Maharashtra Agricultural Competitiveness Project (MACP)

Expression of Interest

Consultancy Services to function as Internal Auditor of MACP

The Government of Maharashtra, India has received credit from International Development

Association (IDA) (Credit No.4809-IN) MACP has to get its books of Accounts audited from

Internal auditors every year and submit audit report to the project. For audit of MACP,

Chartered Accountants firms empanelled under CAG have to be appointed as service

provider.

The MACP invites eligible applicants to indicate their interest in providing the services. An

applicant will be selected in accordance with the procedures set out in the World Bank’s

guidelines Selection of Employment of Service Provider by World Bank Borrower (May 2004

Revised Oct-2006 & May 2010) Interested applicants/Firms may submit “Expression of

Interest” in a sealed envelope clearly superscripted as “Expression of Interest for Service

Provided for-------------------------“ and may obtain further information (ToR) about the services,

procedure for submitting the EoI which is available at http://macp.gov.in

EoI must be delivered to the address given below on or before dated 23rd March 2015 before

@17.00 hrs.

The Project Director,

Maharashtra Agricultural Competitiveness Project (MACP)

F/E/78/, 1st Floor, LDB Training Center Building, Near SBI Bank, Market Yard, Gultekadi,

Pune-411037, Maharashtra State, INDIA

0091-2024270315/16

Request for Expression of Interest

Maharashtra Agricultural Competitiveness Project (MACP) IDA Credit No. 4809-IN

Consultancy Services to function as Internal Auditor of MACP

for the Financial Year 2015-16. Ref: MACP/PCU/Internal Audit/2015 Date-23/2/2015

1. The Government of Maharashtra through Government of India has received a credit

from the International Development Association (IDA) (CreditNo.4809-IN), for

implementation of Maharashtra Agricultural Competitiveness Project (MACP). MACP

intends to apply part of the proceeds of this credit to the payments under the contract

for “Consultancy Services to function as Internal Auditor for MACP” for the

period of 18 months or till the closing date of the project.

2. The broad scope of the assignment is as under:

To complete Internal audit (on quarterly basis)of MACP as whole BDS and Non-

BDS units of Project for F.Y.2015-16 in accordance with the auditing standards

promulgated by Institute of Chartered Accountants of India (ICAI).

Submit the audit report as prescribed in ToR for hiring internal auditor for MACP.

The auditor may be assigned special projects such as ‘training at district level’ and/

or ‘sample review of accounting records at Rural Haats; FCSCs; SR federations;

Goat demonstration units; etc.

The contract will stand amended as per changes, if any, approved by the World Bank

in the procedures followed to implement the project schemes for beneficiaries such as

APMC, Rural Haat etc.

3. The Maharashtra Agricultural Competitiveness Project (MACP) now invites eligible

CAG empanelled (Under “Major Audit”) Chartered Accountant Firms to indicate

their interest in providing the Services. Interested Service Providers must clearly

specify

Whether they are empanelled under CAG for “MAJOR AUDIT”.

Provide information indicating-

i. No. of full time partners, No. of years of their association with firm,

ii. No. of qualified staff (CA) employed in the firm

iii. Financial details (turnover of last three years),

iv. No. of audit assignments undertaken by firm this should separately indicate

v. No. of similar audit assignments (externally aided project)undertaken by firm as

well as audit of government department / scheme/ project assignments

undertaken also the other audit assignments i.e. statutory bank audit, society/

trust/ Company / PSU/ audits undertaken by firm. (with details on client,

assignment period, region, staff involved, budget, etc),

vi. Experience in similar nature (regional experience & experience on international

funded projects),

vii. Availability of appropriate skills among staff (qualification and relevant

experience of the proposed staff), etc.

The draft ToR for the said assignment is available at project website http://macp.gov.in

4. Consultants may associate to enhance their qualifications. The “Association” may take

the form of a joint venture (with joint and several liability) or of a sub-consultancy.

This should be clearly stated in the submission along with supporting documents.

