the management of epdc of ap ltd. has decided to assign ......internal audit assignment in apepdcl...

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INTERNAL AUDIT ASSIGNMENT IN APEPDCL

The Management of EPDC of AP Ltd. has decided to assign Internal Audit task

for the year 2019-20 pertaining to its area of operations in Operation Circles –

Srikakulam, Vizianagaram, Visakhapatnam, Rajahmundry and Eluru to Chartered

Accountancy Firms with good reputation and experienced partners.

Details of assignment with terms of references and other particulars may be seen

on our website www.apeasternpower.com Internal Audit firms may send the firm profile

along with personal bio-data of all the partners to reach the undersigned, on or before

15-12-2019.

Chief General Manager (Internal Audit)

APEPDCL :: Visakhapatnam

File No.EPCOR-07009(01)/1/2016-IA-1-COR

http://www.apeasternpower.com/

TERMS OF REFERENCE – INTERNAL AUDIT ASSIGNEMENT IN APEPDCL

(FOR INTERNAL AUDIT IN OPERATION CIRCLES: SRIKAKULAM:VIZIANAGARAM: VISAKHAPATNAM: RAJAHMUNDRY & ELURU)

1) In this behalf, the Terms & Conditions for taking up the above

assignment are as follows:-

i) The Firm shall carry out the Internal Audit work at the respective Offices

located and preference will be given to the Audit Firm, having branches

locally.

ii) Internally Audit is to be conducted on half yearly basis and submit the

reports within the specified time frames.

iii) The Internal Audit assignment shall initially be for a period of one year

w.e.f. 01-04-2019 with a specific scope of audit. The performance of Internal

Audit Firm shall be reviewed after one year and based on mutual

discussions the period will be extended on yearly basis.

iv) The Internal Audit Firm shall conduct the Internal Audit during the working

hours on all working days along with his/her assistants.

v) Any other engagements / works of Internal audit Firm and personnel deputed

shall not hinder the quality, continuity and timely completion of Internal

Audit in EPDCL.

vi) The Internal Audit Firm shall place a qualified Chartered Accountant duly

assisted by a minimum of two Audit Assistants ( 1+2) having a minimum

qualification of Chartered Accountancy (Inter).

vii)The Internal Audit Firm shall be at the disposal of the Company to cater to

the requirements of any urgent / important tasks. Any deviation found shall

give an option to the Company to terminate the contract.

viii) The personnel deployed by the Internal Audit Firm shall be the

employees of the Firm to be deputed for the Internal Audit assignment of

EPDCL on contract basis without reference to the Rules and Regulations

which are applicable to the Regular Employees of EPDCL. The personnel

deployed for the Internal Audit task of EPDCL shall have no claim what-so-

ever on APEPDCL for future employment or for any other matter.

ix) Sub contracting of the Internal Audit assignment by the Firm selected by

EPDCL to others is not allowed.


2) It is the responsibility of the Internal audit Firm to ensure immediate filling up of

any vacancies due to resignation or otherwise of the personnel deputed for

Internal Audit of EPDCL with professionals having same qualification and

experience as that of previous personnel so deputed. This is to ensure

continuation in the Internal Audit activity in EPDCL.

3) During the Internal Audit work secrecy should be maintained and not to reveal

any information to others. They should inform the same to the concerned Higher

Officers only.

4) SCOPE OF AUDIT:

The scope of audit shall initially include the following:

To ensure 100% implementation of tariff order issued by APERC.

Ensure compliance of regulations of APERC.

Compliance of Electricity Laws.

To ensure correctness of books of accounts and ancillary records/registers etc.

To ensure proper cost control and cost reduction techniques andalso the implementation of the recommendation of Cost Auditor.

To ensure Statutory Compliances including tax matters.

To ensure that there is a proper compliance with,

a) Good business practices.

b) Generally accepted accounting principles.

c) Legal and Govt. regulations and to report violations to the Management.

To study and evaluate the adequacy and effectiveness of accounting, financial and operating controls.

