Tender calling for Expression of Interest for
engagement of Auditors for Internal Audit of the Accounts of the Tamil Nadu Puthuvazhvu Society and District Puthuvazhvu Societies, Tamilnadu, India  Credit No: 4103 - IN

The Project Director, Tamilnadu Empowerment and Poverty Reduction Project, Tamilnadu, Government of Tamilnadu has applied for a grant from the IDA 

The Government of Tamil Nadu has sought World Bank assistance to provide additional support to help in reducing the incidence of poverty and a project named as the Tamil Nadu Empowerment and Poverty Reduction Project has been designed and the Project Implementation Plan has been appraised by the World Bank. The Project aims at social and economic empowerment of the poor and disadvantaged people in rural Tamil Nadu by addressing the poverty, livelihoods and empowerment issues of the rural poor. 

The Tamil Nadu Empowerment and Poverty Reduction Project is proposed at a total outlay of about Rs.717 crores and the project period is for six years. The project is proposed to be implemented in fifteen districts of the State. The Project is about to be launched shortly. 

PROJECT SET UP

The project shall be managed by the Government of Tamil Nadu. The proposed project implementation set up shall be as follows:

(1) TNPVS 

At the State level a registered society called Tamil Nadu Puthuvazhvu Society (TNPVS) shall be constituted which will be responsible for strategy and policy formulation, coordination with the District Puthuvazhvu Societies for implementation of the project, review of performance at district level, approval of budgets, review of expenditure, audit reports, etc. The State Society would also be responsible for supervision of project's operational matters, including close monitoring of the project at all levels, imparting professional support to the districts, etc.

(2) DPVS.

At the district level, a registered society called District Puthuvazhvu Society (DPVS) shall be constituted for every district and would primarily be responsible for execution of project implementation at the district level including capacity building, forming of local institutions, procurement, disbursement, monitoring, reporting, etc.

(3) PFT.

For every 12 villages a Project Facilitating Team (PFT) shall be constituted which would be responsible for mobilising the target poor and vulnerable into groups and for livelihoods promotion, to assist them in the preparation of business plan, capacity building and other entry point activities.

(4) VPRC.

At the village level, VPRC( Village Poverty Reduction Committee) would carry out the Project activities. VPRC would be constituted with Panchayat President as President and representatives from each hamlet representing the target poor, disabled etc. At least 50 % of the members shall be women.

(5) EAGs.

Self Help group members forming themselves into an Economic Activity Group (EAG) will submit sub project proposals for accessing the Productive Livelihood Investment Fund (PLIF). The sub project proposals will be appraised by the VPRC and recommended by the VPRC to the District Unit. The District Unit will make a compliance check and after a MOU is entered into between the District Unit and the EAG, funds will be released in tranches, on achievement of the milestones contained in the MOU.

6) Gram Panchayat.

In order to initiate start up activities in the village, the Gram Panchayat will be paid a Project Initiation Fund of Rs.25,000/- for taking up the activities of participatory identification of poor, formation of VPRC, formation and strengthening of groups among the left out poor, constitution of the Social Audit Committee, opening of VPRC Bank Account etc.
The Gram Panchayat is also eligible to receive an incentive fund of Rs.6 lakhs in two instalments of Rs.3 lakhs each based on their pro poor attitude and on scoring 80 % marks in the Score Card for G.P. Incentive Fund

FLOW OF FUNDS

Flow of Funds to state and district societies and Village Level Insitutions. The flow chart depicting the flow of Funds from Government to State Society, State to District Societies, District Society to V
PRC / EAG / GP is given below:

Fund Flow Arrangements under the project

SCOPE OF WORK

Objectives: The overall objectives of the internal audit are to: (i) enable the auditor to express a professional opinion on the effectiveness of the overall financial management arrangements ; and (ii) provide project management with timely information on financial management aspects of the project, including internal controls and compliance with financing agreements, to enable follow-up action.

Coverage of the Audit: The audit would cover the entire project i.e., covering all sources and application of funds by State unit and the District units and other agencies as considered necessary for the audit. The audit would also cover all consultancies or other contracts that may be entered into by the implementing agencies.


The Project Financial Statements are expected to include the following:
(a) Summary of Sources and Uses of Funds. Sources of funds would include GOTN and beneficiaries. Appropriate schedules summarizing uses of funds by main project components, expenditure accounts, disbursement categories and implementing agencies would be included;

(b) Balance Sheet of the Project, showing project assets and liabilities. This statement could also be combined with (a) above, if necessary;

(c) Statement of Claims raised and Credit Withdrawals.

Period: The audit would be for three years from commencement of the project (expected to be from 2005-06) and the audit would cover the financial years ending on March 31st. The audit for the first year would also cover transactions, which occurred before the commencement of the project (covered as retroactive period in the financing agreement with the IDA).
The internal audit should be carried out in accordance with the Auditing 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. 