5. The Consulting Firms submitting the EOI should note that the Consulting Firms

expressing their interest will be required to propose complete team at the time of

submission of proposal (if short listed). Also, Consulting Firms should be in a position

to commence the work within a week (with the complete team) from the date of

initiation of contract, if selected.

6. A Consulting Firm will be selected in accordance with the procedures set out in the

World Bank’s Guidelines: Selection and Employment of Consultants by Bank

Borrowers, May 2004, revised Oct 2006, revised May 2010.

7. Interested consulting firms may obtain further information about the terms of reference,

procedures for submitting the EOI etc. at macp.gov.in and may obtain further

information at the address given below on any office working day from11.00 AM

to17.00 PM

8. Expression of Interest in English must be submitted in a sealed envelope clearly

superscripted as Expression of Interest for “Consultancy Services to function as

Internal Auditor for MACP for Financial Year 2015-16”.

9. Expression of interest must be delivered to the address mentioned below on or before

23rd

March 2015 at 17.00 PM.

Project Director,

Maharashtra Agricultural Competitiveness Project (MACP),

S. No. F/E/78, 1st Floor, Land Development Banks Training Center, Market Yard, Gultekadi,

Pune-411037 (Maharashtra) INDIA Telephone No -0091-20-24260315, 0091-20-2420316

FAX No. -0091-20-24260327E-mail-pdmacp@msamb.com, fs@macp.gov.in

Website-http://macp.gov.in

ToR for hiring Internal Auditor in

Maharashtra Agricultural Competitiveness Project

I. INTRODUCTION

1) Background: The Government of Maharashtra through Government of India has applied for a loan from

International Development Association for implementation of Maharashtra Agricultural

Competitiveness Project.

The Project Development objective of the Maharashtra Agriculture Competitiveness Project

(MACP) is to increase Agricultural Productivity and Marketable surplus as well as support

competitive marketing arrangements resulting in increased farmer access to

market opportunities. The objectives will be achieved through (i) Intensification and

diversification of market lead production; (ii) Improving Farmer access to Markets by

Promoting alternative Markets and Modernizing existing APMC and (iii) project

coordination and management.

a. Intensification and diversification of market lead production: by providing market

led agriculture technology transfer to improve productivity and quality production and

market information and marketing intelligence, agribusiness opportunities through

agribusiness development facility and livestock improvement through livestock support

services.

b. Improving Farmer access to Markets by Promoting alternative Markets and

Modernizing existing APMC: by promoting alternative marketing systems involving

farmers in the formation of producer groups, their associations, developing there

Farmers Common Service Centre (FCSC), introducing E-Marketing platform with the

help of commodity exchanges, by producing warehouse receipt financing to

overcome price risk and to provide moderate improvement in Rural Haats besides

modernization of selected APMCs and Livestock Markets.

c. Project management: would help to ensure effective project management at the state

and district levels, and support information and logistics, communications, project

related consultancies and monitoring and evaluation

2) Overview:

The duration of project is six years and cost of project is Rs 703.95 crores. The funds

contribution for project by World Bank through Central Govt. is 65.5% of total fund, the State

Government contributes 7.3% and beneficiary contribution 27.1% of the total. The project

would be implemented across the whole State. However the implementation would be

undertaken in three phases with 10, 11 and 12 district in phase I, II and III

respectively. The Project involves the fund flow to three line departments and

autonomous bodies. The three line departments involved are Agriculture, Co-operation &

Marketing and Animal Husbandry. The Co-operation and Marketing Department is the

Nodal Department. The autonomous bodies involved are :

a) MSAMB – Maharashtra State Agricultural Marketing Board – Nodal Agency for the

project. (under Co-operation and Marketing Department)

b) MSWC – Maharashtra State Warehousing Corporation (under Co-operation and

Marketing Department)

c) 33 ATMAs in the State (under Agriculture Department)

d) Other training institutions

VANAMATI (under Agriculture Department)

NIPHT (under MSAMB)

The Finance Department of the GoM will initially provide the funds to Co-operation and

Marketing Department which will further reallocate the funds to Agriculture and Animal

Husbandry Department. As the funds received and expenses incurred are on large

scale, it is necessary to do accounting and auditing of the funds properly. As the total

volume of accounting is very vast and complex, it can result in errors or

mismanagement of funds. As far as external audit of funds received in MACP in concerned

the funds received through BDS will be audited by Accountant General and non BDS funds

and beneficiary contribution will be audited by a Chartered Accountant. The internal audit of

MACP accounts will be done by a separate Firm of Chartered Accountants to be taken on

contractual basis as per guide lines given by the World Bank.