To ascertain the extent to which business assets are accounted for and safeguarded from losses.

The Auditors should have great interest in Operations of Business in more efficient and profitable manner.

To ensure expenditure is incurred with due regard to general principals and financier propriety.

Identify indication of frauds.

Reviewing the robustness of the IT environment and consider any weakness on deficiency in the design and Operation of any IT control within the entity.

Follow up Internal Audit manual, and guidelines issued from Corporate Office from time to time.

Ensure sufficient Internal Financial Controls as per the Companies Act 2013.

During the course of Internal Audit, the following issues are to be observed invariably:


I. EXPENDITURE UNITS (DIVISIONS & CIRCLE OFFICES)

Part-I: (Accounting aspects)

1. LOC Received – Funds utilized for the same purpose – Delay if any.

2. Expenditure is booked against the respective schemes correctly.

3. Verification of Temporary Advance Vouchers.

4. Inter Unit Reconciliation.

5. Delay in admitting the Bills – any expenditure.

6. Verification of Vouchers under ADM and General Expenditure.

7. Appling of LOC without passed Bills.

8. Court cases – counters not filed – Action not taken.

9. Medical Claims

10. Compliance of Statutory payments.

11. Expenditure items abnormal variations between last year this year

12. Bank Reconciliation

13. Penalty recoveries ordered by CGRF / Courts.

14. Compliance of Agreement Conditions

15. Compliance of Purchase Orders Conditions

16. Review of Bank Guaranties

17. Purchases are supported by indents

18. Non closure of Work Orders / Abnormalities in closed work orders

19. Review of Vehicle agreements

20. Verification of Expenditure on Transport Bills

21. Non - levy of penalty for violation of contracts

22. Non utilization of assets if any – expenditure incurred

23. Payment of different rates for same work in same circle in different contracts.

24. Excess procurement of materials

25. Preparation of un – Realistic estimates

26. Work or Tender allotted without giving opportunity to competitors

27. Completion of Works as per the Schedule.

28. Review of Trial Balance for the current year.

29. Information Technology environment.

30. Legal bills to be verified.

31. Non implementation of SOP norms.

32. Failure of DTRs.

33. Review of Estimates

34. Review of Tenders

Part-II: (Administrative & General Aspects)


1) Register of incumbency is properly maintained

2) Review of pension payments

3) Review of Long Term Loans to employees

4) Review of un-disbursed salaries

5) Register of T & P

6) Register of Theft of Mal Practices

7) DD’s Register (In SAP)

8) Cash Book (in SAP)

9) Chitta

10) Fixed Assets register in SAP environment

11) FCR for salaries

12) Review of rent rates & Taxes

13) MIS Reports

14) EJ Register

15) Review of Inter Unit Reconciliation

16) Statutory payments recovery and remittances

17) Increments Registers

18) Review of amounts kept in Personal accounts and subsequent recovery

19) Review of TA Bills Register

20) Rectification of Pay Anomalies

21) Sanction of Leaves (EL, ML & Terminal Leave)

22) Verification of Service Registers

23) Full Additional Charge proposals and bills

24) Automatic Advancement Scheme Implementation

25) Review of Disciplinary cases

26) Finalization of theft of energy, Mal-Practice & Back billing cases

27) Electrical Accidents

28) Review of GST matters

29) Verification of Physical Cash if any

30) Compliance of delegation of powers

Part-III: (Technical aspects)

1. Review of Energy Losses

2. Review of DTR Failures

3. Review of the implementation of PMI and their agreements & expenditure

4. Review of Specific Revenue and Specific Consumption

5. Review of loss of Transformer Oil

6. Review of Rolling stock of DTRs and Meters

7. Review of IR Port Metering and IR Port Billing

8. Review of Complaints and their resolving times

9. Review of MIS


10. Review of Bank Billing Assessment cases

11. Review of theft of materials

12. Review of Metered Sales %

13. Meters not removed for bill stopped services

14. Check Readings are taken or not.

Part-IV: (For Transformers Divisions & M&P Divisions)

1. Rectification of Transformer departmentally

2. Loss of Transformer Oil

3. Agreements entered with DTR repairing agencies

4. Failure of DTRs / Meters within guarantee period and replacement by suppliers

5. Review of MIS

II. REVENUE UNITS (EROs & HT UNITS)

1. Review of passed Revenue Journals as per delegation of powers

2. Minus balances in consumer ledger

3. Inter unit reconciliation

4. Short collections against the demand made by Revenue cashiers and

agencies.

