FMS Manual Update

7/27/2019 FMS Manual Update

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TECHNICAL EDUCATION QUALITY

IMPROVEMENT PROGRAMME OFGOVERNMENT OF INDIA

FINANCIAL MANAGEMENT MANUAL

AUGUST 2003

NATIONAL PROJECT IMPLEMENTATION UNIT4TH FLOOR, EDCIL HOUSE, PLOT 18-A, SECTOR 16-A,

NOIDA 201301 UTTAR PRADESH


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CONTENT

Page

DEFINITIONS 1

Section I REIMBURSEMENT & DISBURSEMENTMANAGEMENT SYSTEM

2

Section II FINANCIAL ACCOUNTING SYSTEM 9

Section III AUDIT REQUIREMENTS 15

Section IV REIMBURSEMENT PROCEDURES 16

Section V CONTRACT AND PROCUREMENT MANAGEMENTSYSTEM

24

Section VI FINANCIAL REPORTING AND FINANCIALMANAGEMENT REPORTS

32

ANNEXURE

Annex I MODEL AUDIT REPORT 33

Annex II SAMPLE TERMS OF REFERENCE FOR THE AUDITOF PROJECT FINANCIAL STATEMENTS

(and Accompanying SOE and SA WhereApplicable)

34

Annex III FINANCIAL MANAGEMENT REPORT (FMR) 37

Annex IV CASH BOOK 42

Annex V PETTY CASH VOUCHER 43

Annex VI PETTY CASH BOOK 44

Annex VII JOURNAL VOUCHER 45

Annex VIII JOURNAL BOOK 46

Annex IX GENERAL LEDGER 47

Annex X BANK RECONCILLATION STATEMENT 48

Annex XI STOCK REGISTER 49


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Annex XII FIXED ASSET REGISTER 50

Annex XIII REGISTER OF CONTRACTS FOR CONSULTANCYSERVICES

51

Annex XIV RECEIPTS AND PAYMENT ACCOUNT 52

Annex XV TRIAL BALANCE 53

Annex XVI INCOME AND EXPENDITURE ACCOUNT 54

Annex XVII BALANCE SHEET 55

Annex XVIII FORM 1B/1C/ABSTRACT OF SUMMARY SHEET 56

Annex XIX CHART OF ACCOUNTS 59


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DEFINITIONS

Accounting Year, Year, or Financial Year means the year commencing from1st of April and ending with 31st of March succeeding year.

Auditor means a firm of qualified Chartered Accountants appointed byNational Project Implementation Unit & State Project Facilitation Unit forauditing the project accounts.

Bank means a Scheduled Bank in which a separate account is opened tooperate the project funds.

BTE means the Bureau of Technical Education within the Department ofSecondary and Higher Education, Ministry of Human Resource Development,Government of India.

NPIU means National Project Implementation Unit created by Ministry ofHuman Resource Development for facilitating, implementing, coordinating andmonitoring Project activities at National level.

Project means Technical Education Quality Improvement Programme ofGovernment of India (TEQIP).

PIP means Project Implementation Plan for the Project dated August 2002,including action plans, procedures and criteria for implementation of theProject.

Project Institutions means technical/engineering education institution, asdefined in PIP, duly selected for support under the Project.

SPFU means State Project Facilitation Unit to provide support to the Secretaryin charge of technical education in facilitating, implementing, coordinating andmonitoring the Project at the State level.


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SECTION I

REIMBURSEMENT & DISBURSEMENT MANAGEMENT SYSTEM

1. Project Implementation Units

1.1. Each State has a State Project Facilitation Unit (SPFU). Each SPFU, inturn will have a number of institutions and these are referred to asLead/Network Institution Project Management Unit (LIPMU/NIPMU). Atnational level for facilitating, implementing, coordinating andmonitoring of the project, National Project Implementation Unit (NPIU)has been constituted.

2. Project Years and Project Periods

2.1. The Technical Education Quality Improvement Programme ofGovernment of India (TEQIP) will span a period of 5 years and hasbeen categorized into 5 Project Years.

Retroactive Period - 01.12.2001 to 31.12.2002Year 1 - 01.01.2003 to 31.03.2003Year 2 - 01.04.2003 to 31.03.2004Year 3 - 01.04.2004 to 31.03.2005Year 4 - 01.04.2005 to 31.03.2006Year 5 - 01.04.2006 to 31.03.2007

2.2. Each Project Year can be further divided into Project Periods on aQuarterly basis for monitoring purposes. These Project Years and

Project Periods will have defined start dates and end dates and eachProject Year and Project Period will be mutually exclusive of each other.

3. Expenditure Categories

3.1. The World Bank has defined certain expenditure categories.Expenditure incurred by each unit for TEQIP will be booked againstappropriate Expenditure Category. The Expenditure Categories definedby the World Bank are as follows:

I Institutional Development sub-projects

II Goods- Equipment- Vehicles- Furniture

III Books & Learning Resources


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IV Consultant Services

- Local Consultants- Foreign Consultants

V Training & Workshops- Local Training/Fellowships- Foreign Training/Fellowships

VI Recurrent Cost

- Incremental Salaries- Incremental Operating Cost

4. Project Components and Sub-Components

4.1. For monitoring of expenditure against physical activities, the WorldBank has defined certain Project Components and Sub-Components.Expenditure incurred by each unit for Technical Education QualityImprovement Programme of Government of India will also be bookedagainst appropriate Project Components and Sub-Components. TheProject Components and Sub-Components defined by the World Bankare as follows:

Component 1: Institutional development

- Promotion of Academic Excellence- Networking of Institutions- Providing Services to Community and Economy

Component 2: System Management Capacity Improvement

- Establishment/Strengthening of Project Management Structures- Research and Training in Education Planning & Management

5. Funding and Financing Plan

5.1. The estimated funding for various institutions and structures during theFirst Phase of the Programme is as below:

(Rs. In Million)

(a) Lead Engineering Institutions 9000

(b) Network Engineering Institutions 5450

(c) Polytechnics (Lead and Network Institutions) 750

(d) SPFUs 150

(e) NPIU, Research Studies, Services of Resource

Institutions

150

Total 15500


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5.2. Detailed Financing Plan

The detailed financing plan for the First Phase is reflected in the tablesbelow :

Cost Table (Project Yearwise)

Rs. in Million

Component/

CategoryYear 1 Year 2 Year 3 Year 4 Year 5 Total

Programme Component - 1 : Institutional Development (Competitive Funding)

1Promotion ofAcademicExcellence

920.488 2,964.187 3,557.025 3,229.375 1,185.675 11,856.750

2Networking ofInstitutions

137.925 444.125 532.950 483.850 177.650 1,776.500

3Services toCommunity &

Economy

121.587 391.688 470.025 426.775 156.675 1,566.750

TOTAL (A) 1,180.000 3,800.000 4,560.000 4,140.000 1,520.000 15,200.000

Programme Component - 2 : System Management Capacity Improvement

( Non-Competitive Funding)

I Goods 3.250 8.125 8.125 6.500 6.500 32.500

II Books & LRs 0.550 1.375 1.375 1.100 1.100 5.500

III Consultancies 3.200 8.000 8.000 6.400 6.400 32.000

IVTrainings,fellowships &workshops

5.000 12.500 12.500 10.000 10.000 50.000

V Salary 7.700 15.400 15.400 19.250 19.250 77.000

VIOperation &Maintenance

10.300 20.600 20.600 25.750 25.750 103.000

TOTAL (B) 30.000 66.000 66.000 69.000 69.000 300.000

GRAND TOTAL(A+B)

1,210.000 3,866.000 4,626.000 4,209.0001,589.000 15,500.000


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Cost Tables - State Level Institutions & SPFUs

Rs. in Million

Component/Category

Year 1 Year 2 Year 3 Year 4 Year 5 Total

Programme Component - 1 : Institutional Development (Competitive Funding) - StateLevel Institutions

1Promotion of

AcademicExcellence

729.350 2,304.750 2,765.700 2,497.300 921.900 9,219.000

2Networking ofInstitutions

107.825 340.875 409.050 369.400 136.350 1,363.500

3Services toCommunity &

Economy

100.325 316.875 380.250 343.300 126.750 1,267.500

TOTAL (A) 937.500 2,962.500 3,555.000 3,210.000 1,185.000 11,850.000

Programme Component - 2 : System Management Capacity Improvement( Non-Competitive Funding) SPFUs

I Goods 2.450 6.125 6.125 4.900 4.900 24.500

II Books & LRs 0.350 0.875 0.875 0.700 0.700 3.500

III Consultancies 0.700 1.750 1.750 1.400 1.400 7.000

IVTraining,fellowships andworkshops

3.500 8.750 8.750 7.000 7.000 35.000

V Salary of KeyStaff

4.200 8.400 8.400 10.500 10.500 42.000

VIOperation &Maintenance

3.800 7.600 7.600 9.500 9.500 38.000

TOTAL (B) 15.000 33.500 33.500 34.000 34.000 150.000


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6. Disbursement

6.1. Disbursement of Credit

Disbursement of Credit is as per the following table.

