded to the lowest bidder and in case of rejection of
          lowest bidders, approval for re-bidding or for negotiations with the L-2 vendors
          has been sought from the competent authority.

1.4.2     Awarding of Contract

1.4.2.1   Ensure that, after finalisation/selection of parties, a final contract has been
          signed within a reasonable period of time.

1.4.2.2   Check that the contract is as per the prescribed format and contains the
          necessary clauses.

1.4.2.3   Check that major contracts are duly vetted by the legal Wing.

1.4.2.4   Ensure that a duplicate copy of the contract has been signed by the contractor
          as a token of his acceptance to all the terms and conditions in the contract.

1.4.2.5   Check the terms and conditions of the contract and ensure that any alteration,
          modification, addition or deletion in the contract terms and conditions has been
          duly approved by the competent authority.

1.4.2.6   Ensure that all the changes agreed to at the time of pre-award discussion
          between the service provider/contractor and the TEC and approved by the
          competent authority have been incorporated suitably in the final agreement.

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1.4.2.7   Verify performance guarantee as stipulated in the contract has been furnished
          within the stipulated time and post confirmation thereof from the issuing bank
          branch.

1.4.2.8   Examine whether there has been a delay in processing the award having
          financial implications to the DHBVN.

1.4.2.9   Confirm that EMD of all unsuccessful bidders has been returned within a
          reasonable time of award of the contract. Report the list of unpaid EMD
          outstanding for more than one year.




  132
1.5       EXECUTION

1.5.1     Advances to Contractors

1.5.1.1   Review applications for advance payments. Verify whether initial advance,
          interim advance, mobilisation advances, etc., have been released in accordance
          with provisions of the Letter of Award (LOA) and have been given with the
          approval of the competent authority.

1.5.1.2   Verify that amount of advances is being adjusted from the running account (R/A)
          bills.

1.5.1.3   In case of interim advance, verify the confirmation by the engineer nominated
          for relevant contract, certifying the completion of specified stage in the contract,
          on which the advance is payable.

1.5.1.4   Verify the documents submitted by the contractor in support of the advance
          payment and ensure that machinery/equipment/material is hypothecated in
          favour of DHBVN.

1.5.1.5   Verify the insurance cover taken by the contractor with endorsement in favour of
          the DHBVN.

1.5.1.6   Verify that the bank guarantee furnished by the contractor is unconditional,
          adequate and valid.

1.5.1.7   Verify that the deduction of Tax under section 194C of the Income Tax Act has
          been made.

1.5.1.8   Whether interest has been charged and accounted as per contract terms and
          conditions. Approval for waiver of interest has been taken from appropriate
          authority.

1.5.2     Processing of Bills and Release of Payments

1.5.2.1   Test check the Running Account bills submitted by the contractors for various
          works, verifying the following:




  133
          The payment due is in line with rates provided in the contract and quantity
          recorded in the Measurement Book (MB) and approved by the competent
          authority.

          Adequate supporting documents, i.e., abstract of MB, test check certificates,
          etc., are attached along with bills.

1.5.2.2   Ensure that deductions/recoveries have been considered on account of
          following items:

          Security deposits/retention money, advance granted;

          Material supplied to the contractor;

          Charges recoverable for the other facilities granted; such as electricity,
          accommodation, machinery hire charges etc.

          Penalty/liquidity damage, Early Payment Rebate if any, provided for in the
          contract;
          Income Tax/Works Tax to be deducted at source.

1.5.2.3   Examine on test verification whether escalation bills are paid as per applicable
          indices with reference to formula instruction mentioned in the LOA.

1.5.2.4   Ensure that no escalation payment is allowed in case of fixed price contract and
          in case of delay in completion of work due to fault of the contractor.

1.5.2.5   Verify the rates charged as per contract/agreement and check all the
          calculations.

1.5.2.6   Examine the works contract register to confirm that the cumulative amount is
          entered in the Analyse column.

1.5.3     Insurance Coverage

1.5.3.1   Obtain the list of major contracts awarded during the period of audit and check
          that required insurance policy has been taken by the contractor concerned.

1.5.3.2   Examine the reasonableness of insurance coverage and indemnity bonds
          furnished by the contractor for material issued to them.


  134
1.5.3.3   Ensure that insurance policy has been taken before starting of construction or
          erection activities and that they are valid.

1.5.3.4   Verify that necessary endorsement in favour of the DHBVN has been recorded
          on the policies.

1.5.3.5   Enquire with the process owner in respect of system of controlling and
          monitoring insurance policies furnished by contractors and timely intimation for
          renewal of policy is given to contractor.

1.5.4     Material Issued to Contractors
1.5.4.1   Verify   the   process    of   material   issuance   and   ensure   the   following:
          Issue of material against the approved and sanctioned indent/requisition;
          Issue of material to the authorised representative of the contractor;
          Acceptance of the material issue note by the contractor's authorised
          representative;
          Accounting of the issue in the correct party code and for correct quantity,
          Adherence to contract's terms and conditions;
          Issue of material is commensurate with the requirement (i.e. issue of material in
          line with consumption).

1.5.4.2   Review the timely recovery of material issued to contractor from every running
          bill at the rates provided for in contract.

1.5.4.3   Verify that records in respect of consumption of material are updated regularly
          and abnormal wastage, if any, has been charged to the contractor's account.

1.5.4.4   Physical verification of the material lying with the contractor is carried out at
          regular intervals.

1.5.4.5   Review the records pertaining to material/equipment issued on loan/returnable
          basis to the contractor, ensuring the following:

          That the issue was as per terms and conditions of the contract and on the basis
          of approval of the competent authority;

          That adequate records are being maintained on a regular basis;




  135
          That proper steps are being taken for recovery of the material lying with the
          contractors;

          That in case of non-recovery of material/equipment within the stipulated
          period/extended period, an adjustment has been made in the contractor's
          account.

1.5.5     Material at Site

1.5.5.1   Ensure that due care is exercised to the material which is unutilised and lying at
          the site, and ensure that proper checking is done by the site in-charge.

1.5.5.2   Ensure that a monthly report is prepared regarding unutilised material and it is
          duly checked by the contract Wing with the records.

1.5.6     Monitoring of Progress

1.5.6.1   Verify the Measurement Book(s) maintained by various Wings ensuring the
          recording of correct item as per agreement/contract, actual date of execution,
          duly approved and authorised by the competent authority.

1.5.6.2   Ensure that Measurement Books are updated on regular basis. Any cutting or
          overwriting should be duly authorised.

1.5.6.3   Obtain the progress reports (e.g. PERT, CPM charts, minutes of periodic site
          management meeting) and ensure that progress of development is adequately
          monitored and timely reported.

1.5.6.4   Ensure that approval regarding Extension of Time (EoT) is granted after taking
          proper approval from the competent authority and recording of the reasons for
          the same is made.

1.5.6.5   Check that no undue advantage was given to the contractor and it should be
          based on the valid reasons and approved by the competent authority as per the
          DoP/Procurement Manual.

1.5.6.6   Ensure that prescribed documents/registers are being maintained by the
          contractor in respect of PF, ESI and under any other labour laws.

1.5.7     Release of Final Payment to Contractor

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1.5.7.1   Check the final bills submitted by the contractors on test check basis and
          ascertain that following steps have been taken before releasing the payment:
          Whether material reconciliation statement has been made. Ensure that recovery
          of balance material has been made, if any.
          Performance Guarantee (PG) has been received from the contractors as per the
          terms of the contract.
          Whether material/equipment given on returnable basis has either been received
          back or adjusted against the final payment.

1.5.7.2   Scrutinise contractor's ledger to ensure that amount recoverable, if any, from
          the contractor has been deducted.

1.5.7.3   Also verify that an NOC has also been obtained from the Engineer-in-Charge
          (EIC) concerned/Wing concerned.

1.5.7.4   Verify and ensure that the documents retired through bank against LC are as
          per terms and conditions of LC including the amendments issued thereafter.

1.5.7.5   Verify deduction of tax under section 194C of the Income Tax Act and work
          Contract Tax as per Act.

1.5.7.6   Verify that security deposit has been released on completion of the contract/as
          per terms of the contract, after prior approval of the competent authority.

1.5.7.7   Obtain a list of security deposits pending for payment for more than one year.




1.6       BANK GUARANTEES RECEIVED FROM THE CONTRACTOR

1.6.1     Validity

1.6.1.1   Verify from the records maintained in respect of Bank Guarantees (BG) and
          ensure that BG has been taken for an adequate amount and period from the
          contractors as per the terms and conditions of the contract.

1.6.1.2   Check whether a written confirmation in respect of the BG has been obtained
          from the issuing bank.




  137
1.6.1.3    Ensure that BG was issued as per specified format and showing the terms and
           conditions in respect of purpose, its validity and invocation.

1.6.1.4    Original BGs are kept in the custody of an authorised official.

1.6.1.5    In case of mobilisation advances/other advances, ensure that these are
           released only after receipt of a valid BG.

1.6.1.6    Where BG is acceptable in lieu of EMD, ensure that the NIT specifically contains
           a clause to that effect.

1.6.1.7    The BG should mention the reference number of the NIT, the date of its
           publication, etc.

1.6.1.8    Ensure that the BG register is renewed on a regular basis and list out the cases
           of the expired BGs.

1.6.1.9    Ensure that on satisfactory completion of the contract, BG is released after a
           prior approval of the competent authority.

1.6.1.10 Ensure that the concerned Wing takes prompt action to invoke the BG in case of
           a default by the contractor, as per the terms and conditions of the contract, with
           the approval of the competent authority.

1.6.2      Renewals

1.6.2.1    Identify the cases of renewal of BGs after the prescribed time limit, as per the
           terms and conditions of the contract and the reasons of such delay.

1.6.2.2.   Timely action is taken to review the BG at least one month before its expiry and
           ensure that necessary costs are borne by the contractor or the service provider
           concerned.




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1.7      INSURANCE OF PLANT AND MACHINERY (P&M)

1.7.1    Ensure that relevant corporate insurance policies/guidelines regarding plant and
         machinery are available.

1.7.2    Check their amount and validity with their respective insurance papers.

1.7.3    Determine whether a cost-benefit analysis is carried out for taking an insurance
         policy for various risks.

1.7.4    Obtain a list of uninsured items of P&M and examine the reasons given thereof.

1.7.5    Check that adequate insurance cover is obtained for all items of P&M, keeping
         in view their replacement values/depreciated values, as per the corporate
         guidelines.

1.7.6    Ensure that quotations were invited from various companies and comparative
         statement was prepared before finalisation of the policies, considering that all
         possible discounts were availed for the DHBVN.

1.7.7    Ensure that an approval from the competent authority has been taken for the
         purchase of the insurance cover.

1.7.8    Ensure that the cover note clearly contains the required details in respect of the
         amount covered, type of risk covered, validity clause, etc.

1.7.9    Ensure that the records for insurance of assets are being maintained properly
         and on a regular basis.

1.7.10   Ensure that the policies are being renewed timely after making a risk
         assessment.

1.7.11   Ensure that proper claims are lodged and records are maintained thereof.

1.7.12   Check the claim records, consisting of claim register and files, to ensure the
         following:

         The claim has been lodged correctly within a reasonable time after occurrence
         of the event.




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         A proper follow-up action has been taken, especially in case of claims pending
         for a long time.

1.7.13   Verify that unclaimed amounts/losses are written off as per the DHBVN
         guidelines/delegations.

17.14    Obtain a list of pending insurance claims and seek the reasons for long-pending
         claims and the follow-up action in that regard.




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2.0      PROCUREMENT

2.1      INDENT/PURCHASE REQUISITION

2.1.1    Verify that purchase requisitions have been raised, approved and sanctioned by
         the competent authority as prescribed in the DHBVN Procurement Manual and
         Delegation of Powers.

2.1.2    Ascertain whether all tendering procedures like approval of tendering, invitation
         of bids, requirement of EMD/bid security, specifying bid opening dates,
         maintenance      of   tender   box,    certification   of   tender   opening    by
         Contracts/Finance, formation of the tender committee has been followed in all
         cases as per DHBVN Procurement Manual and Delegation of Powers.

2.1.3    Ensure that there is availability of adequate budgetary provisions and in the
         absence of budgetary provisions, an approval of the competent authority has
         been obtained.

2.1.4    Ensure that in the case of purchase requisition involving expenditure in foreign
         currency, a prior approval of the competent authority has been obtained.

2.1.5    In case of repeat order, ensure that terms and conditions as prescribed in
         Procurement Manual have been duly complied with.

2.1.6    Ensure that the detailed purchase order has been issued in standard format and
         contains all the relevant terms and conditions, e.g., description, quantity, price,
         delivery schedule, payment, freight payment, etc.

2.1.7    Make sure that any modification/change in any terms in the PO has been done
         only after taking prior approval of the competent authority.

2.1.8    Ensure that due concurrence of the Finance Wing has been obtained.

2.1.9    In case of purchase order on urgency basis, verify that there is no undue time
         gap between award of contract and supply of the order.

2.1.10   Check that in case the PR is for purchase of an item for replacement of an
         existing asset, proper justification for the replacement, i.e., obsolescence etc.



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      along with the proposed action plan for disposal of the existing asset has been
      recorded.




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2.2     VENDOR SELECTION

2.2.1   Check the nature of the tender and ascertain, adhering to the provisions of the
        Procurement Manual whether it is:
        Single Tender,
        Limited Tender, or
        Open Tender.

2.2.2   In case of single tender/limited tender, the basis of procurement proposal,
        where adequate justification for the same like source standardisation, technical
        suitability, urgency, etc. have been given; analyse the reasonableness of the
        justification furnished.

2.2.3   Verify that the enquiry was issued to competent parties, preferably to
        PSU/Government agencies ­ manufacturers, authorised dealers, etc. ­ dealing
        in the same item.

2.2.4   Verify that approval on the selected names of the vendors have been obtained
        from the competent authority.