5. Court Cases – Counter not filed, Court orders not followed.

6. New – Services released first Bills issued or not.

7. Agl. Billing as per tariff orders done are not and Amount collected or not

8. Amount collected by Private Agencies – remittances are equal or not.

9. Billing Exceptionals

10. Review of ACD collection and Levy of interest on ACD

11. Live – Services having arrears on CC charges (Not disconnected)

12. Live –services having arrears on Theft, Mal practice, additional loads, Back

billing

(Not disconnected)

13. Live – Services having arrears on ACD (Not disconnected)

14. Amounts transferred to Govt. receivables accounts.

15. Revenue abnormal variations between last year this year

16. Revenue recovery Act not applied for bill stopped services

17. Bank Reconciliation

18. Credit Reconciliation (Periodically)

19. Debit Reconciliation (Periodically)

20. OBs, CBs are tallied

21. Specific Revenue & Specific Consumption


22. Spot billing mistakes occur due to non-following of regulation 4.1.2, a. It shall be obligatory on the part of the Licenses to read meter of a

service on prescribed date. The licensee shall obtain theacknowledgement of the Consumer after issue of the bill,

b. Wrong status codes are noted by the agencies. c. Penalties are also not levied for wrong billing in certain ERO’s even

though, penalties are levied, there are not matching with wrong billingas per agreement conditions

d. The compliance of agreement conditions are not seriously observedbefore admitting the bills.

23. Non-levy of interest at 16% per annum on assed amount compounded everysix months, in accordance with section 127 (6) of Electricity Act.

24. Levy of revenue shortfalls for Exceptional statuses, as per tariff order andterms and conditions supply.

25. Change of Category from paying Category to free or to lesser tariff categorywith support documents.

26. Performance of RC’s.

27. Inspection Report of collection centers made by SIRC/AAO/AO.

28. Collection against RR Act notices not acknowledged for which

acknowledgement not sent to Deputy Tahsildar.

29. Review of Trial Balance for the current year.

30. IT Software scenario.

31. Review of Off-line collection Transactions.

32. Review of short collection of Security Deposit for New services & Additional

Load cases & Category change cases

33. Review of Category changes against Malpractice (MP) cases

34. Review of Cash Book in SAP

35. Verification of Chitta & DD’s Register.

36. Review of Receipt Books, BCRCs, PCBs

37. Verification of Incumbency Registers & FCR.

38. Review of soft copy of consumer agreements in EPCCB

39. Review of TE / MP / BB / AL & DT cases

40. Review of SIRC control register.

41. Review of MIS – Reports ( CC Charges Report, Demand Consolidation

Report, FL-CL Reconciliation Report, Financial Progress Report, ED Return, etc)

42. Review of Inter-Unit Reconciliation

43. Implementation of Court / Ombudsman / CGRF orders

44. Review of Master changes (Title, Load, Category, Phase, etc)

45. Compliance of Inspection Reports of AOs/ SAOs, etc

46. Review of Co-ordination Meeting Booklets which are not covered in the above

aspects

47. Any other financial bearing aspects


HT issues that are to be observed in internal audit(Exclusive):

1. CAT exceptionals

2. HT Court cases-whether counter affidavit filed/Stay or Stay vacation and

implementation of interim direction and present stage of the case.

3. D-listed HT services not disconnected beyond disconnection date.

4. Reasons for short collections.

5. Delay in transfer of funds from the date of collection to transfer to H.Q. accounts

by banks.

