AUDITOR GENERAL OF PAKISTAN DIRECTORATE GENERAL AUDIT (WORKS) NAME OF AUDIT ENTITY: AUDIT PERIOD: AUDIT COMPONENT: Audit

Objectives:To check that proper control system is designed and implemented throughout the period under audit for planning and contract awarding with respect to following risks conditions by testing selected sample for compliance of applicable rules and regulations. I II III IV V VI Audit Obj I Audit Procedure Award of contract site of work Check that site of work was acquired / available prior to awarding of contract Award of contract without approval of Scope of Work & Specifications. Check that drawing & design was approved by the competent authority prior to awarding of contract. Award of contract without administrative approval/technical sanctioned estimate Check that administrative approval was accorded by the competent authority after project approval from competent authority i.e. ECNEC/PDWD/DDC etc as per delegation of financial powers. Check technical sanctioned estimate accorded upto 10% Award of contract Award of contract without approval of scope of work. Award of contract without sanction administrative approval/technical sanctioned estimate. Application of incorrect MRS in technical sanctioned estimate and provision of non-standardized items without preparation and approval of rate analysis Tendering Bid Evaluation Done By; WP Ref. PLANNING AND CONTRACT AWARDING PUBLIC HEALTH ENGNEERING

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above AA cost and 10% cushion enjoyed for change in quantities and not for premium / rates Check that revised administrative approval was accorded on the basis of sound/genuine reasons and from the same competent authority who accorded original administrative approval. Work plan for M&R of relevant works got approved from competent authority Check that Revised Technical sanction of estimate was accorded on the basis of sound/genuine reasons and by the same competent authority. Check the TSE for M&R of road and buildings works accorded as per yard sticks and without provision of contingencies.

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Application of incorrect MRS Rates of Schedules and Nonschedules Items Check that rough cost estimate for administrative approval / revised administrative approval was based on MRS. Check that detailed estimate for technical sanctioned estimate /revised technical sanctioned estimate was based on MRS Check that correct rates were taken in the Admn. Approval/ technical sanctioned estimate Check that approved rates were depicted in technical sanctioned estimate of non standardized items. Tendering Check that rates provided in DNIT were based on rates as per TSE/AA and was got approved before calling of tender. Check that the tenders were advertised through publicity vide No. & Date was mentioned in the advertisement. Check that earnest money/call deposit was obtained from the bidders well in time. Check tenders were opened in the presence of bidders and members of the committee. Check that quoted rates were written in figures as well as in words and entered in the tender Register. Prequalification was done as per laid down procedure. Check that blank tender form entry exist in Tender Form Issue Register and fee @ 02% of tender cost recovered and deposited into treasury.

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Bid Evaluation. Check that the cost of administrative approval and technically sanctioned was recorded in the tender register. Check that no interpolations and corrections were made in the tender, documents after opening of tender. Check that all the bid received was recorded in the tender opening register In case of rejected tender, check the basis. Check the correctness arithmetical correction of calculation of the figures provided in the tender. Check the attendance sheet of potential bidders to see participation of all the bidders. Check approval of competent authority in case tender other than lowest accepted. Check that the comparative statement was prepared on the basis of quoted rates and technical sanctioned estimate excluding contingency and signed by tender opening committee/ approving authority. Check that all post bidding amendments were got approved by the competent authority. Check that the work was allotted within validity period after the approval of the tenders by the competent authority. Check that the rates incorporated in acceptance letter were as per bid/comparative statement and any subsequent undertaking and other provision made in accordance with approved DNIT. Check that signed contract provision did not vary with DNIT stipulations. Check that cushion of 4.5% was not applied for M&R work as same is not acceptable as per delegation of financial powers Rules.

AUDITOR GENERAL OF PAKISTAN DIRECTORATE GENERAL AUDIT (WORKS) NAME OF AUDIT ENTITY: AUDIT PERIOD: AUDIT COMPONENT: Audit Objectives:To check that proper control system is designed and implemented throughout the period under audit with respect to following risks conditions by testing selected sample for compliance of applicable rules and regulations. CONTRACT IMPLEMENTATION PUBLIC HEALTH ENGINEERING

I. II. III. IV. V. VI VII VIII IX I

Execution Variation / change orders in original contracts / work orders. Measurement of works. Non-imposition of liquidated damages in late completion of works Failure and termination of contracts. Escalation claim of the contractors. Violation of contract clauses. Non-encashment of performance bonds / bank guarantees. Recoveries as per contract.

Execution Check that work was started within the time mentioned in acceptance letter. Check that performance bonds secretary were obtained within time period. Check that work schedule was submitted by the contractor. Check that the work was executed as per scope specification of approved work by the competent authority as provided in administrative approval/TSE. Check additional bank guarantee obtained @ 5 10 % in case of tender accepted below TSE cost Check that items/quantities of work done are as per agreement.