2.2.5   Ensure that no preference has been accorded to any party in the selection
        process.

2.3     ANNUAL RATE CONTRACT

2.3.1   Enquire with the process owners and ensure that a system of vendor source
        standardisation is in place and in line with the provisions of the Procurement
        Manual.

2.3.2   Check and ensure that annual rate contracts are reviewed at regular intervals.

2.3.3   Ensure that annual rate contracts have been finalized as per provisions of
        Procurement Manual.

2.3.4   Ensure that the annual rate contract/vendor source standardisation has been
        carried out by the committee constituted for the purpose and as per the
        provisions of the Procurement Manual

2.3.5   Review the system of quantity estimation and ensure that quantity estimation is
        in line with the consumption pattern.
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144
2.4     RECEIPT OF MATERIAL AND MONITORING OF PENDING PURCHASE
        ORDERS

2.4.1   Review the statement of pending purchase orders/follow-up action at regular
        intervals.

2.4.2   Check the instances of delay in receipt of material. Ensure that penalty for late
        delivery has been recovered from the service provider or waived off after the
        approval of the competent authority.

2.4.3   Where extension in delivery schedule was made, ensure that due approval has
        been obtained from the competent authority.

2.4.4   Auditors should check if there are any purchase orders placed on service
        providers that have not been executed by them. Make comment on the follow-
        up action being taken by the unit concerned. Auditors should also comment on
        action taken for procurement of the items not supplied by parties on whom POs
        have been placed from other sources along with details of additional cost
        incurred and penal action taken against defaulting service providers.

2.5     SERVICE PROVIDER'S BILL

2.5.1   Examine the service provider's bill with the purchase voucher.

2.5.2   Compare the quantity and rates of the bill with the purchase order and the
        stores receipt voucher/challan. Verify that correct quantity is received and
        quality is approved after proper inspection.

2.5.3   Examine the service provider's account in the subsidiary ledger and confirm
        whether advances have been deducted while making payment.

2.5.4   Verify that the date of payment is in accordance with the payment terms in the
        purchase order. In case payment made is considerably earlier than what is
        stipulated, this is to be reported in the audit report.

2.5.5   In case of shortages, excesses, rejections, etc., verify that deductions have
        been made from the bill.




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2.5.6    Where debit/credit notes have been issued for shortage, excesses, rejection,
         etc., trace them in service provider's account in the subsidiary ledger.

2.5.7    Check that LD has been recovered from the party, where applicable, for delivery
         of materials beyond contractual delivery, etc.

2.5.8    Check that Early Payment Rebate has been recovered from the party where
         applicable for Early Payment i.e before due date of payment.

2.5.9    Review the claim for advance from service provider and refer to the relevant
         purchase order to confirm the terms regarding advance payable.

2.5.10   Match the amount payable with the payment voucher.

2.5.11   Confirm that the approval of the competent authority has been obtained on the
         payment voucher.

2.6      SPOT/CASH/LOCAL PURCHASE

2.6.1    Ensure that spot purchases have been made only in emergency cases. Verify
         the justification of the same from the concerned authority.

2.6.2    Ensure that in case of cash purchases the amount should not exceed the
         maximum amount prescribed in the Procurement Manual/DoP and check the
         relevant bills for rates computation etc. Ensure that a committee consisting of
         one representative each from the indenting, finance & accounts and
         procurement division has made spot purchase beyond the amount prescribed.

2.6.3    Verify the instances of spot/local purchase and ensure that spot purchases are
         duly recorded in store records and not directly issued to end-user.




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3.0       FINANCE AND ACCOUNTS

3.1       CASH TRANSACTIONS

3.1.1     Cash Payments and Receipts

3.1.1.1   Verify the vouchers selected along with supporting documents and ascertain
          that these have been approved by the competent authority in accordance with
          the DoP/instruction. Also ensure that correct head of account has been debited.

3.1.1.2   There is no manual change on the cash payment voucher.

3.1.1.3   Ascertain reasons if payment in cash exceeds Rs. 20,000/- in contravention of
          Income Tax Act 1961 and report these in the audit report. Also ensure that
          voucher and supporting documents have been stamped "PAID".

3.1.1.4   Verify that the date of the receipt for payment and the date of payment is the
          same. In case the date of receipt is later than the date of payment mentioned in
          the cash payment voucher/cash book, report this in the audit report.

3.1.1.5   Check the entry in the cash book with vouchers for the amount, date and the
          account debited.

3.1.1.6   Verify that cash payments made on holidays or beyond working hours are
          supported by the reason for making such payments.

3.1.1.7   Verify that all cash payments are duly stamp-receipted wherever necessary.

3.1.1.8   Review the request for imprest and confirm that this has been duly approved by
          the competent authority prior to the amount of the imprest having been paid.

3.1.1.9   Select the receipts to be audited and ensure that these have been signed by the
          competent authority.

3.1.1.10 Ensure that there is a proper system for issue of official receipt for all cash
          receipts, which are serially controlled.

3.1.1.11 Ensure that cash receipts have been properly accounted for and the same is
          deposited into the bank on the same/next day of the receipt.




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3.1.1.12 Verify the nature of receipts and in case of certain items such as sale of
          scrapped assets etc., ensure that the approval of the competent authority has
          been obtained.

3.1.1.13 Trace the receipt into the cash book and check the date of the receipt and entry.
          Ensure that the continuity of serial numbers of the receipts is in order.

3.1.1.14 Verify the receipts control register to ensure that there are no missing receipt
          books. A physical count of the receipt books may sometimes be carried out.

3.1.1.15 Take physical verification of cash at the beginning of selected dates and note
          the details there of in the audit working papers. Surprise check is to be made
          without any prior information or indication to cash section.

3.1.1.16 Check that the cash book is written up-to-date. Observe whether cash tally
          statement is prepared daily with periodical checks by higher official.

          Check if there is dual control of the safe and that the amount being kept in the
          chest is not abnormally high.

3.1.1.17 Check that at the close of month balance is made nil by depositing the surplus
          cash in the Bank and the balance amount is not deposited with sole intension to
          use the same in the next month.

3.1.1.18 Check that the amount deposited with Nigam is not utilized for making payment
          and the same is deposited in the Bank at the earliest.

3.1.2     Bank Transactions

3.1.2.1   Select the vouchers to be checked.

3.1.2.2   Verify that all cheque books have been kept in safe custody under the
          authorised officials.

3.1.2.3   Verify the vouchers along with the supporting documents and ascertain that
          these have been approved by the competent authority in accordance with the
          DoP / instruction.




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3.1.2.4   Ascertain that correct classification of capital and revenue expenditure has been
          made and debited to the correct head of the account with reference to the
          Corporate Chart of account codes.

3.1.2.5   Ensure that the voucher and the supporting documents have been stamped
          "Paid".

3.1.2.6   Verify that the payment has been made by an account payee cheque and the
          payee receipt is available.

3.1.2.7   Trace the entry into bank book and tally the amount and account debited with
          correct account code.

3.1.2.8   Verify the posting from the bank book to the general ledger and the sub-ledger.

3.1.2.9   In case the cheque is outstanding for more than six months, report this in the
          audit report.

3.1.2.10 Unpaid cheques for more than 6 months should be transferred to unpaid
          cheques account and review this account to see further that cheques
          outstanding for more than 3 years are transferred to misc. receipts account.

3.1.2.11 In case of issue of a duplicate cheque, ensure that permission from the approval
          authority has been taken and instructions were also issued to the bank for
          stopping the payment of the earlier cheque.

3.1.2.12 Foreign currency payments by DD/transfers:

          In addition to the above checks, verify the exchange rate and calculations for
          conversion.

          Check exchange permit and its endorsement as to the date and rate of
          remittance and verify the same.

3.1.2.13 Retirement of documents through bank:

          In addition to the above checks, verify the purchase order as to the terms of
          payment.

          Check the calculation of interest and bank charges with reference to the terms
          of the purchase order, verify by whom these are to be borne and ensure that

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           this has been complied with. Verify the stores receipts voucher with bank
           documents.

3.1.2.14 Ensure that the receipts have been duly approved by the competent authority.

3.1.2.15 Verify the receipts into the bank book.

3.1.2.16 Verify postings from the bank book into the general ledger and the sub-ledger.

3.1.2.17 Check the entry into the cheques receipt register and ensure that cheques are
           under safe custody until they are promptly deposited with the bank.

3.1.2.18   Verify the entry of the cheque into the bank pay-in-slip, duly authenticated by
           received stamp of the bank.

3.1.2.19 Verify that cheques are properly checked at the time of receipt for completeness
           and validity.

3.1.2.20 Ensure that post-dated cheques received are properly recorded, kept in safe
           custody and presented on due dates.

3.1.2.21 Bank          receipts     In       Foreign      Exchange       paid      directly
           In addition to the above checks, verify the exchange rate and its calculations.
           Ascertain the amount receivable on this account in rupee value and ensure that
           the difference on account of exchange fluctuation has been accounted for in the
           exchange rate fluctuation account.

3.1.3      Cash Withdrawals from Bank

3.1.3.1    Examine the bank withdrawal voucher and ascertain whether it has been duly
           authorised by the competent authority.

3.1.3.2    Verify that total cash in hand has not exceeded the sanctioned limit for cash in
           hand and it is within the limit of insurance coverage for cash in safe, fidelity
           insurance and cash in transit policy.

3.1.3.3    Report all cases of withdrawal from bank where the withdrawal was made in
           excess of requirement and the cash withdrawn was kept in the chest for
           substantial time without any cogent reasons.



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3.1.3.4   Ensure that cash withdrawal is accounted on the same day and adequate
          custody procedure is followed to keep the cheque for cash withdrawal in case
          cash is not withdrawn on the same day.

3.1.4     Bank Reconciliation

3.1.4.1   Verify that the bank reconciliation for all bank accounts is made as per
          schedule.

3.1.4.2   Select the months for which bank reconciliation's are to be checked and obtain
          the bank reconciliation statements and the corresponding bank statements.

3.1.4.3   From the previous month's bank reconciliation statement, tick the outstanding
          items which have been cleared during the month under review. Regarding items
          still outstanding,   report any inordinate delays in the audit report including
          inordinate delays in respect of current month's outstanding items.

3.1.5     Journal Vouching

3.1.5.1   See that all journal vouchers are serially numbered and all transactions should
          be approved by the competent authority.

3.1.5.2   Ensure that all journal vouchers are supported by the relevant documents and
          see that the narration given is as clear as possible.

3.1.5.3   Check that the payments made from imprest account are for the purpose for
          which imprest was sanctioned. Imprest account should be closed as soon as it
          is required for recoupment but not later than a month. The imprest in any case
          should be closed at the end of the financial year and the unspent balances be
          remitted.

3.1.5.4   Check that the imprest accounts are operated by the person to whom the
          imprest has been sanctioned.

3.1.5.5   Examine the justification for passing the journal entries for making rectification
          of errors.

3.1.5.6   Verify   the   accuracy   of   entries   made    for    various   adjustments   for
          expenses/incomes accrued but not received or paid.


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3.1.6     Fund Transfers/Limit Transfers to Units, Fund transfer from Collection
          Centres

3.1.6.1   Whether monthly fund requirement from various units are received as per time
          schedule duly approved by head of the unit.

3.1.6.2   Whether funds transferred exceed the budgeted provisions. Ensure that transfer
          of additional funds was duly approved by concerned Director/MD/ competent
          authority.

3.1.6.3   Verify that fund utilisation statements are received on monthly basis from all the
          units.

3.1.6.4   Test check the fund utilisation for a few months and verify that no surplus/idle
          balance was lying in the unit.

3.1.6.5   Check the inter unit reconciliation and related bank reconciliation's and confirm
          that all inter unit fund transfers have been accounted.

3.1.6.6   Obtain the list of long outstanding entries and review the explanation given by
          unit for the outstanding amounts.




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3.2       FIXED ASSETS

3.2.1     Procurement of Fixed Assets

3.2.1.1   Obtain the list of fixed assets purchased during the period of audit. Examine the
          relevant vouchers and confirm that the amount has been provided for in the
          capital budget duly approved by the competent authority.

3.2.1.2   Purchases of fixed assets have been duly authorised by the competent
          authority.

3.2.1.3   If fixed assets have been purchased without any provision in the approved
          budget, special approval was obtained as per guidelines provided in this regard.

3.2.1.4   Verify the freight, insurance, registration, installation expenses, any directly
          attributable cost incurred for bringing the assets to its working condition or for its
          intended use etc. with the relevant vouchers and that these have been included
          in the cost of assets.
3.2.1.5   Verify the entry into the fixed assets register and ensure that the assets have
          been classified and coded in accordance with specified classification and
          codification procedure.
3.2.1.6   Ensure that Assets Identification Number (AIN) is allotted to all assets at the
          time of preparation of Store Requisition (SR), if routed through stores.
          Otherwise AIN is allotted at the time of capitalisation.
3.2.1.7   Ascertain whether valid insurance policy for the assets exists. In case insurance
          policy has been lapsed and not renewed, report this in the audit report.
3.2.1.8   Verify that all cost elements for procurement of land have been included in the
          cost such as purchase price of land/compensation paid for land, compensation
          for structure, trees, crops on the acquired land, legal charges, stamp duty,
          resettlement/rehabilitation and community development expenses.
3.2.1.9   In case of building, verify that its cost includes purchase price/compensation
          paid for acquisition of building, stamp duty and legal charges, payment to tenant
          at the time of acquisition, fees paid to architects and amount incurred on
          repair/alteration/improvement.

3.2.1.10 Where building is purchased alongwith land at a consolidated price the
          purchase cost shall be bifurcated between land and building.

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3.2.1.11 Ensure that machinery spare parts/standby equipments procured, whose use is
          expected to be irregular, have been capitalised with the main equipments.

3.2.2     Capital Work-in-Progress

3.2.2.1   Review the details of capital work in progress and trace out the purchase orders
          raised for its procurement. The amount has been booked under various heads /
          accounts codes as per DHBVN's Chart of Accounts Codes.