3) The fund flow for the project is attached in Annexure 1

4) The accounting centres for the project is attached in Annexure 2.

II. Internal Audit:

The essence of the World Bank audit policy is to ensure that the bank receives adequate,

independent, professional, audit assurance that the proceeds of World Bank loan were used for

the purposes intended, that the audit reports are free from material mismanagement and that

terms of the loan agreement are complied with in all material respects.

1) Objectives :

The overall objectives of Internal Audit is to provide the project management with independent

assurance that (i) the internal controls established by management are designed appropriately

and is commensurate to the nature and size of the project (ii) verify whether the overall

financial management and specifically internal controls as documented in the Project

Financial Management Manual (FMM), and the Project Implementation Plan (PIP) are in

practice and working effectively. In addition, it is expected that internal audit should play a

role in assisting management in bringing a systematic, disciplined approach to evaluate and

improve the effectiveness of risk management and internal controls

2) Scope:

The internal audit will be carried out in accordance with the Standards for the

Professional Practice of Internal Auditing issued by the Institute of Internal Auditors. The

internal auditor should accordingly evaluate and will include such tests and controls as the

auditor may consider necessary under the circumstances. In conducting the audit special

attention should be paid to the following.

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

agreements and only for the purposes for which the financing was provided. Relevant

legal agreement includes the Financing Agreement, the Project Agreement and the

Minutes of Negotiation

b) The monthly expenditure Statement submitted by the districts indicating the approved

budget provision and expenditure during the month, cumulative expenditure against the

activity / sub-activity during the year should be reviewed in the internal audit.

c) The procurement procedure adopted for civil works, goods and consultancy services

should be reviewed by the internal auditors and it should be ensured that correct

procedures as per the Bank procurement guidelines have been followed for each

procurement.

d) It should be ensured that the records of all procurement, agreements, work/purchase

orders, invoices, receipts, stock registers etc are properly maintained, duly linked and

retained including expenditures reported via Interim Unaudited Financial reports (IUFR).

The auditor should also review contract management and whether business standards for

payment to contractors are being adhered to.

e) The project account have been prepared in accordance with consistently applied Govt.

accounting standards

f) The auditor should ensure the efficiency and timeliness of the funds flow mechanism at

the State and District level and whether there are delays and which could impact the

timely implementation of project. The auditor should also identify and report the

reasons for such delays and possible remedial measures.

g) The auditor should ensure all project funds received under the project have been used

with due attention to economy, efficiency and effectiveness, and only for the purposes

for which the financing was provided;

h) The auditor should ensure that all Beneficiary Contributions, deposited in separate

bank account at District level are maintained as per the terms and conditions stated in

the financial manual.

i) The auditor should ensure that all necessary supporting documents, records, have been

separately filed in respect of all project activities and that clear linkages exist between

the supporting documents, accounting books and records and the periodic financial

reports from the respective spending units

j) The internal auditor should ensure that the adequate records are maintained regarding

the assets created and assets acquired by the project, including description, details of

cost, identification and location of assets. The internal auditor should carry out

physical verification of a sample of assets created out of the project and comment on

its utilization .The internal auditor should check as to whether the terms and conditions

of contract of building new infrastructure have been adhered to with respect to time

and money

k) Whether the accounting for the advances to line departments and concern units are

properly recorded in the accounting books; whether systems are in place for

monitoring the receipt of periodic financial reports & follow up on overdue reports are

adequate. Exceptions should be identified and reported.

l) Whether the IUFRs are submitted in a timely manner, whether release of funds are

conditional to receipt of IUFRs and report exceptions, if any

m) Bank reconciliations have been carried out on a monthly basis. In case spending units

having a treasury/BDS system, whether quarterly reconciliation of accounts are being

done by the DDO of all PIU-Agri and PIU-AHD and Director of Agriculture

Marketing with the AG(A&E) in a timely manner.

