MAHARASHTRA STATE RURAL LIVELIHOODS MISSION (MSRLM)

RURAL DEVELOPMENT AND WATER CONSERVATION DEPARTMENT,

GOVERNMENT OF MAHARASHTRA

Request for Expression of Interest

Appointment of Chartered Accountant Firm for Internal Audit

Deen Dayal Antoyodaya Yojana -National Rural Livelihoods Mission (DAY-NRLM) is an ambitious mission mode programme launched by Ministry of Rural Development, Government of India for eradication of rural poverty. Maharashtra State Rural Livelihoods Mission (MSRLM) is established to implement DAY-NRLM. A special component under DAY-NRLM is National Rural Livelihoods Project (NRLP), which is funded jointly by Government of India, IDA, IBRD & Government of Maharashtra. National Rural Livelihoods Mission aims at creating efficient and effective institutional platforms of the rural poor enabling them to increase household income through sustainable livelihood enhancements and improved access to financial and public services.

Maharashtra State Rural Livelihoods Mission intends to apply a portion of the proceeds to make payments under the contract for the following service:

CONSULTANCY FIRM FOR INTERNAL AUDIT

The Maharashtra State Rural Livelihoods Mission now invites eligible consulting firms to indicate their interest in providing the above mentioned services. Consulting firm will be selected in accordance with the procedures set out in the DAY-NRLM Procurement Manual, which follows the Selection and Employment of Consultants [under IBRD Loans and IDA Credits & Grants] by World Bank Borrowers “Consultants Selection Guidelines of the World Bank dated January 2011” (“Consultant Guidelines”), setting forth the World Bank’s policy on conflict of interest. "The Guidelines are available at www.worldbank.org/procure." Interested consulting firms may submit "Expression of Interest" for any or all of the services in separate sealed envelopes clearly superscripted as Expression of Interest for internal audit.

Consulting Firms may obtain further information about Terms of Reference and procedures for submitting the Expression of Interest at www.umed.in . Any further notice regarding change in the ToR /EOI submission date etc. will be uploaded on www.umed.in.

Consultants may associate with other firms in the form of a joint venture or a sub consultancy to enhance their qualifications. Expressions of Interest must be delivered to the address below, by 16 / 04 /2018 before 15.00 Hours.

R.Vimala IAS Chief Executive Officer

Umed-Maharashtra State Rural Livelihoods Mission (MSRLM) 5th floor, South Wing (SBI Side),

CIDCO Bhavan, CBD Belapur, Navi Mumbai 400614. Phone: 022-27562552/54

UMED - Maharashtra State Rural Livelihoods Mission (MSRLM),

Rural Development Department Government of Maharashtra

DRAFT TERMS OF REFERENCE Internal Audit

1. Introduction

Maharashtra State Rural Livelihoods Mission (MSRLM) is an independent and autonomous institution registered society under the Societies Registration Act 1860. Maharashtra State Rural Livelihoods Mission is implementing National Rural Livelihoods Mission (NRLM).A special component under National Rural Livelihoods Mission is National Rural Livelihoods Project (NRLP), which is funded jointly by Government of India, IDA& Government of Maharashtra.

2. Objectives of the Audit:

The essence of the World Bank/NMMU audit policy is to ensure that the Government Of India/Government of Maharashtra receives adequate, independent, professional, audit assurance that the proceeds of World Bank loan/Government Of India/Government of Maharashtra financing were used for the purposes intended, that the audit reports are free from material mismanagement and that terms of the loan agreement are complied with in all material respects. The objectives of the internal audit are to enable the auditor to express a professional opinion on the effectiveness of the overall financial management and procurement arrangements. It has to be ensured that the overall financial management and arrangements including the system of internal controls as documented as per the Financial Management Manual (FMM) & Procurement Manual (PM). It is expected that the process of audit shall be in position to provide to project management with timely information on financial management aspects of the mission, including internal controls and compliance with financing agreements, to enable follow-up action. In addition, it is expected that internal audit should play a role in assisting management with mis utilization of fund, including the prevention, detection and investigation of fraud as part of “Bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes”.