ProgrammeComponent/Expenditure

Category

Programme

Cost(Rs. inMillion)

Bank FinancingPercentage

Institutional Development 15200 80%

System ManagementCapacity Improvement

Goods 32.5

100% of foreignexpenditure, 100% of localexpenditure (ex-factorycost) and 80% of localexpenditures for otheritems procured locally

Books & LRs 5.5 100%

Consultancies 32 80%

Trainings, fellowships andworkshops

50 100%

Incremental Operating Costs 180

80% until December 31,

2004, 65% until December31, 2006 and 25%thereafter

Total Programme Cost 15500

6.2. Disbursement Process

The disbursement will be made in the traditional system(reimbursement with full documentation and against statement ofexpenditures). Under the traditional system of claiming disbursement,the Programme implementing agencies initially incurs the expenditureand then reimbursement is claimed by way of reimbursement claims.The reimbursement claims constitutes three parts:

1. Withdrawal Application2. Summary Sheets3. Documents such as invoices, bills, payment receipts, etc.


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6.3. Disbursement Categories

Expenditure incurred by each unit for Technical Education QualityImprovement Programme of Government of India will be booked as perWorld Bank designated Expenditure Categories. However for thepurpose of claiming reimbursement for these expenditures, the claimshave to be consolidated under certain heads designated by the WorldBank as Disbursement Categories as given below:


IIGoods (including equipment, furniture &vehicles)



V Training & Workshops

VI Incremental Operating Cost including salaries

The entire expenditure at the institutional level will be claimed underCategory I Institutional Development sub projects. Theexpenditure of SPFUs and NPIU will be claimed under Category II toCategory VI as per the nature of expenditure.


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SECTION II

FINANCIAL ACCOUNTING SYSTEM

1. Funds And Funds Flow

1.1. For the centrally supported institutions and the NPIU, funds will bebudgeted under identifiable budget line item in the Ministry of HumanResource Development (MHRD). On approval of the budget by theParliament, MHRD will release annual fund requirements in three tofour instalments to the institutions as grant. The transfer of funds willbe through cheque/draft. The institutions will maintain a separate bankaccount (PLA account) for the Programme funds. For NPIU, MHRD willrelease funds in three to four instalments.

1.2. For State supported institutions and SPFUs, funds will be allocated inthe budgets of the concerned Departments of the respective StateGovernments. On approval of the budget by the legislature, the StateGovernments will allocate and release funds in three to four instalmentsas grant to the institutions and SPFU. The funds to private institutionswill be on lend by the respective State Governments as loan. Thetransfer of funds will be through cheque/draft. The SPFU andinstitutions will maintain a separate bank account for the Programmefunds.

2. Flow of Funds

2.1. The Programme funds to the institutions will be released in three tofour installments each year on the basis of a Memorandum of

Understanding (MOU) between the States and the institutions, whichwill contain the terms and conditions of the grants/loan. The firstinstallment will not be more than 20% of the grant/loan amount andwill be based on the committed expenditure as per the annual plan.Further installments will be released on the receipt of utilization status.Each subsequent installment will be released on utilization of 70% ofthe amount of the previous installments. This would ensure smoothflow of funds to the institutions and will avoid accumulation of funds atthe institution level.

3. Chart of Accounts

3.1 Each accounting unit i.e. NPIU, SPFU, and LIPMU/NIPMU would maintaina detailed chart of accounts for booking of the expenditure under theproject. The chart of accounts would confirm to the accountingrequirements of the respective governments under which it falls. Asample chart of accounts is attached at Annex XIX.


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4. Method of Accounting/Accounting Policies

4.1. Each accounting unit i.e. NPIU, SPFU, and LIPMU/NIPMU would adoptDouble Entry System of book keeping on Cash basis retaining basicprinciples of Government Accounting.

4.2. All payments will be charged off to relevant expense account head atthe time of making the payments except advance payment.

4.3. Advance payments will be charged off to the relevant heads of accountson adjustment.

4.4. The assets created out of project will be accounted at cost.

4.5. No depreciation will be provided on Fixed Assets acquired under theproject.

4.6. Materials purchased for the project activities will be charged off to therelevant project expenditure at the time of purchase itself.

4.7. Eligible expenditure incurred on project activities will only be claimed.Expenditure not in accordance with the project agreements will not beclaimed.

5. Project Accounting

5.1. To ensure a transparent and accurate accounting system, the followingactions are required:

5.1.1. Separate books of accounts and record of fund flow for the Programmefunds will be maintained by each management structure at institutional,State and National levels i.e. by LIPMU, NIPMU, SPFU, and NPIU. Eachof these management structures will maintain standard Books ofAccount (Cash Book, Bank Book, Journal, Ledgers, etc.).

A. Cash Book

Each management structure at institutional, State, and NationalLevels i.e. LIPMU, NIPMU, SPFU and NPIU will maintain Cash Bookwith Cash and Bank columns. The format of the Cash Book is

attached at Annex IV. The transactions of Cash and Bank will berecorded in the Cash Book along with classification as and whentransactions take place.

The Cash Book will be closed monthly and attested by the Incharge(Finance).

There will be a surprise verification of Cash at least once in a monthby an appropriate authority and result of such verification will berecorded in the Cash Book under his date and signature.


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B. Petty Cash Book

A reasonable amount of Cash will be fixed as Imprest to meetroutine office expenses and it will be in the custody of the Cashier.Adequate security will be obtained from the Cashier.

The Cashier will obtain the approval of Incharge (Finance) on thePetty Cash Voucher before making payment out of the imprest cash.The format is attached as Annex V. He will maintain properaccounts for the amounts spent. The format of the Petty Cash Bookis attached as Annex VI. Expenditure from the imprest will bereimbursed as per the requirements but in any case on the lastworking day of the month.

Petty Cash Book will be closed at the close each working day andgot verified and attested by Incharge (Finance).

C. Journal Book and Journal Voucher

Journal Voucher will be prepared for any adjustment entry ( theformat is attached at Annex VII ) and the same will be posted toJournal Book ( the format is attached as Annex VIII )

The entries from Journal Book will be posted to General Ledger asand when recorded in the Journal Book giving full details oftransactions, Journal Voucher number and amount.

D. General Ledger

The entries from Cash Book will be posted to General Ledger (theformat is attached at Annex IX) as the transactions occur. It willbe balanced quarterly.

E. Bank Reconciliation Statement

Bank statement will be obtained from the bank within 5 days afterthe close of the month.

Closing balance appearing in Bank statement would be got

reconciled with that shown in the Cash Book by preparing the BankReconciliation Statement. The format is attached at Annex X.

F. Stock Register

The person in charge of Stores will maintain a Stock Register (theformat attached at Annex XI) to account for stores itemspurchased and issued. The details regarding date of purchase,quantity and value of items purchased will be recorded in the


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register based on the bills, while the issues will be based on theindents approved by competent authority.

There will be a physical verification of stores on half yearly basisand the same will be completed within 15 days after the end of thehalf-year. Result of such verification will be noted in the stockregister under dated signature of verifying officer.

G. Fixed Asset Register

The Agency will maintain Fixed Asset Register (the format isattached at Annex XII) to record the assets acquired and createdout of project funds. Individual asset-wise entries will be recordedin the Fixed Asset Register.

An identification number for each item of asset would be assignedfor easy identification of the assets. These identification numberswould be painted on each item prominently, and the same would berecorded in the Fixed Assets Register.

There will be an annual physical verification of fixed assets. Theresult of such verification will be recorded in Fixed Asset Registerunder date and signature of verifying officer. Any significantdifference will be dealt with in the books of accounts properly.

4.1.2 The institutions will follow the applicable statutory procedures formaintaining accounts. However, records of expenditure incurred underthe Programme will be kept separately for claiming reimbursement.

4.1.3 The institutions, SPFUs, NPIU would retain all records (contracts,orders, invoices, bills, receipts and other documents) for at least oneyear after the audit reports for the fiscal year are submitted to theWorld Bank.

4.1.4 There are well-defined components and expenditure categories for thepurpose of claiming reimbursement under the Programme. Properlinkages will have to be established between the accounting head andthe components/categories of expenditure.