n) While conducting internal audit in a subsequent phase the auditor will ensure that the

compliance report on audit observations pointed out in the reports relating to earlier

audit is made and corrective actions taken on those points are furnished in the Audit

Report of the subsequent phase

o) Routine errors of omission or commission noted during the course of internal audit

may be rectified on the spot.

p) The auditor should ensure that project assets exist, are adequately safeguarded and

are actually used for their intended purposes.

q) The auditor may be assigned special projects such as ‘training at district level’ and/

or ‘sample review of accounting records at Rural Haats; FCSCs; SR federations;

Goat demonstration units; etc. r) The contract will stand amended as per changes,

if any, approved by the World Bank in the procedures followed to implement the

project schemes for beneficiaries such as APMC, Rural Haat etc.

3. Coverage for the Audit :

The audit would cover the entire districts implemented in Phase I, Phase II and Phase III of

the project during the year. The audit would also cover all consultancies or other contracts

that may be entered into by the implementing agencies.

4. Extent of Audit :

a) The number of districts covered under phase-I, phase-II and phase III are listed below

Project phases and the districts covered under Phase I, Phase II and Phase III

Sr.

No.

Phase I

Districts Phase II Districts

Phase III

1 Amaravati Nagpur Sindhgurg

2 Akola Wardha Ratnagiri

3 Washim Bhandara Raigad

4 Yeoatmal Gondia Thane

5 Buldhana Chandrapur Nashik

6 Jalna Gadchiroli Dhule

7 Aurangabad Latur Jalgaon

8 Parbhani Beed Nadurbar

9 Hingoli Osmanabad Pune

10 Ahmednagar Nanded Satara

11 --- Solapur Sangli

12 Kolhapur

b) The auditor will undertake a review of 50 – 70% of the transactions by value; keeping in

mind the risk assessed at each unit. All transfers of funds to various DDO accounts by the

GoM is also to be checked and verified.

5. Period, Timing and sample coverage of Internal Audit :

The Internal Audit will be conducted on a quarterly basis for all the accounting centers. The

auditor will draw up an audit plan for each quarter within 5 days from the end of the

quarter in consultation with the management that is PCU, PIU-MSAMB, PIU-Agri and PIU-

AHD. In case of special assignments management will inform the auditor the scope of

assignment and accordingly the audit plan will be chalked out by the auditor.

6. Reporting :

Quarterly Reporting: Internal audit reports containing the following elements should be

submitted to the Audit Committee on a quarterly basis:

a. The objective and scope of the internal audit

b. A summary of the internal auditing procedures performed.

c. The internal auditor’s opinion as to the overall adequacy of the systems of

internal control and its implementation.

d. Key management issues: The internal audit will report the critical issues unitwise i.e. PCU,

PIU (Agri), PIU(AM) and PIU (AHD). The internal auditor should provide an Executive

Summary highlighting the critical issues which require the management’s attention

and the status of actions on the previous recommendations

e. Detailed internal audit findings of each unit audited, with adequate descriptions of

weaknesses identified and the associated impacts and risks

f. Appropriate and reasonable recommendations t o address the identified weaknesses;

g. A separate, brief summary of the findings on review of procurement aspects with

reference to the Procurement Manual, Financial Management Manual and Annual Work

Plans.

h. Responses to findings and recommendations by authorized persons stating the

timeline for remediation and the person responsible.

i. Audit queries/remarks/observations/suggestions should be bifurcated unit wise i.e. PCU,

PIU (Agri), PIU(AM) and PIU (AHD). The reporting should be done on “report by exception

basis” and rest should be maintained as working papers. The main audit report (which is unit

wise) should be bifurcated in three parts, first is critical issues/ serious queries which need

management attention, second is queries which are not yet solved/sorted and third is queries

which have been solved but management should have knowledge of these kind of errors..

j. Besides the above internal audit procedures, the information demanded through audit

questionnaire by the management should be provided unitwise in each report.

k. Communication/Presentation to senior Management: The auditor will present to all the

Nodal Officers/ Concerned Incharge the findings of the quarterly reports and on six

monthly basis will present his findings to the Project Director.