3.2.2.2   Incidental expenditure during construction should include corporate office
          expenses for the year as apportioned to capital work in progress.

3.2.2.3   Claims for price variation/exchange rate variation in case of contracts are
          accounted for on acceptance.

3.2.3     Incidental Expenditure during the Construction Period (IEDC)

3.2.3.1   Ensure that IEDC have been computed accurately and capitalised accordingly.
          The incidental expenses comprise borrowing cost, exchange rate variation,
          administrative and other general overheads attributable to assets, depreciation,
          etc.

3.2.3.2   In case a building is constructed, ensure that all cost relating to construction has
          been identified and capitalised.

3.2.3.3   Ensure that borrowing cost in respect of construction/acquisition of the fixed
          assets for the period up to completion of construction of fixed assets have been
          capitalised to the cost of related assets. Ensure that Accounting Standard-16
          issued by the ICAI has been followed.

3.2.3.4   Verify that all the incomes during construction period i.e. sale of scraps etc.
          have been adjusted against expenditure during construction period. Ensure that
          in case such income is taxable as per Income Tax Act, then tax liability in this
          respect has been considered as IEDC.

3.2.3.5   Ensure that the sales revenue during the period has been deducted from the
          commissioning expenses and the net expenses have been capitalized.

3.2.3.6   Check that cost incurred on start up and commissioning of any plant including
          expenses on trial run have been capitalised.
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155
3.2.4     Interest during Construction Period

3.2.4.1   Ensure that while calculating interest relevant provisions issued by the ICAI are
          being followed.

3.2.4.2   Check and ensure that interest for the period is being charged on the closing
          balance of capital work-in-progress items.
3.2.4.3   Ensure that payment of interest is being made as per the provisions of the DoP
          and after taking prior approval from the competent authority.

3.2.4.4   Also ensure that all the interest payments are made timely and obtain statement
          of the financial institution/bank showing the outstanding amount of loan.

3.2.5     Fixed Assets Register (FAR)

3.2.5.1   Ensure that acquisition cost of fixed assets have been computed considering
          the relevant accounting standard issued by ICAI. Also check that proper
          classification of assets have been made as per Accounts Code Book of the
          DHBVN.

3.2.5.2   Ensure that fixed assets register (FAR) is being maintained as per requirements
          of CARO, 2003. Verify that the same is regularly updated.

3.2.5.3   Check whether FAR shows all necessary details regarding every item, viz.,

          Assets identification number (AIN).

          Location, quantitative details and description of all assets.

          Historical cost of fixed assets.

          Accumulated depreciation.

3.2.5.4   Verify that FAR is regularly reconciled with the General Ledger.

3.2.5.5   Ensure that every movement of fixed assets has been recorded in FAR stating
          date of transfer and quantitative details.

3.2.5.6   FAR should also contain the information in respect of assets located at
          residential premises of employees, if any.



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3.2.5.7   Ensure that any mortgage or encumbrance against a fixed asset has been
          properly disclosed in accordance with Schedule-VI of the Companies Act, 1956.

3.2.5.8   In case of revaluation of fixed assets, verify whether it has been disclosed
          properly in the accounts as per AS-10 issued by the ICAI.




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3.2.6     Sale/Disposal and transfer of fixed assets

3.2.6.1   Check that a register for recording scrapped/obsolete assets and sale and
          disposal thereof is maintained and updated regularly.

3.2.6.2   Review the procedure for identification and disposal of fixed assets and ensure
          the following:

          Regular system for identification of obsolete and scrapped items is as per
          guidelines of the DHBVN.

          Net realisable value of assets has been determined as per guidelines issued in
          this regard.

          Ensure that disposal of assets have been made as per the guidelines and
          authorised as per DoP through tendering process except when sale is made to
          Government or to PSUs.

3.2.6.3   In case sale of fixed assets is made to employee of DHBVN ensure that the sale
          has been made in accordance with the rules of DHBVN in this regard.

3.2.6.4   Ensure that there is a proper system to identify any impairment of
          tangible/intangible assets. Verify that provisions of AS-28 are complied with.

3.2.6.5   Verify that any loss/profit on sale of fixed assets has been properly accounted.

3.2.6.6   Check the cases of transfer of assets during the period under audit and verify
          the followings:

          Requisition for transfer of assets duly approved by head of the unit has been
          received from transfer unit.

          The transfer of assets has been approved by competent authority.

3.2.6.7   Ensure that Inter-unit advise prepared by transferor unit contains all relevant
          details such as original cost, accumulated depreciation, date of capitalisation,
          rate of depreciation etc. to facilitate the transferee unit for making necessary
          accounting entry.




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3.2.7     Depreciation/Amortisation

3.2.7.1   Ensure that depreciation is being charged on various assets as per DHBVN
          policies and procedures and is in conformity with AS-6. Check whether the
          DHBVN is providing depreciation on rates as per Schedule-VI of the Companies
          Act, 1956 or as per the rates notified under The Electricity Act, 2003 whenever
          applicable and as per the Income Tax Act, 1961 for Tax audit purposes.

3.2.7.2   Check the computation of depreciation and verify entry of provision for
          accumulated depreciation in the general ledger.

3.2.7.3   Where historical cost of depreciable assets is changed due to change in long
          term liability consequent upon exchange rate fluctuation, price adjustments,
          changes in duties or similar factors etc., the depreciation on revised
          unamortized depreciable amount has been provided over the residual life
          determined on the basis of the rate of depreciation of the assets.

3.2.7.4   Depreciation should be charged even if fixed assets remain idle during the
          accounting period under reference.

3.2.7.5   Check that depreciation on assets acquired is provided on proportionate basis
          from the month in which assets was ready to use.

3.2.7.6   If cost of depreciable assets is covered partly by Government Grants (GG),
          one of the two following alternative accounting approaches as per policy of
          DHBVN are suggested for accounting purposes:

          Amount of GG is deducted from cost of fixed assets and depreciation is charged
          on the net cost, or

          Amount of GG is credited to a subsidy reserve and depreciation is charged on
          the original cost of the fixed assets and the balance standing in the credit of the
          subsidy reserve is transferred to profit and loss account systematically in
          proportion of depreciation.

3.2.7.7   In case of transfer of assets to other units, verify that depreciation is provided for
          by the transferee unit for the whole year, irrespective of the period for which
          such asset was actually used by the transferor.


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3.3     INVESTMENTS

3.3.1   Ensure that the investments are made as per the DoP and proper approval from
        the competent authority. Also ensure that all investments are made by the
        CE/Finance, DHBVN and in case of any other office, with the approval of the
        competent authority.

3.3.2   Check and ensure that a detailed study of risk and returns for various
        investments is carried out after considering factors like past returns, etc., for
        determining the line of direction for future investments.

3.3.3   Check and ensure that a register is maintained for recording of investments u/s
        372(A) of the Companies Act, 1956 and there is a system of intimating the
        Company Secretary for the details of investments made/disposed off to enable
        him to update the register on a regular basis. Also ensure the compliance of AS-
        13 issued by the ICAI.

3.3.4   Ensure that proper bifurcation of the nature of investments is made regarding
        trading/non-trading, quoted/unquoted, short-term/long-term investments, etc.,
        and proper procedure and documentation is followed for the same.

3.3.5   Ensure that a physical verification of all the investments has been made by the
        competent authority and during the period of audit, surprise checks are done so
        that proper reliance is being placed on that and obtain confirmation for
        investment lying with the bank/third parties.

3.3.6   Ensure that a separate register is being maintained for the income from
        investments and check that all incomes are booked on accrual basis.

3.3.7   Ensure that whenever an investment is sold, proper approval is taken from the
        competent authority and necessary adjustments are made in the investment
        register. Also ensure that no investment is sold below the acquisition cost and if
        it is so, ask for the reasons for the same.

3.3.8   Ensure that if the investments are made in shares/mutual funds, a statement is
        received periodically from the broker/depository participant (DP) or the original
        certificates are checked on sample basis.



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3.3.9    Review the valuation of investments in the books of accounts and check
         whether any provision for permanent diminution is required to be made.

3.3.10   Ensure that TDS certificates are obtained monthly or at the end of the year in
         case of deduction of tax at source in respect of income earned.

3.3.11   Ascertain that all the investments have been stated in the Schedule of
         Investments as per the requirements of Schedule-VI of the Companies Act,
         1956.

3.3.12   Income/gains and losses on disposal of investments have been properly
         recorded.

3.3.13   Proper disclosure of any encumbrance of an investment or contingent liability in
         respect of partly paid shares.




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3.4       LOANS AND BORROWINGS

3.4.1     General Aspects Applicable to All Loans

3.4.1.1   Obtain details of loans and borrowings raised in foreign currency during the
          period of audit and ensure that an approval had been taken from the Board of
          Directors.

3.4.1.2   Ensure that terms and conditions of loan agreement have been vetted
          thoroughly by the legal Wing.

3.4.1.3   Whether necessary charge on assets has been registered with the Registrar of
          Companies within the prescribed time limit after signing of loan agreement.

3.4.1.4   Check that drawls have been made as per schedule given in the loan
          agreement.

3.4.1.5   Verify that proper accounting entries have been passed for each drawl.

3.4.1.6   Verify the computation of interest as per rate given in the loan agreement. Penal
          interests levied, if any, are due to the default. Reasons for the default have also
          been informed to the competent authority.

3.4.1.7   Interest payment is accounted for on accrual basis and made in time.

3.4.1.8   Check that processing charges, commitment charges, and other fees paid are
          as per the terms of the loan agreement.

3.4.1.9   In case of prepayment of loan, check whether detailed cost-benefit analysis had
          been made justifying the prepayment.

3.4.1.10 In case of closure of loan, ensure the following:

          Satisfaction of charge has been filed with the Registrar of Companies within the
          prescribed time limit.

          NOC has been obtained from the lender.

          Securities provided for the loan have been received back.

          Loan master has been updated.


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3.4.1.11 Ensure that no long-term borrowing was used for short-term requirements and
         vice versa.




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3.4.2     Specific Aspects Related to Loans Raised in Foreign Currency

3.4.2.1   Verify the following:

          Rate of interest is reasonable considering the risk of exchange rate variation

          Exchange rate variations have been computed and loan liability has been
          restated at the end of each accounting year.

          In case of forward exchange contract, analyse the terms like period of contract,
          premium/discount, etc.

3.4.2.2   Ensure that in case of External Commerce Borrowings (ECB), guidelines issued
          by Ministry of Finance/RBI have been duly complied with.

3.4.2.3   Verify that Accounting Standard 11 in respect of accounting for effect of
          changes in foreign exchange rate issued by the ICAI has been followed.

3.4.3     Specific Aspects Related to Funds Raised Through Bonds

3.4.3.1   Ensure that bonds are issued after complying with the requirements of
          Companies Act, 1956, SEBI Guidelines or any other guidelines applicable and
          issued from time to time.

3.4.3.2   Check that interest on bonds has been paid as per terms of the issue after
          deducting the tax at source at the applicable rate.

3.4.3.3   Check that redemption of bonds, if any, made during the year was as per terms
          of issue and on due date.

3.4.3.4   Ledger account of bonds is reconciled with bond issue register on regular basis.

3.4.3.5   Confirm that unclaimed amount of matured bonds and interest thereon over 7
          years have been credited to Investor Education and Protection Fund
          established as per the provision of Sec. 205C of the Companies Act., 1956.

3.4.3.6   Ensure that stock of stationery is physically verified and reconciled with record
          maintained in this regard.




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3.5       PAYABLES

3.5.1     Bill Passing and Payments

3.5.1.1   Ensure that a proper system exists for bill passing and release of payments to
          service providers.

3.5.1.2   Verify the following:

          Documentary evidence in respect of goods/services received and inspected.

          Calculation of bill amount with regard to rates charged, allowable discount, TDS
          or other statutory dues if applicable, adjustment of advance, retention
          money/other claims.

          Expenditure was made as per approval by the competent authority and within
          the budgetary limits.

          Report the inordinate delay between passing of bill and actual payment made
          to service providers.

3.5.1.3   In case, the payments are made to service providers before the due date verify
          that approval from the competent authority was taken. Early Payment Rebate
          was also availed from service providers as per terms of the contract.

3.5.2     Reconciliations, Confirmations

3.5.2.1   Scrutinise the sub-ledger of creditors and report the debit balances/advances
          outstanding for more than six months.

3.5.2.2   Check whether some old or disputed bills have been booked just to adjust the
          long outstanding debit balance / excess payment.

3.5.2.3   Check whether debit balance / advance payment has further been accumulated
          without adjustment of earlier debit balance / advance payment unreasonably.

3.5.2.3   Obtain the list of creditors showing long outstanding credit balances but not
          written back till date.

3.5.2.3   Ensure that creditors' accounts are reconciled on regular basis.



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3.5.2.4   Check and ensure that there is a system of obtaining balance confirmation from
          the creditors at the year-end.




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3.6      BUDGETING

3.6.1    Ensure that there is a clear policy of the DHBVN on preparation of the budget,
         portraying with precision the overall business activities and determining targets
         of performance for each section or Wing of the DHBVN. It includes a detailed
         procedure for budget preparation and compilation, basis of estimation and
         justification for the budgeted amount.

3.6.2    Review the procedure for preparation and compilation of the budget at various
         levels and verify the following:

         The formats used are standardised.

         Adequate consideration has been given to representations from concerned
         Wings on the budget proposals. It provides yardsticks against which actual
         performance can be compared with the predetermined targets.

         It provides a detailed procedure for analysing the deviations, if any.

3.6.3    Obtain a copy of the budget for one or two Wings and verify the following:
         The budget lays down the responsibility of each executive and other personnel
         for          making       objective        assessment           of       activities.
         Whether budget proposals were made timely and approved by the competent
         authority.