4.1.5 To ensure transparency in the system, accurate records will be kept at

LIPMU, NIPMU, SPFU, and NPIU. These records will have to besupported by documents/vouchers, etc. in order to establish accuracyand authenticity of expenditures.

4.1.6 Financial reports generated from the above accounting system will becomparable to Programme allocations, yearly budgets, forecasting andutilization of funds relating to physical and academic achievement astargeted under the Programme.


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6. Internal Checks & Controls

6.1. All the institutions to be funded under the Programme would be wellperforming institutions. Annual report containing audited accounts andaudit report of all centrally funded institutions under the Programmewill be laid on the table of both Houses of Parliament within a specifiedtime frame of nine months from the date of closing of the financialyear. Similarly, all State funded institutions will lay their accounts onthe table of their respective Legislative Assembly.

6.2. The process of laying of audited annual accounts is very rigorous. Theadministrative Ministry/Department is required to review the reportsand prepare a Review Statement and Delay Statement (explaining thereasons of delay, if any). These are required to be approved by theMinister In-charge and laid along with the Audited Accounts Reports. AParliamentary Committee on Papers Laid on the Table conducts adetailed examination of these documents. It ensures the sound internalcontrol mechanism at the institution level.

6.3. In addition, internal control mechanism at institutional, State andNational levels i.e. by LIPMU, NIPMU, SPFU, and NPIU would include thefollowing:

a) Establishment of appropriate budgeting systems

b) Regular monitoring of actual financial performance with budgets andtargets

c) Monitoring of physical and financial progress

d) Establishment of procedures and systems for ensuring standard internalcontrol such as checking of expenditures, appropriate documentation,levels of authorization, periodic bank reconciliation and physicalverification

6.4. For the purpose of proper checks and control at the institutional level,the institutions will ensure the following:

a) Maintain basic day-to-day transactions on a regular basis in separateregisters and ledgers.

b) Generation of Trial balance, reconciliation statements, receipts andpayment, income and expenditure statements, etc. The formats areattached as Annex XIII to XVII.

c) Comparison of Statement of expenditure with the annual budgetaryallocations, Programme components and categories of disbursement.


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d) Periodic checks on delay of payments on the pending bills and animmediate corrective action to be taken by LIPMU/NIPMU/SPFU andNPIU.

6.5. A finance committee at the institution level for yearly physicalverification of assets independently.

7. Staffing and Training

7.1.1. Finance cell of NPIU will be headed by a qualified finance professionalas Financial Management Specialist. The specialist will be assisted by aqualified accountant designated as Accounts Manager. The FinancialManagement Specialist will be responsible for establishment of theagreed financial management arrangements, providing timely financialreports, facilitating smooth and timely flow of funds and providingoverall guidance in respect of financial management issues includingmonitoring of expenditures, audit and internal control to SPFUs and theparticipating institutions.

7.1.2. At SPFUs, a Finance Coordinator who will be assisted with adequatesupport staff will head the finance function. He will be responsible forproviding timely consolidated financial reports to the State authoritiesand the NPIU, monitoring of expenditures, providing overall guidance tothe institutions, facilitating smooth flow of funds to all institutions andconduct of timely audit and ensuring consolidation of reimbursementclaims.

7.1.3. At the institutional level a senior staff will be designated as in charge ofthe accounts function for the Programme funds. He will be responsible

for complying with the disbursement procedures, financial reportingrequirements, monitoring of Programme expenditures and audit.Accounts personnel to work exclusively on the Programme will beidentified.

7.1.4. Entire financial staff under the Programme at institutional, State andNational levels would be given training on financial management, andreimbursement procedures, etc.


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SECTION IV

REIMBURSEMENT PROCEDURES

1. External Assistance and Reimbursement Procedure

1.1. The Programme is an externally assisted project and attracts theprovisions of GOI policies in respect of externally assisted projects.Relevant extract from the External Assistance Manual of Ministry ofFinance, GOI is given below:

a) Under externally assisted projects, the external assistance receivedfrom various multilateral and bilateral agencies is passed on by GOI tothe States as Additional Central Assistance (ACA) on the same termsand conditions as Central Assistance for State Plans. These are different

from the conditions at which external assistance is received fromvarious multilateral/bilateral agencies. For States not falling under thespecial category status, assistance is given in 30:70 mix of grant andloans. With effect from 1st April 2001 a loan with 20years maturityperiod will carry a rate of interest of 12%. Further, half of it carries agrace period of 5 years.

b) All external-aid disbursed by external agencies to GOI is first receivedby the Central Government in the Ministry of Finance (MOF),Department of Economic Affairs (DEA), office of Comptroller of AidAccounts and Audit (CAA&A). The fund flow process in case of Central

and State Sector Project is as below:

Central Sector Projects

In case of Central Ministry/Department implemented projects, theexternal aid takes the following route:

Based on Project provision, the Ministry spends money on theproject

Ministry sends claims for reimbursement to CAA&A. (In the

Programme central institutions will submit their reimbursementclaims to NPIU with intimation to BTE. BTE within 15 daysindicate to NPIU any inconsistency)

CAA&A arranges reimbursement from the external agencies,which gets into the Central budget as a receipt.


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State Sector Projects

For the projects implemented by the State Govt. departments, theexternal assistance follows the route given below:

State Government makes budget provisions for the project

State Finance Department authorizes the implementingDepartment by releasing funds.

The Departments concerned makes payments and sends thereimbursement claims to CAA&A

CAA&A scrutinizes the claims and forwards application toExternal Agency

The External Agency reimburses CAA&A after examining theclaims. CAA&A advises Project Management Unit (PMU) in DEAabout receipt of funds

The PMU advises Plan Finance-I of the Department ofExpenditure (DoE) to release funds in the form of ACA to theStates.

Plan Finance I authorizes Chief Controller of Accounts, Ministryof Finance to effect the transfer of funds.

The Chief Controller of Accounts advises the RBI Central AccountSection, Nagpur to debit the Central Government Account andcredit the State Government Account for the amount.

c) The States initially incur expenditure on externally aided projects andthereafter claim reimbursement from GOI. In order to prevent anyadverse effect on Project implementation by the States due to fundconstraints and for expeditious utilization of external aid, a system ofadvance release of ACA is available up to 25% of the budgetaryprovision which is released by the Department of Expenditure on advice

from the Department of Economic Affairs in the first month of afinancial year. The States subsequently adjusts this against thereimbursement claim during the last 3 to 4 months of the financialyear.

1.2. All State level institutions will send their claims to the SPFU and theCentral institutions will send their claims to NPIU. SPFU after thescrutiny will send the claims to the NPIU, which will forward the sameafter necessary checks and verification to CAA&A for claimingdisbursement every quarter. The Financial Coordinator at SPFU and


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Finance In-charge at the institutional level will be responsible forpreparing quarterly claims and the Head of the Institution will ensuretimely submission of these claims for the purpose of disbursement.CAA&A will examine these claims and take appropriate action forclaming disbursement from the World Bank. CAA&A will provideinformation on periodic disbursement status to NPIU, and the States.

Flow of Reimbursement Claims for Centrally funded Institutions

Flow of Reimbursement Claims for State-funded Institutions

1.3. The disbursement will be made in the traditional system(reimbursement with full documentation and against statement ofexpenditures). Under the traditional system of claiming disbursement,the Programme implementing agencies initially incurs the expenditure

and then reimbursement is claimed by way of reimbursement claims.The reimbursement claims constitutes three parts:

1. Withdrawal Application2. Summary Sheets3. Documents such as invoices, bills, payment receipts, etc.

2. Guidelines For Correct Preparation And Presentation Of Claims

2.1. Formats to be used in the preparation of claims

2.2. The claim forms to be used for claming reimbursement are given asAnnex XVIII. The size of the formats would be in A4 only and be inoriginal and no photocopy.

2.3. Amount eligible for reimbursement which is to be claimed

2.4. The percentage of reimbursement of the eligible expenditure is asfollows:

Institution NPIU CAA&A Funding AgencySPFU

Institution NPIU CAA&A Funding Agency

Intimation to BTE


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Expenditure Category Financing Percentage

Institutional Development sub-projects 80%

Goods

100% of foreign expenditures,100% of local expenditures (ex-factory cost) and 80% of localexpenditures for other items

procured locally

Books & Learning Resources 100%

Consultant Services 80%

Training & Workshops 100%

Incremental Operating Cost includingsalaries

80% until 31/3/2004, 65% until31/12/2006, and 25%

thereafter

2.5. Wherever reimbursement percentage is 100% the claim will not includetaxes and duties levied in India.

2.6. Wherever the reimbursement percentage is less than 100% the claimswill include taxes and duties levied in India.

2.7. Amount not eligible for reimbursement

(i) Earnest money deposit, secured advances recovered form thecontractors bill are not eligible for disbursement at the time ofsuch recovery. However, the same may be claimed at the time offinal release of the money after completion of the work.

