GOVERNMENT OF KARNATAKA

National Livelihood Mission

Karnataka State Urban Livelihoods Mission Society (KSULMS)
DeendayalAnthyodayaYojana – National Urban Livelihoods Mission (DAY-NULM)

REQUEST FOR PROPOSALS

(RFP No. MD 39 DAY-NULM 2020-21 Dated: /06/2021

SELECTION OF CHARTERED ACCOUNTANT FIRMS
FOR STATUTARY AUDIT AND

CERTIFICATION OF FINANCIAL STATEMENT OF ULBs,
FOR A PERIOD OF 2019-20 & 2020-21

Karnataka State Urban Livelihoods Mission Society (KSULMS)

(DeendayalAnthyodayaYojana – National Urban Livelihoods Mission)
# 11, Room No.305, 3rd Floor, Blue cross Chambers Building, Infantry Road, Bangalore-560001
CONTENTS Description Page No

Annexure Letter of Invitation
Terms of Reference
Annexure-1 Supplementary Information for
Annexure-2 Consultants
Technical Proposal – Standard Forms
Annexure-3 Contract for Consultant Services
SECTION: 1-LETTER OF INVITATION (LOI)

Subject: Selection of CA Firms for Statutory Audit & Certification of ULB accounts for
a period of 2019-20 under the DAY-NULM Scheme.

1. You are hereby invited to submit Technical proposals required for the above consultancy
assignment, which could form the basis for future negotiations and ultimately a contract
between your firm and National Livelihood Mission.

2. The purpose of assignment is to:
(a) The Selected CA firm is required to do Certification of accounts after the Annual
Audit of the ULBs allotted and give its opinion on the financial management.

3. The following documents are enclosed to enable you to submit your proposal:
(a) Terms of Reference (TOR) – Annexure 1
(b) Supplementary Information for the including suggested formats for the submission
of Technical Proposal – Annexure 2
(c) Form of Contract for Consultant’s Services under which the Services will be
performed. (Annexure)

4. Eligibility:
4.1 Must be a Charted Accountant Registered Partnership Firm, or a proprietary firm
in existence for a minimum of 3 full financial years.
4.2 Must have registered with ICAI.
4.3 Must have GST registration.
4.4 Must have Head Office or Branch Office in Karnataka.

5. In order to obtain first-hand information on the assignment and local conditions, it is
considered desirable that a representative of your firm visit the Client before the proposal
is submitted. Your representative shall meet the following officials.

Mission Director
DAY-NULM # MY SUGAR Building
2nd and 3rd Floor,
Opp to Ravindrakalkshethra

JC Road, Bangalore-560002

Please ensure that advance intimation regarding your visit is sent to enable them to
make appropriate arrangements.
6. Method of selection

Method of selection is fixed Budget Selection. The fee structure for the assignment is
as follows. Only those firms who are willing to accept the fee structure offered need
submit the proposal. The period of assignment for the audit is 2019-20 & 2020-21.

7. Audit Fee:

Audit fees payable for this audit are mentioned in the table given below.

Sl. Payments as per Receipts and Payments Account Proposed fees (Rs.)
No. (excluding GST)

1 Up to 1 Crore 27500

2 Over 1 Crore and up to 3 Crores 38500
3 Over 3 Crores and up to 5 Crores 66000
4 Over 5Crores and up to 10 Crores 88000
5 Over 10 Crores and up to 15 Crores 110000
6 Over 15 Crores and up to 25 Crores 137500
7 Over 25 Crores and up to 50 Crores 165000

8 Over 50 Crores and up to 75 Crores 192500
9 Over 75 Crores and up to 125 Crores 220000
10 Above 125 Crores 275000

The fees include all costs, excluding GST, which would be incurred for carrying
for carrying out the assignment. No other expenditure claims are allowed.

8. Submission of Proposals:
Proposals should be submitted through e-procurement portal of Government of
Karnataka. Last date for submission of proposals is 17.30Hrs on 05/07/2021.

8.1 Pre Bid Meeting-
Meeting will be held on 22/06/2021 at 11.30AM DAY NULM office, If any agency
have query with respect to RFP on Priority mail can be send before a day to email
daynulm@gmail.com.

9. Opening of Proposals:
The Proposal will be opened by the Client of his authorized representative in his office
at 1700 hours on 06/07/2021in presence of such consultants or their authorized
representative who may choose to be present.

10. Eligibility Criteria

The firms submitting the proposal for shortlisting must fulfill the following criteria:
Sl no Criteria Evidence required

The CA firm must be empanelled in the CAG Copy of Proof of Empanelment
1

empanelled List for 2019-20

Constitution certificate of the firm/

Certificate of Practice issued by Institute of

2 The firm must have been registered with the Institute Chartered Accountants of India or

of Chartered Accountants of India (ICAI) Appropriate Certificate or Document Issued

by Institute of Chartered Accountants of

India.

The firm must have been in existence for at least 10 As above
3

years before 01/01/2020

4 The firm must have at least 8 Full time Chartered Certified copy of the Partnership deed of the

Accountants as on 01/01/2020 firm.