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Variation/Change in original contracts Check that the variation order was approved by the competent authority as mentioned in para 2.7, 2.12, 2.86 of B&R Code. Check that the engineer (nominated consultant) of the contract recommended variation (where applicable). Check that the cost of variation order was prepared in accordance with the terms and conditions of the contract agreement. Check the prior approval of the competent authority, who accorded the technical sanction/Admn. Approval sought.

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Measurement of Works Check the arithmetic accuracy of calculations booked in the measurement book and ensure the aggregate measurements do not exceed estimated quantities as mentioned in the Bill of Quantity (BOQ). Identify the cases of excess measurement from the measurement book and check proper action was taken against the responsible officials. Check that measurement book properly issued to the concerned engineer and duly entered in the measurement book register. Check that certificate of SDO/XEN for execution of work as per specification, secured advance, and advance payment recorded in M.B. Check that measurement in M.B. check measure by SDO /XEN and action initiated in case of difference @ 5% or more. Check that the measurements recorded in MB according to contract drawing and T.S.E.

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Non-imposition of Liquidated Damages in Late Completion of Works Check the progress reports and acceptance letter to ascertain the date of completion. Check that the competent authority had granted extension in time limit on genuine grounds. Check that the extension had been granted on the recommendations of Sub-divisional Officer. Check that no price variation paid where the contractor

was at fault for delay in completion of work, Extension granted with warning or with some penalty. V Failure and Termination of Contracts Check that clause 60 and 61 was invoked in case of failure of contractor for completion of work properly. Check that security was forfeited under clause 60 and recovery of risk & cost under clause 61. Final measurements for work done by defaulter contractor and award of balance work.

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Escalation claims of the contractors. Payment of escalation to the contactors will be checked with reference to provision of relevant clauses in the contract agreement. Check that escalation was not paid to the defaulted contractor who had been granted extension after imposition of some penalty or with warning. Check base and prevailing rates as per website/FD circular. Check that price variation paid within the contingency provision of TSE of work/Project. Check that no payment of price variation allowed on M&R work without revision of TSE. In case of payment of escalation on labour, bricks, POL etc. it may be checked that payment was made as per contract agreement/provision provided in contract agreement. Violation of contract clauses Check the provisions of the contract agreement and compare it with the payment vouchers. In case of instances of violation of clauses of contract, work out the financial impact of the violation. per provision of contract.

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Non-encashment of performance bonds / bank guarantees. Check that performance bonds/bank guarantee were got enchased due to recession of contract. Check that performance bonds/bank guarantee was got renewed before the expiry date otherwise un-cashed.

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Recoveries as per contract Check that recoveries of income tax, general sales tax (4%) at source, security deposits, mobilization advances, secured advance and dismantled material were made as per provision of contract.

AUDITOR GENERAL OF PAKISTAN DIRECTORATE GENERAL AUDIT (WORKS) NAME OF AUDIT ENTITY: AUDIT PERIOD: AUDIT COMPONENT: Audit Objectives:To check that the payments of contracts are made according to the rules & procedures laid down and payments are not materially misstated. Done by WP Ref. CONTRACT PAYMENTS (VOUCHERS) PUBLIC HEALTH ENGINEERING

Audit procedure

Check that paid vouchers were serial numbered. Check that paid vouchers were pre-audited / passed. Check that necessary deductions were made from the contractors payments. Check that paid voucher amount or its part in case placed in suspense head Misc. P.W. advances as recoverable from departmental officials was as per rules and its adjustment/recovery made within financial years as per budget manual. Check that paid voucher for release of security deposit was prepared after the maturity period or amount released against bank guarantee as per agreement clause. Equal amount in deposit was available in P.W. Deposit. Check that expenditure was within the budgetary allocations. Check that paid vouchers entered in the cash book Payments made were acknowledged by the contractors. Check that complete information of work was provided in the bill/voucher. Check that price variation worked out correctly and arithmetical calculations were correct. Check availability of funds. Check that paid vouchers for mobilization advances were against irrevocable bank guarantees issued by local scheduled banks and forfeited in case of defaulter contractors Check secured advance payment against indenture bond, on

the certificate of SDO and recovered with interest in case of contractors default. Check voucher for advance payment of work done but not measured as per laid down instructions Check work done in case of risk and cost, necessary adjustment of risk and cost made. Security deposit forfeited Check rates / quantity in vouchers correctly paid i.e. as per contract/ MRS. Check vouchers passed/payment made by SDO was preaudited by DAO Check muster roll/Casual labour rolls against proper appointment and against provision in TSE. Check that tendered rates were not paid in violation of contract clause 47-A and FD Notification. Check that financial statement on RTSE/Final or last bill prepared and recovery of imbalance rates made. Check recovery of minus final/running bill made. Check that voucher amount for POL/M&R of official vehicles/machinery charged to grant 24 under head 500 C&S 400 R&M of machinery and equipment and not book to ADP work etc as per FD letter No. FD (M-11)1-6/2001(Irri) dated 23-7-2007 and 13-5-2008. Check that entries of temporary advance/imprest and their adjustment were correctly made.