(ii) Amounts recovered from contractors bill towards Liquidateddamages/penalty imposed.

(iii) Amount recovered from contractors bill towards any fund

managed by SPIU/PPIU.(iv) Expenditure on cost of land for project activities.

(v) Advances given to consultants are not eligible for reimbursement(except for mobilisation advance of the consultant).


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3. Documents to be sent along with claims

3.1. The following supporting documents are required to be submittedalongwith Form 1-B :

(i) Contractors Running Account Bill for civil works

(ii) Suppliers or Consultants Invoice

(iii) Summary statement of works performance signed by supervisingengineer or any other authorised representative.

(iv) Evidence of payment in the form of receipt from contractor, etc.

(v) Bank guarantee in case claim is towards advance payment.

3.2. When summary sheet (Form 1-C) is used where no documents arerequired to be sent with the claim, the documents are to be retained inSPIU claim application-wise and must be readily available for review byauditors.

4. Other points to be adhered to

(i) Separate summary sheet is to be prepared for each category ofexpenditure as per schedule of withdrawal of proceeds to thecredit agreement.

(ii) The consolidation sheet (abstract of summary sheet) of all thesummary sheets in a claim would be prepared and placed onthe top of each set of the summary sheet.

(iii) Four copies of Summary sheet and the documents whereverapplicable would be submitted to NPIU in A4 size, paper inoriginal. The photocopy would not be submitted.

(iv) If the claim is delayed for more than six months, a certificatethat the amount has not been claimed/reimbursed to the Statein any of the earlier claims and the reasons for the delay would

also be given in the remarks column of Abstract of Summarysheet/SOE Form 1-C/DOC Form 1-B.

(v) Reference period would be Day-Month-Year format.Overlapping of the reference periods would be avoided.

(vi) The claims would be ink-signed by the person authorized tosign the claims. The authorized person would duly attest anycutting or overwriting.


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5. The instructions of filling up of summary sheets are given below :

5.1. Summary Sheet with Documents (FORM 1-B)

5.1.1. This form is to be used for expenditure relating to contract priorreviewed by the bank, e.g. I.C.B. (International Competitive Bidding).These would be sent for the prior review contracts and for contracts,which are above threshold limits of SOE. The Following instructions areto be followed sequentially while filling up the columns in the summarysheets

1. Application No.: This column is to be left blank by the SPIU.

2. Summary Sheet No.: Each page (Summary Sheet) is to benumbered sequentially under each claim.

3. IDA Credit Number: Insert full reference (number and letter) asit appears on the Credit Agreement. i.e.

4. Item No.: Identifies item sequentially within each summarysheet and facilitates identification of the relevant item in anyrelated correspondence.

5. Category No.: Obtain category reference from schedule 1 of thecredit agreement. Separate summary sheet is to be used foreach category of expenditure.

6. Brief description of Goods, works or services: Give briefdescription e.g. pumps; electrical equipment; constructions of

school, etc.7. Name and address of contractor or supplier: Give the name, city,

state and country.

8. Contract or purchase order No. and date: Give full reference toensure that the contract or purchase order can be readilyidentified. In respect of contract having more than one package,identify each package separately.

9. Currency and total amount of contract : Give currency name andvalue, including any price escalation. Wherever contract is

revised and approved by the Bank, revised contract value to beindicated.

10. Currency and Cumulative Amount Paid to Date: Cumulativeamount of expenditure including the expenditure of the currentclaim is to be shown against each currency of the contractamount.

11. Currency and Amount paid during the period: Give currency andtotal value of invoices net of retention and other deductions for


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ineligible items. When there are more than one invoice in anitem in the Summary Sheet, an annexure showing the details ofeach invoice would be sent with the claim. When the currency isIndian Rupees, the same would be indicated in Millions into threedecimals.

12. Financing percentage: Eligible percentage taken from theappropriate category of schedule 1 of the Credit Agreement.

13. Amount eligible for financing: Total amount of invoices coveredby the application multiplied by the eligible percentage. Amountsare net of retention money or any other deductions.

14. Exchange Rate: This column is to be left blank.

15. US Dollar charged to Special Account: This column is to be leftblank.

16. Remarks (including W.B.R.No.): Include invoice references, ifapplicable. Also indicate WBR No. related to contract above theprocurement prior review limit.

17. Total: The total of Col.7 and Col.9 of the Summary Sheet is to bestruck for each summary sheet.

18. Authorized Representative: The Project Director or any otherperson authorized to sign a claim has to give his full signaturewith designation under each of the summary sheet.

5.2. Summary Sheet without Documents (FORM -1-C -S.O.E)

5.2.1. This summary sheet is known as Statement of Expenditure. Thissummary sheet is tailor-made to suit the individual Project in respect ofexpenditure, relating to the contract, which are post-reviewed by theBank. This instructions outlined above as are relevant would befollowed while filling up the statement of expenditure' summary sheet.In addition the following certificates arc to be furnished at the bottomof the summary sheet.

a) "Supporting Documents for this SOE Retained at(insert location).

b) Where the amount claimed for reimbursement for goods underSOE is 100% of the eligible expenditure incurred, an additionalcertificate is also required to be furnished as given below:

a. "Certified that the expenditure claimed above does not

include local taxes and duties."

c) Where the amount claimed under Civil Works; Equipments andConsultancy are large as to exceed the equivalent of USD


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mentioned for SOE threshold, an additional certificate isrequired to be furnished as given below: -

a. 'Certified that the value of the contracts against this claimdoes not exceed the SOE threshold."


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SECTION V

CONTRACT AND PROCUREMENT MANAGEMENT SYSTEM

1. Procurement Plan

1.1. Before start of the project, each unit would prepare a procurement plancontaining the procurement schedule and procurement arrangementsfor the entire project period giving year wise breakup in respect ofitems to be procured during execution of the project.

1.2. The procurement of civil works, goods and services will occur at theinstitutional level under the Programme Component-I (InstitutionalDevelopment). The details of requirement including the cost of civilworks, goods and services for each institution will be reflected in theProposals of the institutions and will vary from proposal to proposal asper their individual needs in pursuit of excellence.

1.3. The participating institutions will, among others, form four workingcommittees namely, Academic Committee, Building and WorksCommittee, Finance Committee and the Procurement Committee.These Committees will function under the supervision of the BOG of theinstitution and these Committees will seek approvals on all institutionalproject related procurements and activities from the BOG.

1.4. Goods and works would be procured in accordance with the provisionsof Section I of the Guidelines for Procurement under IBRD Loans andIDA Credits published by the Bank in January 1995 and revised inJanuary and August 1996, September 1997 and January 1999 (the

Guidelines) and the provisions of the following Parts of this Section I.The limits of procurement of various goods, civil works and consultantservices will be applicable as per the details contained in the legalagreements.

1.5. Except as otherwise provided in Part C of this Section, goods estimatedto cost $ 200,000 or more per contract, will be procured undercontracts awarded in accordance with the provisions of Section II of theGuidelines and Paragraph 5 of Appendix I thereto.

2. Procurement Procedures

2.1. National Competitive Bidding

Works to be carried out under an Institutional Development Subprojectand estimated to cost $ 50,000 or more per contract and equipmentestimated to cost more than $50,000 equivalent per contract but lessthen $200,000 equivalent may be procured under contracts awarded inaccordance with legal agreements.


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2.2. National and International Shopping

2.2.1. Vehicles, equipment and furniture estimated to cost less than $50,000equivalent per contract may be procured under contracts awarded onthe basis of shopping procedures in accordance with the provisions ofparagraphs 3.5 and 3.6 of the Guidelines.

2.3. Direct Contracting

2.3.1. The following items be procured in accordance with paragraph 3.7 ofthe Guidelines and in accordance with the legal agreement:

a) Equipment which is of a proprietary nature and is estimated to costless than $20,000 equivalent per contract;

b) books and learning resources estimated to cost less than $50,000equivalent per contract, and

c) small items estimated to cost less than $500 equivalent percontract.

3. Civil Works

3.1. The Programme does not envisage large scale civil works but hasprovision to meet essential requirements of developmental plans ofinstitutions for acquiring excellence.

3.2. Three types of activities under civil works are envisaged: (a)construction of buildings as extensions, b) refurbishing of the existing

infrastructure and c) improvement of facilities.