Copy of Form 102 and Form 103 of the
The firm must employ at least 20 Articled assistants Articled Assistants & Letter issued by ICAI
who have qualified PE-II/IPC/IPCC/IPCE/Intermediate regarding registration of Article ship.
5 examination of ICAI and atleast10 Audit Staff

employed in the same firm for more than three years Copy of Appointment Letter of the Audit
as on 01/01/2020 Staff and B.Com Certificates of the staff

The audit personnel should be well-versed in Copy of SSLC Marks card of the audit staffs &

6 Kannada, English. Full time CA attested by Chartered

Accountant.

7 The firm’s annual turnover should not be less than Rs. Balance Sheet, Profit & Loss account and IT

100.00 Lakhs in any two years of the last 5 years Returns

Constitution certificate of the firm/

8 The CA Firm must have an Office in Karnataka. Certificate of Practice issued by Institute of
Chartered Accountants of India or any

appropriate document supporting the

constitution of the H.O/ Branch.

Must have conducted Statutory/External/Branch As mentioned in the sl no 11 of the invitation

Audit of Centrally Sponsored Schemes/PSU /State or
9

Central Government Department/Nationalized

Banks.
11. Evaluation of Proposals:

The Proposals will be evaluated on the following criteria.

Sl. Qualification Max Point allocation criteria
No. points

1 pt for every financial year

- Counted from the date of constitution of

1 Experience of the firm 20 the firm with one full time FCA, or date of

joining of the firm by the existing partner

having the longest association with the

firm, whichever is later.

2 Full time FCA Partners 3 points each or first 4 partners. 2pt for 5th partner
20

onwards.

3 Full time CCA Partners 2 points each for first 5 partners. 1 pt for 6th partner
15

onwards.

4 Full time CA employees 10 1 point each for first 10 CA employees.

Audit experience of Government
2 points for each audit assignment of Govt.

5 / PSU (excluding ULBs) in the 10
Department / PSU.

past 5 years.

6 Audit Experience of ULBs in the 05 1 pt for audit of one ULB.

past 5 years.

7 Turnover of the firms Up to Rs. 0.20 Cr - No points.
0.21 to 0.50 Cr - 1 pt
0.51 to 1.00 Cr - 2 pts.
1.01 to 1.50 Cr - 3 pts
1.51 to 2.00 Cr - 4 pts
10 2.01 to 2.50 Cr - 5 pts
2.51 to 3.00 Cr - 6 pts
3.01 to 3.50 Cr - 7 pts
3.51 to 4.00 Cr - 8 pts
4.01 to 4.50 Cr - 9 pts
4.51 Cr and above -10 pts
Sl. Qualification Max Point allocation criteria
No. points

8 Team Composition No. of CAs – 6 points (3 pts for each CA) (Should
have studied Kannada in 10th Std.)

10 Audit staff - B.Com Graduates / CA apprentices
with 2 year experience – 4 points (1 point for each)
with knowledge of Kannada.

CVs signed by candidates to be furnished.

Note :-
1) Full time partner does not include,
a) A person who is a partner in other firms
b) A person who is employed full time / part time elsewhere, practicing in their own
name or engaged in practice otherwise, or other activity which would be deemed to
be in practice under Section-2 of the Chartered Accountants Act, 1949.
c) Partners whose total compensation (some total of share of profit, remuneration and
interest on capital) from the firm is below the following limit.
i. ICA partner : Rs.1.80 lakh in a year (Rs.15,000 per month)
ii. FCA partner : Rs.3.00 lakhs in a year (Rs.25,000 per month)
2) All members (Sole proprietors / partners /CA employees) will get points if they were
exclusive associated with the firm throughout the financial year immediately preceding
the year of assignment.
3) In case of merger, the partners of the merging firms will be assigned points after one
year of merger and points for partners association to be given after five years from the
date of merger.

12. Deciding the award of contract:

Quality and Competence of the consulting services shall be the paramount requirement.
The decision of the award of the contract would be made as under.

i) Technical bids of only those bidders who satisfy the eligibility conditions
specified in Para-3 of this document, will be evaluated.

ii) Selection of the firms will be based solely and the order of merit of points scored
in the technical proposal. The firm which scores the highest point in the technical
bid, evaluation, will be awarded contract of the unallocated district based on their
preferential order.

iii) The allocation will be done throughout the State based on the evaluation.
iv)Having selected the consultants, the clients expect to negotiate a contract on the
basis of the staff named in the technical proposal, and prior to contract
negotiations will require assurance from consultant that these staff will be
actually available. The client will not consider substitutions during contract
negations except in cases of unexpected delays in the starting date or incapacity
of key professional staff for reasons of health.

v) The negotiations will be concluded with a review of the draft from the contract.
The client and the Consultant will finalize the contract to conclude negotiations.

vi)If the negotiations with the Consultant are successful, the firm will be assigned
for the audit of ULBs of the allotted district, as per the TOR, for a period of one
year.