Specific areas of coverage of the audit will include the following:

a) An assessment of the adequacy of the project financial management systems , including internal controls. The first such review of project financial management systems would be done in the first quarter of project implementation. Thereafter this would be done continuously, and a specific report on this aspect would be provided along with the audit report. This would include aspects such as adequacy and effectiveness of accounting, financial and operational controls, and any needs for revision; level of compliance with established policies, plans and procedures ; reliability of accounting systems, data and financial reports; methods of remedying weak controls or creating controls in areas where they are lacking; verification of assets and liabilities, controls, security and effectiveness of the operation of the computerized system; and

b) Efficiency and timeliness of the funds flow mechanism at the State and District level and whether there are delays which could impact the timely implementation of schemes. 

c) An assessment of compliance with provisions of financing agreements (IDA Development Credit Agreement and Project Agreement), especially those relating to accounting and financial matters. 

d) All external funds received under the project have been used in accordance with the financing agreements, with due attention to economy, efficiency and effectiveness, and only for the purposes for which the financing was provided;

e) Community Contributions, wherever required, have been provided and used in accordance with the relevant financing agreements, with due regard to economy, efficiency and effectiveness, and only for the purposes for which they were provided;


The project financial management systems would include methods and records to identify, assemble, analyze, classify, record and report on transactions and to maintain accountability for the assets and liabilities.
including the Financial Management Manual, Bye Laws of the State and District Societies and Memorandum of Understandings between SU-DU and between DU and other implementing agencies.

f) Expenditures charged to the project are eligible expenditures and have been correctly classified . This would also include ensuring accuracy of summary statement of expenditures submitted by DUs and the SU.

g) Goods, works and services financed have been procured in accordance with the World Bank procurement guidelines, procurement manual of the project and financing agreements;

h) All necessary supporting documents, records, and accounts have been kept in respect of all project activities and that clear linkages exist between accounting records, accounts books and the periodic financial reports from the VPRC/EAG/GP to the District Unit, and District Society to State Society...

i) Clear linkages exist between the accounting records including accounts books, and the Project Financial Statements.

j) Adequate records are maintained regarding the assets created and assets acquired by the project, including details of cost, identification and location of assets. Carry out physical verification of a sample of assets created out of the project and comment on its utilization.

The scope of internal audit will include a review of mechanisms in place to conduct regular audits of a sample of VPRCs and EAGs on sample basis and follow up of audit observations by Separate Village Level Audit to be done at Regional Levels. In case of GPs, the scope of internal audit will be limited to receipt of copies of annual reports of Local Fund Audit. 

k) The auditor is expected to obtain and satisfactorily document sufficient audit evidence to support audit conclusions.

l) The auditor shall also be responsible for the finalisation of the accounts of the State and District Societies and coordinate for completion of financial audit.

Timing: The audit would be carried out on a quarterly basis.

Coverage of the Audit: The transactions of the State and District Societies shall be verified 100 %. The audit would cover the entire project i.e., covering all sources and application of funds by SU and the DUs and other agencies as considered necessary for the audit. The audit would also cover all cost-based consultancy or other contracts that may be entered into by the implementing agencies.


these would be determined with reference to consistent practices and internal policies and with reference to documents such as the IDA Development Credit Agreement and Project Agreement, Project Implementation Plan and IDA Project Appraisal Document, Government orders, Bye laws of the Society and rules and regulations made from time to time.

Reporting: The Report shall contain the records verified, deviations, if any, the adequacy of internal controls and the adherence to Government orders, Society bye laws and rules and regulations made from time to time under the project.

Audit of State Society

The auditor will prepare quarterly internal audit report of State society.

Audit of District Societies

The auditor will prepare quarterly internal audit report of each of the district societies (DVPS).

Consolidated Audit Report of TNERP project: 
The auditor will also audit and certify the compiled and consolidated quarterly internal audit report for the whole project.
Qualifications & Experience of Consultants for Internal Audit of TNPVS & DPVS.

1. The consultants shall be a firm of practising Chartered Accountants empanelled with the Comptroller & Auditor General of India.

2. The firm shall have a standing of at least ten years in the profession. 

3. The firm shall have at least 2 to 3 Fellow /Associate Chartered Accountants as partners.

4. The firm shall have sufficient number of employees to handle the audit of the project ~ break up details of (i) semi qualified & (ii) other staff ( articled / audit clerks, paid assistants to be furnished ( total number preferably not less than 10 numbers )

5. The firm should have handled internal & statutory audit of at least 20 Government Companies / Boards / Societies and shall be familiar with Government Rules & Regulations.

6. The firm should have handled audit of Externally Aided Projects preferably of a similar nature.

7. The firm shall not be involved in any legal cases in professional matters with its clients or others.

Interested audit firms with required experience are requested to provide information indicating their qualifications to perform the services (brochures, description of similar assignments, experience in similar conditions, no. of officers / staff available and availability of appropriate skills among staff, Balance Sheet of the last three years etc.). 

A consultant will be selected in accordance with the procedures set out in the World Bank’s Guidelines for Selection and Employment of Consultants by Bank Borrowers (May 2004).

Expression of Interest may be delivered or mailed not later than 14 days from the date of advertisement to the address given below:

The Project Director,

Tamil Nadu Empowerment and Poverty Reduction Project (TNEPRP),
No.100, Anna Salai, Guindy, Chennai 600 032.
Telephone: 52085803.
E mail : tneprp@yahoo.com