NATIONAL TRANSMISSION AND DESPATCH

COMPANY LIMITED (NTDC)

INTERNAL AUDIT FUNCTIONS

AND ITS PERFORMANCE
INTERNAL AUDIT DIVISION (NTDC)
It was established in 2001 as a result of Wapda restructuring. Internal Audit
performs an independent on going appraisal of the Company’s financial, operational
and control activities. Internal Audit is primarily responsible for assisting
management in their operational responsibilities through independent audit and
consultation designed to evaluate and promote the system of internal control.
Internal Control is a process designed to provide reasonable assurance
regarding achievement of objectives in the following categories.
● Effective and efficiency of operations.
● Compliance with applicable regulations, laws, procedures, and policies of
company.
● Reliability of financial reporting.
 NATIONAL TRANSMISSION AND DESPATCH COMPANY (NTDC)
ORGANOGRAM OF INTERNAL AUDIT DIVISION

TOTAL NO OF SANCTIONED POSTS = 59

Manager Audit
(NTDC)

Deputy Manager Deputy Manager Steno = 1

(Post Audit of IPPs N.Q =1
(Head Office) Payments) Driver =1
A.A.O = 2 CKDR =1

(Audit Cell)
A.O =1
Audit Party-I Audit Party-III Audit Party-IV
A.A.O =1 Audit Party-II
A.A =1
N.Q =1

(Head Office) Audit Officer =1 Audit Officer =1 Audit Officer =1 Audit Officer =1
A.A.O =2 Asstt Audit Officer = 1 Asstt Audit Officer =1 Asstt Audit Officer = 1 Asstt Audit Officer =1
A.A = 10
C.C.A =4
Audit Assistant =3 Audit Assistant =3 Audit Assistant =3 Audit Assistant =3
S.V =1 Stock Verifier =1 Stock Verifier =1 Stock Verifier =1 Stock Verifier =1
J.C =2
N.Q =3
SHORT FALL IN MANPOWER AS PER
SANCTIONED STRENGTH
Nomenclature of the post BPS Sanctioned Working Short Fall
Strength Strength
Manager Audit (NTDC) 19 1 1 -
Dy. Manager Audit (NTDC) 18 2 2 -
Audit Officer 17 5 4 1
Assistant Audit Officer 16 9 8 1
Stock Verifier 14-16 5 2 3
Audit Assistant 14-15 28 20 8
Steno 14 1 1 -
Junior Clerk 7 2 - 2
Driver 7 1 - 1
Chockidar 2 1 1 -
Naib Qasid 1 4 3 1
Total 59 42 17

No of Employees
Field Staff = 26
Head Office = 16
Total = 42
FUNCTIONS OF INTERNAL AUDIT
REGULAR
1. Annual Financial Audit.
2. Audit of payments to
Consultants.
3. Post Audit of payments to IPPS.
4. Expenditure Audit of capital
projects.
5. Stock Verification of Warehouses,
stores and Office T&P.
6. Concurrent check of Warehouses.
7. Liaison with Government Audit,
D.G Audit, Wapda.
OCCASSIONAL
1. Special audit assigned by PEPCO,
Chief Executive NTDC/BOD
2. Participation in high powered &
middle order inquires.
3. Participation in Auction of store
material, Tender Opening
Committees & other Allied
Activities.
4. Post Audit of Amounts written off
by the competent authority.
 AUDIT PLAN
An audit plan is prepared every year before the commencement of the ensuing financial year and
presented to the BOD for its approval through NTDC Audit Committee. After approval of BOD the plan
is ready for implementation and serves as a guide line for execution of Internal Audit function.