3. Coverage :

Schemes under the coverage of MSRLM primarily cover World Bank sponsored National Rural Livelihood Project(NRLP), Centrally sponsored National Rural Livelihood Mission(NRLM),Centrally sponsored Deen DayalUpadhyay Gramin Kaushalya Yojana(DDU GKY), State sponsored Sumatibai Sukalikar Mahila Sakshamikaran Yojana(SSUMSY), Mahila Kisan Shashaktikaran Pariyojana (MKSP) and a few others.

i) NRLP:-This World Bank sponsored Scheme is upto June 2018. The NO. of centres to be

covered for the period 01st April 2018 to 30th June 2018 is as below:

Unit *Total No. of Units to be audited for 2018-2019

NRLP

State Mission Management Unit 1

District Mission Management Unit 16

Village Organizations (5 % of 6000 VO) 300

The central allocation for the year 2018-19 has been earmarked at Rs. 70.00Crores. {Central Share 60% & State Share 40%}

Approximate Expenditure under NRLP component for the year 1/4/2018 to 31/3/2019 is INR 70.00Crores

ii) NRLM:-

Unit Total No. of Units to be audited for 2018-19

NRLM Intensive NRLM Non-Intensive

State Mission Management Unit 1 1

District Rural Development Agency 26 8

Block Panchayats 254 97

Note: 120 Blocks are currently Non Intensive but are to be brought in the fold of Intensive districts in the F.Y. 2018-19. Expenditure related to these blocks for 1st quarter will be booked in Non-Intensive District, but later quarter in Intensive District. The central allocation for the year 2018-19 for NRLM was earmarked at Rs.628 Crores {Central Share 60% & State Share 40%} for implementation of NRLM for 2018-19. Approximate Expenditure under NRLM component for the year 1/4/2018 to 31/3/2019 is INR 628 Crores.

iii) Partnerships with MSRLM:

Unit Total No. of Units to be audited for 2018-2019

Accounting centres under MAVIM 4

Accounting centres under other Partnerships 15(Approximately)

MSRLM allocation to all Partnerships for the year 2018-19 has been earmarked at approximately Rs.40.00 Crores. Approximate Expenditure under all Partnership component for the year 1/4/2018 to 31/3/2019 is INR 40.00 Crores. The detailed coverage of accounting centers to be audited has been enclosed (Annexure I)

iv) Standards for the Internal Audit:

Internal audit should be carried out in accordance with the Auditing & Assurance Standards prescribed by the Institute of Chartered Accountants of India and will include such tests and controls, as the auditor considers necessary under the circumstances.

v) Scope of Work:

The Auditor is expected to make an assessment of the adequacy of the mission financial management systems, including internal controls. This would include aspects such as adequacy and effectiveness of accounting, financial and operational controls and any need for revision if any. The scope of the Audit is as given below:

a) Approved Annual Action Plan:Auditor is expected to ensure that expenditure on each

activity throughout the Project is as per approved annual action plan and budget.

b) Availability and utilization of funds:

i) The auditor should ensure the efficiency and timeliness of the funds flow mechanism at the

State and District level and whether there are delays and which could impact the timely

implementation of project. The auditor should also identify and report the reasons for

such delays

ii) The auditor should ensurethat all 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. Relevant legal agreement includes the Financing Agreement, the Project

Agreement and the Minutes of Negotiation.

iii) The auditor should ensure all funds received under the Mission have been used with due

attention to economy, efficiency and effectiveness, and only for the purposes for which

the financing was provided.

iv) Auditor will verify the no. of CBOs to whom fund transferred during the quarter and no. of

CBOs reported in IUFR.

c) Books of Accounts & Reporting:

i) The auditor should ensure that all necessary supporting documents, records, have been

separately filed in respect of all project activities and that clear linkages exist between

the supporting documents, accounting books and records and the periodic financial

reports from the respective spending units

ii) The monthly expenditure Statement submitted by the districts indicating the approved

budget provision and expenditure during the month, cumulative expenditure against the

activity / sub-activity during the year should be reviewed in the internal audit.

iii) The auditor should see that IUFRs are submitted in a timely manner, whether release of

funds are conditional to receipt of IUFRs and report exceptions, if any

iv) The auditor should see that the Mission account throughout the State has been

prepared in accordance with consistently applied Govt. accounting standards.

v) The auditor should see that systems are in place for monitoring the receipt of periodic

financial reports & follow up on overdue reports are adequate. Exceptions should be

identified and reported.