13. Please note that the Client in not bound to select any of the firms submitting proposals.
Further as quality is the principal selection criterion, the Client does not bind itself in any
way to select the firm not meeting the quality standard. There will be no negotiation on
the audit fee structure.

14. Please note that the cost of preparing a proposal and of negotiating a contract including
visits if any is not reimbursable as a direct of the assignment.

15. Assuming that the contract can be satisfactorily concluded in March-2021, the selected
firms should be expected to take up/commence the assignment in April-2021.

16. The remuneration received from this assignment will be subject to normal tax liability as
per rules. Concerned tax authorities may be contacted for further information in this
regard, if required.

The Client.

Annexures: 1. Terms of Reference (TOR)

2. Supplementary Information to Consultants.

3. Contract format under which Assignment will be performed.
TERMS OF REFERENCE

Statutory Audit of Karnataka State Urban Livelihoods Promotion Society for the
year 2019-20 & 2020-21

1. Background

Karnataka State Urban Livelihoods Promotion Society (KSULPS) has been set
up by the Government of Karnataka as part of its strategy to address urban poverty
through enhancing the livelihoods of the poor. In order to implement DAY-NULM
scheme Government of Karnataka has established Karnataka State Urban
Livelihoods Promotion Society (KSULPS), an independent and autonomous
institution registered under the Society Registration Act. KSULPS has been
implementing DAY-NULM scheme to promote urban livelihoods, Urban skills,
promotion of women empowerment Support to Urban Street Vendor & Support to
Shelter for Urban Homeless. At present i.e during FY 2021-22, KSULPS is
implementing DAY-NULM scheme.
2. Objectives of the Project

“To reduce poverty by enabling the poor households to access gainful self-
employment and skilled wage employment opportunities, resulting in appreciable
improvement in their livelihoods on a sustainable basis, through building strong
grassroots institutions of the poor.”
3. Project Scope & Components

It is envisaged that the project, to be implemented over a period of 6 years,
will cover 277 Urban Local Bodies spread over 30 districts. The broad components of
the project are Social mobilization and Institutional Development, Employment
through Skill Training and Placement, Self Employment Programme, Shelter for
Urban Homeless, Support to Urban Street Vendors and Capacity Building &
Training components.

3.1 Social Mobilization and Institution Development (SM&ID)
DAY- NULM envisages universal social mobilization of urban poor into Self-

Help Groups (SHGs) and organizing them into federations. At least one member
from each urban poor household, preferably a woman, should be brought under
the Self-Help Group network in a time-bound manner. These groups will serve as a
support system for the poor, to meet their financial and social needs. City
Livelihood Centers (CLCs) will be established in Mission cities to provide a
platform whereby the urban poor can market their services and access information
on self-employment, skill training and other benefits.

1
3.2 Employment through Skills Training and Placement (EST&P):

EST&P component under DAY -NULM is designed to provide skills to the
unskilled urban poor as well as to upgrade their existing skills. The program will
provide skill training to the urban poor so that they can set up self-employment
ventures or secure salaried employment. The program intends to fill the gap
between the demand and availability of local skills by providing skill training
programs as required by the market.

3.3 Self-Employment Programme (SEP):

SEP component will focus on financial assistance to individuals/groups of
urban poor for setting up gainful self-employment ventures/ micro-enterprises
suited to their skills, training, aptitude and local conditions. This assistance will
be in the form of interest subsidy on bank loans for setting up of projects by
individual micro enterprises and for group enterprises.

3.4 Support to Urban Street Vendors (SUSV):
This component aims at skilling of street vendors, support micro-enterprise

development, credit enablement and pro-vending urban planning along with
supporting social security options for vulnerable groups such as women,
SCs/STs and minorities. Up to 5% of the total DAY -NULM budget will be spent
on this component which will cover pro-vending urban planning, development
of vendors market, credit enablement of vendors, socio-economic survey of street
vendors, skill development and micro enterprises development, and convergence
with social assistance under various schemes of the Government.
3.5 Shelter for Urban Homeless (SUH):

SUH aims to provide permanent shelter with all other essential services to the
urban homeless. The shelter will be a permanent all-weather 24 X 7 shelter for the
urban homeless. For every one lakh urban population, provisions should be
made for permanent community shelters for a minimum of one hundred persons.
Depending upon local conditions each shelter could cater to between 50 or more
persons.

3.6 Capacity Building and Training (CB&T):
A key objective of DAY- NULM is to transform the role of the Ministry of

Housing and Urban Poverty Alleviation and State Agencies in charge of urban
poverty alleviation into providers of high quality technical assistance in the fields
of urban livelihoods promotion and urban poverty alleviation. DAY-NULM will
establish a dedicated implementation structure with high quality technical
assistance to implement DAY-NULM at different level. Focused attention will be
taken care of to strengthen implementation of the Mission, monitoring,
evaluation, social audit and capacity building.