ALLOCATED AND AVAILABLE RESOURCES AS PER AUDIT PLAN

SR. # ACTIVITY TOTAL MANDAYS ALLOCATED SHORT FALL

AVAILABLE MAN DAYS MAN DAYS
___________________________________________________________________

1. Financial Audit of GSO

Formations (86 Nos) (4 X 4 X 205)=3280 5790 2510

2. Consultants Audit (19 Nos) (1 X 4 X 224)=896 2200 1384

3. Projects Expenditure
Audit (19 Nos) Nil 1200 1200

4. Stock Verifications (123 Nos) (3 X 230)=690 1089 399

5. Concurrent Check
Auditors (4 Nos) (4 X 270)=1080 1080 -
KEY PERFORMANCE INDICATORS BASED ON
AUDIT FUNCTIONS PERFORMED

DURING 2009-10
Sr Audit Activity Auditable Audit Financial Amount Amount Settled Amount
# Formations Completed Irregularities Recovered Agreed after Outstanding
for verification
recovery of record
(No) (No) (Rs) (Rs) (Rs) (Rs) (Rs)
Million Million Million Million Million
1. GSO 86 84 126.02 0.29 5.81 5.77 114.15
Formations
including
supervisory
offices
2. Consultancy 19 5 113.27 1.25 63.50 - 48.52
Payments
3. Post Audit of 15 15 4066.00 - - - 4066.00
IPPS Payments
4. EHV Projects 6 5 262.59 - - - 262.59
Expenditure
(Monthly
Review)
5. Special Audits 2 2 107.74 26.66 - - 81.07
75.65 US$ - 75.65 US$
6. Stock 123 73 99.44 (Surplus) - - 5.06 94.38(Surplus)
Verification of 43.76 (Short) 0.59 43.17(Short)
Ware Houses,
Stores &
Offices
ANNUAL FINANCIAL AUDIT
During the year 2009-10, Internal Audit has carried out annual financial audit of 84 No NTDC formations comprised of Grid
Stations, Transmission Lines Divisions and other NTDC offices. Four Audit teams and two additional Adhoc Parties completed this
assignment by exercising 100% checking of one detail month and general scrutiny of 11 months transactions appearing in the
books of accounts. A brief of the observations involving financial irregularities of worth Rs.126.026 million is as under:-

Nature of Observations Amount Settled Recovered Agreed for Pending

pointed out Recovery
(Rs) (Rs) (Rs) (Rs) (Rs)
Non recovery of Wapda facilities,
services from employees 2,631,832 349,010 35,793 629,339 1,617,690
Excess or over payment to staff against
pay & allowances 13,076,484 1,540,526 32,260 1,702,143 9,801,555
Excess payment of Traveling Allowance
8,082,141 2,261,729 79,791 241,061 5,499,560
Non recovery of shortage of store 10,514 - - 500 10,014
Less or non recoveries from contractors
or suppliers 58,530,402 1,025,198 - - 57,179,622
Less recovery on account of deposit
work 837,369 - - - 837,369
Cash embezzlement or excess payment
due to tempering of record 45,681 3,000 - 12,400 30,281
Standard rent recoverable from
companies/employees 35,879,044 1,052,510 - 2,896,789 31,929,745
Profit/Interest not credited by bank 3,073,578 - - - 3,073,578
Wrong deduction of withholding tax on
profit by banks 303,318 - - 14,750 288,568
Store handling charges not charged
from companies other then NTDC 1,282,667 - - - 1,282,667
Miscellaneous 2,273,795 244,346 149,205 319,441 1,560,803
Total: 126,026,825 5,776,703 297,049 5,816,423 114,136,650
 AUDIT OF CONSULTANCY PAYMENTS
Internal Audit carried out 100% scrutiny of payments made to consultants engaged for technical services for construction of
NTDC projects. During the year 2009-10 payments made to the consultants M/S NESPAK & M/S BARQAAB for 5 No projects were
examined. Financial irregularities worth Rs.183.275 million were reported. The serious observations of Rs.113.275 million were
discussed with the client (C.E EHV-I) in presence of the Consultant’s representative. The Financial status of these observations are
as under:-

Total Amount Principally Recovery Under

Sr.#
Nature of objections Detected Agreed by
Client
Agreed by
Consultant
finalization

(Rs) (Rs) (Rs) (Rs)

1. Excess billing rates worked out in appendices 3,352,000 2,697,837 - 654,163
against the contract clause.
2. Amount claimed for lapsed leave. 10,263,000 10,263,000 - -
3. Claims for higher grades than agreed in 32,338,000 32,338,000 - -
contract agreement.
4. Difference of amount claimed & amount 3,164,000 1,235,000 633,000 1,296,000
actually paid to employees for salary & benefits.
5. Unjustified claim/reimbursement of social cost. 8,280,000 1,597,000 - 6,683,000
6. Un-due retention of vehicle by consultants. 400,000 - 400,000 -
7. Excess claim of annual increase more than 8% 14,042,000 14,042,000 - -
as per contract.
8. Expenditure incurred against rent a car than 3,808,000 - - 3,808,000
purchase of vehicle by EHV.
9. Un-due free supply and medical claims for 1,561,000 1,336,000 225,000 -
Wapda retired employees.
10. Overhead charges of contract employees of the 31,956,000 - - 31,956,000
consultants.
11. Estimated billing rate charged instead of actual 3,671,942 - - 3,671,942
billing rate.
12. Irrelevant claim of man month not supported in 439,848 - - 439,848
contract being last invoice.
Total (Rs) 113,275,790 63,508,837 1,258,000 48,508,953
 POST AUDIT OF PAYMENTS MADE TO IPPS
In 2002 Wapda Authority established an Internal Audit cell in the office of G.M (WPPO) under the
administrative control of Manager Audit (NTDC). The Audit Cell comprising of 3 officers have assigned the job of
Audit of Payments made to 15 IPPS.
During the period 07/2009 to 06/2010 payments of Rs.232 Billion Appox came under review and financial
irregularities worth Rs.4066.69 million were pointed out as under.

