Kolkata Branch Period Covered ’ 2014 to June’ 2014 ... · Shipping, Purchase, Accounts &...
Transcript of Kolkata Branch Period Covered ’ 2014 to June’ 2014 ... · Shipping, Purchase, Accounts &...
Internal Audit Department, Duliajan Page 1 of 39
Internal Audit Report – Kolkata Branch
Report No. IA/KOL/FY-2014-15/Q1
Period Covered – Apr’ 2014 to June’ 2014
Report date: 23.09.2014
Internal Audit Department, Duliajan Page 2 of 39
Internal Audit Department, Duliajan Page 3 of 39
CONTENTS:
Chapter 1 – Introduction
Chapter 2 – Scopes & road map of Audit
Chapter 3 (a)-Executive Summary
Chapter 3 (b)–Detailed Audit Observation
Chapter 4- Annexures of the Audit Report
Chapter 5 - Follow up Status of Prior Internal Audit Recommendations
Internal Audit Department, Duliajan Page 4 of 39
Chapter 1
1.0 Introduction:
The principal business activity of the Kolkata Branch Office of OIL located at 4, India Exchange Place, is to make clearance of
various imported equipment & chemicals for the oil field operations through its shipping functions and procurement of various
indigenous items based on the indents (PRs) raised from the Fields. It also provides support services to the Fields and other spheres of
the Company.
The Kolkata Office is headed by the Head (Calcutta Branch). The activities of the Kolkata Branch Office are managed through the
following offices, separately located:
• Administrative Office
• Shipping office
• Brooklyn warehouse
The Kolkata Branch Office is comprised of mainly the following sections:
Shipping, Purchase, Accounts & Administration
2.0 Period under Audit:
April’14 to June’14 (QTR-1-2014-15)
3.0 Duration of Audit:
Audit Commenced on 4th August’14 & Completed on 08th August’14 at the Main office/shipping office of Kolkata Branch. (Audit
completed during 5 working days)
Internal Audit Department, Duliajan Page 5 of 39
4.0 Date of receipt of Management Comment:
The management’s comment have been received from Kolkata office on 11.09.2014
5.0 Internal Audit Team members :
1) Shri Sanjay Khatri, Manager (IA).
2) Shri Arvind Kumar Sinha Dy.Manager (IA)
3) Shri B.L.Das, Sr. Internal Audit Officer
6.0 Objectives: The basic objectives of the internal audit were to review the overall accuracy and adequacy of the Internal
control System and the compliance with the laid down procedure of the company.
Internal Audit Department, Duliajan Page 6 of 39
Chapter 2
Scopes & Road Map of Audit
2.01 Scope and Approach (Annexure-A)
2.01.1 Scope: The internal audit was conducted for the period April’14 to June’14 and covered the following audit
areas/functions:
a) Review of Bank Guarantee
b) Review of Retention money
c) Review of Descripancy Report
d) Review of Cost Elements
e) Review of Hotel Payments
f) Review of contracts and Purchase
g) Review of Customs and port clearance
h) Review of Tax deducted from salary and contractual payments
i) Scruitny of GLs
j) Review of Cash /Bank Management System
2.01.2Approach: It was a Risk based audit and accordingly the risks associated with the observations made on the above audit area
are measured and quantified wherever found justifiable.
Approach to the internal audit commenced with an overview of activities and documentation of the existing systems and procedures.
The adequacy, efficiency and effectiveness of internal controls have been evaluated & tested by checking samples of transactions for the
period covered by the audit. Adherence to the laid down standard policies and procedures (wherever applicable) for each of the audit
areas have been examined.
Internal Audit Department, Duliajan Page 7 of 39
2.02 Risk Based Internal Audit
The concept of Risk based audit has been followed considering the following areas of risks:
1) Financial Risk: An event is recognised as a financial risk if there is any possibility of occurrence of financial loss to the
Company due to that event or transaction.
2) Compliance Risk: A risk is identified as compliance risk if there is any deviation in legal or procedural obligations.
3) Operation Risk: A risk is identified as operational risk if any technical operation of a system is not done as per the norms or
standard rules of operation.
Internal Audit Department, Duliajan Page 8 of 39
Chapter 3 (Part a) Executive Summary of Kolkata Audit for Qtr 1 of 2014-15
Sl.No Observation Recommendation Implementaion Timeline
01 Non-updation of Bank Guarantee in SAP
1) The bank Guarantee has not been fully uploaded in the system.
2) Some correction is required to be made in few of the BGs already
uploaded in the system.
3) Few of the BGs have already been expired, however the same has
not been updated in the system.The further requirement of these BG
need to be seen.
1) Pending BGs should be uploaded in
system with the support of FI-CO Team.
2) Cases where wrong information has
been entered in the SAP should be
corrected.
3) The BGs which have been expired and
to be returned to the parties should be
reviewed and the decision to be taken
accordingly.
4) SAP has functionality to prepare bank
confirmation as well as BG extention, it is
advised to use the above functionality to
generate the aforesaid letter on time.
5) BG report generated from the system
should be monitored on regular basis.
6) The BGs related to the tender should
Future Compliance
Internal Audit Department, Duliajan Page 9 of 39
Sl.No Observation Recommendation Implementaion Timeline
be maintained in the register as well as in
the excel sheet and should regularly be
monitored.
02 Old retention Money on pending installation and commissioning
of capital items
Internal audit has reviewed the GL 205002 and observed that the
retention money for very old purchase orders are lying open in the
system. On scrutiny it has been observed that most of cases are
pending because of pending installation and commissioning of capital
items
The concerned department should be
informed to take necessary actions to
expedite pending installation and
commissioning.
As early as Possible
03 Discrepancy Report (DRs) not settled for more than 3 years
Provision against DR balance pending As on 31.03.14 was made for
Rs.3,70,83,157.89 vide document No 2613011452 dated 31.03.2014.
It may be noted that the Pending DRs have gone up to Rs. 5,85,33,364
in Q1 (2014-15). Morover the last year provision for the DRs is also
being carried on in Q1 2014-15.
All old descripancy reports needs to be
scruitinised and effort should be made to
settle all old and Pending DRs.
Audit is of the opinion that the provision
for the last year should be reversed and a
fresh provision for the actual amount
should be made.