The auditor or his representative shall be required to put the certificate with date on all manual records and books of accounts of being verified. Any record not found to have the stamp shall be considered as not verified and deficiency in audit on the part of auditor. d) Procurement:

i)The procurement procedure adopted for civil works, goods and consultancy services should be reviewed by the internal auditors and it should be ensured that correct procedures as per the Bank procurement guidelines have been followed, for each procurement. ii) It should be ensured that the records of all procurement, agreements, work/purchase orders, invoices, receipts, stock registers etc are properly maintained, duly linked and retained including expenditures reported via Interim Unaudited Financial reports (IUFR). The auditor should also review contract management and whether business standards for payment to contractors are being adhered to.

e) Verification of Assets:

The internal auditor should ensure that the adequate records are maintained regarding the assets created and assets acquired by the project, including description, details of cost, identification and location of assets. The internal auditor should carry out physical verification of a sample of assets created out of the project and comment on its utilization.

f) Advances:

The Auditor should check that whether the accounting for the advances to line departments and concern units are properly recorded in the accounting books.

g) Duties and Taxes:

The Auditor should check whether all types of tax liabilities have been deducted and deposited to Government Treasury and periodical tax returns have been filed within time.

h) Compliance of previous outstanding paras: While conducting internal audit in a subsequent phase the auditor will ensure that the compliance report on previous audit observations pointed out in the reports relating to earlier audit is made and corrective actions taken on those points are furnished in the Audit Report of the subsequent phase.

It is expected that the Audit team comprising of Audit Team Leader, Senior Audit Assistant and Junior Audit Assistant, should be deployed at each of the accounting centre in each quarters for minimum of 3 working days and for a single day at each of Partnership Firm centre.(List of the same has been attached separately)

vi) Reporting Procedure:

a) Audit Plan:

The auditor should make audit programme and plan for SMMU in coordination with the accounts & finance team. The auditor shall interact with the management before furnishing of any report. Discussion notes duly signed by the both parties(Auditor and Head of the concerned Accounting Centre) will be part of the Audit Report. The routine errors of omission or commission noted during the course of internal audit may be rectified on the spot.

b) Management Letter:

The Management Letter provided by the Auditor for each quarter have the following sections: 1) Objectives of the audit;

2) Methodology of the audit;

3) The status of implementation of the financial management system;

4) The status of compliance of the previous audit reports, including major audit

observations pending compliance;

5) Risk Assessment Report (the key areas of weaknesses that need improvement)

6) Recommendations for improvements.

Executive Summary (summary of the key findings) c) The Auditor will provide separate consolidated reports on NRLM, NRLP and all partnerships.

The reports will be provided Quarterly.

d) The audit reports should be submitted within 45 days after completion of the said Quarter.

Any delay beyond 45 days for any Quarterly report attracts the termination of the contract

without any financial liability of the client.

vii) Composition of Review Committee and review procedure to monitor Consultants work

The proposed assignment will be reviewed and monitored by a review committee on a Quarterly basis and take further remedial measures on the discrepancies pointed out in internal audit constituted by MSRLM. The Internal Audit Review committee at SMMU will keep a watch on the deliverables, of the assignments, take actions for the speedy settlement of the issues raised by consultant and timely follow up. Committee is set up under Chief Executive officer with following members.

SMMU Members Designation Representation

Chief Executive officer Chairman SRLM/State Govt.

COO & Additional Director Member SRLM/State Govt.

Under Secretary Member SRLM/State Govt.

Dy. Director –Finance and Accounts Member SRLM/State Govt.

Senior Accounts Officer Member Secretary SRLM/State Govt.

Committee will provide an update to the Principal Secretary, (RDD). Review will be done for the work performed by the Internal Audit Firm.

viii) Data, services and facilities to be provided by MSRLM:

o All the Mission documents, copy of agreement and relevant papers needed for Audit will be

provided by the MSRLM. The auditor would be given access to all documents,

correspondence, and any other information relating to the Mission and deemed necessary

by the auditor for carrying out audit.

o The auditor would be provided copies of the Project Implementation Plan (NMMU),

Financial Management Manuals, Procurement Manual, guidelines, Government

Resolutions, minutes of executive committee meeting, policies and procedures issued by

NMMU/MSRLM.

o One day workshop will be organized by MSRLMS for giving details of

Mission. It should be attended by all the members of audit team.

o In order to facilitate the Auditor, the Project shall provide an Indicative Questioner to the

Auditor.

ix) Period of Internal Audit.

Initially contract with the firm will be for one year which could be extended further, taking into consideration the performance of the Auditor.