The report should be discussed and agreed with the auditable units and should be

structured to list the observations, the implications of the observations, the suggested

recommendation and the management comments/agreed actions. The audit observations

should be supported by instances and quantified, as far as practicable. The audit report of the

previous quarter should be submitted within two months of end of the quarter.

III. Qualifications & Experience of Consultants for Internal Audit.

1) Qualifications & Experience of Consultants for internal audit is as follows:

• The firm shall have a standing of at least ten years in the profession and should be

empanelled with CAG for “Major Audits”.

• The firm shall have at least 5 partners out of which 3 should be full time partners.

• The Chartered Accountant shall have sufficient number of employees to handle the

audit of the project. The break up details are (i) semi qualified & (ii) other staff (articles

/ audit clerks, paid assistants to be furnished. The team Composition should preferably

be as follows:

Sr.No. Particulars Qualification required

(a) Project Leader (PL) Chartered Accountant with at least ten years of

post qualification experience.

(b) Audit Task Leader (ATL) Chartered Accountant with experience of

minimum five years.

(c) Senior Audit Asst. ( Minimum

Two Persons Required)

Graduate/ C.A. Inter with audit experience of

minimum two years.

(e) Junior Audit Asst. ( Minimum four

Persons Required)

Graduate/ Articles.

There should be at least two teams which should handle the internal audit.

• The firm should have handled at least 7 internal or statutory audit assignments of

Government Companies / Boards, Societies, Externally Aided Projects i n t h e

l a s t 5 y e a r s and shall be familiar with Government Rules & Regulations. The

details of the same should be submitted.

The firm has to consider Pune has the establishment base and accordingly calculate

the per diem (per day) rate for re-imbursement of Traveling, lodging, communication

and other expenses incurred.

2) Internal Auditor’s fees:

The payment of the fees for the services of the CA firm will be done by the Project

Co-ordination Unit (MACP).

3) Tenure:

The contract is for a period of 18 months and can be renewed thereafter (for a

maximum of two years, one year at a time or till the end of the project period) based

satisfactory performance of the firm. The audit fees will be mutually decided with prior

consent of World Bank.

4) Project Audit Review Committee:

The audit committee at PCU will keep a watch on the audit objections raised by the

auditor and take actions for the speedy settlement of the objections by timely follow up.

Audit Committee will be set up under Project Director with following members.

1) Chief Financial Controller, PCU- member

2) Finance Specialist, PCU- member secretary

3) Nodal Officer PIU (MSAMB ) - member

4) Nodal Officer PIU (Agriculture) – member

5) Nodal Officer PIU ( AHD ) - member

6) Sr. Accounts Officer PIU (MSAMB)- member

7) Accounts Officer PIU (Agriculture)- member

8) Accounts Officer PIU (AHD)- member

9) Representative of C.A. firm assigned with internal audit - member

10) Accounts Officer, PCU - member

IV. Data support provided by MACP:

1) The auditor would be given access to all documents, correspondence, and any

other information relating to the project and deemed necessary by the auditor

(including all contract document, sub-project agreements, final audit reports submitted by

the concern units ). The auditor should become familiar with the project, and with the

relevant policies and guidelines of the World Bank (including those relating to

disbursements, procurement and financial management and reporting).

2) The auditor would be provided copies of the Project Implementation Plan;

Project Appraisal Document (PAD) of the World Bank; Development Credit

Agreement , Project Agreement with IDA (including agreed Minutes of negotiations);

Procurement Manual, Annual Procurement Plan, Financial Management Manual and

Annual Work Plans.

3) Adequate information. files, records will be made available.

Annex 1

Co-operation & Marketing Department

BDS

BDS

Commissioner of

Animal Husbandry – PIU

AHD Comp.

Training to farmers of livestock & SR markets.

Exposure visits of LSM , SR market and Goat demonstration unit.