6. Reasons for reduction of metered sales.

7. Action taken in respect of UDC/Bill Stopped HT services as per rules.

8. New services – 1st bills issued or not.

9. Levy of interest on ACD

10. Uncollected ACD – Reasons.

11. Correctness of categorization – with references to tariff orders.

12. Release of Phased demand as per agreement.

13. Sales data base exceptionals

14. Meters not removed for bill stopped services

15. Revenue recovery Act not applied for bill stopped services

16. Bank reconciliation

III. CORPORATE OFFICE:

(a) HRD Wing:

1) Rectification of Pay anomalies (Certification of Seniority).

2) Terminal (Earned) Leave Sanctions.

3) Leave Travel Concessions / Home Town Sanctions.

4) Advance Increments for High Qualification.

5) Full Additional Charges Sanctions.

6) Automatic Advancement Scheme – SGP/SPP-I/SPP-II/SAPP-I/SAPP-II.

7) Permission for engagement of various works on works contract basis.

8) Sanction of Legal Expenses, Decretal amounts and Costs.

9) Compensation sanctions-Non departmental fatal / Non fatal accidents.

10) Compensation sanctions – Departmental fatal / Non-fatal accidents.

11) Issue of medical credit cards.

12) Settlement of medical credit bills.

13) Settlement of medical reimbursement bills.

14) Advertisements-Publication of Tenders / Notifications.


15) Sanction of advertisement bills.

16) Sanction of Terminal Benefits.

17) Long term loans-Motor Car / Motor Cycle / Moped/ Bicycle/ Moped/

Bicycle/ Marriage Advances.

18) Court cases-Financial involvement.

19) Disciplinary Cases-Financial Involvement.

20) Long-Term Loans-HBA Advances.

(b) P&MM Wing:

1) Preparation of material requirements after and receipt of material indents

Budget-Material requirement-Consumption – How they placed material indent.

2) Carrying of technical analysis and financial analysis of bids.

3) Placing of purchase orders based on SPC instructions if the value of materials

is more than 1 Crore Rupees and based on LPC instructions up to 1 Crore

Rupees.

4) Vendor registrations and evaluation and bank guarantee approvals.

5) Price variation calculations & Approvals for Conductors, Cables &

Transformers.

6) Excess material available in stores.

7) Compliance of purchases orders conditions.

8) Extending of Purchase Orders.

9) Quality Control team of stores.

10) Stores Inspection Report compliance

11) Scrap Disposal periodically

(c) O&CS Wing:

1) Finalization of theft of energy, Mal-Practice & Back billing cases.

2) Electrical Accidents.

3) Monitoring, maintenance of equipment, Failure & Repairs.

4) Work contract registration.

5) Tenders and Agreements.

6) Sanction of Estimates.

7) Compliance of agreement conditions-Entered with private agencies

8) IT related Agreements.

9) Extension of Agreements.

10) Extension of Purchase Orders.

10) Consumer Complaints


11) Cost data implementation in preparation of Estimates & Tax obligations

(d) Projects Wing:

1) Securitization of scheme proposals and preparation of DPRs.

2) Board resolution for taking up the works.

3) Identification of source funding.

4) Scheme submitted to funding agency and obtaining sanction.

5) Terms and Conditions of funding agency.

6) Hypothecation deed and MOU (Loan Agreement).

7) According administrative and Technical Sanctions.

8) Preparation of cost estimate and getting approval for calling of open tenders.

9) Opening of technical bid analysis.

10) Opening of price bid and analysis.

11) SPC for finalization of Tenders.

12) Obtaining performance security and Entering into agreement.

13) Compliance of agreement conditions.

14) Extending time of agreements.

15) Quality Control Report.

(e) Commercial Wing:

1) Securitizing and processing of estimates for administration approval and

technical sanction for HT loads of above Rs.30 lakhs.