The extension can be given one year at a time limited to 2 such extensions based on the performance and the decision of the Audit Review Committee.

x) Selection process based on Quality and Cost Based Selection Method(QCBS):

The Audit firm will be selected based on Quality and Cost Based Selection (QCBS) method of NRLM procurement guidelines.

xi) Delivery and Payment Schedule:

Deliverable Period of Audit

Time line Schedule Payment Schedule

Remark

1stQuarterly Audit Report

April -18 to June-18

30th August 2018 20% of Contract Value

Payment will be released only after the acceptance of the Audit Report by MSRLM.

2ndQuarterly Audit Report

July-18 to September-18

30thNovember 2018 20% of Contract

Value 3rdQuarterly Audit Report

October-18 to December-18

28th February 2019 20% of Contract

Value 4thQuarterly Audit Report

January-19 to March-19

30th May 2019 20% of Contract

Value Annual Audit Report

April-2018 to March-2019

30th May 2019 20% of Contract

Value

The written acceptance of the report by MSRLMs will be considered as the date of submission of the Report.

xii) KEY PERSONNEL

The list of key personnel’s required for this assignments;

Sr.No

Key Professionals

Description of Services to be provided

Experience

No. of persons

1 Audit Manager Overall coordination, & planning, team leadership, reporting, liaison with client

Qualified Chartered Accountant with at least 7 years experience as a partner with expertise in the area of internal audit planning, execution and reporting.

1

2 Audit Team Leader

Responsibility to lead the audit teams in the field, planning and execution of the audits, discussion with heads of offices, consolidation/compilation

Qualified Chartered Accountants with at least 5 years experience in internal audit with ability to lead and team and interact with senior level govt officials

3

3 Senior Audit Asst. ( Minimum Two Persons Required)

Vouching and verification of SMMU and DMMU books of accounts

CA (Inter) with 3 years of experience in Accounting, audit and report writing.

3

4 Junior Audit Asst. ( Minimum four Persons Required)

Vouching and verification of SMMU and DMMU books of accounts

Graduate/ CA (Inter) with 1 years of experience in Accounting, audit and report writing.

3

xiii) Qualification Criteria for short listing of Internal Audit firm for the RFP Stage.

a) The firm shall have a standing of at least ten years in the profession and should be

empanelled with CAG for “Major Audits”.C.A. firm should be an Indian firm having

independent legal existence, registeredunder the applicable Act. [Submit proof of CAG

Empanelment, Registration Certificate, Articles and Memorandum of Association].

b) C.A. firm expressing interest should have an annual turnover of Rs70 Lakhs or more in each

of the last three financial years. [Relevant documents viz, Audited financial statements and a

certificate from Charted Accountant in support of satisfying the criteria should be submitted]

c) Experience of having undertaken at least 5 similar assignments (Internal Audit Assignments)

with Central/state Government/externally aided projects in India, in last 10 years.

d) Experience of having undertaken at least 3 similar assignments (Internal Audit

Assignments)with Central/state Government/externally aided projects in Maharashtra, in

last 10 years.

e) The Chartered Accountancy firm shall have at least 6 of chartered accountants / CA Partners.

The break up details are (i) Partners of Firm i.e. number of full time chartered accountant

partners (ii) paid chartered accounts of firm must be given in the Annexure II.

f) Consultant must submit the Annexure II information along with EOI.

xiv) Instructions to the Applicants:

The detail approach and methodology should be provided by the auditor themselves in the RFP.

1) Interested C.A. firm should submit their application expressing interest, to the MSRLM in the

prescribed proforma annexed herewith [Annexure I] in sealed envelope with each page of

the application signed by an authorised signatory, including the pages comprising the

annexure, if any, of EOI document.

2) The Expression of Interest MUST be accompanied by all the relevant documents in support of the statements or claims made in the application including:-

a) Brief description of the background and organization of your entity/firm (not more than two page)

b) Brief description of ownership details, date and place of incorporation of the firm, objectives of the firm, total manpower strength- availability of appropriate professional staff , infrastructure etc. in annexure I

c) Evidence of registration/incorporation of the firm. d) Annual Audit Report of firm for last 3 years. e) A Self attested copy of the latest empanelment intimation letter issued by the CAG

containing the Unique Identification Number and the score. f) A self-declaration form from the firm to the effect that the firm including the partners of

the firm has not been found guilty of professional/other misconduct by the Institute of Chartered Accountants of India under First and Second Schedule of the Chartered Accountants Act 1949 or is one against whom no disciplinary sanction order have been passed by the Public Companies Accounting Oversight Board. In case the firm has such partners, the firm provides details of such partners and certifies that they will not be associated with the audit in any manner.