3.3. Each institution will be required to create a special Cell in theirinstitution to undertake the responsibility of civil works comprising offaculty from Civil Engineering Department or hire a consultant forundertaking the civil works in consultation with the SPFU.

3.4. Procurement of Small Works

3.4.1. Works to be carried out under an Institutional Development Subprojectand estimated to cost $50,000 equivalent or less per contract may:

(i) be procured under lump-sum, fixed-price contracts awarded onthe basis of quotations obtained from three (3) qualifieddomestic contractors in response to a written invitation. Theinvitation will include a detailed description of the works,including basic specifications, the required completion date, abasic form of agreement acceptable to the Association, andrelevant drawings, where applicable. The award will be made tothe contractor who offers the lowest price quotation for the


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required work, and who has the experience and resources tocomplete the contract successfully;

(ii) be procured under the unit/piece rate systems through qualifiedcontractors; or

(iii) as a last resort, be carried out by force account provided suchworks meet the requirements of the provisions of paragraph 3.8of the Guidelines.

3.5. Review of Procurement Decisions

3.5.1. Procurement Planning

3.5.2. Prior to the issuance of any invitations to bid for contracts, theproposed procurement plan for the Project will be furnished to theWorld Bank for its review and approval, in accordance with theprovisions of paragraph 1 of Appendix 1 to the Guidelines. Procurementof all goods and works will be undertaken in accordance with suchprocurement plan as approved by the World Bank, and with theprovisions of said paragraph 1.

3.5.3. Prior Review

a) With respect to the first contract for goods by each SPFU andthe NPIU procured under national competitive biddingprocedures, regardless of the value of such contract, theprocedures set forth in paragraphs 2 and 3 of Appendix 1 tothe Guidelines will apply.

b) With respect to the first contract for works by each ProjectInstitution under national competitive bidding procedures,regardless of the value of such contract, the procedures setforth in paragraphs 2 and 3 of Appendix 1 to the Guidelines willapply.

c) With respect to each contract estimated to cost the equivalentof $200,000 for goods and $300,000 for works or more, theprocedures set forth in paragraphs 2(f), 2(g) and 3 of Appendix1 to the Guidelines will apply.

3.5.4. Post Review

3.5.5. With respect to each contract not governed by paragraph 2 of this Part,the procedures set forth in paragraph 4 of Appendix 1 to the Guidelineswill apply.


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3.6. Employment of Consultants

3.6.1. Consultants services would be procured in accordance with (a) theprovisions of the Introduction and Section IV of the Guidelines:Selection and Employment of Consultants by World Bank Borrowerspublished by the Association in January 1997 and revised in September1997, January 1999, and May 2002 subject to the modifications theretoset forth in paragraph 2 of this Part A of this Section II (the ConsultantGuidelines), and (b) the provisions of the following Parts of this SectionII.

3.7. Quality- and Cost-based Selection

3.7.1. Except as otherwise provided in Part C of this Section, consultantsservices would be procured under contracts awarded in accordance withthe provisions of Section II of the Consultant Guidelines, paragraph 3 ofAppendix 1 thereto, Appendix 2 thereto, and the provisions ofparagraphs 2.13 through 2.18 thereof applicable to quality- and cost-based selection of consultants.

3.7.2. The following provisions would apply to consultants services to beprocured under contracts awarded in accordance with the provisions ofthe preceding paragraph. The short list of consultants for services forprocurement of works and goods including procurement planning anddevelopment of technical specifications, estimated to cost less than$500,000 equivalent per contract, may comprise entirely nationalconsultants in accordance with the provisions of paragraph 2.7 of theConsultant Guidelines.

3.8. Other Procedures for the Selection of Consultants

3.8.1. Selection Under a Fixed Budget

3.8.2. Services for academic aspects of Institutional Development Subprojectsestimated to cost less than $200,000 equivalent per contract may beprocured in accordance with the provisions of paragraphs 3.1 and 3.5of the Consultant Guidelines.

3.8.3. Selection Based on Consultants Qualifications

3.8.4. Services for conduct of performance, reforms, quality and efficiencyaudits and for policy research studies estimated to cost less than $100,000 equivalent per contract may be procured under contractsawarded in accordance with the provisions of paragraphs 3.1 and 3.7 ofthe Consultant Guidelines.

3.8.5. Individual Consultants

3.8.6. Services for tasks that meet the requirements set forth in paragraph5.1 of the Consultant Guidelines will be procured under contracts


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awarded to individual consultants in accordance with the provisions ofparagraphs 5.1 through 5.3 of the Consultant Guidelines.

4. Procurement Method

4.1. The procurement methods applicable to the project as per World Bankguidelines are

4.2. National Competitive Bidding (NCB)

It is an open tender inviting quotations/bids at the national levelsubject to the following conditions

(i) Only the model bidding documents agreed with Government ofIndia will be used.

(ii) Tender Notice Inviting for Bid will be published in at least onewidely circulated national newspaper at least 30 days prior to thedeadline for submission of bids.

(iii) There will be no preference for any bidder including State/CentralGovernment undertaking or Small Scale Enterprises.

(iv) DGS&D rate contracts will not be valid.(v) There would be no price negotiation even with the lowest

evaluated bidder except with the prior concurrence of the WorldBank.

(vi) Except in cases of force majeure and/or situations beyond thecontrol of borrower, extension of the bid validity will not bepermissible without prior concurrence of Association.

(vii) Re-bidding will not be carried out without prior concurrence ofAssociation.

a) National Shopping

This method of procurement will be adopted for procurement of goods,which are readily available off-the-shelf or standard specificationcommodities. It would be ensured that at least 3 quotations areobtained for comparing the prices and the lowest is selected. DGS&Drate contracts are valid for National Shopping procedure.

b) Direct Contracting

This is procurement from a single source where no advantages could beobtained by further competition. This could be adopted for extension ofexisting contracts for works or goods justifiable on economic grounds,proprietary items and for early delivery to avoid cost delay in case ofneed.

c) Force Account

This is for construction using own material, labour and equipment(generally limited to 10% of the total cost of civil works) where:


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(i) Quantities of Work cannot be defined in advance.(ii) Works are for small value, scattered or in remote locations.(iii) Work has to be carried out without disrupting on going operation.(iv) There are emergencies.

4.3. Thresholds for Procurement Methods and Prior Review

Expenditure

Category

Contract Value

(threshold)

Procurement

Method

Contract Subject to Prior

Review / Estimated TotalValue Subject to Prior review

Civil Works a) Civil worksestimated to costthe equivalent ofUS$50,000 or lessper contract may

be executed by:

i) Fixed pricecontract

ii) Unit/PieceRate systemthrough

qualifiedcontractors

iii) By ForceAccount as a

last resort in amannersatisfactory tothe Association

NationalShopping

Rate Contract

Force Account

Post Review only

Post Review only

Post Review only

b) Civil worksestimated to costmore than the

equivalent ofUS$50,000 percontract.

NationalCompetitiveBidding (NCB)

First works contract by eachInstitution under NCB regardlessof value and all contracts above

US$300,000 by prior review inaccordance with paragraphs 2and 3 of Appendix 1 to theGuidelines for Procurement under

IBRD Loans and IDA Credits ofJanuary 1995, revised January,

August 1996, September 1997and January 1999. All others bypost review.

Goods(a) Equipment (i) US$50,000

equivalent or lessper contract

International

shopping andNationalShopping(includes DGS&D

rate contracts).

Post Review only

(ii) Proprietary

equipment ofUS$20,000equivalent or less

Direct

Contracting

Post Review only


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per contract

Contracts of more

than US$50,000equivalent but lessthan US$300,000

equivalent.

National

CompetitiveBidding (NCB)

First bidding document and first

contract from eachSPFU/NPIU by Prior Review.

(iii) Contracts ofmore than US$300, 000equivalent

InternationalCompetitiveBidding

First bidding document fromNPIU and all contracts for priorreview

(b) Furniture US$50,000 equivalentor less per contract

NationalShopping

Post Review only

(c) Books,Proprietary

Software,LearningResources and

EducationalMaterials

US$50,000 equivalentor less per contract

DirectContracting

Post Review only

(d) Vehicles US$50,000 equivalentor less per contract,

NationalShoppingprocedures

(includesDGS&D ratecontracts).

Post Review only

(e) SmallItems

US$500 equivalent orless per contract upto

an aggregate of

US $ 1,000,000.

DirectContracting

Post Review only

Services

Procurement

agent,researchcontracts,professionalservices,

training,workshops andfellowships.

Consultant servicesmay be procured by:

(a) More thanUS$200,000equivalent percontract.