2
4. Implementation Arrangements

State Level: At the state level, the State Mission Management Unit (SMMU) has
been formed and staffed with a team of dedicated development professionals. The
project and the KSULPS are headed by a Mission Director and Project Officer (DAY-
NULM).

City level: At city level 277 Urban Local Bodies (ULBs) are established in all 30
districts with Commissioner / Municipal Commissioner / Chief Officer /
Community Affairs Officer / Community Organizers and Mission Managers with
primary responsibility of Coordinating with their respective ULBs for effective
implementation and convergence with ongoing programmes in the district.

5. Funds flow arrangement

The funds flow process is depicted below:-

(1) GOI to SMMU: Based on approval of Annual Action Plan, Central share
of DAY-NULM funds shall be provided to Government of Karnataka.
Government of Karnataka then releases funds to KSULPS along with the
state matching contribution. When the funds are received from State
Government, the same shall be accounted in SMMU books of accounts.

(2) Further, the SMMU releases funds to implementation units viz., Urban
Local Bodies VTPs, DC office etc. The Urban Local Bodies shall release
funds to take up mission activities and also release community funds to
the CBOs viz., SHGs, Area Level Federations, SHG Bank Credit Linkage,
Interest subsidy and interest subvention, Training cost to Skill Training
Providers, Assessment & Certification fees, Street Vendors training,
issuing ID cards, Operational & Maintenance of Shelters, Construction of
new shelters, Shelter refurbishment and Salary to Mission Managers and
Multi-tasking Officials.

6. Disbursement of funds to Urban Local Bodies.

 On receipt of Funds from Central / State Government, the funds shall be
transferred to ULBs based on the target fixed in various installments in
respect of scheme components after receiving the demand from the respective
Urban Local Body.

 The Mission Director shall have the power to release the funds fully /
partially to ULBs.

 The Accountant section shall prepare a letter to the bank requesting transfer
of funds from SMMU Component wise Account to the respective ULB
Component wise Account.

 Concerned staff at SMMU shall be responsible to follow-up with the Bank and
ensure that the funds are transferred to ULBs.

3
Concerned staff at SMMU shall intimate the respective Districts/ULBs the amount
of funds released and other details of account transferred by letter /registered
post/courier/e-mail.

The community support funds like Revolving Fund, Skill training & assessment
cost, O&M cost, Capacity Building Cost etc., is released to either directly by
SMMU or through ULB as per the norms.

7. OBJECTIVES OF AUDIT

KSULPS propose to hire the services of a Statutory Auditor (Chartered
Accountant firm) for undertaking statutory audit of society accounts (Financial
statements under different schemes and a consolidated statement for the Society).
The objective of the audit of the Project Financial Statement (PFS) is to enable the
auditor to express a professional opinion as to whether;

(1) The PFS give a true and fair view of the sources and applications of project funds
under different schemes for the period under audit examination;
(2) The funds were utilized for the purposes, for which they were provided,

In addition, where applicable, the auditor will express a professional opinion
as to whether the Financial Management, the books of account that provide the basis
for preparation of the PFS are established to reflect the financial transactions of the
project and are maintained by KSULPS and its constituent state, district and ULB
level units.

8. AUDIT STANDARDS

The audit will be carried out in accordance with the Auditing Standards
promulgated by the Institute of Chartered Accountants of India. The auditor should
accordingly consider materiality when planning and performing the audit to reduce
audit risk to an acceptable level that is consistent with the objective of the audit.
Although the responsibility for preventing irregularity, fraud, or the use of
credit/loan proceeds for purposes other than as defined in the legal agreement
remains with the borrower, the audit should be planned so as to have a reasonable
expectation of detecting material misstatements in the project financial statements.

9. AUDIT SCOPE

The Statutory auditors are required to undertake the verification of expenditure
/receipts under the schemes/programmes implemented by KSULPS.

In conducting the audit of all the districts and ULB’s, special attention should
be paid to the following:

 Whether all external funds have been used in accordance with the conditions
of the relevant legal agreements and only for the purposes for which the
financing was provided.

 Whether effective project financial management systems‘, including internal
controls, were in operation throughout the period under audit examination.
This would include aspects such as adequacy and effectiveness of accounting,
financial and operational controls, and any needs for revision; level of

4
compliance with established policies, plans and procedures‘; reliability of
accounting systems, data and financial reports; methods of remedying weak
controls or creating them where there are none; verification of assets and
liabilities; and integrity, controls, security and effectiveness of the operation of
the computerized system; and

 Whether counterpart funds have been provided and used in accordance with
the relevant legal agreements and only for the purposes for which they were
provided;

 Whether all necessary supporting documents, records, and accounts have
been kept in respect of all project transactions including expenditures
reported via Interim unaudited Financial Reports (IUFRs) where applicable.
Clear linkages should exist between the books of account and reports
presented to the Bank; certification of IUFR and financial report reconciliation.

 Whether the project accounts have been prepared in accordance with the
accounting principles defined in the Project Financial Manual and give a true
and fair view of the financial position of the project at the year end and of
resources and expenditures for the year ended on that date; and

 Whether compliance with all the applicable legal requirements are met.

