Expression of Interest for Appointment of Chartered Accountant Firms on the Panel of REC for Undertaking Internal Audit work In Specialized Area of Function of the Corporation As And when Required. i) REC invites Expression of Interest from reputed and experienced Chartered Accountant Firms to be on the panel of the Corporation for undertaking Internal Audit, work as and when required, in specialized areas in Finance & Technical, as per the scope of the auditing defined in the Internal Audit Manual of the Corporation or otherwise required. ii) Terms of Reference and Scope of Internal Audit can be obtained from the Deputy Chief (Internal Audit), REC Corporate Office on any working day. Application Form and relevant documents are also available at REC website : www.recindia.com or www.recindia.nic.in iii) The Sealed tenders containing Expression of Interest should be submitted in the office of the undersigned upto 1500 hrs on 30.11.2004. iv) REC reserves the right to reject any or all the tenders without assigning any reason thereof. Sd/- Executive Director (IA) 1
Terms and Condition For Appointment Chartered Accountant Firms:- The Chartered Accountant Firms should have adequate experience in carrying Internal Audit work of reputed Companies and PSUs in Power Sector. The organization/firms shall have adequate no. of qualified Chartered Accountants/Cost Accountants with relevant experience and engaged on full time of the Audit work. The Chartered Accountants from reputed institutes having experience in carrying Internal Audit work in the Power Sector Companies will be preferred. A list of full time employed Chartered Accountants with their complete bio-data, who are likely to be assigned the Internal Audit Work of the Corporation, to be enclosed. General Terms and Conditions:- Empanelment of firms will be done only after detailed scrutiny of the credentials of the firm, their competency, no. of qualified Chartered Accountants to be engaged for the Internal Audit work of the Corporation. Empanelment of firms shall hold good for atleast three years unless otherwise extended or cancelled by REC. Firms empanelled by REC shall have to give an undertaking to follow all ethics of faith and the information provided by REC shall be kept strictly confidential. In case of any dispute, the decision of CMD, REC shall be final and binding. All assignments shall be carried out with due diligence maintaining quality of work done and in least possible time. All reporting including MIS shall be done on regular basis as required by REC from time to time. REC reserves the right to cancel empanelment of firms, if it considers necessary. 2
APPLICATION FORM FOR EMPANELMENT 1. Name of the Firm : 2. Contact Person(s)/Authorised signatories : 3. Registered Address : 4. Tel No./Fax No: 5. Name of the Chief Executive : 6. Legal status of the Firm:- 7. Date of incorporation/registration :- 8. Details of Directors:- S.No. Name of Age Qualification Full time/ Directors Part-time 1. 2. 3. 4. Experience Whether acting as Director in other Firms, if so, details. 9. Turnover of the Company: 10. Balance sheet for last 3 years (to be enclosed) 11. Detailed Bio-data of all Chartered Accountants: (to be enclosed) 12. List of Assignments handled in last 10 years:- 13. Organisation Chart (to be enclosed) 14. Whether any Litigation is pending : 3
DECLARATION I/We hereby certify that: 1. The information provided above are to the best of my/our knowledge and belief, true and correct in all particulars. 2. There is no litigation pending against the company/firm or its Directors. 3. I/We shall furnish all information as required by REC in connection with this assignment. 4. All information provided by REC is in the course of the assignment shall be kept strictly confidential. 5. REC or its nominees or any agency authorised by REC may at any time inspect/verify our assets, book of accounts etc. in any premises of our Company/firm. 6. This is to certify that none of the Chartered Accountants or the Firm who are going to be appointed with this work, have any interest in the business of the REC and have no relative working in the Corporation. Further they have not been associated with Audit of Accounts of REC and involved in financial dealings of the Corporation. 7. I/We understand and accept that REC has a right to reject our application without assigning any reason therefore. Name of the Authorised Signatory Designation Name of the Firm Signature Place : Date : (Signature with Seal) 4
SCOPE AND TERMS OF REFERENCE OF INTERNAL AUDIT FOR OUTSOURCING THE WORK FROM OUTSIDE AGENCIES. The followings are the broad scope and terms of reference for outsourcing the Internal Audit work from outside agencies:- Area in which Internal Audit work proposed to be outsourced. (i) Review of Market Borrowings (ii) Recovery of loans, interest and levy of penal interest. (iii) Financing of generation projects. Scope of Work. Examination of System of Internal checks and control so as to ensure accuracy and efficiency. To check whether rules, regulations and guidelines of the Corporation are followed properly. Examination of documents of evidence from which the records are written in order to assess their validity. Detection and prevention of errors. Examination of financial statements and other records in relation to the areas assigned for auditing. Terms & Reference for Auditing. Market Borrowings: Check that --- 1. Approval of Board of Directors/ Chairman and Managing Director as per delegation of powers exists for floatation of bonds. 2. Whether sufficiently large number of banks and financial institutions are contacted for subscribing to the bonds in case of private placement. 5