Demonstration on livestock management and fodder production technology

Animal Husbandry

Department in Mantralaya

(ADF) BDS

BDS

Finance Department

BDS Agricultural Department in

Mantralaya

BDS

Commissioner Agriculture – PIU

PIU expenses

Foreign training

SP expenses

Buyer Seller meet (State level)

VANAMATI ATMAs

Agri. Comp.

Preparation of Marketing Strategy

Supplement, mobilization of farmers into

CIGs/FIGs, Procurement of computer,

Training for officers & farmers,

Demonstrations, exposure visits, innovative

pilots, buyers sellers meet (district level),

strengthening of grower association

Director of Agricultural Marketing

MSWC

PIU Expenses

Market Intelligence

Service Provider

Separate bank

A/C for

Beneficiary

contribution 3

For Contracts

APMC

Repairs of godowns

Lab equipments

Connectivity with commodity exchanges

DDRCS

PIU AGRI.

MKTGAgri.

Mktg A/C 2

PCU MACP

A/C 1

PCU Expenses

ABPF

Audit Internal & External

Consultant Expenses for M & E Procurement training

V

BDS Cheque

Separate

Bank A/C

Through core

banking

1 -PCU – MACP A/C jointly operated by Project Director

and Chief Finance Controller & Accounts Officer.

2 -PIU – Agri Mktg A/C jointly operated by /Accounts

Officer .

3 -Beneficiary A/C operated by DDRCs and DDO from the

DDRCs office on recommendation of the bill by concerned

beneficiary

PIU Expenses

Service Provider

Market Development Cell

Training Centre of AHD

Vaccination kits to lady link workers

Cheque DSAO Dy. Comm.

AHD

BDS

RJDA

Aurangabad

Cheque

Contractors of

HPTI

Aurangabad

Supply of Bucks and rotary chaff cutters to farmers in goat demonstration units

Supply of bucks to SR farmers

BDS

For

Contracts

APMC Community

Procuremen

t for

FCSC

Rural Haat

EFT by

treasury

NIPHT (Training )

ANNEXURE- 2

Agriculture Department

Name of A/c

center Level

Phase I

Nos.

Phase II

No.s

Phase III

Nos.

Accounts/ to be

submitted to

Format in

which accounts

is to be

submitted

Frequency of

submission of

accounts

PIU- Agriculture Commissioner

Agriculture 1 0 0 PCU MES/ IUFR Monthly/

Quarterly

VANAMATI Nagpur (State

level) 1 0 0 PIU Agriculture

MES Monthly

ATMAs District level 10 11 12 PIU Agriculture

MES Monthly

JDA

AURANGA

BAD (for

HPTI)

Aurangabad 1 0 0 PIU Agriculture MES Monthly

Sub Total 13 11 12

Co-operation and Marketing Department

Name of

A/c

centre

Level

Phase I Nos.

Phase II

No.s

Phase III Nos.

Accounts/ to be

submitted to

Format in

which

accounts

is to be

submitted

Frequency

of

submission

of accounts

PCU-MACP PCU-MACP-Pune 1 0 0 World Bank Consolidated

IUFR

Quarterly

PIU AGRI. MKTG PIU-AGRI-MKTG-

Pune

1 0 0

PCU-MACP MES/ IUFR Monthly/

Quarterly

DDRCS District level 10 11 12 PIU Agri Marketing MES Monthly

MSWC Pune 1 0 0 PIU Agri Marketing MES Monthly

NIPHT Pune 1 0 0 PIU Agri Marketing MES Monthly

Sub Total 14 11 12

Animal Husbandry Department

Name of A/c center

Level

Phase

I Nos.

Phase

II

No.s

Phase III

Nos.

Accounts/

to be

submitted

to

Format in

which

accounts is

to be

submitted

Frequency

of

submission

of

accounts PIU – Animal

Husbandry

Department

Commissioner

Animal

Husbandry

(State)

1 0 0 PCU -MACP MES/ IUFR Monthly/

Quarterly

Office of Deputy

Commissioner of

AHD

District level 5 5 8 Commissioner

AHD / PIU –

AHD

MES Monthly

Sub Total 6 5 8 Total 33 27 32