( To be printed on
the letter head of the Company)
To
M/s XYZ & Co
Chartered Accountant
Karol Bagh
New Delhi
Sub :
Appointment of Internal Auditor of ***** Limited.
Dear
Sir,
The management of **** Ltd. would like to avail of your services in the area
of Internal Audit and therefore, it is
pleased to appoint your firm to conduct the Internal Audit of our company
having its registered office at *****
Ltd, Salt Lake City, Kolkata -700091 for the period 01.04.2013
to 31.03.2014 as per terms & conditions mentioned herein below :
Terms
& Conditions
1.
Period : Internal Audit for
the period 01.04.2013 to 31.03.2014 with a cut off date of as on 31st
March 2014
2.
Time Schedule : The Internal Audit
shall commence on or after 1st April 2014 & should be completed
on or before 15th April 2014. The report is to be submitted
positively by 25th April 2014.
3.
Internal Audit Report
:
The firm shall submit three copy of Internal Audit report to the management of
***** Ltd.
4.
Scope of Work : As per Annexure A
5.
Fee : The Internal Audit
fee shall be Rs.50,000/- for this assignment. Service tax as applicable will be
paid extra. The fee will be paid on completion of the assignment in timely
manner & on submission of the bill.
6.
Out of pocket expenses
:
TA/DA (Travelling allowance & Daily allowance) shall be paid as under
TA :
Actual Air fare/Train fare & Taxi fare shall be reimbursed on submission of
bill
DA :
Partner/Qualified assistant : Rs.500/-day of visit
Article/Un qualified assistant
:Rs.200/-day of visit
7.
Mode of payment : All payment shall be
maid either through RTGS/Net transfer or A/c payee cheque.
8.
Internal Audit team : The internal audit
team should not exceed as under :
Partner/
Qualified Assistant : One
Article/Un
qualified assistant :2/3 no.
9.
Address &
Telephone/fax number : You are requested to be kindly in touch with following
officer of ***** Ltd. to provide your time schedule & list of records
required :
Mr. *******
Sr. Manager (Fin)
******* Ltd.
Sec V, Salt Lake City
Kolkata-700 091
Phone :0333-******* , Fax :
Mob. No.:
10.
The
management reserve the rights to amend, modify and alter any or all of the
terms & conditions of this appointment letter.
You
are requested to return one copy of this letter of appointment duly acknowledge
to the office of the undersigned as token of having accepted all the terms
& conditions of this letter.
Thanking you,
Your’s faithfully,
Chief Executive Officer (CEO)
****** Ltd.
Copy to :
Sr. Manager (Finance), ******
Ltd.
Annexure
-A
The scope of work of Internal auditor shall
include:
(1)
Examination and evaluation of adequacy and effectiveness of the internal control
and risk management system at various operations and activities of the Corporation.
(2)
Review of the accuracy and reliability of the Corporation accounting records and
financial reports.
(3)
Checking of both transactions and functioning of specific internal control procedures
at various departments /offices.
(4)
Evaluation of adherence to legal and regulatory requirement and approved policies
and procedures.
(5)
Evaluation of effectiveness of existing policies and procedures and give recommendations
for improvement.
(6)
Identifying opportunities for cost saving and give recommendations for improving
cost efficiencies.
(7)
Examine that resources are acquired economically, used efficiently and safeguarded
adequately.
(8) Suggest measure to add value, improve
operational efficiency, risk management and internal control systems.
The following functional/ operational areas
shall be covered by the internal auditor :
|
Area
|
Broad
Audit Coverage
|
|
Finance & Accounts
|
a Cash and bank management
b Fixed assets management
c Fund management
d Payable management
e Loans and advances
f Budgeting
g Expense ledger scrutiny
h Investment (FD, Bonds & Other Investment)
i. Cash & Chest insurance, Fidelity
insurance,
|
|
Human Resources & Administration
|
a Manpower planning
b Recruitment, selection and induction
c Training
d Time office management
e Payroll management
f Entitlement management – loans, advances, medical, LTC,
uniform, accommodation etc.
g Engagement of outside agencies viz. security services
h Administrative services - guest house, schools, hospital
etc.