         Verify that the basis of estimation, used in the budget, has been computed as
         per          budgetary     guidelines      issued       by       the     DHBVN.
         Review the compilation process of the budget.

3.6.4    Ensure that budget was approved by the competent authority and sent to
         concerned Wings in time.

3.6.5    Review the overall budgetary process and ensure that expenses were made
         within the constraint of the budget, and necessary approval is sought from the
         competent authority, when the amount exceeds the budgetary provisions.

3.6.6.   On the basis of overall budget working report, showing variance analysis in
         respect of actual expenses vis-à-vis budgeted expenses, ensure that variances
         are shown as a part of the MIS and report it.

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3.6.7   Test check whether these variances have been correctly calculated and
        analysed with the reason to take an appropriate plan of action.

3.6.8   Ensure that a corrective action has been taken timely on the basis of action
        plan.




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3.7      SCRUTINY OF EXPENSES

3.7.1    Check the expenditure with source document i.e. expense bills, rent receipts,
         insurance policies, electricity bills, telephone bills, etc. (in case, the same have
         not been or could not be covered during vouching).

3.7.2    Ensure that expenses have been booked for the relevant quarter/half-year and
         at the correct value for the purpose of preparation of quarterly/half-yearly results
         accurately.

3.7.3    Ensure prepaid expenses have been properly booked and year-end provisions
         for outstanding expenses have also been made on accrual basis as per the
         accounting policy of the DHBVN. All provisions should be based on
         unaccounted bills and other calculations justifying the amount of provisions.

3.7.4    Ensure that amount of all the provisions have been reversed in the beginning of
         next accounting year.

3.7.5    Ask for the explanation if any expense account has negative balance.

3.7.6    Ensure that prior period expenses/incomes are identified and booked separately
         under the head "Prior Period Expenses", if they exceed the limit prescribed in
         the accounting policy of the DHBVN and in terms of AS-5 issued by the ICAI.

3.7.7    Examine whether expenses are within the budgetary provisions.

3.7.8    Compare the major expense heads with the previous year and make out the
         detailed analysis in case of large variation. Also analyse the monthly trend of
         major expenses and carry out the scrutiny of expenses showing abnormal
         increase or decrease.

3.7.9    Verify the DHBVN office expenses and allocation of the same as per DHBVN
         policies and procedures.

         Electricity and Water Expenses

3.7.10   Check whether rebate for timely payment is availed.

3.7.11   Ensure that there is a system for passing the electric and water bills on the
         basis of consumption shown by relevant meters.

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         Rent

3.7.12   Verify the amount of rent for the premises with the rent agreement. In case of
         new premises refer the approval of the competent authority and legal Wing.

3.7.13   Check that Tax is deducted at the prescribed rate wherever applicable and TDS
         is deposited with the Income Tax Department within the stipulated time.

         Advertisement and Publicity

3.7.14   Examine whether an approved list of advertising agencies has been drawn,
         reviewed and updated at a reasonable interval.

3.7.15   Verify the matter advertised had prior approval of the competent authority.

3.7.16   Examine whether the bills have been duly sanctioned and approved by the
         competent authority, the agreed discount has also been availed and contracts
         have been awarded at the best economical rates.

3.7.17   Ensure that there is a budgetary provision for the amount.

         Repair/Servicing of Vehicles

3.7.18   Compare the expenses with the sanctioned estimates.

3.7.19   Ensure that expenses have been approved by the competent authority.

3.7.20   Check the entry in vehicle maintenance register and history record of a
         particular vehicle.

         Miscellaneous Expenses

3.7.21   Verify that amount has been duly approved by the competent authority.

3.7.22   Examine the nature of expenses and ensure that the same has been correctly
         charged as per accounting policy of the DHBVN with correct accounting code.




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3.8        REVIEW OF SUB-LEDGERS

3.8.1      Employees' Sub-Ledgers

3.8.1.1    Report the detail of all the debit balances in various accounts outstanding for
           more than six months.

3.8.1.2    Enquire about the credit balances for taking the appropriate steps for their
           adjustment. Report the detail of all the credit balances in various accounts
           outstanding for more than six months.

3.8.1.3    Some of the accounts in respect of various loans, advances and recoveries are
           as under:

           HBA, conveyance advance, computer advance, multipurpose advance, furniture
           / household items advance, TA, LTC advance, pay advance, four months' pay
           advance, other temporary advance, amount recoverable from employees
           (salary), amount recoverable from employees (store), amount recoverable from
           ex-employees, electricity charges recoverable from employees / others etc.

3.8.2      Sub-Ledgers for Contractors, Service providers, Govt. Deptts. /Agencies &
           Others

3.8.2.1    Scrutinise the sub-ledgers in respect of various advances/balances of
           contractors including security deposit, EMD, retention money, deduction on
           account of performance guarantee etc. and examine whether the balances in
           the control account in general ledger have been duly reconciled with sub ledger
           balances.

3.8.2.2.   Review and comment on old balances appearing in sub-ledgers after taking the
           feedback from the Wing. Report the list of old outstanding balances (both debit
           balances & credit balances) for more than six months.

3.8.2.3    Verify that recoveries in respect of rent, electricity and water, accommodation
           charges, machinery hire charges, cost of departmental materials issued on
           recoverable basis etc. are being made and are being properly accounted for.

3.8.2.4    Ensure that all the deductions, i.e., retention money, EMD, security deposit, etc.,
           are being made and properly accounted for.


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3.8.2.5   Some of the accounts in r/o various advances, recoveries etc. relating to the
          contractors are as under:

          Mobilisation advances against bank guarantee (BG), machinery / equipment
          advances, unsecured advances, material issued to contractors, amount
          recoverable from contractors (works), electricity charges recoverable from
          contractors etc.

3.8.2.6   Some of the accounts in respect of various advances, recoveries etc. relating to
          the service providers are as under:

          Advances to service providers- revenue, advances to service providers- capital,
          amount recoverable from service providers (purchase), amount recoverable
          from service providers (considered doubtful) etc.

3.8.2.7   Some of the accounts in respect of various advances, recoveries etc. relating to
          the Govt. Deptts / Agencies and other parties are as under:

          Advances to Govt. Deptts/ agencies, advances to others, amount recoverable
          from Govt. Deptts.- salary/store/welfare, machinery / equipment hire charges
          recoverable from Govt. Deptts/agencies/others.

3.9       INTER-UNIT ACCOUNT

3.9.1     Remittances / Inter-Unit Adjustments

3.9.1.1   Examine the debit notes/credit notes and ascertain whether the same have
          been authorised by the competent authority.

3.9.1.2   Check that the bank payment/receipt voucher has been duly approved by the
          competent authority, along with supporting documents. Trace the entry in the
          bank book and see that the concerned unit has been debited/credited with the
          same amount.

3.9.1.3   Check whether the concerned project/office has issued a corresponding credit
          note for the amount.




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3.9.1.4   Verify the payment made on behalf of other unit and check the entry in the bank
          book and in the general ledger in order to check that the concerned unit's
          account is debited.

3.9.2     Reconciliation

3.9.2.1   Verify the inter-unit reconciliation statement and check whether outstanding
          items are adjusted subsequently.

3.9.2.2   Verify the year-end reconciliation between units and ensure that their balances
          are in agreement.

3.9.2.3   In case of unadjusted items beyond a reasonable period, the same should be
          reported with comments of project/office concerned.




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3.10      SALARY SECTION

3.10.1    Preparation of Salary

3.10.1.1 Scrutinise the attendance records of a few employees and check the calculation
          of the number of working days with the payroll, including earned leaves, half-pay
          leaves and leaves without pay.

3.10.1.2 Obtain the list of increments, promotions, etc., and verify whether the same
          have been incorporated in the payroll on test check basis.

3.10.1.3 In the case of a few new employees / transferred cases, check with relevant
          appointment letters and personnel records for their rate of pay and the basis of
          remuneration.

3.10.1.4 If any difference occurs in respect of basic pay, dearness allowance, HRA, city
          compensatory/project allowance, PF contributions, etc., note it properly and
          verify it with personnel section's memos and individual pay record and ensure
          that the differences observed are properly reported in the audit report.

3.10.1.5 List out the salary advances outstanding for more than three months.

3.10.1.6 Scrutinise the loan accounts of these employees to check whether the data
          regarding amount of loans and monthly deductions thereof are being correctly
          stated and deducted accordingly.

3.10.1.7 Verify that the net amount payable figure is arrived at after accounting for all
          types of recoveries of loans/advances, interest thereon (viz. HBA recovery,
          conveyance advance recovery, pay advance recovery, unspent balance of
          TA/TTA/LTC etc.).

3.10.1.8 Ensure that all supplementary packages have been updated before processing
          the salary for the month, i.e., attendance records, advance records, leased
          accommodation, TDS accounting system, PF system, etc.

3.10.1.9 Check the journal voucher prepared for the gross amount deducted and paid to
          appropriate authorities in time and check for any differences. The above
          vouchers should also be compared with the payroll. Challans/receipts received
          should also be verified and amounts compared.

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3.10.1.10 Ensure that the final processing of the salary is made after due verification of
          trial processing.

3.10.1.11 Whenever an employee is relieved on transfer, it is to be ensured that the unit
          has issued the LPC immediately and the advances outstanding against his
          name should be sent through Inter-Unit Advice i.e ATD/ATC immediately.

3.10.1.12 Verify the negative pay cases and enquire reasons for the same.

3.10 .2   Salary Disbursement

3.10.2.1 Verify the documents generated in respect of a few employees subsequent to
          final processing of payroll, such as final pay bill, bank payment voucher and pay
          slips etc.

3.10.2.2 Where salary is disbursed through direct transfer to employees' bank accounts,
          ensure that employee's bank account particulars are updated at the time of
          appointment, transfer, resignation or death, in the master data.

3.10.2.3 Where salary is disbursed through cheque, authorised pay slips are forwarded
          to the head of office for distribution of salary.

3.10.3    Payments of Arrears

3.10.3.1 Test check the arrear payments based on orders received for revision /
          promotion. Calculate the arrears retrospectively from the date specified in the
          order. Ensure that relief under section 89 (i) of the Income Tax Act has been
          correctly calculated.
3.10.3.2 Verify the Inter Unit Advice raised for the arrear paid to the employee for the
          period of service rendered in other units.

3.10.4    Leave Encashment

3.10.4.1 Check whether a well defined leave policy for the DHBVN is in existence.

3.10.4.2 Ensure that the amount of leave encashment has been correctly calculated as
          per the rules and paid on the basis of order issued by the competent authority.

3.10.4.3 Verify that the earned leave encashment is made as per instruction and TDS
          has been made, if applicable.

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3.10.4.4 Check that the earned leave register is updated on the payment of leave
         encashment.

3.10.4.5 Compare the leave records with the provision for leave encashment.




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3.10.5    Shift Duty Allowance

3.10.5.1 Verify whether the shift duty allowance has been paid to the eligible employees
          only, as per DHBVN guidelines in respect of payment of such allowance.

3.10.5.2 Verify on test check basis that the amount of shift duty allowance has been paid
          to the employee as per prescribed rates. Care should be taken in case an
          employee has been rostered for the shift but he does not attend the same.

3.10.5.3 Verify that proper records are being maintained for shift duty allowance and the
          prior approval of the competent authority has been taken.

3.10.6    Payment of Lease Accommodation and its Recovery

3.10.6.1 Ensure      that   lease   masters   are   updated   as   per   the   new    lease
          agreements/amendments during the year.

3.10.6.2 Check entitlement of the employee for lease and lease recovery from him as per
          rules of the DHBVN. In case lease rents are paid in excess of rent entitlement;
          ensure that recoveries for the excess amount are being made through the
          payroll.

3.10.6.3 Lease rentals, paid in case of transferred employees, have been transferred to
          the concerned units through Inter Unit Advices.

3.10.6.4 Ensure that TDS affected on payment of lease rents are deposited with the
          government within the stipulated time limit.

3.10.7    Payment of Staff Loans and Advances ­ HBA, Computer, Furniture,
          Conveyance etc. and its Recovery

3.10.7.1 The principal amount and the interest accrued have been correctly computed
          and recovered as per terms of the sanction order.

3.10.7.2 List out the cases where recoveries have not been affected from the due date.

3.10.7.3 Ensure that employee's records for loan sanctioned and repayments are
          updated on a regular basis.




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3.10.7.4 Verify the cases where new advances were given to employees without
         adjusting the previous outstanding advance in contradiction of DHBVN rules.

3.10.7.5 In case of transfer of an employee, ensure that a detailed recovery schedule is
         sent to the transferee unit for the outstanding amount of the advance and
         interest thereon.

3.10.8   ESI, PF, TDS and other Deduction and Timely Deposit thereof

3.10.8.1 Test check the employer's contributions and confi rm that these have been
         correctly computed while preparing payroll and have been duly entered in the
         PF account.

3.10.8.2 Ensure that the deductions against PF advance made through the payroll are in
         accordance with the terms of the advances.

3.10.8.3 Ensure that relevant evidence for claiming various deductions under the Income
         Tax Act have been received, along with his declaration submitted with the
         DHBVN, viz. rent receipt, saving certificates, certificate for payment of housing
         loan for claiming negative income under the head "Income from House
         Property".

3.10.8.4 Ensure that TDS made are deposited within the prescribed time limit and timely
         returns are filed accordingly.

3.10.8.5 Verify the payment voucher for the deposit of amount into the bank. In case
         there is an inordinate delay, reasons for the same are to be obtained and
         reported in the audit report.

3.10.9   Scrutiny of Employee Remuneration and Benefits

3.10.9.1 Reconcile the salary and wages booked in the books with payroll section
         records and provident fund records.

3.10.9.2 Analyse monthly trend of expenses and verify the instances of abnormal
         variations (increase/decrease).




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3.10.9.3 Compare the salary and wages with previous year's figures and analyse
        reasons whether the differences are due to new recruitment, employee
        retirement, payment of arrear of salary normal hike in the wages rates, etc.