 Verification of statement of receipts & payment a/c relating to the scheme of

ULB and DUDC / DSDO Office as the case may be (certified copy by

Commissioner/Chief officer, Deputy Commissioner/Project

Director/DSDO).

 All Bank statements/Pass book/cash book concerned (copy to be certified by
commissioner/chief officer)

 Bank Reconciliation statement as on 31st March 2020 & 31st March 2021
Circulars and orders issued by Mission office pertaining to implementation of
Scheme. Certified copies of office orders towards amount spent.

 Utilization certificates as on 31st March 2020 & 31st March 2021.

 Physical progress of the scheme as on 31st March 2020 & 31st March 2021.

 Utilization certificates from the Deputy Commissioner/Project Director
office/ DSDO office as the case may be, towards amount spent and released
for the ULBs during 2019-20 and 2020-21.

 Whether all grants sanctioned or received by the Urban Local Bodies during
the year, have been accounted properly.

 Whether all payments made by Urban Local Bodies during the year, have
been accounted properly.

 All the above aspects are to be verified in respect of 277 Urban Local Bodies &
at State Mission Management Unit, Bangalore.

5
10. Data Series and facilities to be provided.

The auditor shall be given access to any information relevant for the purposes
of conducting the audit. This shall normally include all legal documents,
correspondence, Annual Financial Statements of the Project and any other
information associated with the project and deemed necessary by the auditor.
The information made available to the auditor shall include, but not be limited to,
copies of the Bank’s Project Appraisal Document, the relevant Legal Agreements,
a copy of these Guidelines etc.,. It is highly desirable that the auditor become
familiar with other Bank policy documents, such as OP/BP, the Bank's internal
guidelines on Financial Management that include financial reporting and
auditing requirements of the Scheme. The auditor shall also be familiar with the
Bank's Disbursement Manual. Both documents will be provided by the Project
staff to the auditor.

11. Reports and Schedule of Deliveries

I) Financial Statements: The Audit is required to certify the Financial
Statements as under:
(A) Financial Statements:-

i) Consolidated financial statement of KSULPS society along with the
schedules.

ii) Component wise Financial Statement of the Scheme with the schedules;
(SM&ID, EST&P, SEP, SUH, SUSV, CB&T, IEC and A&OE)

(B) Reconciliation of Claims (reconciliation of IUFR and Audit figures) to Total
Applications of Funds under DAY-NULM.
(C) Certify Utilisation Certificate under each scheme at the end of the year.
(D) Other Statements or Schedules which may include:

• A separate schedule showing implementation unit wise cumulative project
expenditures by Project Component/Sub-components;
• A detailed list showing implementation unit wise assets created or
purchased from project funds.
(E) Assertion: Management should sign the project financial statements and provide
a written acknowledgement of its responsibility for the preparation and fair
presentation of the financial statements and an assertion that project funds have
been expended in accordance with the intended purposes as reflected in the financial
statements. An example of a Management Assertion Letter is shown at Annexure I.

ii) Statements of Expenditures and Financial Management Reports
In addition to the audit of the Project Financial Statement (PFS), the auditor is
required to audit all Statements of Expenditures (SOE) and/or Financial
Management Reports

6
(FMR) for withdrawal applications made during the period under audit
examination. The auditor should apply such tests as the auditor considers necessary
under the circumstances to satisfy the audit objective. In particular, these
expenditures should be carefully examined for project eligibility by reference to the
relevant financing agreements. Where ineligible expenditures are identified as
having been included in withdrawal applications and reimbursed against, these
should be separately noted by the auditor and highlighted in the report.

iii) Audit Report

 An audit report on the project financial statements should be prepared in
accordance with the Auditing Standards promulgated by the ICAI. Those
standards require an audit opinion to be rendered related to the financial
statements taken as a whole, indicating unambiguously whether it is
unqualified or qualified and, if the latter, whether it is qualified in certain
respects or is adverse or a disclaimer of opinion. In addition, the audit
opinion paragraph will specify whether, in the auditor’s opinion,

(1) The funds were utilized for the purposes, for which they were provided,
(2) Expenditure shown in the PFS are eligible for financing under the relevant
loan or credit agreement and, where applicable,
(3) The IUFRs submitted during the period are supported by adequate
detailed documentation maintained in the project accounting offices.

A sample audit report wordings are shown at Annexure II.

 Immediately after conducting audit at SMMU Head Office, the auditors shall

discuss the content and findings of the audit with the Mission Director (DAY-

NULM) before preparing the audit report.

Reports Schedule for submission Submission to
whom

Annual Financial Statements July 20th of the calendar year GOI, GOK and
of the Project July 31st of the calendar year KSULPS

Annual Audit Report for FY
2019-20 & 2020-21 and Annual

Management Letter

MANAGEMENT LETTER

In addition to the audit report on the project financial statements, the auditor
will prepare a management letter containing recommendations for improvements in
internal control and other matters coming to the attention of the auditor during the
audit examination, possibly including matters such as the following:
 Give Comments and Observations on the accounting records, systems, and

controls that were examined during the course of the audit
 Identify specific deficiencies and areas of weakness in systems and controls and

make recommendations for their improvement.