Future Compliance
04 Significant variance in actual expenditure vis a vis Budgets
Few of expenditures have significantly increased compared to the
budget. It was further observed that some of the expenditures have
been wrongly posted in the GL.
Necessary correction entries should be
made to rectify the wrong booking.
Morover, the GL where booking is un-
reasonably high/low compared to plan
cost should be reviewed and necessary
correction entries to be passed in the
As early as Possible
Internal Audit Department, Duliajan Page 10 of 39
Sl.No Observation Recommendation Implementaion Timeline
system.
05 Payments of Hotel bills without supporting documents-
While reviewing the hotel bills it has been noted that in some of the
cases relevant approval for the hotel booking has not been attached
with the bill, particularly hotel bills for executives staying at Mumbai.
It is suggested that the entire Hotels bill
should be accompanied with the relevant
approval/mail/advice of the
administration before processing the
payment.
As early as Possible
06
Review of contracts/Purchase payments
(a) Contract No: 6204023: creation of duplicate vendor code
and non availabiltiy of supporting documents.
Contract No:6204023-caretaker services for 2 Nos guest house at
kolkata:The Contract was awarded to Mr Rabindra Nath Tiwari for the
period from 01.01.2012 to 31.12.2014 for Rs.89,00,000/-
It was observed payment of Catering Services is released without the
PF/ESI Documents
There were no details/supporting documents for the monthly
payment made for Catering Service.
Two vendor code were opened for the same vendor:
a)Vendor code-403792
b) Vendor code-500516
Review of PO: All the PO execeeding Rs 5 lakhs raised during the
1)PF/ESI clause should be incorporated
in the contract as per Guidlines
2) Opening of duplicate vendor should be
may lead duplicate payment and should
be avoided.
It is suggested that existing vendors list
needs to be reviewed for exploring new
suppliers for better & smoother
operations.
As early as Possible
Internal Audit Department, Duliajan Page 11 of 39
Sl.No Observation Recommendation Implementaion Timeline
quarter were verified.
(i)It was observed that the lead time for Purchase process from
Purchase requisition stages to placement of formal Purchase Order
were 3 to 4 months. All the required approvals were found in line
except in one case where technical suitability report was on mail
confirmation.
(ii)In some cases it was observed that Pos are placed mentioning rate
of taxes like ED, CST,VAT etc. As the rate are statutory and subject to
change the PO should be placed without mentioning the rate of taxes
in absolute terms.
(iii)It was noted that data bank for suppliers are limited.
07 Delay in port clearance resulting of demurage of 7.17 Lakhs:
It was observed that considerable time was taken right from
submission of application to getting Essentiality Certificate from DGH
for Custom duty exemption. On scrutiny of Few cases , it was noticed
that the lead time from date of application of EC & Arrival of Imported
Goods were minimal (PO no. 7207613).EC application sent on
03.04.2014 & Imported material reached port on 09.04.2014 .
Demmurage charges incurred -7.17 lacs
Because of time lag & other consequential factors, storage, port rent,
detention & demmurages are incurred and is loss to organisation
inevitable.
Proper system should be evolved so that
these types of losses do not occure.
A guideline should be issued in this
regard and a copy of the same be
furnished to audit.
As early as possible
Internal Audit Department, Duliajan Page 12 of 39
Sl.No Observation Recommendation Implementaion Timeline
08 Review of Statutory Payments:
1.GL-201000- TDS Payable-192-Salaries & Wages 2.GL- 201001- TDS Payable-194 C-Contractors 3.GL- 201002- TDS Payable-194 I-Rent 4.GL- 201004-194 H -Commission And Broker 5.GL-201005-195 -Foreign Payments There have been few difference in all the aforesaid GLs, however instead of reconciling the GL, the differenece were posted in the GL 875000.
The difference observed in the Tax
related GL should be reconciled before
transfering the amount to the Prior
period item.
As early as Possible
09
Scruitny of GLs
Liability to others-Sundry Creditors-205021 and Security
Deposit given to vendor-550510-
There are quite a few security deposit has been taken against the
tender. Similarly there is few old security deposit given by the OIL to
various parties.
clearing Accounts
On Scrutiny of the following Clearing A/cs, it was found that some of the old items were lying unadjusted against different POs for long time: GL- 200000 Scrs - Materials (Foreign)-Recon A/C
It was observed that Debit balance of 303,175,564.16 was lying in
Sundry Creditors account. On scrutiny it was found that some of them
are very old. (Annexure IV).
These need to be reviewed and necessary
action, if any, required are to be taken.
Old pending items should be cleared at
the earliest
It is suggested that Periodical review is
required for any Debit Balance lying in
Sundry Creditor Materials (Foreign)
Recon A/c.
Steps to be taken immediately for
recovery/reconciliation of old amount.
As early as Possible
Internal Audit Department, Duliajan Page 13 of 39
Sl.No Observation Recommendation Implementaion Timeline
10 Non closer of dormant Bank Accounts
Cash was verified on 05.08.2014 and found to be in agreement with
the main cash journal WB03.
In Union Bank of India a/c 521330 a Dr. Balance of Rs.56,978 and in ICICI Bank a/c 524010-a Dr. Balance of Rs.45,269.91was lying idle for a long time. No transactions were made in the aforesaid bank accounts after 31.08.09 and 30.11.07 respectively.
Necessary steps to be taken for
discontinue the accounts with the
approval of the competent authorities; it
was pointed out in earlier report also.
As early as Possible
Internal Audit Department, Duliajan Page 14 of 39
Chapter 3 (Part b)
Detailed Audit Observations of Kolkata Audit for QTR-1 of 2014-15
Sl.
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Observations Risk Recommendations Management Comments
1 Non-updation of Bank Guarantee in SAP
1) There are 46 PBGs (annexure-I) and 10 Bid Security in form of
BGS against tender (annexure-II) in the Kolkata Branch. Out of
the aforesaid 46 PBGs, 40 have already been uploaded in the SAP.
SAP does not have the functionality to maintain the Bid security
in form of Bank Guarantee againt the tender therefore rest of 10
BG for bid security could not be uploaded in SAP.