3.10.9.4 Check the provision for gratuity and leave encashment and ensure that
        provision has been made accurately on actuarial basis and provisions of AS-19
        (revised) issued by the ICAI in respect of accounting for retirement benefits of
        employees have been complied with.
3.10.9.5 Ensure that the muster roll for casual labour has been approved by the
        competent authority.




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3.11     OTHER ISSUES RELATING TO EMPLOYEES

3.11.1   LTC ­ Advances and Claims

3.11.1.1 Test check the LTC claims which were duly supported with rail /bus/air tickets,
         taxi bills etc. and duly sanctioned by the competent authority.

3.11.1.2 LTC rules had been complied with and various criteria, e.g., eligibility as per
         block year, family members, their age, etc., have been met.

3.11.1.3 LTC advances have been paid as per entitlement of employees prescribed in
         rules and circulars issued from time to time.

3.11.1.4 Ensure that the advance against LTC has been refunded to the DHBVN if not
         utilised within fifteen days. Ascertain that the unspent advance has also been
         returned immediately i.e. within fifteen days from the date of advance.

3.11.1.5 Verify that penal interest has been charged in case of delay in submission of
         bills or deposit of unspent amount.

3.11.1.6 List out the advances outstanding for more than three months.

3.11.2   Tour Advances and Claims

3.11.2.1 Verify that the tour advance is released on the basis of application, duly
         approved by the competent authority.

3.11.2.2 Where an earlier advance is outstanding, verify whether second advance has
         been paid with the specific approval of the competent authority.

3.11.2.3 Ensure that the quantum of advance has been determined on the basis of
         duration of trip, rules laid down and circulars issued from time to time in this
         regard.

3.11.2.4 Review the tour authorisation and confirm that the tour undertaken by an
         employee has been authorised in advance.

3.11.2.5 Verify that mode of travel, conveyance, hotel expenses and out-of-pocket
         expenses claimed by the employee are in accordance with the Travelling Rules
         of the DHBVN.

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3.11.2.6 Check where journey tickets etc. are provided by the DHBVN, no claim is made
          in the bills.

3.11.2.7 Ensure that the travelling bill has been approved by the competent authority.

3.11.2.8 Ensure that the travelling bill has been submitted within the prescribed time limit
          from the completion of the tour.

3.11.2.9 Ensure that the advances are refunded immediately in case of cancellation of
          journey.

3.11.2.10 Verify that penal interest has been charged in case of delay in submission of
          bills or deposit of unspent amount.

3.11.2.11 List out the advances outstanding for more than six months.

3.11.3    Medical Advances and Claims

3.11.3.1 Test check the cases of reimbursement of medical claims.

3.11.3.2 Verify that bills for medical claims have been verified as per entitlement of
          employees and medical attendance rules laid down in the Medical Attendent
          Rule and circular issued from time to time.

3.11.3.3 Check that the payment of bills have been authorised by the competent
          authority with reference to employees and their dependents.

3.11.3.4 Test check the direct payment made to the hospitals.

3.11.3.5 Verify that penal interest has been charged in case of delay in submission of
          bills or deposit of unspent amount.

3.11.3.6 Verify that TDS made and deposited in time on the payment of medical claims in
          excess of the amount specified in the Income Tax Act.

3.11.3.7 List out the advances outstanding for more than six months.

3.11.3.8 Test check the employee's individual details for claim in respect of dependents.




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3.12      REVIEW OF SALES AND OTHER INCOME

3.12.1    Sales

          Since the main business activity of DHBVN is sale of power detailed, intensive
          and concurrent audit of Revenue Accounts including audit of expenditures'
          accounts is required to be carried out. Accordingly a separate and independent
          wing headed by the XEN/Revenue Audit has been established and separate
          Manual of Audit has been published.

3.12.2    Other Income

3.12.2.1 Ensure that other incomes are booked only with source documents, viz., interest
          income with interest warrant/loan agreement, dividend income with dividend
          warrants.

3.12.2.2 Reconcile the income of consultancy in financial records vis-à-vis records
          maintained in the consultancy division.

3.12.2.3 Test check the details of miscellaneous income with the relevant source
          documents and ensure the correctness and accuracy of the amount booked,
          income pertaining to current year only, etc.

3.12.2.4 Ensure that the approval from the competent authority is obtained before writing
          back the provisions/liability not required.

3.13      STORES ACCOUNTS

3.11.1    Maintenance of Price Stores Ledger

3.13.1.1 Verify that the price stores ledger is prepared and reconciled at periodic
          intervals with bin cards/stores ledger and the general ledger.

3.13.1.2 Check whether coding of receipts and issues has been done properly.

3.13.1.3 Obtain a list of items purchased but not issued.

3.13.1.4 Report on odd balance quantity without value, value without quantity, and
          negative balances.




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3.13.1.5 Ensure that discrepancies found during physical verification are adjusted after
          approval of the competent authority.

3.13.2    Valuation

3.13.2.1 Verify that receipts of items are valued at landed cost basis and issues at
          monthly weighted average price basis.

3.13.2.2 Verify whether AS-2 issued by the ICAI has been followed in the valuation
          process.

3.13.2.3 Ensure that valuation of inventories has been made in accordance with the
          policies and procedures adopted in the previous years.

3.14      Audit of Final Accounts

3.14.1    Ensure that the amount has been debited to the correct accounting head and
          there is no error of principal.

3.14.2    Ensure that the generally accepted accounting standards issued by the ISAI
          and provisions of Companies Act, 1956 and all other laws have been complied
          while compiling the accounts.

3.14.3    Ensure that there is no change in the accounting policy of the company as
          adopted by the company and if any change was made the same has been
          brought on the record.

3.14.4    Ensure that the contingency liability, if any, has been brought on the record.

3.15      COST AUDIT

3.15.1    Verify that units are maintaining necessary accounting records and cost
          statements as provided in Cost Accounting Records (Electricity Industry) Rules,
          2001.

3.15.2    Verify that proper quantitative records are being maintained for received/sale of
          electricity.

3.15.3    Ensure the following:




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         (a) There is a proper reconciliation between cost and financial records.
         (b) Maintenance of store accounting records showing quantity and relevant
         components of       cost in     respect of   receipts/issues including wastage,
         spoilage/loss of stores etc., if any.

3.15.4   Review the expenses in respect of salary & wages, repair & maintenance,
         depreciation, all other over heads, royalties, financial cost, human resource
         development, expenses on various measures of pollution control etc. with a
         view to facilitate the cost audit.




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4.0       PERSONNEL AND ADMINISTRATION

4.1       MANPOWER PLANNING

4.1.1     Preparation of Manpower Requirement

4.1.1.1   Ensure that there is a clearly defined policy of the DHBVN in respect of
          manpower requirement.

4.1.1.2   Verify that manpower planning is based upon various factors, like upcoming
          project requirements, nature of vacancies, retirements during the year, etc. and
          as per the manpower approved by the BoD.

4.1.1.3   Ensure that a proper sanction is received from the competent authority and all
          the basic criteria are fulfilled as per the Recruitment Policy considering the
          requirement of HERC/other regulatory guidelines in respect of manpower
          planning.

4.1.1.4   Check that comparative statements are made in respect of own staff vs.
          outsourcing option.

4.1.2     Monitoring of Actual v/s. Sanctioned Strength

4.1.2.1   Verify whether there is a formal reporting system for existing manpower which
          clearly shows actual manpower grade-wise deployed at various units.

4.1.2.2   Check whether periodic reports are received in respect of employees
          outsourced or deployed on contract basis, while calculating the actual
          manpower.

4.1.2.3   Check and highlight the cases where shortage/surplus of certain manpower
          positions is continuing for a long time and ensure from the competent authority
          that necessary steps are being taken to correct the same.

4.1.2.4   Ensure that excess employees of certain categories not required in one project
          are shifted to other construction projects.

4.1.2.5   Certain categories of employees essential to control the O&M projects have
          been transferred to other projects before commencement of commercial
          operations.

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4.1.2.6   Check the requisition for casual labour and ensure that these have been
          sanctioned by the competent authority.




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4.2       RECRUITMENT

4.2.1     Receipt and Approval of Manpower Requirement

4.2.1.1   The manpower requirement advices are received timely to provide sufficient
          time to the recruitment cell to recruit the personnel on the basis of given
          selection criteria.

4.2.1.2   Check the reports of various units showing their manpower requirement and
          ensure that a proper approval has been taken from the competent authority to
          fulfil the same.

4.2.2     Advertisement for Inviting Applications

4.2.2.1   Check the means of communication used for the advertisement for recruitment
          having wide reach to the people. Ensure that proper approval has been taken
          from the competent authority for such advertisement in the media. Check where
          the posts are not advertised whether other resources for recruitment as
          prescribed in the regulation have been used.

4.2.2.2   Verify few advertisements on test check basis and ensure that proper details as
          per pre determined criteria have been given.

4.2.3     Receipt and Scrutiny of Applications

4.2.3.1   Enquire whether procedures for collection of application are proper and facilitate
          to short list the application as per pre defined procedure.

4.2.3.2   Verify that registration number has been written on each application and
          particulars of application are recorded in the register.

4.2.3.3   Ensure that reasons have been recorded for rejecting the application.

4.2.3.4   Check that the project/Wing concerned has scrutinised the applications and
          selected the short-listed candidates.

4.2.3.5   Check that the selected applications have been verified and approved by the
          competent authority.

4.2.4     Conducting Written Test


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4.2.4.1   Ensure that there is a reasonable procedure to intimate short listed applicants
          about date, time and venue of written test.

4.2.4.2   The process for setting and printing of question paper, appointment of
          invigilators, venue, etc. are carried as per the policy guidelines of the DHBVN in
          this regard.

4.2.4.3   Approval is taken from appropriate authority if no policy/guidelines exist.

4.2.4.4   Check that various aspects were considered regarding confidentiality in respect
          of selection of test paper, collection and safe keeping of answer sheets, etc.

4.2.4.5   Travel expenses are reimbursed to the candidate if same are allowed as per
          rules of DHBVN.

4.2.5     Short-Listing of Candidates

4.2.5.1   Ensure the evaluation criteria for test sheets and test check a few test sheets to
          ensure that the same has been followed.

4.2.5.2   Check that the list is free from personal bias and that there is a proper authority,
          which checks the entire procedure to ensure the accuracy.

4.2.5.3   Short listing process is made within reasonable time limit and ensure that result
          has been declared on the basis of marks secured.

4.2.5.4   Candidates are invited for interview as per the final list as approved by the
          competent authority and call letters have been issued to them.

4.2.6     Interviewing the Candidates

4.2.6.1   Enquire about the procedure of conducting interviews.

4.2.6.2   Ensure that interviews were conducted by the panel of people from relevant
          discipline constituted as per instruction.

4.2.6.3   Obtain the details of expenses incurred on the interview and ensure that the
          same is as per policy / budget of the DHBVN.

4.2.7     Selection and Issue of Appointment Letters



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4.2.7.1   Ensure that appointment letters are sent only to the selected candidates as per
          standard format containing the terms of appointment and authorised by the
          competent authority. All terms in respect of monetary benefits have been duly
          authorised.

4.2.7.2   Check and ensure that there are no unreasonable delays in issuing appointment
          letters after the selection of employees.

4.2.8     Induction, Assignment of Designation and Job Profile

4.2.8.1   Ensure that a reasonable induction procedure exists in the DHBVN to introduce
          a newly appointed employee to the DHBVN's general decorum and other rules
          and regulations.

4.2.8.2   Selected candidates are appointed at the required location after assigning the
          designations as approved by the competent authority.

4.2.8.3   Ensure that detailed job profiles are prepared and issued to employees with
          concurrence of the functional head in writing.

4.2.9     Exit Interviews

4.2.9.1   Enquire about the existence of a reasonable system of taking an exit interview
          at the time of relieving an employee.

4.2.9.2   Analyse the data on employee turnover for the last one year and necessary
          steps taken to minimise the same in case of high employee turnover.

4.2.9.3   There should be a system of regular analysis of the remarks given by the
          employees and reporting the same to the management.

4.3       TIME OFFICE

4.3.1     Attendance

4.3.1.1   Understand the procedure of marking and recording the daily attendance of
          employees.
4.3.1.2   Ensure that in case of punch cards, there exists a sufficient control over the
          blank punch card inventory kept under the custody of time office.



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4.3.1.3   Check and ensure that reasonable records are kept to record the issue of punch
          cards and acknowledgement is taken from the employee.
4.3.1.4   Take a dummy card and test the attendance recording and conversion by using
          it at all the machines installed in the premises.
4.3.1.5   Check the procedure of setting the time on all machines and ensure various
          security measures exist to avoid any manipulation of time which should be
          uniform in all the machines and regularly tallied with Indian standard time.
4.3.1.6   No manual intervention should be possible in the attendance data after
          punching, except as authorised by the competent authority.
4.3.1.7   Obtain the manual register kept for taking attendance in case an employee fails
          to bring punch card and ensure that it is not resorted to regularly.
4.3.1.8   In case employees record their attendance manually in separate registers
          maintained at different Wings, obtain the same and check that attendance,
          leaves, absence etc. have been properly recorded and compare the same with
          the absentee statements sent by the Wings concerned.
4.3.1.9   Compare the monthly absentee statement with the manual attendance register
          and ensure that there are no discrepancies.

4.3.2     Leave Management

4.3.2.1   Understand the system of maintaining leave record. Check whether a well-
          defined leave policy for the DHBVN is in existence.

4.3.2.2   Test check the sample leave application and verify that leaves are sanctioned
          as per entitlement in accordance with leave rules of the DHBVN and sanctioned
          by the competent authority.

4.3.2.3   Check the attendance sheets forwarded to finance deptt. containing all types of
          leaves including leave without pay, the amount of which is to be deducted from
          the salary.

4.3.2.3   Ensure that leave records are maintained properly and comply with the statutory
          requirement in this regard.