i Retirement benefits
|
|
Legal
|
a Appointment of advocates & fixation of fees
b Monitoring of Expenses
|
|
Work shop & Maintenance
|
a Vehicles / equipment hiring process
b Vehicle/ equipment utilization
c Disposal of vehicles/ equipment
d Performance of equipment/ vehicles
|
|
Contract & Work order Management
|
a Soundness of system and procedures
b Compliance with
(i) Management directives e.g. delegation of power and other
circulars
(ii) Statutory laws and rules
c Adequacy and accuracy of estimates
d Awarding of contract at the best economical rates
e Awarding of the contract/ work order to competent parties
f Adequacy of contract terms and conditions for safeguarding
Corporation’s interest
g Adherence of contract terms and conditions in respect of
release of advance payment,
issuance of material etc.
h Adequacy of insurance coverage
i Accuracy and reliability of accounting
j Adequacy of system of recovery / adjustment of material,
scrap items etc.
|
|
Pre-Tending Process
|
a Review of system of sanction and approval of proposal
b Review of system of preparation, vetting and sanction of
estimates
c Review of pre-qualification process – fixation and
evaluation of criteria
d Review of process of NIT circulation, vetting and issuance
of tender documents
e Review of process of pre bid conference
|
|
Tendering Process
|
a Review of system of tender receipts, tender opening
b Review of system of tender evaluation
c Review of process of preparation of comparative statement,
negotiation with contractor
d Review of process of awarding of contract
|
|
Processing / passing of running bills
|
a Review of sanction and approval process of bills
b Review of system of adjustment on account of material,
advance amount etc.
c Compliance of statutory requirement – Deduction of TDS, Work
contract tax
d Review of process of recovery / waiver off of L.D charges
e Review of process of settlement of deviations – increase in
scope of work, increase in
quantity etc.
f Review of system of compliance of terms and conditions of
the contract e.g. taking of
adequate insurance policies.
g Review of reconciliation process
|
|
Full and final payment to contractor
|
a Review of process of release of full and final payments –
sanction and approval
b Review of process of claim settlement
c Review of process of release of security deposits
|
|
Statutory compliance by contractors – Contract Labour
Regulation and Abolition Act,
Minimum wages Act, Provident Fund
|
a Review of records and register maintained by the contractor
b Review of license taken by the contractor – license for the specified
jobs, actual labour
deployed is within the limits specified in license etc.
c Review of challans and returns
d Review of wage register and muster rolls
|
|
Main documents/Records for Review,
Evaluation & Appraisal
|
a Contract/ work order files
b Minutes of meeting of tender opening and evaluation
committee and other relevant meetings
c Tender Receipt register
d Corporation circulars, notification etc.
e Offer / bids submitted by parties / bidders
f EMD register
g Copy of the contract/work order
h Ledger accounts of contractors / parties
i Budget / Annual plan
j Insurance policies taken by contractor
k Material consumption register
l Running bills of contractor
m Abstract of Measurement books
n Statutory records – provident fund challans, return, register
of wages etc.
|
|
Procurement Management
|
a Soundness of system and procedures
b Adequacy of offers/ quotation / bid system
c Adequacy of estimates
d Adequacy of purchase requisition in terms of quantity, rate/
price of item, need of an
item, etc.
e Compliance with:
i Provision of delegation of power matrix and other circulars
issued by Corporate
office.
ii Procurement manual
iii Purchase order terms and condition
f Procurement at economical rates
g Procurement from competent parties/ suppliers
h Procurement is commensurate with the requirement
i Timely procurement of material and reduction in overall lead
time.
|
|
Vendor selection process (tendering)
|
a Review of process of selection of procurement mode viz. open
tender, limited tender
or single tender etc.
b Review of process of floating of enquiries
c Review of process of receipt of offers/ bids
d Review of tender / bid/ offer evaluation process
e Review of system of comparative statement preparation,
negotiation with the
|
|
Store Management
|
a Effectiveness of inventory management
b Adequacy of receipt and issue procedures
c Adequacy of physical inventory controls
d Accuracy and reliability of material accounting
e Economical disposal of scrap material
f Adequacy and reliability of records / documents
g Adequacy and effectiveness of system of controlling and
monitoring of moving and
non moving inventory
h Effectiveness of system and procedures for items issued on
returnable basis
i.
Monitoring of Slow & Non Moving Item
|
|
Review of fixed Assets
|
a.
Review of Fixed Assets Register
b.
Maintenance of Department wise Fixed Assets
Register
c.
Review of Physical Verification report of Assets
& Stores
d.
Review of Assets Identification No. (AIN)
e.
Method of charging depreciation
f.
Title deed of land & original invoice of other
Fixed Assets
|
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