Quality- andCost-BasedSelection

(QCBS)

Quality- andCost-BasedSelection

(QCBS) withshort list (wouldcomprise entirelyof national

consultants forall contracts

Prior Review of all consultantcontracts shall be governed by

the provisions of paragraphs (i),(ii) and (iii) below:

(i) With respect to each

contract for the employmentof consulting firms estimatedto cost the equivalent of US$100,000 or more, theprocedures set forth in

paragraphs 1, 2 and 5 of

Appendix 1 to the Guidelines forSelection and Employment ofConsultants by World BankBorrowers of January 1997,revised September 1997, January

1999 and May 2002 shall apply


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below

US$500,000)

(b) More than

US$100,000 and upto US$ 200,000equivalent.

(c) US$100,000equivalent or less per

contract

Selection based

on aFixed Budget(SFB)

Selection basedon

Consultant'sQualification(CQ)

(ii) With respect to each

contract for the employmentof individual consultantsestimated to cost the

equivalent of US$50,000 ormore, the qualifications,

experience, terms ofreference and terms ofemployment of the

consultants shall be furnishedto the Association for its priorreview and approval. Thecontract shall be awarded

only after the said approvalhas been given.

(iii) Terms of Reference for allconsultant contractsestimated to cost the

equivalent of US$12,000 ormore per contract in the caseof firms, and the equivalentof US$5,000 or more percontract in the case of

individuals shall be furnishedto the Association for its priorreview and approval. The

contract shall be awardedonly after the said approvalhas been given.

All other cases Post Review

Miscellaneous

Incrementaloperatingcosts.

Expenses incurred onmaintenance ofequipment, vehicles

and buildings, hiringcost of vehicles andoffices, andconsumables may be

executed by:

(i) Each package

not exceeding

US$5000, or

(ii) On the basis of

National Shopping

Direct

Contracting

National

Shopping

Post Review only

Post Review only


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SECTION VI

FINANCIAL REPORTING AND FINANCIAL MANAGEMENT REPORTS

1. Financial Reporting

The Quarterly Financial Management Report (FMR) will include

a) Comparison of budgeted and actual expenditure and analysis ofmajor variances.

b) In case the disbursement is converted to FMR based, additionalFMRs on (a) Withdrawals (b) Cash Forecast (c) ProcurementManagement for major contracts (d) Physical progress wouldhave to be generated.

The formats are attached at Annex III. Project Financial Statements andFMRs will be generated manually.

In addition to the above, monthly statements of expenditure as perexpenditure category/Components showing the allocations, current andcumulative expenditures at institutional, State and National levels i.e. byLIPMU, NIPMU, SPFU, and NPIU will be prepared.

2. Review And Analysis

a) The Financial Reports will be reviewed by LIPMU/ NIPMU/BOG/SPFU/NPIU/State Government/BTE. Each review will focus onphysical and academic progress in the Programme, and make

recommendations for future course of action to be taken by theinstitution.

b) The LIPMU/NIPMU will ensure the correctness and reliability offinancial data by comparing with the previous reports. Thediscrepancies found at the NPIU level will be referred to SPFU forreconciliation.

c) Wherever delays occur in the reimbursement claims or theerror/mistakes are noted, the same will be communicated to theconcerned SPFU to take corrective measures by the NPIU.

3. In addition a quarterly review of the financial controls of the institutionsand SPFUs will be conducted by NPIU.


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33

MODEL AUDIT REPORTUnqualified Opinion

(for Project Financial Statement Including SOE)

Addressee *

Introductory Paragraph

We have audited the accompanying financial statements of the [_____________]Project [financed under World Bank Loan No. ___________/IDA as of December 31,20XX [indicate any other additional years necessary] for the year(s) then ended. Our

responsibility is to express an opinion on these financial statements based on ouraudit.

Scope Paragraph

We conducted our audit in accordance with International Standards on Auditing [or relevant

national standards or practices, and/or World Bank guidelines]. Those Standards and/or WorldBank guidelines require that we plan and perform the audit to obtain reasonable assuranceabout 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 financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

A Opinion Paragraph

In our opinion, the financial statements give a true and fair view of the Sources and Applicationof Funds** of _______________________ Project for the year ended December 31, 20XX, inaccordance with [indicate International Accounting Standards or relevant national standards.Add financial position at December 31, 20XX where a balance sheet is required]

In addition, (a) with respect to SOEs, adequate supporting documentation has been

maintained to support claims to the World Bank for reimbursements of expendituresincurred; and (b) which expenditures are eligible for financing under the Loan/CreditAgreement [Ln/Cr. _______________]. (c) the SOE submitted and procedure and

internal controls involved in their preparation can be relied upon to support thewithdrawals.

[Name and Address of Audit Firm][date Completion Date of Audit]

* The auditors report should be appropriately addressed as required by the circumstances ofthe engagement and local regulations.

** A Source and Application of Funds statement is always required for each project. Abalance sheet is also required where the project has assets and liabilities.


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SAMPLE TERMS OF REFERENCE FOR THE AUDIT OF PROJECT FINANCIAL STATEMENTS

(and Accompanying SOE and SA Where Applicable)

Objective

The objective of the audit of the Project Financial Statement (PFS) is to enable the auditor toexpress a professional opinion on the financial position of [__________] project at the end ofeach fiscal year and of the funds received and expenditures for the accounting period endedmm/dd/yy, as reported by the PFS, [as well as an opinion on the Statement of Expenditures].

The project accounts (books of account) provide the basis for preparation of the PFS and areestablished to reflect the financial transactions in respect of the project, as maintained by theproject-implementing agency [_____________].

Scope

The audit will be carried out in accordance with International Standards of Auditing, and will

include such tests and controls, as the auditor considers necessary under the circumstances. In

conducting the audit, special attention should be paid to the following:

(a) All external funds have been used in accordance with the conditions of the relevant

financing agreements, with due attention to economy and efficiency, and only for thepurposes for which the financing was provided. Relevant financing agreements are (--------name of loan agreement);

(b) Counterpart funds have been provided and used in accordance with the relevant

financing agreements, with due attention to economy and efficiency, and only for thepurposes for which they were provided;

(c) Goods and services financed have been procured in accordance with the relevantfinancing agreement;

(d) All necessary supporting documents, records, and accounts have been kept in respect ofall project ventures [including expenditures reported via SOEs or SAs]. Clear linkagesshould exist between the books of account and reports presented to the Bank.

(e) Where Special Accounts have been used, they have been maintained in accordance withthe provisions of the relevant financing agreement.

(f) The project accounts have been prepared in accordance with consistently applied

International Accounting Standards and give a true and fair view of the financial situationof the project mm/dd/yy and of resources and expenditures for the year ended on thatdate.

(g) Whether the PMR or SOE submitted during the fiscal year, together with the procedure

and internal controls involved in their preparation can be relied upon to support thenecessary withdrawals.

(h) Review of outstanding previous years audit observations and their compliance.

Project Financial Statements

The Project Financial Statements should include

(a) A Summary of Funds received, showing the World Bank, project funds from otherdonors, and counterpart funds separately;

(b) A Summary of Expenditures shown under the main project headings and by main

categories of expenditures, both for the current fiscal year and accumulated to date; and(c) A Balance Sheet showing Accumulated Funds of the Project, bank balances, other assets

of the project, and liabilities, if any.

As an annex to the Project Financial Statements, the auditor should prepare a reconciliation

between the amounts shown as "received by the project from the World Bank" and that shownas being disbursed by the Bank. As part of that reconciliation, the auditor should indicate the


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35

mechanism for the disbursement, i.e. Special Accounts, Statements of Expenditures, or directreimbursement,

Statements of Expenditures

In addition to the audit of the PFS, the auditor is required to audit all SOEs used as the basis forthe submission of withdrawal applications. The auditor should apply such tests and controls, asthe auditor considers necessary under the circumstances. These expenditures should becarefully compared for project eligibility with the relevant financing agreements, and withreference to the Staff Appraisal Report for guidance when considered necessary. Where

ineligible expenditures are identified as having been included in withdrawal applications andreimbursed against, these should be separately noted by the auditor. Annexed to the ProjectFinancial Statements should be a schedule listing individual SOE withdrawal applications byspecific reference number and amount. The total withdrawals under the SOE procedure should

be part of the overall reconciliation of Bank disbursements described above.

Special Accounts

In conjunction with the audit of the Project Financial Statements, the auditor is also required toaudit the activities of the Special Accounts associated with the Project. The Special Accountsusually comprise

Deposits and replenishments received from the Bank Payments substantiated by withdrawal applications Interest that may be earned from the balances and which belong to the borrower; and The remaining balances at the end of each fiscal year.