3. Where public issue is involved, whether large number of banks /FIs /Firms of brokers etc. who have registered with SEBI are contacted for the appointment as Lead Manager, Managers to the issue, trustees, underwriters, brokers, sub-brokers etc. of the issue. 3.1 The draft prospectus is vetted by SEBI to ensure adequacy of disclosures. The disclosures shall contain among other things, the existing and future equity, equity and long term debt ratio, servicing behaviour on existing debentures, payment of due interest on due dates, no objection certificate from Banks and/or financial institutions for a second or pari passu charge on assets. 3.2 The lead manager(s) has satisfied itself about the net worth of the underwriters and the outstanding commitments and disclose the same to SEBI. 3.3 The underwriting agreement is filed with the stock exchanges. 3.4 The public issue is kept open for at least three days and is disclosed in prospectus. 3.5 The provision of the Companies Act, 1956 and SEBI guidelines RBI terms for SLR bonds etc. and as amended from time to time are complied with. 4. The statement in lieu of prospectus, any noting or publication conforms to the provisions of the Companies Act,1956. 5. Acceptance of book bids are done by competent authority. 6. Letters of Allotments are issued to the parties whose bids/applications are accepted by the Board of Directors. 7. Bond certificates are issued within reasonable time in exchange of letter of allotment. 8. The brokerages and commissions are paid within the limits specified in the terms of issue of bonds by SEBI/or by companies act,1956. 9. The trust deed is executed within six months of the closure of bond issue. 6
10. Charge to secure debenture holders interest is created within six months from the date of bond issue. 11. Interest paid into the designated account only on the day the half yearly interest is due. 12. Interests credited to designated account are correct and interest on cumulative bonds are not credited to the designated account. 13. Statements are received from the banks of the designated accounts and reconciled periodically. The amount of expired interest warrants is transferred to current account of the Corporation, six months after the interest due date. 14. Trustee fees paid are correct. 15. Proper record of all the revalidated interest warrants are maintained. 16. All such surrendered bond certificates are received, transferred in the companies name and kept in safe custody. The surrendered bond certificates should be physically verified to tally with account balance. 17. Where the bonds are transferable by endorsement and delivery, transfers need not be registered. The bondholders who want to avail of exemption under Income Tax and Wealth Tax Act are required to register their holdings to enable the Corporation to issue necessary certificates. For such bondholders, transfers are to be registered and details maintained properly. 18. All interest payments on bonds which are not tax free, are made after deduction of tax at source in accordance to the provisions of the Income Tax Act, 1961. 19. The Debenture Redemption Reserve (DRR) is being created in accordance to the Companies Act, SEBI guidelines or on the terms stipulated by the erstwhile Comptroller of Capital issues. 20. The terms and conditions of bonds for each series are continued to complied with during the currency of the bonds. 7
21. The procedure followed by the Bonds Section in redeeming the bonds and see that payment is made to the rightfully entitled bondholders only. 22. Redemption is made against surrender of bond certificates and they are cancelled on payment. 23. Appropriate amount of DRR is extinguished on redemption. Recovery of Loans, Interest and levy of Penal Interest. 1. See that there is proper system for safe keeping of the loan documents. 2. Check that first disbursement is made only after all the terms and conditions stipulated in the sanction letter are fulfilled and accepted by the competent authority. 3. Verify that subsequent disbursements and deviations, if any, are approved by the competent authority. 4. Verify that the disbursement is made according to the terms specified in the sanction, the disbursement procedure and items specified in the Memorandum of Agreement. 5. Examine that the method of calculation of interest, service charges etc. is proper and interest and commitment charges are correctly received. 6. Check that balance confirmations are obtained every year from the borrowers. 7. Check that penal interest is levied on all delayed cases and the penal interest levied are correct and are realized. 8. Check that defaults made are reported to higher authority through MIS and realized. 9. Check that payment vouchers are signed by competent authority. 10. Check that all receipts are made accounted by preparing vouchers on the same day signed by competent authority and sent to Banking Section for deposit into accounts. 8
Generation Projects 1. Check that proper application for loan is received. 2. See that the project proposed is in accordance with the approved formats giving all relevant information, data etc. 3. Check the funds provided constitute an additionality to the funds provided to SEB s/sgc through the Plan process and the borrower doesn t substitute the Corporation funds for earmarked allocations by the Planning Commission. 4. Check that project financed by the corporation meets the lending criteria approved by the Board of Directors, which inter alia, are as under: i) Project is economically justified, with the rate of return as per existing guidelines and viability criteria under different categories of projects ii) Project is technically sound iii) Technical solutions are least cost. iv) Solutions are meeting GOI and State environmental and impact standard; v) Project has received all the clearances of state and federal agencies. 5. See that project sanctioned is within the exposure limits fixed by the corporation. Review the system of credit rating done of borrower based on the parameters approved by the board. 6. Check the method of calculation of IRR and the projection of the benefits, which will accrue to SEB/Borrower on completion of the project. 7. Check the system of monitoring of the projects, returns called for and reporting system to the management. 8. See whether the returns are submitted to the management and the action taken of the reports. 9. The documents are received within the stipulated period given the sanction letter. 9
10. Examine the loan documents to see that these are executed by the authorized officer after obtaining the approval of the competent authority. 11. Check that the projects for which documents are not received within the stipulated period are reported to appropriate authority for cancellation or otherwise for extension of the period of acceptance. 10