2) Processing for issue of Turnkey order for execution of works on Turnkey basis

by prospective Consumers in respect of all schemes up to 33 KV.

3) Processing for issue of extension of supply for more than 6 months for

temporary supply of both HT & LT services.

4) Correspondence of relevant issues pertaining to power purchase agreements

(PPAs) of NCE Power Projects, Mini Power Projects exclusively allocated to

EPDCL based on territorial geographical area and the prospective developers.

5) Third party sales by wheeling generators to the HT Consumers.

(f) Civil:

1) Scrutiny of estimates.

2) Tendering of Poles.

3) Rents.

4) Payments regarding, Taxes on lands and buildings.


5) Maintenance of Buildings.

(g) RA, QC & PP Wing:

1. Correspondence on Open access

2. Cross subsidy surcharge on Generators & Consumers

3. Renewal power purchase agreements

4. Disputes related to Power Purchase agreements

5. Timely filing of ARRs and True-ups Petitions

6. Functioning of QC activities (Departmental & Outside agencies)

7. Agreements with outside agencies for QC activities

(h) Expenditure Wing:

1) Processing of LOAs (Purchase Orders) and release of payments.

2) Processing of LOAs (Work Bills) and release of payments.

3) Release of LOCs to the circles.

4) Release of refund of penalty amounts of 5 circles pertaining to LPOs & Work

bills.

5) Release of EMDs and SDs.

6) Passing of PO bills, Inspection fee bills, AMC of Computer bills, Internal bills etc.

7) Filing of monthly returns GST, EPF, etc.

8) Scrutiny of bank guarantees and its maintenance.

9) Receipt of funding from banks / REC, etc-opening of account, Utilization of funds against scheme, etc.

10) Drawing Account Reconciliation.

11) Receipt Account Reconciliation.

12) Scrutiny of passed bills.

13) Bank reconciliation statement.

14) Salary deductions and remittances.

15) Statutory recoveries and remittances.

16) TDA, TCA’s.

17) Trail balances.

18) Review of Centralized Collections and their accounting.

5) 100% audit is expected from the Internal Audit Firm instead of random

verification / sample audit. All the units covered within the Area / Circle

assigned to the Internal Audit Firm shall be audited with 100% coverage of

Scope and extent. At the end of one year, a completion report in respect of 100%

coverage of all the areas mentioned in the scope of Internal Audit Firm before


the management of EPDCL starts the performance evaluation process of Internal

Audit Firm.

6) The performance of Internal Audit Firm shall give a 100% Confidence level to

EPDCL regarding correctness and perfect internal control systems with respect

to the areas which are included in the scope of Internal Audit which is the very

purpose of Internal Audit. The management of EPDCL may consider modifying

the scope of audit (mentioned above) based on performance evaluation and

confidence level mentioned above.

7) Internal Audit Firm is required to give any reports / certificates in connection

with the Internal Audit. No additional fees is payable towards such

reports/certificates.

8) Based on the requirement and situation prevailing from time to time

management of EPDCL shall communicate the scope of Internal Audit.

9) Internal Audit Reports and Compliance:

The Internal Audit Firm must complete the Audit allotted to them within thetime schedule stipulated by the management. It is the prime responsibility ofInternal Audit Firm is to ensure follow-up for compliance to the audit report /remarks / findings. Any difficulties in this process shall be immediately broughtto the notice of the top management for necessary action.

10) OTHER IMPORTANT POINTS:

1) Audit reports are to be addressed to Director (Finance) and SuperintendingEngineer (Operation) and concerned unit officer.

2) Audit Reports, bills for remuneration, amount of revenue leakage identifiedand collected or pending, progress of audit reports, and progress oncompliance to audit reports and attendance reports of personnel deputed areto be sent half yearly.

3) Bills for remuneration & GST reimbursement bills should be submitted tothe Chief General Manager (IA) for his counter signature. Payment will bearranged at Corporate Office.

4) The contents of the audit report shall be discussed with head of the officeand a Discussion Certificate is to be attached before sending the report toCorporate Office.