The auditor must form an opinion as to the degree of compliance with the Bank's proceduresand the balance of the Special Account at year-end. The audit should examine the eligibilityand correctness of financial transaction during the period under REVIEW and fund balances atthe end of such a period, the operation and use of the SA in accordance with the financingagreement, and the adequacy of internal controls for this type of disbursement mechanism.

For this project, the Special Accounts are referred to in [cite references] of the relevantfinancing agreements. Special Accounts statements and the auditor's report should with the

Project Financial Statements.

Audit Opinion

Besides a primary opinion on the Project Financial Statements, the annual audit report of theProject Accounts should include a separate paragraph commenting on the accuracy andpropriety of expenditures withdrawn under SOE procedures and the extent to which the Bankcan rely on SOEs as a basis for loan disbursement. The financial statements, including the audit

report, should be received by the Bank no later than [three to six] months after the end of theaccounting period to which the audit refers. The auditor should submit the report to the

borrower's designated agent rather than to any staff member of the project entity. The agentshould then promptly forward two copies of the audited accounts and report to the Bank.

Management Letter

In addition to the audit reports, the auditor will prepare a " management letter,' in which theauditor will:

(a) Give comments and observations on the accounting records, systems, and controls thatwere examined during the course of the audit;

(b) Identify specific deficiencies and areas of weakness in systems and controls and makerecommendation for their improvement;


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(c) Report on the degree of compliance of each of the financial covenants on the financingagreement and give comments, if any, on internal and external matters affecting such

compliance;(d) Communicate matters that have come to attention during the audit which might have a

significant impact on the implementation of the project; and

(e) Bring to the borrower's attention any other matters that the auditors considers pertinent.

General

The auditor should be given access to all legal documents, correspondence, and any other

information associated with the project and deemed necessary by the auditor. Confirmationshould also be obtained of amounts disbursed and outstanding at the Bank [and of amountsdisbursed under [specify other donor, loan or grant, if any]. Bank Task Managers can assist inobtaining these confirmations.

It is highly desirable that the auditor becomes familiar with a copy of the Bank's Guidelines onFinancial Reporting and Auditing of Projects Financed by the World Bank, which summarizes the

Bank's financial reporting and auditing requirements. The auditor should also be familiar with

the Bank's Disbursement Manual. Both documents will be provided by the Task Manager.


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37

FINANCIAL MANAGEMENT REPORT (FMR)

Quarterly Financial Management Reports would be prepared each of which

Sets forth actual sources and application of funds for the project, both cumulativelyand for the period covered by said report, and projected sources and application offunds for the project for the six months period following the period covered by said

report

Shows separately expenditures financed out of the proceeds of the Credit during theperiod covered by said report and expenditures proposed to be financed out of theproceeds of the credit during the six months period following the period covered by

the said report.

Technical Education Quality Improvement Programme of Government of India

Use of Funds by Component/Expenditure Category for the Quarter Ending_____________

Rs. In Million

Actual Planned VarianceComponent/Category Current

QuarterCumulative

Current

QuarterCumulative

Current

QuarterCumulative


1 Civil Works

2 Goods*

3 Books & LRs

4 Consultancies

5Trainings, fellowshipsand workshops

6IncrementalOperating Expenses

Total

Programme Component - 2 : System Management Capacity Improvement ( Non-Competitive Funding)

I Goods*

II Books & LRs

III Consultancies

IVTrainings, fellowshipsand workshops

VIncrementalOperating Expenses

Total

* Goods includes Equipment, Furniture & Vehicles


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Cash Forecast for Quarter ending .

Rs. In Million

DisbursementCategory

Cashrequirementfor the nextfirst Quarter

ending

Cashrequirementfor the next

secondQuarterending

Total Cashrequirement

for sixmonthsending

100%Govt.

FinancedExpenditu

res

Government& World Bank

financedexpenditures

WorldBank

eligible%

World BankEligible Cashrequirementfor the sixmonthsending

Sl.No.

Particulars 1 2 3 = 1+2 4 5 6 7 = 5 X 6


1 Civil Works

2 Goods*

3 Books & LRs

4 Consultancies

5Trainings,fellowships andworkshops

6IncrementalOperatingExpenses

Total

Programme Component - 2 : System Management Capacity Improvement( Non-Competitive Funding)

I Goods*

II Books & LRs

III Consultancies

IVTrainings,fellowships and

workshops

VIncrementalOperatingExpenses

Total



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Withdrawl for Quarter ending

In Million

DisbursementCategory

Eligible% age

Expenditureincurred

during the

Quarter

(Rs.)

EligibleExpenditure forreimbursement

during Quarter

(Rs.)

Expenditureincurred

during the

Quarter

(USD)

EligibleExpenditure forreimbursement

during Quarter

(USD)

Total BankDisbursement

To-date

BankCredit

Programme Component - 1 : Institutional Development (CompetitiveFunding)

1 Civil Works

2 Goods*

3 Books & LRs

4 Consultancies

5

Trainings,fellowshipsand

workshops

6Incremental

OperatingExpenses

Total

Programme Component - 2 : System Management Capacity Improvement

( Non-Competitive Funding)

I Goods*

II Books & LRs

III Consultancies

IV

Trainings,fellowshipsandworkshops

V

Incremental

OperatingExpenses

Total



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Technical Education Quality Improvement Programme of Government of

Procurement Progress Report of Works & Goods as on

(For Contracts Valued at US $ 1,00,000 and above)

Sl.No.

Description ofWorks

Estimated Cost

Method ofProcurem

ent

DesignCompletion Date

Bid

Document

Preparati

on Date

BanksNOCdate

BidsInvitation date

BidsOpening

date

Contract

Awarddecided(Date

/Value/Currenc

y)

Bank's

NOCContractAward

Date

ContactSignedDate

Contract No.


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Annex III

41


Programme Target Achievements as on

Physical Targets Amount Spent (Rs.)Sl.

No.

Programme

TargetsPlanned Achieved Variance Remarks Planned Achieved Variance Remarks


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TECHNICAL EDUCATION QUALITY IMPROVEMENT PROGRAMME OF GOVERNMENT OF IN

CASH BOOK

RECEIPTS PAYMAmount Month &

DateReceipt

No.Particulars Head of

AccountL.F.No.

CashRs.

BankRs.

Month& Date

VoucherNo.

Particulars

TOTAL TO


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Annex V

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TECHNICAL EDUCATION QUALITY IMPROVEMENT PROGRAMME OF GOVERNMENT OF INDIA(TEQIP)

PETTY CASH VOUCHER

Petty Cash Vr. No:

Date

Petty Cash Book Folio No:

Debit ____________________________________________________________________ Account.

a sum of Rupees ___________________________________________________________________

Paid to ___________________________________________________________________________

by Cash/ Cheque No. _______________________________________________________________

Towards _________________________________________________________________________

_________________________________________________________________________________

Rs. Received By

Prepared by Checked by Approved By

(Cashier) (Accounts Incharge) (Appropriate Authority)


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PETTY CASH BOOK

Sl.No.

Receipt Payment Particulars of Expenditure

Date Amount Date Vr.No.

Amount

Balance

Printing andStationery

Postage Travellingand

Conveyance

Refreshment

Expenses

Vehiclemainten

ance

RateTax

*Suitable Columns to be provided for appropriate expenditure heads


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Annex VIII

46


JOURNAL BOOK

Particulars with Head ofAccount

JournalVoucher No.

Ledger FolioNo.

DEBITRs.

CREDITRs.


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Annex IX

47


GENERAL LEDGER

Head of Account:Budget provision for the yearRevised Budget provision

Date andMonth

Particulars Vr. No./Receipt No. /Journal Vr.

No.

CB Folio/JL Folio

No.

DEBITRs.

CREDITRs.

BalanceRs.


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Annex X

48


BANK RECONCILLATION STATEMENT

MONTH:

Banks Name:

Sl. No. Particulars Amount Rs. Amount Rs.A Balance as per Bank StatementB ADD:

(i) Amount Deposited but not Creditedby Bank

(ii) Amount debited but not taken toCash Book

C SUB TOTAL (A+B)D

LESS:(i) Cheques issued but not presented in

the bank(ii) Amount credited by bank but not taken

to Cash BookE Balance as per Cash book (C-D)

List of Cheques not presented in the Bank as per D (i) Amount Date ofEncashment

Cheque No.

TOTAL

Prepared by Checked by Approved By

(Cashier) (Accounts Incharge) (Appropriate Authority)


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Annex XI

49


STOCK REGISTER

Name of the article

Date Particulars Bill No./Indent No.