4.3.2.4   Check that leave records are timely updated. Verify whether the number of
          leaves as stated in the records in respect of each employee is correct as
          compared with employee's handbook on test check basis.

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4.3.2.5   Check that balance leaves are carried forward to the next period.

4.3.2.6   Obtain a copy of the employee handbook issued to new joiners and check if it
          contains all the information regarding the leave rules.

4.3.3     Late Coming and Early Going

4.3.3.1   Check whether a well-defined policy exists in respect of late coming and early
          going.

4.3.3.2   Test check few cases for late coming and early going and ensure that half day
          has been deducted as per the requirement of the policy and also check that out-
          duty slip, duly approved from the competent authority, is available in the file.




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4.4       PAYROLL

4.4.1     Pay Fixation and Maintenance / Updation of Employees' Master Records

4.4.1.1   Understand the procedure of maintenance and updation of employees' master
          records.

4.4.1.2   Test check few cases of new appointment, promotion, increment in salary and
          ensure the following aspects:

          Pay fixation order has been issued by the authorised executive and is as per
          pay fixation rules notified from time to time.

          Records for pay fixation and employees detail are updated from time to time.

          In case of increment, date is fixed for making the payment as per pay fixation
          rules.

4.4.1.3   Ensure that the right to access the employees' master record is available only
          with authorized executives.

4.4.1.4   In case of computerized records, appropriate back up procedure exists.

4.4.2     Promotion/Transfer of Employees

4.4.2.1   Ensure that promotion/transfer orders of employees are issued by the executive
          duly authorised by the competent authority.

4.4.2.2   In case of transfer of employee, Last Pay Certificate (LPC) is issued by his DDO
          annexing the details / documents regarding payroll ledger, recovery schedule of
          advances, pay details, entitlements etc.

4.4.2.3   Inter unit advise has been made at the time of transfer showing various
          advances / loans.

4.5       LEGAL

4.5.1     Empanelment of Lawyers

4.5.1.1   Verify the empanelment process of the lawyers and ensure the followings:




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          Minimum qualification and experience criteria and field of specialisation has
          been defined.

          Empanel number of advocates as per requirement of DHBVN.

          Provision of DoP has been complied with.

4.5.2     Fixation of Fees

4.5.2.1   Review the fees fixation criteria and ensure the following:

          a). Various factors such as seniority and expertise of lawyers, market standing
          of lawyer, prevailing rates have   been considered.
          b). Entitlement for expenses such as boarding and lodging, travelling has also
          been determined and specified in agreement.

4.5.3     Controls on Expenditure

4.5.3.1   Details of expenditure incurred on various cases are prepared and submitted to
          appropriate authority.

4.5.3.2   Verify that expenditure incurred on cases are monitored and controlled as far as
          possible.

4.5.3.3   Appropriate decision for withdrawal of case or any other remedial action has
          been taken with the approval of appropriate authority.

4.6       Hospitals/Dispensaries

4.6.1     Medicines/Consumables
4.6.1.1   Ensure that proper records are maintained for receipt, issue and availability of
          medicines and consumables.

4.6.1.2   Check that approval of officer in-charge is obtained for making the indent for
          procurement of medicines and consumables.

4.6.1.3   Ensure that approval for procurement of medicines is given on the basis of
          average consumption and seasonal requirements.

4.6.1.4   Verify from the records that costly medicines are being purchased as per the
          actual requirements.

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4.6.1.5   Ensure that a monthly summary of medicine consumption is prepared and
          reviewed by the competent authority. Obtain one of the monthly summaries and
          check a few entries from the daily medicine issue register. Investigate if any
          differences are noted in the same.

4.6.1.6   Ensure that expired medicines are disposed off as per the approval of the
          competent authority and in the presence of a senior executive of the hospital.

4.6.1.7   Ensure that all the receipts of surgical equipments, apparatus and tools received
          are recorded in the register maintained for the purpose.




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4.7       TOWNSHIP

4.7.1     Allotment

4.7.1.1   Examine the applications for allotment of houses and ensure that employees'
          particulars have been verified by the personnel department.

4.7.1.2   Obtain the following registers and ensure that they are being properly
          maintained and updated:

          a. Township occupancy register,

          b. Register of contracts/agreements,

          c. Recovery register.

4.7.1.3   Ensure that houses have been allotted on the basis of recommendation of the
          Residence Allotment Committee (RAC) formed for this purpose.

4.7.1.4   Check the basis of allotment of houses and ensure that allotments have been
          made as per the pre-defined criteria e.g. entitlement, seniority of employee, etc.

4.7.1.5   Ensure that in cases allotment of house is made to contractors, other persons
          not entitled for allotment, approval from the competent authority has been
          obtained. Also ensure that in case of such type of allotment, corporate rules and
          guidelines have been followed.

4.7.1.6   Check a few entries in township occupancy register and ensure that these are
          as per the terms and conditions given in the allotment letter.

4.7.1.7   Verify that agreements have been entered into with all the persons other than
          employees whose names are appearing in occupancy register.

4.7.1.8   Verify the entries in the register of agreement and ensure that terms of
          agreement have not been expired and in case date has been expired and the
          premises has not yet been vacated , then investigate the reason of non-vacation
          of the premises or the renewal of agreement.

4.7.1.9   Review the allotment register and ensure that accommodation has been allotted
          to the eligible persons only and no unauthorised allotment has been made.


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4.7.2     Recoveries

4.7.2.1   Verify that rent, electricity, water and other charges are being recovered on the
          basis of rules/rates specified in the circulars issued from time to time.

4.7.2.2   Ensure that proper records are being maintained for taking meter readings in
          respect of electricity consumed.

4.7.2.3   Ensure that a statement of outstanding recoveries is prepared on a periodic
          basis and an appropriate action has been taken for recovery of charges.

4.7.2.4   Ensure that charges for rent, electricity, water and other charges are being
          recovered from contractors/commercial premises as per rates stipulated in the
          contract/agreement.

4.7.2.5   Ensure that in case recovery of such charges is made in the form of deduction
          from the contractor's bills, the recovery should be from the running bills/final bills
          as per the terms and conditions of the contract.

4.7.3     Vacation

4.7.3.1   Verify the case of vacation of houses and premises by employees and outsiders
          with the vacation orders and ensure that fittings etc. have been duly verified by
          the office concerned.

4.7.3.2   Verify the recoveries in case of shortage/breakage etc.

4.7.3.3   Verify that all the recoveries in all cases of vacation have been effected before
          issuing vacation orders.

4.7.3.4   Ensure that vacation orders are sent to finance deptt. immediately for updation
          of their records.

4.7.3.5   Check whether the houses are being vacated timely. Report the cases where
          the vacation date has been expired or the employee has been transferred but
          the house has not yet been vacated. Investigate the reasons, why the premises
          have not yet been vacated.




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4.8       GUEST HOUSE/TRANSIT HOSTELS/TRANSIT CAMPS (TCs)

4.8.1     Check whether the following registers are being maintained in the guest house
          or not:
          a. Guest occupancy register,
          b. Register of non-consumable items,
          c. Register for consumable items.

4.8.2     Obtain the aforesaid registers and ensure that they are being properly
          maintained and updated.

4.8.3     Ensure that all entries in the guest register are properly filled in and no
          unauthorised alteration is being made.

4.8.4     Ensure that allotment of guest house facility has been provided only to the
          guests entitled for availing it and as per approval of the competent authority.

4.8.5     Verify the charges recovered from the guests as entered in the register with
          cash receipt from the employees and outsiders and ensure that the same are in
          conformity of the rules.

4.8.6     Check that the amount of rent and other charges collected from the guests are
          being deposited to the DDO on weekly/ monthly basis.

4.8.7     Compare the actual expenditure and income of the guest house with that of
          earlier year and note the deviations.

4.8.8     Check and verify the assets register maintained by the guest house in-charge
          with the fixed assets register maintained in the finance Wing.

4.8.9     In case of stay of guest for more than 5 days ensure that prior approval of
          competent authority has been taken.

4.9       OTHER ISSUES

4.9.1     Leave travel concession and claim

4.9.1.1   Ensure that the leave Travel concession is allowed as admissible to the
          claimant under the rules as applicable at the time of sanction.



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4.9.1.2   Ensure that the approval has been granted by the authority competent to grant
          such permission.

4.9.1.3   Check and ensure that the actual claims are submitted within the stipulated
          period and the same are adjusted without any delay.

4.9.1.4   Check and ensure that where the advance are not utilized within the stipulated
          period or where advance was in excess of the claim the same were deposited
          within the stipulated period.

4.9.1.5   Ensure that penal interst has been recovered wherever applicable.

4.9.2     Staff Loans and Advances ­ HBA, Computer, Furniture, Conveyance etc.
          and its Recovery

4.9.2.1   Ensure that loans/advances were sanctioned to the employees on the basis of
          advance requisitions in the prescribed format and duly approved by the
          competent authority as per entitlement of the employee.

4.9.2.2   Required documents in respect of loan sanctioned have been collected and
          vetted by the legal cell before issue of necessary office orders for disbursement.

4.9.2.3   In case of HBA, ensure that the employee concerned has given the intimation in
          respect of possession taken so that the DDO can start the recovery of
          instalments as per terms of the agreement.

4.9.2.4   Ensure that the insurance cover on house was taken for an amount not less
          than the advance amount with the necessary endorsement for hypothecation in
          favour of the DHBVN.

4.9.3     Leased Accommodation

4.9.3.1   Ensure    that   lease   masters   are   updated    as    per   the   new   lease
          agreements/amendments during the year.

4.9.3.2   Verify personnel records to ensure that the approval of the competent authority
          has been obtained before leasing the accommodation to the employee.

4.9.3.3   Examine the lease deeds of the rented accommodation and ensure the interests
          of the company have been safeguarded.

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4.9.3.4   Ensure that the system is working properly regarding timely renewal of lease
          deeds before the due date.

4.9.3.5   Ensure that all the documents required for lease deed are complete and are
          duly vetted by the legal cell.




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5.0      STORES AND TRANSFORMER REPAIR WORKSHOPS

5.1      RECEIPT OF MATERIAL

5.1.1    Review the material receipt process and ensure that material is checked and
         recorded at all the locations, viz. security gate, at stores etc. Ensure that gate
         inward register has been maintained by the gatekeeper and entry of receipt of
         material has been recorded on a timely basis. Undue delay with reason should
         be viewed.

5.1.2    Check that store challan control registers/stock registers and store requsition
         (SR) are maintained as per DHBVN's policies and procedures. Verify that
         proper serial control exists over SRs. Test check whether Store Challan and
         Store Requsition are being controlled properly with reference to stores records.

5.1.3    Verify the procedure for receipt of material on test check basis and ensure that
         all documents like Purchase Order, Challan, Gate Entry Note, Invoice and
         Inspection Note/Report are attached to the Store Challan including a note
         regarding shortage/rejection, if any.

5.1.4    Examine the Store Return Warant (SRW) duly signed by the authority approving
         return of stores and stores giving reasons for return and references of Store
         requisition in respect of unused material.

5.1.5    Check that any deviation from the purchase order is intimated to the
         procurement Wing for their necessary action.

5.1.6    Ensure that damaged/rejected goods are kept separately and reported to
         procurement Wing for necessary follow-up action.

5.1.7    Verify the receipt/consumption certificate in case of direct unloading of material
         at site.

5.1.8    Ensure that wherever required an adequate transit insurance cover has been
         taken.

5.1.9    Check the computations of pricing of the returns and verify the basis and
         confirm it to be in accordance with the pricing of the issues of the relevant items.

5.1.10   Verify entry into the stock register and priced stores ledger.
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5.1.11   In case of returns by contractor, check the difference on receipt of materials and
         necessary adjustments are made in contractor's account.

5.1.12   Confirm that the competent authority has duly approved the relevant vouchers
         for the above entries.

5.1.13   Check the Store Challan and ensure that all goods received have been
         accounted for and recorded under the correct item code.

5.1.14   Report the variations in rates of a particular item purchased on different dates in
         the period under review.

5.1.15   Verify the cases of material returned from various offices duly authorised by the
         concerned Officers. Verify that material returned has been inspected for proper
         condition, quantity of material before issuing SRW.

5.2      ISSUE OF MATERIAL

5.2.1    Verify the Store Requisitions on test check basis showing the detail of work,
         work order number and name of the Wing to which the cost is chargeable and
         also that the Store Requisition is authorised by the competent authority.

5.2.2    Verify that over-writing on the Store Requisition is duly authorised.

5.2.3    Ensure that bin card/stock register has been updated on every receipt/issue of
         material and accounted for in correct item code.

5.2.4    Verify that Value Ledger is also updated on every issue made and valued as per
         accounting guidelines. Ensure that material has also been issued on monthly
         moving average basis in accordance with the AS-2 issued by the ICAI.

5.2.5    Intimation is given to procurement Wing when the stock level reaches at reorder
         level.

5.3      INVENTORY MANAGEMENT

5.3.1    Enquire that inventory level have been fixed viz. minimum, maximum and
         reorder level considering the lead time of procurement, consumption pattern, etc

5.3.2    Enquire that aforesaid inventory levels are reviewed at reasonable intervals.


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5.3.3   Verify that actual inventory in respect of A and B class items are not kept in
        excess of maximum inventory level.

5.3.4   Whether list of slow moving/non moving inventory item are being made and
        intimated to user Wing for review and chalking out action plans for
        disposal/alternate use of such items also ensure that the said list is being
        submitted to Head office/management regularly and specifically with regard to A
        and B class items.

5.3.5   List out the stores items which have been procured on emergency basis but not
        yet utilised/issued.

5.3.6   List out the stores items which have been procured for the specific work/
        requirement by the authorities other then the material procurement authority but
        not yet utilised/issued.

5.4     RETURN OF DAMAGED TRANSFORMERS IN STORES/ TRANSFORMER
        REPAIR WORKSHOPS

5.4.1   Ensure that the transformer oil as contained in the transformer and the parts
        visible outside the transformers are properly checked and the shortages, if any,
        is properly recorded in the shortage book.

5.4.2   Ensure that the measurement of the transformer oil and the parts as available at
        the time of receipt/checking is recorded in the measurement book properly.

5.4.3   Ensure that the notional value of the damaged transformers as well as the value
        of transformer oil and the available parts; as fixed from time to time and
        applicable at the time of receipt is accounted for in the month of receipt itself
        and resultant credit is afforded to the concerned accounting unit through IUT.

5.5     ACCOUNTING         OF      TRANSFORMER       OIL   AND   CHECKING      OF    THE
        TRANSFORMER FOR THE PURPOSE OF REPAIR/DISPOSAL

5.5.1   Ensure that the transformer oil as received along with the transformer and
        recorded in measurement book is taken into Dirty Transformer Oil card; sludge
        as contained in the oil is determined and deducted and the balance is
        transferred to the de-hydration transformer oil register. Also ensure that the oil


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        received after de-hydration is recorded in the De-hydrated transformer Oil
        Register.

5.5.2   Ensure that the damaged transformer is opened and checked thoroughly at the
        earliest possible and a decision regarding repair or the disposal is taken
        promptly. Also ensure that the parts/material dismantled after opening of the
        transformer are properly measured, accounted for and the resultant credit is
        afforded to the concerned accounting unit.        It may also be ensured that
        abnormal delay in checking/accounting is not committed.

5.6     CUSTODY OF MATERIALS AND PHYSICAL CONTROL

5.6.1   Ensure that adequate internal checks and controls are in place and adhered to
        regularly e.g. no single person is responsible for physical storage, custody,
        issue and maintenance of bin cards etc.

5.6.2   Ensure that adequate storage facilities are available with stores and based on
        the nature, volume, value and criticality of the items, storage place has been
        allocated e.g. high value items should be kept under lock and key; heavy
        materials may be kept near the exit gate etc.

5.6.3   Check that storage place has been properly marked with identifiable code,
        numbering, marks etc.

5.6.4   Ensure that bin card/stock register clearly shows the receipt, issue and balance
        and location of inventory and the same should be authenticated with the
        physical verification on test check basis.

5.6.5   Enquire from the process owner about the procedure to maintain the stock and
        ensure that the stores personnel have followed that procedure while handling
        stock.

5.6.6   Ensure that the physical verification of the inventory has been carried out as per
        the schedule chalked out by the process owner and carried out by an
        independent person/committee.




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5.6.7   Review the physical verification reports and ensure that the reasons for
        shortages/excesses have been ascertained and necessary action plan for
        controlling such shortages/excesses has been chalked out.

5.6.8   Review the procedure for writing off any shortage and ensure that shortages
        have been written off after taking the approval of the competent authority.

5.6.9   Ensure that adequate fire fighting and security arrangements have been made.

5.7     SCRAP DISPOSAL

5.7.1   Verify that scrap/surplus/obsolete inventory items are identified and disposed off
        as per the policy and procedures of the DHBVN.

5.7.2   Examine the relevant material disposal authorisation and confirm that it has
        been authorised by the competent authority in accordance with instruction.

5.7.3   Verify whether store Wing maintains adequate records showing receipt of scrap
        from different Wings, its disposal and balance in hand, etc.

5.7.4   Ensure that scrap items have been disposed off after weighment and system for
        weighment is adequate.

5.7.5   Ensure that contractor has returned the entire scrap quantity calculated on the
        basis of standard/actual consumption.

5.7.6   Review the list of dealers invited to quote for the disposal, their quotations
        received and comparative statement.

5.7.7   Confirm that the selections of the dealer and the prices have been duly
        approved by the competent authority with concurrence of the financial Wing.

5.7.8   Verify the payments received with the register maintained by the store Wing and
        counter check it with bank account in the general ledger.

5.7.9   Check that the Sales Tax has been recovered on this transaction and remitted
        to Sales Tax authorities in time.




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6.0     COMMERCIAL

        Since the main commercial activity of DHBVN is the sale of electricity to the
        expenditures', the concurrent audit of expenditures' accounts as well as
        Revenue Accounts is required and the same is carried out by the Revenue Audit
        Section of Internal Audit Wing. A separate Manual for Revenue Audit is in
        existence.




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7.0      CONSULTANCY SERVICES

7.1      COST ASSESSMENT AND PRICE FIXATION

7.1.1    Examine request for consultancy services and ensure that this has been
         authorised by the competent authority.

7.1.2    Review the terms of reference and verify the determination of resource
         requirement by considering the detailed scope of work, suitable person with the
         requisite experience duly approved by the competent authority.

7.1.3    Verify the manpower costing after considering all the relevant cost factors viz.
         basic pay, perquisites and reimbursement allowed to employees, etc. as also
         the approval of the competent authority for the manpower costing.

7.1.4    Examine the system for review/revision of manpower rates at a reasonable
         interval.

7.1.5    Ensure that the cost sheet was made after considering all the cost items i.e.
         manpower, overheads, hiring of outside resources etc.

7.1.6    Check that the overall costing of the proposal has been approved by the
         competent authority.

7.1.7    Verify that due consideration was also given to normal profit margin, provision
         for contingencies, etc.

7.1.8    Check the proposals having low profit margin and find out the reasons of
         accepting the proposal.

7.1.9    Ensure that the costing and pricing of the assignment have been duly concurred
         by the finance Wing.

7.1.10   Check whether the legal Wing has duly vetted the contract.

7.2      EXECUTION
7.2.1    Ensure that the resources have been deployed as per the original plans. Identify
         the cases where excess resources have been deployed and the reasons for the
         same.


  206
7.2.2   Verify that the resources have been timely deployed and the assignment has
        been taken up as per the schedule.

7.2.3   Check whether resources deployed in various assignments are reasonable in
        terms of number, skill and experience.

7.2.4   Ensure that actual deployment of resources has been regularly monitored,
        periodically reviewed and modifications are also carried out accordingly by the
        HoW.

7.2.5   See the correspondence file/records and ensure that all the matters/queries
        have been duly taken up/replied/sorted out.

7.2.6   Review the progress of the assignment against the predetermined schedule;
        adequate action plans for timely completion of the project have been chalked
        out.

7.3     BILLING, RECOVERING AND FOLLOW-UP
7.3.1   Verify the debtors ledger and ensure that billing has been carried out as per
        terms and conditions contained in the contract and as per time schedule.

7.3.2   Check that billing for the extra items/deviation has been made timely.

7.3.3   Check that payments from the clients are being collected in time as per
        stipulated terms.

7.3.4   Check that collection outstanding positions are made a part of MIS.

7.3.5   Check that regular follow-up has been ensured with the parties for speeding up
        the collection process.

7.3.6   Check that rebate/discount/writing off bad debts, if any, have been allowed only
        after prior approval from the competent authority.

7.4     ASSESSMENT AND FEEDBACK SYSTEM
7.4.1   Ensure that the system of getting client feedback is in existence.

7.4.2   Review that steps are being taken for improvement of quality of services,
        considering the new ideas and feedback of clients.


  207
7.4.3   Profitability of the assignment is reviewed from time to time. In case of deviation
        plan for future improvement has been chalked out and implemented.

7.5     BUSINESS DEVELOPMENT PROCESS
7.5.1   Review the departmental efforts towards getting the business and maximisation
        of revenue.

7.5.2   Enquire whether analysis of success ratio is being made a part of MIS.

7.5.3   Enquire with the process owner and ensure that a system of budgetary control
        is in place and regularly followed for monitoring the performance of the Wings.
        Compare the actual with the budget and note the reasons for variance.




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8.0     IT & COMMUNICATION

8.1     SOFTWARE DEVELOPMENT PROCESS

8.1.1   Review the plan of the Wing in respect of software development. Also review
        the budget for the same.

8.1.2   Review the system of the organisation for taking the feedback from various
        Wings in respect of their software needs.

8.1.3   Analyse the software requirement received from various units and verify the
        following:

        a. Whether required software is to be procured / got developed from outside
        agency or to be developed in house.

        b. Assess the in-house resources for development of software.

        c. Identify the agencies for development of required software and assess the
        credentials of software development agencies.

        d. Prepare the comparative statement.

8.1.4   Ensure that the IT system development assignment has been undertaken after
        obtaining the approval of the competent authority.

8.1.5   Test check the records and verify the estimates in detail/budgets outlaying the
        cost time lines and resource requirements, etc., has been prepared before
        taking up the authority.

8.1.6   Ensure that the outside consultant has been deployed only in absence of a
        competent person available in house.

8.2     MAINTENANCE OF HARDWARE AND SOFTWARE

8.2.1   Verify that there is an adequate training programme regarding the new system.
        Proper emphasis is given on the system of feedback on quality. Due
        consultations are given in case of difficulties faced by user promptly.

8.2.2   Verify that the software purchased/developed in house have been used for the
        intended purposes and meeting the envisaged requirements.

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8.2.3   Verify that all the IT assets have been covered under an adequate AMC.

8.2.4   Review the system to ascertain whether the contractor of AMC has performed
        his duties as per the terms and conditions of the contract, i.e., number of visits,
        deployment of staff, supply of spares, etc.

8.3     INFORMATION SECURITY AND CONTROLS

8.3.1   Verify that the licences for all the software have been obtained.

8.3.2   Verify that there is a regular system to take the feedback from all user Wings in
        respect of performance of AMC contractors/software for the intended use, time
        taken by the contractor to remove the defect.

8.3.3   Ensure that the information security policy has been framed and intimated to all
        the employees. The policy is also reviewed at periodical intervals.
8.3.4   Ensure that password policy has been followed strictly. The internal auditor
        should verify the system by using dummy data.
8.3.5   Ensure that there is a system to monitor whether the user Wings are keeping
        back-up of data and arrangements are being made for its proper placement
        outside the premises.




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9.0     OPERATION AND MAINTENANCE

9.1     SCHEDULE OF PREVENTIVE MAINTENANCE

9.1.1   Check that the preventive maintenance schedule defining the maintenance
        frequency has been prepared and all the critical equipment and machines have
        been covered.

9.1.2   Review various log books to verify that maintenance has been carried out as per
        these schedules.

9.1.3   List out the instances of non-adherence of maintenance schedules and
        ascertain the consequences, if any.

9.2     BREAK DOWN ANALYSIS

9.2.1   Verify that regular breakdown analyses are prepared for ascertaining the nature,
        root cause analysis of breakdowns, etc.

9.2.2   Review the break down reports to check that an appropriate plan of action has
        been chalked out and implemented to ensure that no repetitive break down has
        occurred.

9.2.3   Instances of break down due to non-adherence to preventive maintenance
        schedules are to be reported.

9.3     BUDGETARY CONTROL

9.3.1   Check that the system of budgetary control in respect of shut down hours, repair
        and maintenance expenses in unit and monetary terms is in place in terms of
        annual plan and the basis of budget preparation are correct.

9.3.2   Verify that the actual performance of the Wing is regularly monitored and
        compared with the budgets and corrective actions are being taken in respect of
        deviations after ascertaining the reasons. Also verify that a proper plan of action
        is being chalked out to control the deviations.

9.4     CRITICAL SPARES




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9.4.1   Ensure that inventory of critical items/spares has been maintained adequately
        and verify the procurement records to ensure that proper quantity of spares
        required in maintenance have been indented/procured in time keeping in view
        the availability of these items in stores, lead period required for procurement,
        availability of spares vis-à-vis the schedule of maintenance to avoid blockage of
        funds and to achieve the maintenance of optimum level.
9.4.2   Ensure that a physical verification system has been maintained by the unit and
        no excess inventory has been kept by the Wing.
9.5     MAINTENANCE OF HISTORY SHEET/CARDS/LOGBOOKS

9.5.1   Check that adequate machine history cards/log books containing the details of
        repair and maintenance expenses, machine life, machine hours, break down
        hours, etc. have been maintained in respect of each machine and are being
        updated at periodic intervals.




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10.0     TRANSPORT

10.1     Hiring Of Vehicles/Equipments

10.1.1   Verify the current position of vehicles/equipments as per the requirement of the
         organisation. Check whether the requirement of hiring more vehicles has been
         determined on the basis of assessment from time to time. A situation of keeping
         surplus vehicles should be avoided.

10.1.2   Check whether the process of hiring additional vehicles/equipments started after
         obtaining an approval from the competent authority.
10.1.3   Ascertain whether all tendering procedures like invitation of bid through
         open/limited tender, formation of tender committee, technical and financial
         evaluation, etc., have been adopted.
10.1.4   In case of final contracts, review the following points:
         (a) Contracts were awarded at economical rates.
         (b) Reasons for not inviting open tenders have been quoted on justifiable
         grounds.

         (c) Contract agreements are signed and accepted by both the parties.

10.1.5   Examine whether estimate has been properly made out and contract has been
         awarded on the terms and conditions not prejudicial to the interests of the
         DHBVN.

10.1.6   Ascertain whether the contract has been renewed at periodical intervals and no
         long extension has been granted without any valid reason.

10.1.7   Vehicles/equipments are checked in respect of their models, condition, past
         behaviour of the contractor, if renewed, etc, before entering into the contract.

10.2     Utilisation of Vehicles/Equipments

10.2.1   Examine and comment on serial control of the requisition slips.
10.2.2   Review the vehicles/equipments allotment/allocation registers and ensure that
         vehicles/equipments have been allotted on the basis of requisition slips duly
         authorised by the competent authority and as per the entitlement of the
         employees for outstation journeys.


  213
10.2.3   Verify whether records maintained for vehicles/equipments in respect of running
         cost are being controlled/monitored.

10.2.4   Review the percentage utilisation of vehicles/equipments, indicating cases of
         under-utilisation, breakdown, lying idle etc.