While reviewing the BG status, It has been observed that:
1)6 BG could not be uploaded in the SAP due to the various
reasons, such as the non availability of the Bank details in the SAP
master data, expiry of BGs etc. A comprehensive list of the
aforesaid 6 BGs has been in annexure-III
2) Out of 40 uploaded BGs, 3 BGs were wrongly uploaded in the
system. Details are as below
Sl. No Order no.
BG Ref No.(SAP) validity Remarks
1 7906367 1000000128 10.08.2015
Status of BG status to be changed from 7 (Invoked) to 5 (Extended by bank)
2 7904511 1000000252 30.09.2012 (expired as
Address to be corrected.BG has already expired and need
Financial/
Compliance
1) The left out BGs which could
not be uploaded in the system
due to various reasons as
mention above should
immediately be uploaded. A
support message with all the
relevant details should be sent to
ERP FI-CO team for the necessary
action such as creation of the
banks mater data. Internal audit
will also monitor with FI-CO
Team once the action is initiated
from Kolkata Branch.
2) The cases where the wrong
information has been entered in
the SAP such as BG status,
address details etc, should
immediately be corrected. As
informed by ERP team CMFA has
been authorized to do the
necessary correction.
3) The BGs which have been
a) Management comment-
Request already sent to ERP
to incorporate the banks
details in SAP for uploading
of BG.
Necessary corrections
wherever required have
been made.
BGs which have expired and
no longer required are in
the process of release.
b) Implementation
Timeline: 30.09.2014
c) Implementation
responsibility:
CMFA(CB)
Internal Audit Department, Duliajan Page 15 of 39
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Observations Risk Recommendations Management Comments
on the date of audit)
extention.
3 7904519 1000000253
30.09.2012 (expired as on the date of audit)
Address to be corrected.BG has already expired and need extention.
It was informed by the ERP that CMFA (CB) has been authorized
to make the changes related to the BG in SAP. The extension has
to be sought from the vendors against above BGs and accordingly
updation to be carried out.
3) Out of 40 uploaded BGs, 10 BGs have already been expired,
however the extension has not yet been received from the party.
Details of the BGs are as follow
Sl. No
BG Ref No.(SAP) BG No. Purch.Doc. Validity date
1 1000000487 800IIBGIS140017 7905901 30-Jun-14 2 1000000252 800IIBGIS110011 7904511 30-Sep-12 3 1000000253 800IIBGIS110013 7904519 30-Sep-12 4 1000000142 0045IBPER001011 7904867 30-Sep-13 5 1000000145 800IIBGIS120048 7905233 30-Jun-14 6 1000000151 24/08 7905499 13-May-14 7 1000000114 0590IGPER003512 7905265 30-Jun-14 8 1000000115 800IIBGIS120004 7904234 30-Mar-14 9 1000000121 32300460630 7905133 23-Apr-14
10 1000000123 014GT02130840010 7905795 22-Jul-14
expired and to be returned to the
parties should be reviewed and
the decision has to be taken
accordingly.
4) SAP has the functionality to
prepare a bank confirmation as
well as the BG extention letter.
The Transaction code ZFIBG has
been customized for that
purpose.
5)BG report generated from the
system should be monitored on
regular basis once all the BGs are
uploaded and wherever
necessary the BG status code
should be changed and updated
to generate the current position
of the BG.
6) Since presentably there is no
functionality to update the BGs
against the Tender, the BGs
related to the tender should be
maintained in the register as well
as in the excel sheet and should
regularly be monitored.
Internal Audit Department, Duliajan Page 16 of 39
Sl.
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Observations Risk Recommendations Management Comments
2 Old retention Money on pending installation and
commissioning of capital items.
Internal audit reviewed the GL 205002 and observed that the
retention money for very old purchase orders are lying open in
the system. On further scrutiny it has been observed that most of
cases are pending due to non installation and commissioning of
capital items. Few of items are as old as 10 years. Audit is of the
opinion that due to delay in commissioning of capital items OIL is
losing the benefit of depreciation.
The year wise break of the Retention money kept under the
business area wb01 is as under
Financial Year Amounts (Rs) No of Documents 2005-06 210,305 4 2006-07 1,420,190 64 2007-08 252,136 32 2008-09 20,198,423 86 2009-10 1,148,129 43 2010-11 602,264 41 2011-12 5,318,638 59 2012-13 51,919,464 31 2013-14 6,047,382 20 Grand Total 87,116,931 380
Most of the retention money has been taken against the foreign purchase, which is being dealt at Duliajan. The payment of foreign Purchase made through LC at Kolkata Branch and therefore the
Financial/
Compliance
The concerned department
should be informed to take the
necessary action to expedite the
installation and commissioning,
in case the retention money has
been kept for these purposes. For
other cases it is suggested that
the aforesaid GL should
thoroughly be scrutinized and the
necessary action should be taken
to clear the old pending line
items.
a) Management comment-
Since line item display is
not possible for account
205002, IA is requested to
provide details of vendors
to analyse case by case and
refer to Duliajan for
necessary action.
b) Implementation
Timeline:
Future compliance
c)Implementation
responsibility:
CMFA(CB)/CMM (CB)/CMM(Shipping)
Internal Audit Department, Duliajan Page 17 of 39
Sl.
No.
Observations Risk Recommendations Management Comments
retention money also is kept under the busines area wb01. However the inernal Audit Department would be taking the issue with Duliajan material department.
3 Discrepancy Report (DRs) not settled for more than 3 years
Provision against DR balance pending as on 31.03.14 was made
for Rs.3,70,83,157.89 vide document No 2613011452 dated
31.03.2014.
It may be noted that the Pending DRs have gone up to Rs.
5,85,33,364 in the 1st Quarter of the financial year 2014-15.
However the last year provision for the DRs is being carried on in
the first Quarter of the financial year 2014-15 as well. However it
was made to understand that it would be reviewed at the year
end 2014-15.
Financial Amounts(Rs) No of Docs Old since 3 years 2008-09 207343 14 2009-10 4742841 60 2010-11 15313536 48 2011-12 9791821 44 3,00,55,540.89 2012-13 448203 60 2013-14 28029620 80 Total 5,85,33,364 306
A detailed item wise list being sent separately in excel sheet for
review and necessary action
Financial
Wrong MIS
All old Descripancy Reports
needs to be scruitinise and effort
should be made to settled all old
and Pending DR.