Quantity Receipts Issues Balance


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FIXED ASSET REGISTER

Asset Group:

Sl.No.

Date ofPurchase

BillNo.

SuppliersName

DetailsofAsset

TypeandMake

Quantity AmountRs.

Location Identification Date ofPhysicalVerificati


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Annex XIII

51


REGISTER OF CONTRACTS FOR CONSULTANCY SERVICES

Sl.No. ContractNo.

ConsultantsName andAddress

Briefdescription

of theconsultancy

service

Date ofcontract

Date ofscheduledCompletion

Amountof

contractwith

stagesif any

Date ofactual

completion

Remarks


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52


RECEIPTS AND PAYMENT ACCOUNT FOR THE MONTH OF/ QUARTER OF ________________(From ___________________ to __________________)

RECEIPTS PAYMENTSSl.No. Particulars For the

monthAmountRs.

Cumulative AmountRs.

Sl.No.

Particulars For themonthAmountRs.

CumulativeAmountRs.

1 OpeningBalancea) Cashb) Bank

1 Release to

2 Received from 2 Payment toConsultants,

Seminars &Workshops3 Other Receipts,

if any3 Procurement of

Assets4 Administration

Expenditure5 Closing

balancea) Cashb) Bank

TOTAL TOTAL


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TRIAL BALANCE AS ON __________________

Sl.No. L.F.No. HEAD OF ACCOUNT DEBIT Rs. CREDIT Rs.

TOTAL


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INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED _____________

EXPENDITURE INCOMEPreviousYear

Particulars AmountRs.

AmountRs.

PreviousYear

Particulars


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Annex XVIII

55

TECHNICAL EDUCATION QUALITY IMPROVEMENT PROGRAMME OF GOVERNMENT OFINDIA (TEQIP)

BALANCE SHEET AS AT ______________

Sl. No. PARTICULARS SCHEDULENO.

CURRENT YEARRs.

PREVIOUSYEAR

Rs.A SOURCE OF FUNDS

1) Amount receivedfrom:

2) Contribution from:3) Excess of income

over Expenditure

TOTAL

B APPLICATION OF FUNDS1) Fixed Assets2) Work in progress

Scheme work underimplementation

3) A. Current Assets,

Loans and advancesa. Cash Balanceb. Bank balancec. Advance for

Capital goodsd. Loans and

Advances

B. Less: CurrentLiabilities

Net Current Assets (A-B)TOTAL


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SCHEDULE OF WITHDRAWAL OF PROCEEDSForm 1 B

Details of Payments made from the Special Account During the Period

Expenditures under contracts valued above the SOE thresholds :

* Expenditures on goods contracts equivalent to USD 300,000 equivalent or more* Expenditures on works contracts equivalent to USD 300,000 equivalent or more* Expenditures on contracts with consulting firms equivalent to USD 100,000 equivalent or more and* Expenditures on contracts with individual consultants equivalent to USD 50,000 equivalent or more

1 2 3 4 5 6 7 8 9

Item

No.

Category

No.

BriefDescripti

on ofGoods orServices

Name ofContractor,Address,

Contract No.Contract

Date

Subloan/ContractAmount

Currencyand

Cumulative

AmountPaid to

Date

Currencyand

Amount

Paidduring this

period

IDAFinancing

Percentagefrom

Schedule 1to the

DevelopmentCredit

Agreement

Amounteligible for

IDAFinancing

(% inColumn 8applied toAmount inColumn 7)

Ex

TO

Column 4 should be filled in respect of ALL suppliers/contractors from U.S., the address should include the city anIf this application is not for replenishment of the Special Account, leave columns 10 and 11 blank.


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STATEMENT OF EXPENDITURES (SOE)

Payments made during the period from

For Expenditure under :

* Goods contracts less than $ 300,000 equivalent Date :

* Civil works contracts less than $ 300, 000 equivalent IDA Credit N* Consulting firms contracts less than $ 100,000 equivalent Application N* Individual consultants contracts less than $ 50,000 equivalent Summary Sh* Books and Instructional Material* Training, fellowships and workshops; and* Incremental Operating Costs

1 2 3 4 5 6 7

Item No.Category

No.Country ofSupplier

Name andAddress ofSupplier/

Contractor

Total Amount ofInvoices covered byApplication (net of

retention)

Amount Eligiblefor Financing

Currency &Amount Paid from

the SpecialAccount (if

applicable)

TOTALSSupporting documents for this SOE retained at

A separate SOE form should be used for retroactive financingItems should be grouped by category or alternately, a separate SOE form may be used for each categoryConsolidate payments by country of supplier except for US suppliersColumn 4 should be filled in respect of ALL suppliers/contractors from the U.S., the address should include the city

It is certified that the expenditure claimed above were incurred with the terms and conditions of Credit Agreement.authenticating these expenditures is retained by the project offices and available for review by IDA supervision mis

By : __________________________(Authorised Representative )


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58

Abstract of Summary Sheet State/UT Application No. _

Name of the Project :IDA Credit No.

Reference Period :

Date :

1 2 3 4

Summary Sheet No. Category No.Total Expenditure

Rs. in MillionsPercentage of

Reimbursement

TOTAL

Project Authority


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Annex XIX

59

Chart of Accounts

MainComponent

Sub Component Indicative Activity Account Code Disbursement Category

InstitutionalDevelopment

01-00-0000

Promotion ofAcademicExcellence

Investment Costs 01-01-0000

Civil Works 01-01-01-00

(a) Refurbishment 01-01-01-01 Institutional Development

(b) Classrooms for ExistingProgrammes

01-01-01-02 Institutional Development

(c) Classrooms for NewProgrammes


(d) Improvement of Facilities 01-01-01-04 Institutional Development

Furniture 01-01-02-00 Institutional Development

Equipment 01-01-03-00 Institutional Development

Vehicles 01-01-04-00 Institutional Development

Books & LRs 01-01-05-00 Institutional Development

Consultant Services 01-01-06-00 Institutional Development

Trainings & Workshops 01-01-07-00

(a) Training & FellowshipProgrammes, etc.


(b) Workshops & Seminars, etc. 01-01-07-02 Institutional Development

Recurrent Costs 01-90-00-00

Salaries of Key Staff 01-90-01-00 Institutional Development

Consumables 01-90-02-00 Institutional Development

Operation & Maintenance 01-90-03-00 Institutional Development


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60

Chart of Accounts

MainComponent


Networking ofInstitutions

Investment Costs 01-02-00-00

Civil Works 01-02-01-00 Institutional Development






Trainings & Workshops 01-02-07-00 Institutional Development




Operation & Maintenance 01-91-03-00 Institutional DevelopmentServices toCommunity &Economy


Civil Works 01-03-01-00 Institutional Development






Trainings & Workshops 01-03-07-00 Institutional Development



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61

Chart of Accounts

MainComponent




Operation & Maintenance 01-92-03-00 Institutional Development

SystemManagement

CapacityImprovement

02-00-00-00

Establishment /Strengthining ofProgrammeManagementStructure


Furniture 02-01-01-00 Goods

Equipment 02-01-02-00 Goods

Vehicles 02-01-03-00 Goods

Books & LRs 02-01-04-00 Books & LRs

Consultant Services 02-01-05-00 Consultant Services

Trainings & Workshops 02-01-06-00 Trainings & Workshops


Salaries of Key Staff 02-90-01-00Incremental Operating

Expenses

Consumables 02-90-02-00Incremental Operating

Expenses

Operation & Maintenance 02-90-03-00Incremental Operating

Expenses

Research &Training inEducationPlanning &Management


Consultant Services 02-02-01-00 Consultant Services


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Annex XIX

Notes to Chart of Accounts

Expenditure

Activities under TEQIP are grouped under Components, Sub Components and Activities.The first two digits are assigned to Components. The next two digits are assigned to Sub

Components. The coding of Sub Components codes 01 to 89 represents InvestmentCosts and codes 90 to 99 represents Recurrent Costs. The Activities are assigned nexttwo digits. The last two digits represent Sub- Activity.

The Activity or Sub-Activity (wherever applicable) is the final head of payment. Theillustration is given below:

Component:(A) Institutional Development 01

Sub Component:(1) Academic Excellence 01

Activity:(i) Civil Works 01

Sub-Activity:(a) Refurbishment 01(b) Classrooms for Existing Programme 02(c) Classrooms for New Programmes 03(d) Improvement in Facilities 04

The Code Assigned for expenditure on Refurbishment: 01-01-01-01

Disbursement Categories


II Goods (including equipment, furniture & vehicles)



V Training & Workshops

VI Incremental Operating Cost including salaries

Receipts

The Codes assigned to Receipts heads are as follows: