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.
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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.
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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%
**********
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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
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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.
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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.
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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
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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
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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,
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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.
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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
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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.
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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.
******
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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
91
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
92
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
93
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
96
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,
97
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.
117
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
124
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.
126
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.
127
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.
130
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.
131
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:
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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.
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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;
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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.
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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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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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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.
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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.
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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.
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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.
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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
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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)
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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.
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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
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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:
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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
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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
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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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