Audit is of the opinion that the
provision for the last year should
be reversed and a fresh provision
for the actual amount should be
taken.
Cases having old issues needs to
be reviewed and details to be
furnished for further review.
a) Management comment-
High value DRs related to
foreign purchase orders
which have to be taken up
by Duliajan Materials with
the foreign vendors for
replacement. Till the matter
is resolved provision is
made in the accounts
accordingly.
b) Implementation
Timeline:
Future compliance
c) Implementation
responsibility:
CMFA (CB)/CMM(M)
Internal Audit Department, Duliajan Page 18 of 39
Sl.
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Observations Risk Recommendations Management Comments
4
Significant variance in actual expenditure vis a vis Budgets
Cost Element
Cost Element-text Act. Costs
Plan Costs Diff
↑ Increase
% of Increase over Budget
751001
Other License Fees 1,238,606 45,000 -1,193,606 ↑ -2652
780050 Other Freight 370,900 80,000 -290,900 ↑ -363
735001 Cont Casual Labour 564,608 157,500 -407,108 ↑ -258
780191 Misc Expenses 85,504 30,000 -55,504 ↑ -185
731031 Cont-Ser -Off Eqp 48,042 17,500 -30,542 ↑ -174
731032 Cont-Ser-Other Mai 204,058 78,050 -126,008 ↑ -161
703009 Trav Exps- India 395,333 215,000 -180,333 ↑ -84
721500 Electricity Expens 552,096 322,625 -229,471 ↑ -71
703010 Trav Exps-Abroad 316,971 187,500 -129,471 ↑ -69
780051 Demmurag 755,473 460,000 -295,473 ↑ -64
Financial/
Compliance
Necessary correction entries should be made to rectify the wrong booking. Morover, the GLs where booking is un-reasonably high/low compared to plan cost should be reviewed and necessary correction entries to be passed under intimation to audit. Concerned section should review the GL codes periodically to avoid such descripancies.
a) Management comment-
Plan and actual expenses
difference will be taken care
of while preparing revised
budget for the current year.
b) Implementation
Timeline:
As early as Possible
c) Implementation
responsibility:
CMFA (CB)
Internal Audit Department, Duliajan Page 19 of 39
Sl.
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Observations Risk Recommendations Management Comments
On Further Scruity of cost centre, it has been observed that few of
the expenditures have been wrongly posted in the GL. For
example, the rent paid to Indian Chamber of Commerce for the
kolkata office, has been wrongly posted under heading other
Licence fees.The Rent should have been debited in the GL 751000
instead of 751001. This has resulted unreasonably increase in
expenditure under the GL 751001.
e Charges
780190 Petty Cash Expense 91,392 80,000 -11,392 ↑ -14
750001 Motor Veh Policy 2,282 2,000 -282 ↑ -14
735002
Cont Horticulture 34,725 31,250 -3,475 ↑ -11
751000 Rent,Rates 1,717,126 1,602,05
0 -115,076 ↑ -7
700105 Staff-Overtime 838,919 811,250 -27,669 ↑ -3
5 Payments of Hotel bills without supporting documents-
While reviewing the Hotel bills it has been noted that in some of
the cases relevant approval for the hotel booking have not been
attached with the bill, particularly hotel bill for the executive
staying at Mumbai. Internal Audit on sample basis reviewed few
of the cases mentioned below where the relevant tour approval
and other documents no available with the bills.
Financial/
Compliance
It is suggested that all Hotel bill
should be accompanied with the
relevant approval/mail/advice of
the administration before
processing the payment.
Copy of the same is to be
furnished to audit for verification.
a) Management comment-
The point noted for future
action.
b) Implementation
Timeline:
Internal Audit Department, Duliajan Page 20 of 39
Sl.
No.
Observations Risk Recommendations Management Comments
Sl. No
FI Doc No Posting date Hotel
1 8413021838 05.12.2013 Orchid Mumbai 2 8413025416 10.01.2014 Orchid Mumbai 3 8413026531 24.01.2014 Orchid Mumbai 4 8414009571 24.06.2014 Sea princes Hotel,
Mumbai
As early as Possible
c) Implementation
responsibility:
CMFA (CB)/Manager
(Admin)
06 Review of contracts/Purchase payments
(a)Contract No: 6204023: creation of duplicate vendor code
and non availabiltiy of supporting documents.
caretaker services for 2 Nos guest house at kolkata for the period
from 01.01.2012 to 31.12.2014 for Rs.89,00,000/-
Audit observed the payment released against SES in
wrong cost centre. Expenditure related to other cost
centres are wrongly booked in KOLKCC0827.
It was observed payment of Catering Services is released
without the PF/ESI Documents
There were no details/supporting document (manpower
Financial/
Compliance
(a)Operating the contracts with
all statutory compliances as
required is important. Releasing
payments without these and
proper manpower required as
per contract is not justified.
Comments / compliance for the
observations is to be furnished.
a) Management comment-
Contract stipulates PF/ESI
clause.
Last PF/ESI deposit
documents submitted by
vendor along with the
current bill.
The point noted.
b) Implementation
Internal Audit Department, Duliajan Page 21 of 39
Sl.
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Observations Risk Recommendations Management Comments
engaged) of the payment made for Catering Services
which are being paid from time to time.
The different vendor codes were opened for the same
Vendor: a) 403792
b) 500516
(b)Review of PO: All the PO execeeding Rs 5 lakhs raised
during the quarter were verified.
(i)It was observed that the lead time for Purchase process from
Purchase requisition stages to placement of formal Purchase
Order were 3 to 4 months. All the required approvals were found
in line except in one case where technical suitability report was
on mail confirmation.
(ii)In some cases it was observed that Pos are placed mentioning
rate of taxes like ED, CST, and VAT etc. As the rates are statutory
and subject to change the PO should be placed without
mentioning the rate of taxes in absolute terms.
(iii)It was observed that data bank for suppliers are limited.
Financial
(b)-(i)The lead time between
purchase requisition & placement
of PO can be further improved.
(b) (ii) PO should mention tax
clause as applicable so that the
tax payment can be made at
actual rate while releasing the
payment
(b) (iii) It is suggested that
existing suppliers list needs to be
reviewed for exploring new
suppliers for better & more
competitions and smooth
operations.
Timeline:
As early as Possible
c) Implementation
responsibility:
Manager (Admin)
Internal Audit Department, Duliajan Page 22 of 39
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Observations Risk Recommendations Management Comments
07 Delay in port clearance resulting of demurage of 7.17 Lakhs:
It was observed that considerable time was taken right from
submission of application to getting Essentiality Certificate from
DGH for Custom duty exemption. On scrutiny of few cases , it was
noticed that due to delay in receipt of DGH certificate toward
exemption of custom duty, the material could not be cleared from
custom authority resulting payment of demurage charges.
PO No7207613: OIL has paid Rs 7.17 lakh demurage due to delya
in receipt of essentiality certitificate besides OIL has also paid
toward storage, port rent etc for non lifting of item on time.
Financial
Proper system should be evolved
so that these types of losses do
not occure.
A guideline should be issued in
this regard and a copy of the
same be furnished to audit.
a) Management comment-
Matter has been taken up with Material Department (Foreign Purchase) requesting them to taking necessary action for further improvement.
b) Implementation
Timeline:
As early as Possible
c) Implementation
responsibility:
CMM (Shipping)
Internal Audit Department, Duliajan Page 23 of 39
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Observations Risk Recommendations Management Comments
08 Review of Statutory Payments:
On Scrutiny of the relevant GL as on 30.06.2014 for TDS under different sections observations are as under: 1. GL-201000- TDS Payable-192-Salaries & Wages The account is showing debit balance of Rs 11.01 lakhs as on 30.06.2014. The balance has been increased over the balance as on 31.03.2014 which was Rs 6.88 lakhs. The entire balance of Rs 11.01 lakhs appearing on 30.06.2014 was transfered to prior period expense GL without reconciliation and justification. 2. GL-201001- TDS Payable-194 C-Contractors
The GL account as on 30.07.2014 shows a debit balance of Rs 5878. On scruitny of the GL, it was found that the debit balance as on 30.06.2014 amounting to Rs 9218 has been transferred to Prior period expense GL without any proper recociliation. 3. GL-201002- TDS Payable-194 I-Rent
Details Amount Balance as on 30.06.2014 Cr 53,669.00 TDS deposited in July,14 53,611.00 Difference Cr 58.00
4. GL-201004 TDS Payable -194 H -Commission And Brokerage
Balance as on 30.06.2014 (Dr) 22,573
Financial/
Compliance
The difference observed in the
Tax related GL should be
reconciled before transfering the
amount to the Prior period item.
Action taken / reconciliation
report with corrections be
furnished to audit for verification.
a) Management comment-
Transfer to Prior Period
Items made in consultation
with/ due concurrence of
the Statutory Auditors since
these balances were quite
old.
b) Implementation
Timeline:
As early as Possible
c) Implementation
responsibility:
CMFA (CB)
Internal Audit Department, Duliajan Page 24 of 39
Sl.
No.
Observations Risk Recommendations Management Comments
The above Debit Balance of Rs.22,573/- transferred to Prior Period Items – Expenses in July,14 without proper reconciliation. 5. GL-201005:TDS Foreign Payments –u/s195 Balance as on 30.06.2014 (Dr) 31,108.00. The aforesaid GL has
not yet been reconciled.
6. GL-206060: Stat Liab-Professional Tax Payable Account Balance as on 30.06.2014 (Cr) 22,146 Amount Deposited in July,14 22,808 Shown Excess Deposit 662
Excess payment of Rs 662 is to be reconciled.
Internal Audit Department, Duliajan Page 25 of 39
Sl.
No.
Observations Risk Recommendations Management Comments
09 Scruitny of GLs
(a) Liability to others Security deposit-205021: In following
cases very old balances are appearing which has not yet been
reconciled and settled.
Sl.No Assignment
Document No
Posting Period Amounts. Text
1 TRIMURTI 141002457
0 2-Dec-10 -110,000 TENDER NO. KIS9714P11/04
2 CLASSIC EX-SERV.
1411008267 21-Jun-11 -10,000 TENDER NO. OIL/01/2011
3 EAGLE SCALE MFG.
1411008257 21-Jun-11 -50,000 TENDER NO. SKI1011P11/02
4 ROTO PUMPS LTD
1411008460 23-Jun-11 -106,000 TENDER NO. SKI123008P11/08
5 ALBARIN SUTING
1411024337 16-Nov-11 -17,000 TENDER NO. KCO2316P12
6 FARID & SONS 141201249
7 26-Jul-12 -50,000 ENQ NO. OIL/CAL/SH/EBR/05
7 GUJRAL 141203052
8 28-Dec-12 -75,000 EXTENDED CONTRACT UPTO APRIL 13
(b)Security Deposit given to vendor-550510: Following old
balance not reviewed.
Document No
posting date Amounts Text
8806036707 2-Feb-07 36,000 chanditala flats SD for addl power consumption
2607001205 1-Apr-07 100,000 SD with Woodlands 2607001205 1-Apr-07 113,644 SD with ICC for Electricity 2607001205 1-Apr-07 2,000 SD with Director, Cal Airport 2607001205 1-Apr-07 6,928 SD for Brooklyn Depo on 01.4.2003
Financial/
Compliance
(a)These need to be reviewed and necessary action, if any, required are to be taken. (b)These need to be reviewed and necessary action, if any, required are to be taken.
a) Management comment-
(a)Liability to others-Some
EMD submitted by bidders
and refunded to them
appeared in the list.
In few cases since PBG not
submitted by the vendors
so EMD cannot be released.
Some PBGs to be retained
as per terms and condition
of P.O.
All other cases scrutiny is
under process to release
EMD which are no longer
required.
(b)Security deposits given
to the vendors for which
services are still availed by
the company.
Internal Audit Department, Duliajan Page 26 of 39
Sl.
No.
Observations Risk Recommendations Management Comments
2607001205 1-Apr-07 46,738 SD for Golf Link Apart, Lee Road & Brookelyne Depo
2607001205 1-Apr-07 300,000 SD with Mr S.N.Roy for Lee Rd
2607001205 1-Apr-07 15,000 SD with AO,CIT II CAL TEL for Shipping Office
8607001570 11-May-07 500,000 SD for addlpower paid to cesc thrugh iccesc thr
8807015313 1-Aug-07 150,000 Indian Chamber of Commerce - pmt doc 1107006945
8807033868 3-Jan-08 2,579 Payment of adl. security deposit to cesc for tol
8809018180 18-Aug-09 40,000 SEQURITY DEPOSIT FOR ADDL. 10 KW LOAD
2610013033 31-Mar-11 1,132,78
5 renewal of lease-main office-icc-bal 01.12.05
(C)Review of clearing Accounts
On Scrutiny of the following Clearing GLs, it was found that some of the old items were lying unadjusted against different POs for long time:
In clearing Account No 220000 (Clearing Acct-GRIR-Stores And
Spares), an amount of Rs. 88269.05(Dr) was lying open as on
30.06.2014 for long period.
(c)The balance should be reconciled periodically compliance of the audit observation is to be furnished.
(C)Efforts have been made
to reduce GRIR account to
the extent possible. In the
present case GRIR is
appearing because LIV of
items are more than
GRN/Order quantity and
amendment of order is
requested to clear the same.
b) Implementation
Timeline:
As early as Possible
c) Implementation
responsibility:CMFA(CB)
Internal Audit Department, Duliajan Page 27 of 39
Sl.
No.
Observations Risk Recommendations Management Comments
10 Non closer of dormant Bank Accounts
Cash was verified on 05.08.2014 and found to be in agreement
with the main cash journal WB03. An amount of Rs.1,65,540 was
found in the following denominations :
Sl.No Currency No Value
1 500 106 53,000
2 100 921 92,100
3 50 133 6,650
4 10 1378 13,780
5 5 Coin 1 5
6 2 Coin 1 2
7 1 Coin 3 3
Total 1,65,540
Bank
In Union Bank of India a/c 521330 a Dr. Balance of Rs.56,978 and in ICICI Bank a/c 524010-a Dr. Balance of Rs.45,269.91was lying idel for a long time. No transactions were made in the aforesaid bank accounts after 31.08.09 and 30.11.07 respectively.
Financial/
Compliance
Necessary steps to be taken for
discontinue the accounts with the
approval of the competent
authorities; it was pointed out in
last Quarter also.
A reason for non closure of
accounts is to be furnished to the
audit.
a) Management comment-
The accounts have since
been closed.
b) Implementation
Timeline:
As early as Possible
c) Implementation
responsibility:
CMFA (CB)
Internal Audit Department, Duliajan Page 28 of 39
Annexure-I
List of PBG uploaded in the SAP
Sl. No BG Ref No. BG No. Bank Key Vendor Purch.Doc. BG Status Amount
Validity date
Extended Till
1 1000000252 800IIBGIS110011 VJBGAU11 200392 7904511 Created 250,000.00 30-Sep-12 2 1000000253 800IIBGIS110013 VJBGAU11 200392 7904519 Created 250,000.00 30-Sep-12 3 1000000142 0045IBPER001011 UCOGAU12 202039 7904867 Released 480,000.00 30-Sep-13
4 1000000129 044GOPG110680003 CANDEL12 207683 7904427 Extended by bank 235,000.00 30-Dec-13 30.03.2014
5 1000000141 069713IGPER0008 DNAKOL15 204481 7904806 Extended by bank 960,000.00 14-Mar-14 14.09.2014
6 1000000111 0697111GPER0003 DNAKOL15 204481 7904806 Created 960,000.00 30-Mar-14 7 1000000115 800IIBGIS120004 VJBGAU11 200392 7904234 Created 426,000.00 30-Mar-14 8 1000000121 3.23E+10 SBITSK12 205335 7905133 Created 290,000.00 23-Apr-14
9 1000000122 6000IPEBG100023 BOIDEL27 208184 7903820 Extended by bank 375,000.00 23-Apr-14 23.10.2014
10 1000000107 6000IPEBG110156 BOIDEL27 208184 7904523 Extended by bank 344,042.00
13-May-14 13.11.2014
11 1000000151 24/08 CBIJOR11 201644 7905499 Created 640,000.00 13-May-
14
12 1000000119 52013 INDTSK11 200211 7905248 Extension Request 170,000.00
31-May-14 30.11.2014
13 1000000146 INDB203795 CRLBNG12 206687 7905232 Extended by bank 240,000.00 15-Jun-14 15.12.2014
14 1000000130 6000IPEBG120033 BOIDEL27 201059 7904639 Extension Request 117,180.00 29-Jun-14 29.09.2014
15 1000000112 044GOPG110680002 CANDEL12 207683 7904475 Extended by bank 235,000.00 30-Jun-14 30.09.2014
16 1000000113 044GPGE140040003 CANDEL12 207683 7904427 Extension Request 235,000.00 30-Jun-14 30.12.2014
17 1000000114 0590IGPER003512 BOBKOL12 200292 7905265 Created 179,000.00 30-Jun-14 18 1000000145 800IIBGIS120048 VJBGAU11 200392 7905233 Created 370,000.00 30-Jun-14 19 1000000127 6000IPEBG120015 BOIDEL27 208184 7904845 Extension 1,002,000.00 30-Jun-14 30.09.2014
Internal Audit Department, Duliajan Page 29 of 39
Sl. No BG Ref No. BG No. Bank Key Vendor Purch.Doc. BG Status Amount
Validity date
Extended Till
Request
20 1000000144 2012/09 SBIKOL108 202164 7111769 Extension Request 670,000.00 30-Jun-14 30.12.2014
21 1000000487 800IIBGIS140017 VJBGAU11 200392 7905901 Confirmed by Bank 850,000.00 30-Jun-14
22 1000000123 014GT02130840010 HDFKOL22 207484 7905795 Confirmed by Bank 223,000.00 22-Jul-14
23 1000000143 2027312BG0000020 SBHKOL13 209095 7905256 Confirmed by Bank 420,000.00 9-Aug-14
24 1000000152 24/08 CBIDIB12 201644 7905968 Released 201,000.00 15-Nov-14 25 1000000147 0151BG00018414 ICIMUM22 206209 7905210 Created 520,000.00 29-Nov-14
26 1000000148 800IIBGIS130031 VJBGAU11 200392 7905901 Confirmed by Bank 850,000.00 31-Dec-14
27 1000000149 5.53E+09 CTIMUM13 208230 7904679 Released 254,000.00 25-Jan-15 28 1000000128 0413IGPER000114 BOBMUM15 207496 7906367 Invoked 270,000.00 1-Feb-15 01.08.2015 29 1000000508 0945IGPER002614 UCOKOL40 407365 6205300 Created 17,707.00 21-Apr-15
30 1000000153 0006BG00194114 ICIKOL11 201167 7114653 Confirmed by Bank 470,000.00
31-May-15
31 1000000150 3.31E+10 SBITSK12 205335 7905967 Confirmed by Bank 600,000.00 3-Jul-15
32 1000000458 0737IGPER000714 UCODUL01 205062 7906480 Created 424,000.00 30-Sep-15
33 1000002105 0068131LPER0013 UBIKOL77 206746 6205024 Confirmed by Bank 273,000.00 30-Jan-16
34 1000002106 177OILG000213 PNBKOL28 201107 6205026 Created 58,500.00 31-Jan-16 35 1000002098 177OILG0000114 PNBKOL28 201107 6205026 Created 62,500.00 31-Jan-16 36 1000000488 0038IPEBG140012 BOIMUM29 204218 7906492 Created 735,778.00 30-Apr-16 37 1000002097 0193614BG0000119 SBIKOL59 208740 7906536 Created 758,000.00 30-Apr-16 38 1000002095 8001IBGIS140032 VJBGAU11 200392 7906658 Created 593,000.00 30-Jun-16 39 1000002096 0505214BG0000793 SBIKOL48 204452 7509293 Created 914,000.00 1-Oct-16 40 1000002217
Internal Audit Department, Duliajan Page 30 of 39
Annexure-II
List BGs against the Tender not required to be uploaded in SAP
Sl. No Vendor BG Validity Tender Remarks
1 Watertech Engineers pvt.ltd SBOPBB50474BG131423 18.09.2014 SKI2070P1408 2 N.K. Fire Safety 0328IGPERO03414 21.11.2014 SKI2132P1404 3 Ravi Brothers 800IIBGIS140012 31.12.2014 SKI2070P1408 4 Fire Safety Devices Pvt ltd 6700IPEBG140022 21.08.2014 SKI2069P1404 5 Ravi Brothers 800IIBGIS120049 30.09.2014 SKI7705P1308 6 Ravi Brothers 800IIBGIS130035 30.06.2014 SKI1099P1408 Extension letter send, 7 ABB India ltd 0002BG00038915 25.05.2015 SKI2928P14
8 Emerson Process Mang PVT 5520604672 31.05.2015 SKI2928P14
9 ABB India ltd 0002BG00017115 25.04.2015 SKI2715P14 10 Rockwell automation 6216LGGT01005614 09.03.2015 SKI2715P14
Internal Audit Department, Duliajan Page 31 of 39
Annexure-III
Sl. No Party name BG NO. Order no. Validity Remarks 1 Sachin sales & service ltd 0045IGPER000611 7904682 31.01.2013 Expired. Extension required from the party
2 Water tech engineers pvt.ltd
SBOP/BB/50474/BG/11-12/038 7904638 31.08.2014
Bank of Patiala, BADA BAZAR is not available in SAP. Need to be updated in SAP. Moreover the extension is also required from the party
3 Water tech engineers pvt.ltd
SBOP/BB/50474/BG/11-12/037 7904637 31.08.2014
Bank of Patiala, BADA BAZAR is not available in SAP. Need to be updated in SAP. Moreover the extension is also required from the party
4 Water tech engineers pvt.ltd
SBOP/BB/50474/BG/11-12/039 7904636 31.08.2014
Bank of Patiala, BADA BAZAR is not available in SAP. Need to be updated in SAP. Moreover the extension is also required from the party
5 Water tech engineers pvt.ltd
SBOP/BB/50474/BG/14-15/002 7906488 15.01.2016
Bank of Patiala, BADA BAZAR is not available in SAP. Need to be updated in SAP. Moreover the extension is also required from the party
6 New age fire fighting co. ltd. 03281GPERO010313 7508282 15.10.2015
Bank of Baroda Gandhi Road Branch FUVARA AHMEDABAD-330001 is not available in SAP. Need to be updated in SAP. Moreover the extension is also required from the party
Internal Audit Department, Duliajan Page 32 of 39
Annexture-IV
GL-200000 Sundry Creditor (Foreign)
Amount (Rs). Column Labels
Row Labels 2008 2009 2010 2011 2012 2013 2014
100008 90259
100061 172356
100092 13729325
100139 47132
100170 19325506
100187 46782
100219 261759
100237 289796
100249 56228
100379 138936
100457 1257676
100497 4838
100529 888
100597 3603
100617 63127.75
100639 366767
100684 1570408.95
100717 190498
100732 491965.59
100769 65984.89
100990 121407.9
100997 442932.89
101104 180696.98
101138 2131264.22
Internal Audit Department, Duliajan Page 33 of 39
Amount (Rs). Column Labels
Row Labels 2008 2009 2010 2011 2012 2013 2014
101160 155439.5
101166 796383
101219 227837.41
101221 8590281.35
101261 16436723
101339 67311
101518 126495
101877 767520
101941 265097.76
102058 4703812.31
102064 8429
102095 41995.06
102198 14508
102206 245875.43
102257 23129.12
102265 192169
102715 865.13
102905 354224.15
Grand Total 8429 587811.04 16850788.33 39811690.26 608757.54 2471432.22 13729325
Internal Audit Department, Duliajan Page 34 of 39
Chapter-5
Follow up Status of Audit Observations of Previous Internal Audit Reports Auditreportperiod- Apr 2010 to March 2011 Report No- IA/kol/FY-2010-11/Q1, Q2,Q3 &Q4 Follow up report No:001
Sl
No
Obser
vation
(In
Brief)
Implemented Partly
Implemented
Not
Implemented
Remarks Responsibility Stataus up to Q4 (2013-14)
6 While reviewing GRIR
A/c, related to orders
placed from Kolkata
(GL- ) it has been
noticed that a large No
of items have not been
settled from 2006
onwards. (Refer:- Page
no. 20 of Q-4)
√ F&A Dept&
Material Dept
GRIR is reviewed frequently and
capital GRIR has been reduced to
great extent. Revenue GRIR is
pursued with Purchase section to
reduce the same to the extent
possible.