7
 Report on the degree of compliance of each of the financial covenants in the Loan
Agreement and give comments, on matters affecting such compliance

 Communicate matters that have come to attention during the audit which might
have significant impact on the implementation of the project;

 The status of recommendations from previous management letters, including any
issues which remain to be addressed and any issues which recurred

 Bring to KSULPS attention any other matters that the auditor considers pertinent.
 A sample covering letter that could be used to transmit a management letter is

shown at Annexure III.

PERIOD, TIMING AND SAMPLE COVERAGE OF STATUTORY AUDIT

The auditor shall have to audit the accounts for the Financial Year 2019-20 & 2020-21
and certify the /Financial Statements including FMR of different projects.

Presence of the Mission activities in various districts and category of the districts and
taluks are provided below.

Table
List of Project Implementation Arrangements

Years 2019-20 2020-21
State 1 1
Districts DSDO/DUDC 30 30
City Corporations 11 11
City Municipal Councils 57 57
Town Municipal Council 119 119
Town Panchayats 90 90

8
Table
Indicative Expenditure for FY 2019-20

(Rs. in Lakhs)

Deendayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY-NULM)

2019-20 (Financial Target & Achievement)

Sl. No. Name of the Component Financial
(Rs. in Lakhs)

Target Achievement

1 Social Mobilization & Institutional 1436.00 526.15
Development

2 Employment through Skill Training 3646.86 1273.22
& Placement

3 Self-Employment Programme 555.80 733.87

(Individual & Group)

4 Capacity Building and Training 1217.50 58.14

5 Shelter for Urban Homeless 1387.25 305.23

New Construction 175.94
Operational & Maintenance –
O&M
6 Support to Urban Street Vendor 766.00

7 A&OE 368.00 993.27
8 IEC 288.60 12.21
9666.01 4078.03
Total

Indicative Expenditure for FY 2020-21

(Rs. in Lakhs)

Deendayal Antyodaya Yojana – National Urban Livelihoods Mission (DAY-NULM)
2020-21 (Financial Target & Achievement)

Sl. No. Name of the Component Financial
(Rs. in Lakhs)

Target Achievement

1 Social Mobilization & Institutional 1015.00 498.75
Development

2 Employment through Skill Training 2367.90 1542.11
& Placement

3 Self-Employment Programme 476.60 301.59

(Individual & Group)

4 Capacity Building and Training 629.60 640.34

9
5 Shelter for Urban Homeless 1359.70 774.52

New Construction 242.82
Operational & Maintenance – 156.34
O&M 2.12
4158.59
6 Support to Urban Street Vendor 896.60

7 A&OE 362.00
8 IEC 158.61
7266.01
Total

The auditors should prepare their financial proposal figure based on the
volume of work and to undertake statutory audit of KSULPS for the Financial Year
2019-20 The audit will be carried out on a yearly basis as given below:

Units Category Remarks
State level Sate Mission Management Unit SMMU, located at Bangalore

District District Skill development Concerned staff will come to the head
level office with relevant documents as per
office/District Urban Development Audit schedule.
City level
Cell located in Office of the Deputy

Commissioner, all Districts.

All 271 Urban Local Bodies.

Auditors while auditing must ensure all the transactions / vouchers (receipt /
payment), physical presence.

Timing: The audit would be carried out annually and the report should be provided
to the SMMU latest by 20th July, of year to facilitate approval and placement before
the Executive Committee and submission to the Central Government by 30th July of
year. The auditor must submit three copies of the audited accounts and audit report
to MD at State office (SMMU) in time.

12. Period of Appointment:
The auditor will be appointed for the period of one year, which may be extendable
for another two more years based on performance of the audit and concurrence of
higher authority.

13. Services to be provided by the client

In order to facilitate the audit work, the client will provide following
services/document to the Statutory Audit firm.

1. Counterpart staff of KSULPS with whom the audit firm will coordinate and
correspond at the SMMU level;

10
2. Details of the Mission units that the Audit firm is required to visit. Details
such as address, contract details of the person responsible for coordination
and completion of audit of each unit.

3. Annual Financial Statements of each implementation unit i.e scheme wise
and consolidated statement along with necessary schedules.

4. Annual Financial Statement of the KSULPS i.e consolidated, scheme wise
along with necessary schedules;

5. Final IUFR submitted for the corresponding year;
6. Tally data backup, wherever is available.
7. Internal Audit Report if any, of the financial year under review along with

action taken report.
8. Statutory Auditor Report of the previous financial year along with

Management Letter and action taken report.
9. Management Assertion Letter

KSULPS will make sure that above details are made available to the Statutory
Auditors latest by First week of April-2021. In addition to the above, in case the
Auditor requires any other information, should notify KSULPS officials at the
earliest.