Sr.# Nature of Audit Observations Amount Present Status

(Rs) Million
1. OVER PAYMENT OF FUEL COST The matter was discussed with G.M
COMPONENT (FCC) DUE TO HIGHER 3808.588 (WPPO) but consensus could not be
CONSUMPTION OF RFO achieved due to difference of opinion
between the Auditors and Auditee.
2. EXCESS PAYMENT OF TRUE-UP AMOUNT The reply furnished by the DGMF
(WPPO) vide letter dated 03.04.2010
112.192 was not convincing. Audit issued
further remarks on 20.04.2010 but
final outcome is still awaited.
3. UNJUSTIFIED PAYMENT OF HOT START 25.467 Reply to re-audit remarks issued by
CHARGES Audit Cell is awaited.
4. OVER PAYMENT OF INTEREST ON A/C OF The issue has been discussed with the
DELAYED PAYMENTS management of WPPO but the matter
76.918 remained unresolved due to non
consensus between the WPPO and
Audit.
5. FINANCIAL LOSS ON A/C OF PARTS LOAD 42.069 Reply to re-audit remarks issued by
ADJUSTMENT CHARGES Audit Cell is awaited.
6. OVER PAYMENT OF CAPACITY & V O&M 0.894 Recovery action on the part of WPPO
CHARGES is still awaited.
7. OVER PAYMENT DUE TO TWO DIFFERENT Reply not found convincing and the
CLOSING EXCHANGE RATES 0.469 excess amount is still recoverable.
8. EXCESS PAYMENT OF INTEREST AGAINST 0.096 Recovery made by WPPO vide letter
DELAYED PAYMENT dated 26.03.2010 and para is settled.
TOTAL (RS) Million 4066.693
AUDIT OF EXPENDITURE ON CAPITAL PROJECTS
The BOD NTDC included the audit of Construction activities in the scope of Internal Audit in Its 31st meeting held
on 26.07.2007. Under the SOP which became effective from 01.07.2009 Internal Audit has entrusted the task of post
audit of bills of Contractors and Suppliers on monthly basis and regular annul financial audit of all EHV offices dealing
with Construction activities. The Internal Audit during monthly review of C.E (EHV-I) and P.D (EHV), Lahore has pointed
out the following Financial irregularities of Rs.262.59 million which have not been attended/responded by the concerned
formations.
DETAIL OF OBSERVATIONS POINTED OUT DURING MONTHLY AUDIT
OF CHIEF ENGINEER EHV-I LAHORE & P.D EHV LAHORE

DURING THE PERIOD FROM 07/2009 TO 06/2010

Sr.# Description Amount Involved

(Rs)
1. Excess Payment of works/supply of material against approved BOQ of 20 137,296,834
footings.
2. Loss due to delayed payment in foreign exchange after increase in Currency 1,107,306
rates.
3. Non deduction of Liquidated damages for late supply of material. 283,090
4. Non deduction of Liquidated damages for late completion of work. 2,054,502
5. Irregular payment to supplier after validity period of Letter of Credit. 5,556,264
6. Irregular refund of Liquidated damages charges to the supplier. 2,422,345
7. Over payment than approved/agreed rates. 56,666
8. Execution of work before issuance of work order by the competent authority. 996,737
9. Irregular payment of crops compensation without proper documentation. 32,469,522
10. Non recovery pf cost of material from contractor. 13,784,091
11. Less deduction of Liquidated damages. 21,228
12. Irregular release of withheld amount to supplier without obtaining certificate 66,548,945
from consultants.

Total 262,597,530
 DETAIL OF SPECIAL AUDITS

CARRIED OUT DURING 2009 - 10

Total Amount Outstanding

Sr.# Name of Project Amount Agreed by amount
Objected Consultant
BPI, Ltd Remarks

(Million) (Million) (Million)

Consultancy of
Preparation of Sub The amount
1. Projects under 28.63 (Rs) 26.66 (Rs) 1.97 (Rs) was agreed in
Power distribution dispute
enhancement settlement
projects stage –II.
Tranch-II
Replies
2. G.E Rental, 75.65 (US$) - 75.65 (US$) awaited,
Sheikhupura 79.10 (Rs) 79.10 (Rs) matter referred
to Chief
Auditor
PEPCO.
 PHYSICAL STOCK VERIFICATION
In discharge of duty to safeguard NTDC assets, Internal Audit has carried out physical stock verification of
Warehouses, Stores formations and other assets like office T&P and line T&P were also physically verified. As a result
of this exercise surplus of Rs.99.44 million and shortage of Rs.43.76 million has been pointed out. The discrepancies
pointed out in respect of 73 formations are under consideration with store management for resolution or recovery.

SHORTAGES/SURPLUSES
OF STORE MATERIAL & T&P DETECTED DURING THE

PERIOD 07/2009 TO 06/2010

Total No of
Formations
Total No of
formations
Pointed Out Settled Out Standing
Completed (Rs) (Rs) (Rs)
Surplus Shortage Surplus Shortage Surplus Shortage

123 73 99,444,175 43,769,753 5,068,888 591,990 94,375,287 43,177,763