11) Profile of EPDCL and other details like list of units within each circle and organizational structure can be viewed on Company’s web-site.


LIST OF UNITS:

The unit wise details to be allotted CA Firms as defined below:

SRIKAKULAM CIRCLE AUDITOR-11. Circle Office

CA Firm No: 012. H.T Section3. DE/O/Srikakulam4. ERO/Srikakulam5. DE/TRS/M&P/SKLM

SRIKAKULAM CIRCLE AUDITOR -21. DE/O/Tekkali

CA Firm No: 02

2. ERO/Tekkali3. ERO/Kasibugga4. ERO/Palakonda5. DE/O/Palakonda6. ERO/Rajam

VIZIANAGARAM CIRCLE AUDITOR -1.1. Circle Office/VZM

CA Firm No: 032. HT/Vizianagaram3. DE/O/Vizianagaram4. ERO/Town/Vizianagaram5. ERO/Rural/Vizianagaram

VIZIANAGARAM CIRCLE AUDITOR -2.1. DE/TRS/M&P/VZM

CA Firm No: 042. DE/O/Bobbili3. ERO/Bobbili4. DE/O/Parvathipuram5. ERO/Parvathipuram

VISAKHAPATNAM CIRCLE AUDITOR -1.1. Circle Office/VSP

CA Firm No: 052. HT/Visakhapatnam3. DE/TRS/M&P/VSP4. Corporate Office/VSP

VISAKHAPATNAM CIRCLE AUDITOR -2.1. DE/O/Zone-I/VSP

CA Firm No: 062. DE/O/Zone-II/VSP3. ERO/East/VSP4. ERO/West/VSP

VISAKHAPATNAM CIRCLE AUDITOR -3.1. DE/O/Zone-III/VSP

CA Firm No: 072. ERO/Gajuwaka3. ERO/Gopalapatnam4. DE/O/Anakapalli

VISAKHAPATNAM CIRCLE AUDITOR -4.1. ERO/Anakapalli2. DE/O/Narsipatnam


CA Firm No: 083. ERO/Narsipatnam4. DE/C&O/Paderu

RAJAMAHENDRAVARAM AUDITOR -1.1. Circle Office/RJVM

CA Firm No: 092. HT/Rajamahendravaram3. ERO/Rural/RJVM4. ERO/Town/RJVM5. DE/O/RJVM

RAJAMAHENDRAVARAM AUDITOR -2.1. DE/TRS/M&P/RJVM

CA Firm No: 102. ERO/Samalkota3. DE/O/Ramachandrapuram4. ERO/Ramachandrapuram

RAJAMAHENDRAVARAM AUDITOR -3.1. DE/O/Amalapuram

CA Firm No: 112. ERO/Amalapuram3. ERO/Razole4. DE/O/Rampachodavaram

RAJAMAHENDRAVARAM AUDITOR -4.1. DE/O/Kakinada

CA Firm No: 122. ERO/Kakinda3. DE/O/Jaggampeta4. ERO/Jaggampeta

ELURU CIRCLE AUDITOR -1.1. Circle Office/Eluru

CA Firm No: 132. HT/Eluru3. DE/TRS/M&P/Eluru4. DE/O/Eluru

5. ERO/Town/Eluru

ELURU CIRCLE AUDITOR -2.1. DE/O/Jangareddygudem

CA Firm No: 142. ERO/Rural/Eluru3. ERO/Janagareddygudem4. DE/O/Narsapuram

ELURU CIRCLE AUDITOR -3.1. DE/O/Tadepalligudem

CA Firm No: 152. ERO/Tadepalligudem3. DE/O/Bhimavaram4. ERO/Bhimavaram

ELURU CIRCLE AUDITOR -4.1. DE/O/Nidadavole

CA Firm No: 162. ERO/Nidadavole3. ERO/Tanuku4. ERO/Palakollu


the management of epdc of ap ltd. has decided to assign ......internal audit assignment in apepdcl...

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