It is expected that the contract award will be completed by the end of the
April-2021 After signing the contract, the core team members of the Audit firm
should visit KSULPS and discuss with KSULPS officials and to understand the
nature of business and may collect information required for conduct of Audit.

14. KEY PERSONNEL
The list of key personnel who shall be deputed for this Contract shall be as follows

Sl. Key Description of Services to Minimum Experience No. of Total

No. Professionals be provided Persons Expected

Man days

1 Audit Overall coordination, & Qualified Chartered

Manager/ planning, team Accountant with at least

Partner leadership, reporting, 10 years’ experience as a

liaison with client partner with expertise in 1
the area of statutory
10 Man days
audit planning,

execution and reporting.

2 Audit Team Responsibility to lead the Responsibility to lead the

Leader -1 audit teams planning audit teams planning

and execution of the and execution of the

audits, discussion with audits, discussion with

head of office and head of office and

reporting writing and reporting writing and 1 15 man days

11
finalization. finalization

3. Audit Team Responsibility to lead the Qualified Chartered

Leader -2 audit teams planning Accountants with at least 15 man
days
and execution of the 5 years’ experience in

audits, discussion with internal audit and 1

head of office and external audit with

reporting writing and ability to lead and team

finalization. and interact with senior

level govt officials

The audit firm should provide CVs of Audit Manager, Audit Team leader -1
and Audit Team leader -2, key personnel who are expected to be engaged in audit
work for evaluation purpose by KSULPS.

Role of the Principal Auditor: When using the work of qualified auditing staff in
his office, the principal auditor shall ordinarily perform the following procedures: (a)
advise his auditing staff , the use that is to be made of the other auditing staff work
and report and make sufficient arrangements for coordination of their efforts at the
planning stage of the audit; and (b) advise the auditing staff about the significant
accounting, auditing and reporting requirements and obtain representation as to
compliance with them. Other important points of consideration may include the
following:
 The principal auditor shall consider the significant findings of the auditing staff ;
 There should be sufficient liaison between the principal auditor and others

auditing staff ;
 Certify & attest the utilization certificate prepared based on their report to

submit the same to GoI.

Role of the auditing staff: The auditing staff may bring to the principal auditors’
immediate attention any significant findings requiring to be dealt with at the entity
level, adhering to the time table for audit of the component1. The other auditor shall
ensure compliance with the relevant statutory requirements.

General
The Auditor will be given access to any information relevant for the purposes

of conducting the audit. This would normally include all legal documents,
Correspondence and any other information associated with the project and deemed
necessary by the auditor. The Information Made available to the auditor should
include, but not be limited to the relevant legal agreements, Financial Management
manual for DAY-NULM, Financial Rules and Annual Plan of KSULPS.

12
15. Penalty for non-performance / non satisfactory.
If the services are not performance as per the schedules of deliverables and

time line, after a deadline for submission of the certified reports, a weekly penalty of
0.1% of the contract value will be imposed. The maximum amount of penalty
imposed for the whole of the services is 5% of the final contract value.

If there is any professional negligence is observed by the KSULPS in carrying
out the work by the firm, the name of the firm will be referred to Central
Government, State Government and Institute of Chartered Accountants of India for
taking suitable disciplinary actions against the firm.

13
Annexure I
Example of a Management Assertion Letter

(Project Letterhead)

(To Auditor) (Date)

This assertion letter is provided in connection with your audit of the financial
statements of the DAY-NULM Project for the year ended 2019-20 We acknowledge
our responsibility for the fair presentation of the financial statements in accordance
with the cash basis of accounting followed by the Government of India, and we
confirm, to the best of our knowledge and belief, the following representations made
to you during your audit:
• The project financial statements are free of material misstatements, including
omissions.
• Project funds have been used for the purposes for which they were provided.
• Project expenditures are eligible for financing under the Loan/Credit agreement.
• There have been no irregularities involving management or employees who have a
significant role in internal control or that could have a material effect on the project
financial statements.
• Procurement procedures as prescribed for the project have been followed.
• We have made available to you all books of account and supporting
documentation relating to the project.
• The project has complied with the conditions of all relevant legal agreements,
including the Financing Agreement, the Project Agreement, the Project Appraisal
Document, and the Project Implementation Plan.

(Project Officer (DAY-NULM)) (Mission Director (DAY-NULM))

14
Annexure II

MODEL AUDIT REPORT—UNQUALIFIED OPINION

Address

Introductory Paragraph
We have audited the accompanying financial statements of the KSULPS for NULM
Project of MoHUA as of March 2020 (any other additional years necessary) for the
year(s) then ended. Our responsibility is to express an opinion on these financial
statements based on our audit.

Scope Paragraph
We conducted our audit in accordance with Auditing and Assurance Standards
issued by the Institute of Chartered Accountants of India. Those Standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.