8 Review of import
related payment and
custom and port
clearances. (Brooklyn
Godown). (Refer:-Page
no. 38 of Q-4)
√ Shipping
Section
Internal Audit Department, Duliajan Page 35 of 39
Auditreportperiod- Oct 2011 to Dec 2011 Reportno -IA/kol/FY-2011-12/Q3 Followupreportno:004
Sl
No
Observation Implemented Partly
Implemented
Not
Implemented
Remarks Responsibility Current Status up to Q4 (2013-
14)
1 Claim Against Discrepancy Report (DR)
A amount of Rs. 4.11 crore is
outstanding as claims against
discrepant supplies
From vendors till 31.12.2011.
The claims against the DRs
which are outstanding from
2008-09 should be followed
Vigorously by Material Department with the Vendors
for replacement / delivery of
the materials under the
relevant Purchase Orders, otherwise the amount should
be adjusted against the next purchase orders.
√ Rs.4.64 crore is
lying as on
30.09.2013.
F&A Dept,
and
Material
Dept.
Provision for DR has been made
as per advice of Statutory
Auditors. Local DRs are recovered
from subsequent bills of vendors.
Internal Audit Department, Duliajan Page 36 of 39
Audit Report Period- July 2012 to Sept 2012 Reportno -IA/kol/FY- 2012-3/Q2Followupreportno:007
Sl
No
Observation Implemented Partly
Implemented
Not
Implemented
Remarks Responsibility Current Status up to Q4
(2013-14)
3 Items lying open in the GL of
GR/IR Stores & Spares, Capital
Goods, SR/IR Services & Overseas
freight Account. Refer:-Audit
Observation-10 to 13)
√ GRN for P.O. no
7600549,7108838
and 7107683 have
been raised. For rest
of the orders are
quite old and since
payment had been
made so the orders
will be closed.
F&A Dept and
Material Dept.
Purchase section has been
requested to close old
orders
Internal Audit Department, Duliajan Page 37 of 39
Audit Report Period- Oct 2012 to Dec 2012 Report No -IA/kol/FY-2012-13/Q3 Follow up Report No:008
Sl
No
Observation Implemented Partly
Implemented
Not
Implemented
Remarks Responsibility Current Status up to Q4
(2013-14)
3 Delay in raising of Purchase
requisition (raised on 13.06.12) for
Silver Salver for distribution to
employees retiring during Jan to
Dec’12 raised on 13.06.2012 and no
GRN raised till 21.03.2013.
√
Material Dept.,
Kolkata in co-
ordination with
User Dept (ER),
Duliajan
ER department has been
requested to raise indent in
time. Purchase order number
to be specified to check status
of pending GRN.
9 Service Entry Sheets (SESs) valued
Rs. 19.42 lakh created at different
dates by the different user
departments haven’t been finally
released and still lying open in the
system for more than 2 years as on
31.12.2012.
√ After receiving
the
management
comment audit
has further
checked the
SESs in the
system and
found that few
of the SESs are
still not
cancelled. Like-
SES no-
1000202129 &
1000245968
F&A Section,
Kolkata in co-
ordination with
concerned user
Sections,
Kolkata
List of pending SES not
released may be provided to
take up with the concerned
for cancellation.
Internal Audit Department, Duliajan Page 38 of 39
Audit Report Period–Jan’ 2013 to Mar 2013 Report No -IA/kol/FY-2012-13/Q4 Follow up Reportno:009
Sl
No
Observation Implemented Partly
Implemented
Not
Implemented
Remarks Responsibility Current Status up to Q4
(2013-14)
4 Shipping Office-
has been observed that the advances are given from the imprest cash of shipping office without settling the previous advances (Refer:-Audit Observation-11)
The matter will be taken up with the CMFA, Kolkata for necessary action/ suggestion
Shipping section has been
told to obtain expenses
statement for adjustment on
incurrence of actual
expenses
Audit Report Period–Apr’ 2013 to June 2013 Report No -IA/kol/FY-2013-14/Q1 Follow up Report No:010
Sl
No
Observation Impleme
nted
Partly
Implemented
Not
Implemented
Remarks Responsibility Current Status up to Q4
(2013-14)
3 Internal audit reviewed the responses of
bidders in limited tenders. A sample of 10 POs
awarded during the Q1 of the financial year
2013-14 was taken for the review. It was
observed that only 42% bidders responded
against the invitation to bids. Moreover most of
bidders had not submitted the regret letter to
OIL.
(Refer:-Audit Observation-07)
Despite our
best efforts,
responses
against few
tenders are
found poor.
We may
think ways
to increase
responses
like issuing
notices to
Purchase section has been
requested to review vendor
list on regular basis by
dropping non-participating
vendors and including new
vendors fulfilling OIL
technical specifications
Internal Audit Department, Duliajan Page 39 of 39
Sl
No
Observation Impleme
nted
Partly
Implemented
Not
Implemented
Remarks Responsibility Current Status up to Q4
(2013-14)
the parties
who do not
response
against our
tender.
5 Internal Audit Department also reviewed the
open D/Rs on test basis and observed that
certain purchase orders were awarded long
back in 2010 and LIVs were also done to effect
the payments to the concerned vendors. The
materials were also received but, subsequently
rejected with the movement type 124. But even
after passage of considerable period of time,
the materials were not received and as such,
the GRNs were not raised.
Few examples of such orders are shown below :
Sl. No
PO PO Date LIV date Amount (INR)
1 7950510 09.03.2010 18.08.2009 25,55,089 2 7950529 30.06.2010 30.12.2009 1,38,22,734 3 7112255 04.05.2012 03.07.2012 18,05,500 4 7950422 28.04.2008 08.09.2009 48,65,811 5 7600592 13.09.2011 11.07.2013 13,63,650
(Refer:-Audit Observation-10)
IA recommendation to be
provided for
implementation.