10.2.5   Examine whether the Wing has submitted statements of hire charges on
         vehicles/equipments let out to contractors on regular/timely basis to the Finance
         Wing for affecting timely recoveries.

10.2.6   Verify whether log books are being maintained properly and updated regularly.

10.2.7   Ensure the compliance of various statutory requirements, viz. validity of licences
         of drivers, validity of registration certificates, insurance with comprehensive risk
         cover, pollution certificate, etc.

10.3     Repairs and Maintenance of Vehicles/Equipments

10.3.1   Examine whether records have been maintained with regard to each
         vehicle/Wing. Review the history records of each vehicle/equipment and identify
         and comment on the instances of uneconomical operations with reference to
         norms.

10.3.2   Verify that repairs and maintenance for vehicles/equipments have been
         undertaken after getting the approval of the competent authority.

10.3.3   Check whether records are being maintained in respect of expenses on repairs
         and maintenance vehicle/equipment-wise.

10.3.4   Any heavy expenditure on particular vehicle/equipment should be reviewed.

10.3.5   Repairs and maintenance jobs are being assigned to outside parties, in case in-
         house maintenance facilities are not available or inadequate. Ensure that jobs
         have been assigned to the outside parties after following the prescribed
         procedure, such as, estimate of expenses, quotations from the various parties,
         etc.
10.4     Disposal of Vehicles/Equipments




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10.4.1   Review the records including minutes of the committee authorising the disposal
         of vehicles/equipments as per prescribed guidelines of the DHBVN.

10.4.2   The surplus vehicles/equipments are also being regularly reported to the Head
         Office.

10.4.3   The reserve prices of vehicles/equipments have been computed as per
         guidelines of the DHBVN in this regard.
10.4.4   Ensure that disposal of vehicle/equipment has been made by the procedure
         prescribed from time to time.
10.5     Compliance of Company Vehicle Rules

10.5.1   Ensure that there is a clear policy regarding admissibility for utilisation of
         vehicle.

10.5.2   Ensure that entitlement for self use of vehicle for the officer has been fixed and
         the rate, terms and conditions for use of vehicle in excess of their admissibility
         has been fixed.

10.5.3   Ensure that proper record of the usage of vehicle has been maintained. Also
         cross check the genuineness of some entries made in the log book.




  215
                                                                           Annexure -E

                                 Summary of check points

The following points must be checked by the Works Audit Party during the Inspection of
Division.

1. Introduction:
   1.1 The nos. of last inspection carried out by the works
           audit party.

     1.2 The no. and period of audit of the present inspection
         report.
     1.3 Territorial jurisdiction with details of officers.

     1.4 The details of the inspections of subordinate offices
         carried out by the Xen
     1.5 The last inspection carried out by SE concerned
     1.6 The last inspection carried out by RAO
     1.7 Review of old inspection reports
     1.8 Non production of records. Officer/official wise detailed
         list is to be enclosed with the Audit Report
     1.9 Deficiencies noticed in similar record               of   other
         officials/officers are to be stated in brief

2.    Analysis Major Works:

     2.1    Administrative approval

     2.2    Technical sanction
     2.3    Estimated amount

     2.4    Date of commencement and completion
     2.5    Expenditure incurred
     2.6    Whether the expenditure is within the limit of
            sanctioned Estimate or cover and above. If excess
            over, the sanction of the competent authority obtained
            or not
     2.7    The name/names of the technical subordinates who
            executed the work
     2.8    Wrong booking.
            For the verification of correct booking, each schedule
            docket should be linked with JVs. SRs and cash


     216
       vouchers to arrive out the exact expenditures
2.9    Non accountal of material is generally created by non
       adjusting of STWs and non recording of material
       drawn from store/purchased from local market
2.10 Checking of the material issued/ transferred to
     subordinates by the supervisors
       Generally the material shown issued to the each subordinate is on higher side
       and further un-acknowledge by the L.M./ALM. There is an attempt to adjust the
       unnecessary purchases over draw of material through store Except the small
       quantity required for day to day use, all the material should must be issued
       against proper SJOs which should be signed by the concerned technical
       subordinates & supervisor. This should be supported by cross entries in the
       E.M.B./ Connected Load register/ CA 104/ Payroll book etc.








2.11 Checking of retrieved/ obsolete material. Disposal of
       retrieved / obsolete material should be watched by
       checking CA-104 and SRWs

2.12 Verification of ground balance of material at the end of
     financial year/ Completion of work
2.13 Checking of Electrical measurement book

       Entry of EMB should must be supported by sketches of work executed and on the
       basis of Sketch utilization of material should be checked/ assessed.
       Some item of steel section are being in weight by the store organization and also
       accounted for in Kg by each subordinates. In many cases a lot of difference in
       utilization of steel items has been noticed. This can only be checked after
       ascertaining the length of these items. So in addition to weight the length of such
       items should also be recorded in the Form-4 / EMB which should be verified by
       the SDO.



2.14    Shared cost of transformer/ Substation recovered or not. Also extra expenditure
        on deposit work recovered or not.

2.15    Other points not covered above but noticed during current audit.
        (a)

        (b)

        (c)


217
3.         Procurement of material:

              To regulate the purchases, the Nigam has prescribed Procurement/Rate
              Contract Manual-2006 and provisions of the same need to be complied with in
              all purchases to be made at HO/Filed. Further the Nigam has prescribed
              Delegation of Financial Powers (DoP) to its various functionaries which are to
              be observed in all cases of purchases. The emergency powers of Division office
              are defined under DoP 4.2.

     In the light of above the purchase other should be audited w.r.t. the following
     observation:-



     3.1      Placement of order

 3.1.1 Requirement of material from the indenting officer

 3.1.2 Non availability certificate from store organization
 3.1.3 Hand quotations should be checked by comparing the
       rates and quality of product. In case of material
       subject to measurement just as PVC tape, Empire
       tape, cotton tape, Cork sheet etc. The rates should be
       compared by taking into Consideration the length/
       area. The quotation should be scaled / in pasted
       envelope. The quotation should bear the signature of
       accompanying officers. Material must be according to
       the technical specifications.
 3.1.4 Comparative statement prepared. Checked & pre-
             audited properly

 3.1.5 Availability of Budget grant

     3.1.6 Rates are comparable and reasonable.

     3.2       Execution of Purchase order.



     3.2.1    Receipt of material should be checked by verification of entries in the form-4
              and its further disposal/ utilization be also checked w.r. to record entries in
              EMB, CL Register, PTW and entry of dismantled material/ scrap should exist in
              CA 104/ SRWs.



 218
     3.2.2   Necessary certificates by Xen as required under DOP 4.2 should must exist on
             POs/ noting sheet in details.



     3.2.3   For verification of the correctness of certificates recorded by Xen the record of
             S/Stn. Such as log book/ telephone message register etc. be consulted.



     3.2.4   Material is considered delivered when

             a)    It is completed in all respect &
             b) Fit for intended use
             c)
             Date of delivery should be worked out in view of above.



     3.2.5   In view of the date of delivery as per clause of purchase manual, the date of
             completion of formalities and due date of payment should be checked to
             ensure correctness so as to avoid the early payment for which the rebate is
             admissible to the Nigam.
     3.2.6   In case of delay in delivery the penalty has been correctly charged or the
             delivery extension granted by the competent authority.
     3.2.7   Other points not covered above but noticed during current audit: -
             (a)    Early payment discount deducted correctly

             (b)

             (c)



4. Checking of form-4 Except the works covered Under analysis
             Detail of expenditure incurred on a particulars work supervisor wise should be
             obtained from the divisional Accountant and the receipt entry of the material
             should accordingly be compared/ checked. Wrong booking noticed if any
             should be got adjusted through JVR. The utilization of the material should be
             checked as already explained in the foregoing paras.
             Other points not covered above but noticed during current audit:

5.    Accident cases:

             It has generally been noticed that finalization of accident cases are being
             delayed on this or that pretext. A and Nigam is burdened with interest and
     219
                penalties. In such cases the payment is made without proper sanction of the
                competent authority. In fact the CE/SE/Xen are empowered to sanction the
                amount of compensation admissible under the act. The payment on account of
                penalty/ interest should must have the sanction of management. It should also
                be checked whether the action as per note IV of DOP- 89 is taken in delayed
                cases.

                Other points not covered above but noticed during current audit: -

6.    Mtc. & Report of vehicle

      6.1       Fixation of average consumption of fuel

                There is wide gap in between the average assured by the manufacturing
                company and being allowed by the Nigam authorities. To arrive at the correct
                average physical verification is suggested vehicle wise certificate to this effect
                be recorded in the mtc. Set/log book.
      6.2       Estimates of vehicle

                The estimates are framed on yearly basis and generally covers 30000 to 50000
                KM per year running. So the exp. incurred should be compared by ascertaining
                the actual running with total expenditure during the year. There is tendency of
                accommodating excess expenditure by sanctioning spl. Estimates for repairs
                /spares. Audit officers should must examine the need & genuineness of the
                special estimate and doubtful cases should be incorporated in the inspection
                report.
                In every estimate, the cost can be divided into two components viz fixed cost
                and running cost. Running cost of same vehicles under different offices should
                be compared & commented upon. It is better to compare the fixed & running
                cost of same vehicle of two different period especially when then is a change of
                driver/JE incharge.
      6.3       Other points not covered above but noticed during current audit.

7.    Works

      The works are covered under the following categories: -

      i)        Electrical works.
      ii)       Civil works.
      iii)      Turnkey jobs.

            All these works are to be checked at the following stages: -

            Allotment of works:

            Execution of works:
     220
 7.1    Allotment of works:

 7.1.1 Rates are comparable and reasonable.

 7.1.2 For electrical & Civil works the allotment letter is issued at schedule rates as
       applicable on the date of tender.
 7.1.3 Audit officer, first of all should go through the authorization letter issued by SE
       and terms & conditions agreed upon in between the Nigam and the contractor.
 7.2    Execution of work:

 7.2.1 In case premium is revised after the allotment of the work then nothing is
       payable on account of such revision. This needs to be ensured.
 7.2.2 The bills are prepared as per form _________ of DFR, so that final bill contains
       the complete details of all items executed under the particular work order.
 7.2.3 Ensure the sales tax paid to the contractor has been deposited with the Govt.
       of Haryana.
 7.2.4 Check the extension granted by the competent authority is on reasonable
       grounds. Extension can be granted by the authority approving the original
       proposal or by the WTDs.
 7.2.5 The completion period of the work has been correctly determined and the
       penalty correctly charged if applicable.
 7.2.6 The Bank guarantee remains in force for the warranty period and discharged
       thereafter.
 7.2.7 Variation in the quantity/ value can be attributed to the following: -

        i) Change in quantity without change in scope of work.

        ii) Change in quality with change in the scope of work.

        iv)      Change in the rates.
        v) Change in items.

        Whereas the change in quantity without change in scope of work is permitted
        at the level of Xen but the changes as per (ii) to (iv) above can only to be done
        by the next authority approving the proposal as per Regulation-30 of the HSEB
        Purchase Regulation and as per Sr. No. 102 of DOP. In turnkey the provision
        of bid documents are also to be kept in view.
 7.2.8 It may be ensured that the bills has been checked technically by HDM w.r. to
       the sketch in the estimate and in the EMB.
 7.2.9 Verification of rates allowed for different item should be done with consultation
       of the labour schedule. It has generally been noticed that higher rates are
       allowed. For example instead of `H' pole the rates for two poles and stays are

221
        allowed separately similarly for "T Off" & Dead end the payment for stays are
        allowed separately. As such the bills should be checked by comparing detail
        analyses in labour schedule.
  7.2.10 Utilization of material used on work should be compared with the attested copy
        of form-4.

  7.2.11 The record entry in EMB should also be checked and it may be ensured that
         prescribed checks have been exercised by JE/SDO and required certificates
         are recorded on the bill.
  7.2.12 Premium on account of sandy area should not be allowed in routine. The
         geographical situation of the southern Haryana has changed and       all
         villages are accessible through metallic roads. However for the works actually
         carried out in the extreme sandy area the premium may be allowed on the
         specific certification by the concerned SDO.
  7.2.13 The audit officer should see that statutory deductions have been made on
         correct rates.
  7.2.14 Other points not covered above but noticed during current audit.

        (a)       Early payment discount deducted.

        (b)

        (c)

8. Power Purchase:

 8.1   Checking of long term & short term Power Purchase
       Agreement

 8.2   Checking of bills raised by the power service providers
       with reference to PPAs
 8.3   Orders of HERC, CERC, APTEL and its applicability on
       power purchase rates and other financial terms
 8.4   Checking of revised bills of power service provider
       with reference to approvals accorded by the
       Regulators from time to time
 8.5   Apportionment of power between UHBVN & DHBVN &
       payment made with reference to apportionment by
       SLDC and adjustment of Inter Utility accounts
       accordingly
 8.6   Tax compliances
 8.7   Penalty for late payment if any, to the Power Service
       provider and rebates allowed by the service providers


 222
            for timely payments
     8.8    Checking of credits given by HVPN on account of
            wheeling & distribution charges and other charges
            collected by HVPNL from open access consumers on
            behalf of DISCOMs
     8.9    Status of Inter Company account settlement
     8.10 Checking of commercial operations dates (CoD) with
          reference to its financial implications on rates of power
          purchased from different sources during the year
     8.11 Checking of FSA bills raised                     by HPGCL and other
          power service providers
     8.12 Checking of payments made/received on account of UI
          power
     8.13 Checking of Banking and sale of power and related
          financial terms
     8.14 Other specific issues
9.    Internal Control System:

            Deficiencies noticed in the internal control system or failure of internal control
            system be brought out in detail Example of failure of internal control system are
            as under: -
      9.1 Non reconciliation of cash

      9.2 Issue of cheques directly by Xens

      9.3          ...........................................

      9.4         ...........................................

      9.5 ............................................

10.   It is to be certified that the extent of checking has been done as per clause No. 3.6
Works Audit Manual.




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