Opinion Paragraph
In our opinion, the financial statements give a true and fair view of the Sources and
Application of Funds and the financial position of DAY-NULM Project for the year
ended March 31, 2020 in accordance with relevant national standards. We are also
satisfied that the procurement procedure prescribed in the KTPP has been followed.
In addition, (a) with respect to IFRs adequate supporting documentation has been
maintained to support claims to the GoI for reimbursements of expenditures
incurred; and (b) which expenditures are eligible for financing under the
Loan/Credit Agreement [ 1 (c) the IFR submitted and procedure and internal
controls involved in their preparation can be relied upon to support the
withdrawals.

[ Name and Address of Audit Firm]
[ date — Completion Date of Audit]
[Auditor‘s Address] [date]

15
Annexure III

Format of Management Letter

(to be printed in Audit firm Letterhead)

(Date)
To Mission Director,

In connection with our audit of the financial statements of the DAY-NULM Project
for the Year ended 2019-20 we familiarized ourselves with Project documents the
internal guidelines and circulars applicable during the period under audit. We also
reviewed the business of the Project and evaluated the accounting systems and
related internal controls of the Project in order to plan and perform our audit.
This Letter to Project Management includes observations noted during the course of
our audit examination in the following areas:
• Matters having a significant impact on the implementation of the Project
• Opportunities for strengthening financial management records, systems and
controls, together with recommendations for improvement
• Status of maintenance of Project books and records
• Accuracy of Project financial statements
• Compliance with prescribed procurement procedures
Compliance with legal requirements applicable to the Society
• Status of prior audit recommendations
The matters contained in this Management Letter are intended solely for the
information of Project management, for such timely consideration and action as
Project management may deem appropriate. They have all been considered by us in
formulating the audit opinion expressed on the project financial statements in our
audit report dated __________ and they do not alter the opinion expressed in that
audit report.
We wish to take this opportunity to thank Mission Director for the courtesies and
cooperation extended to our auditors.
Yours truly,
(Name and Title)

16
Annexure IV
Suggested Procurement audit check list related to Goods/Works

Once contracts for goods/works have been selected for detailed audit review the
following check list / post review check list may be followed:

1) Date of audit.
2) Procurement by State/District/any other organization receiving project funds.
3) Description of items procured, quantity and estimated value.
4) Whether procedure laid down in the Manual was observed while procuring goods

and works?
5) If not, any other, justification was available?
6) Whether bid was advertised/placed in public domain?
7) Whether sufficient time was given to bidders for preparing and submitting the

bids?
8) Whether the bids were opened at the notified time in the presence of bidders?
9) Whether the bids were evaluated in terms of the provisions of the bid documents

and the evaluation report was available?
10) Whether contract was awarded to the lowest evaluated responsive bidder

fulfilling the qualification requirements indicated in the tender document?
11) Whether the contract was awarded within original bid validity period?
12) Whether the signed copy of the contract/purchase order was available?
13) Whether articles received/work completed in time?
14) Whether payment released timely to the supplier/contractor or valid reasons for

delay?
15) Whether the assets procured are accounted for?
16) Whether any complaint was received regarding the procurement and was

addressed?
17) Whether procurement related complaint handling mechanism as envisaged in

the Project Implementation Plan is available?
18) Whether any procurement related irregularities reported in the previous audit

report have been complied with?
19) Whether Performance Security was sought?

Procurement Audit check list related to Service Contract
Once service contracts have been selected for detailed audit review the following
check list may be followed:
1) Date of audit.
2) Procurement by State/District/any other organization receiving project funds
3) Whether the Terms of Reference covering the scope of work, time schedule,

output required, etc were prepared?
4) Whether the Expressions of Interest were checked against advertisement and short

list of service providers/consultants prepared?
5) Whether the Request for Proposals (RFPs) was issued to short listed service

providers/consultants?

17
6) Whether sufficient time was given to service providers/consultants for preparing
and submitting the proposals?

7) Whether the proposals were invited in two separate envelopes, one containing
technical and another for financial proposals?

8) Whether the evaluation was done in two stages, first the evaluation of technical
proposals and then opening of the financial proposals of only technically
qualified service providers/consultants and reports are available thereof?

9) Whether the contract was awarded within the validity period of the original
proposal?

10) Whether the signed copy of the contract was available?
11) Whether the services were completed within the prescribed time limit or valid

reasons for delayed completion?
12) Whether payment was released timely to the service providers/consultants or

valid reasons for delay?
13) In the case of single source selection, if there was justification for the purpose?
14) Whether any complaint was received regarding the procurement and was

addressed?
15) Whether procurement related complaint handling mechanism as envisaged in

the Project Implementation Plan is available?
16) Whether any procurement related irregularities reported in the previous audit

report have been complied with?

18
FORMAT FOR FINANCIAL BID

(Firm’s quoted fees through E procurement portal only
for the FY 2019-20 & 2020-21)

Particulars Total Amount (in Rupees)
Audit Fee Both in Numeric and in words
Rs. ___________________ /-
a. Audit Fees _____________ Rs. ___________________/-
(including Cost of TA/DA)

b. GST __________________
c. Total Fees

Note: In case of change in the rate of GST the revised GST shall be paid.

19