3) Any response received after the due date or not found to be in accordance with the above

procedure, maybe liable to be rejected outright and the decision of the MSRLMS in this

regard shall be final.

4) The proposal containing EOI should be addressed to The Chief Executive officer, MSRLM.

Each page should be signed and stamped

5) The sealed envelope containing the proposal should be superscripted with the words

“Expression of Interest for appointment of Internal Audit for F.Y.2018-19 for MSRLM”

6) The chartered account firm selected for Statutory Audit of MSRLM for the year 2017-18

shall not be eligible for Internal Audit. If said firm is technically qualified, in such case its

financial bid shall not be opened.

Annexure I LIST OF ACCOUNTING CENTRES UNDER MSRLM FOR F.Y.2018-19

Division NRLM Districts NRLP Districts

Intensive Non Intensive

Amravati 1. Amravati 1. Yavatmal

2. Akola

3. Buldhana

4. Washim

5. Yavatmal

Aurangabad 6. Beed 1. Aurangabad 2. Beed

7. Hingoli 3. Jalna

8. Jalna 4. Osmanabad

9. Latur

10. Nanded

11. Osmanabad

12. Parbhani

Kokan

13. SMMU Office 2. Raigad 5. Palghar

14. Palghar 6. Ratnagiri

15. Ratnagiri 7. Sindhudurg

16. Sindhudurg 8. Thane

17. Thane

Nagpur 3. Nagpur 9. Chandrapur

18. Chandrapur 10. Gadchiroli

19. Gadchiroli 11. Gondia

20. Gondia 12. Wardha

21. Bhandara

22. Wardha

Nashik 23. Nashik 4. Ahmednagar 13. Nashik

24. Dhule 14. Nandurbar

25. Jalgaon

26. Nandurbar

Pune 27. Solapur 5. Pune

6. Kolhapur xv) Solapur

7. Sangli

8. Satara

Indicative list of Partnership Firms

Sr. No. Partnership Firms Partnership District / State

1. MAVIM Gondia Thane Solapur

2. AFARM Pune

3. MITTRA Nashik

4. KUDUMBASHREE Kerala

5. BAIF Pune

6. TGT Lucknow

7. SJSM Satara

8. CSA Hyderabad

9. CMSA Hyderabad

10. SSP Pune

11. SERP Hyderabad

12. MSSRF Chennai

13. IIT Mumbai

Village Organisation Audit

300

Chief Executive Officer

Maharashtra State Rural Livelihoods Mission

Annexure II Mandatory Information for of Internal Audit Firm of Maharashtra State Livelihoods Mission Submission Requirements A - Consultant’s Company/Firm Profile: 1. Organizational: Provide a brief description of the background and organization of your

firm/entity. The brief description should include ownership details, date and place of incorporation of

the firm, objectives of the firm etc

Brief Data Sheet of CA Firm for Internal Audit

Sl. No.

Particulars To be filled up by CA firms

1 Name of Firm

2 CAG Empanelment Number (Please attach Empanelment Certificate as per instructions)

3 CAG Empanelment Year

4 Registration No. & Date: (Please attach Registration Certificate)

5 Year of incorporation

6 Total number of years of Experience from the incorporation of the Firm.

2. Financial: Provide previous three financial years turn over and net worth of the firm on the basis of the audited accounts of the previous three financial years as follows.

Particulars Amount in Lakh (INR)

Turnover2014-15

Turnover2015-16

Turnover2016-17

Average Turnover

B - Consultant’s Experience Internal Audit consultancy Assignments of Central/state Government/externally aided projects in Maharashtra. Information of at least last 10 years

Sl. No. Name of Assignment Type of Assignment Fees Received

Internal Audit Assignments of Government of India or Other State Government and Externally aided Projects (Excluding Maharashtra) Information of at least last 10 years

Sl. No. Name of Assignment Type of Assignment Fees Received

Key Staff Profile: A} Total Number of full time chartered accountants (partners with the firm)

S. No.

Name of Chartered accountant (Partner) Education Total Years of Experience

B} Details of Paid Chartered accountants with the firm

Si. No. Key member of the firm (Name / Position)

Education Total Years of Experience

C} Details of Senior Audit Assistant with the firm

Si. No. Key member of the firm (Name / Position)

Education Total Years of Experience

D} Details of Junior Audit Assistant with the firm

Si. No. Key member of the firm (Name / Position)

Education Total Years of Experience