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AUDITOR GENERAL OF PAKISTAN

DIRECTORATE GENERAL AUDIT (WORKS)

NAME OF AUDIT ENTITY: PUBLIC HEALTH ENGNEERING

AUDIT PERIOD:

AUDIT COMPONENT: PLANNING AND CONTRACT AWARDING

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 Award of contract

II Award of contract without approval of scope of work.III Award of contract without sanction administrative approval/technical sanctioned

estimate.

IV Application of incorrect MRS in technical sanctioned estimate and provision ofnon-standardized items without preparation and approval of rate analysis

V Tendering

VI Bid Evaluation

Audit

Obj Audit Procedure

Done

By;

WP

Ref.

I

II

III

Award of contract site of work

Check that site of work was acquired / available prior toawarding of contract

Award of contract without approval of Scope of Work &

Specifications.

Check that drawing & design was approved by the competentauthority prior to awarding of contract.

Award of contract without administrative approval/technicalsanctioned estimate

Check that administrative approval was accorded by thecompetent 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%


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IV

above AA cost and 10% cushion enjoyed for change in

quantities and not for premium / rates

Check that revised administrative approval was accorded onthe 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 wasaccorded on the basis of sound/genuine reasons and by thesame competent authority.

Check the TSE for M&R of road and buildings worksaccorded as per yard sticks and without provision of

contingencies.

Application of incorrect MRS Rates of Schedules and Non-schedules 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 technicalsanctioned estimate of non standardized items.

V Tendering

Check that rates provided in DNIT were based on rates as perTSE/AA and was got approved before calling of tender.

Check that the tenders were advertised through publicity videNo. & Date was mentioned in the advertisement.

Check that earnest money/call deposit was obtained from thebidders well in time.

Check tenders were opened in the presence of bidders andmembers of the committee.

Check that quoted rates were written in figures as well as inwords 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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VI Bid Evaluation.

Check that the cost of administrative approval and technicallysanctioned was recorded in the tender register.

Check that no interpolations and corrections were made in thetender, documents after opening of tender.

Check that all the bid received was recorded in the tenderopening 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 seeparticipation of all the bidders.

Check approval of competent authority in case tender otherthan lowest accepted.

Check that the comparative statement was prepared on thebasis of quoted rates and technical sanctioned estimateexcluding contingency and signed by tender opening

committee/ approving authority.

Check that all post bidding amendments were got approvedby the competent authority.

Check that the work was allotted within validity period afterthe approval of the tenders by the competent authority.

Check that the rates incorporated in acceptance letter were asper bid/comparative statement and any subsequentundertaking and other provision made in accordance with

approved DNIT.

Check that signed contract provision did not vary with DNITstipulations.

Check that cushion of 4.5% was not applied for M&R workas same is not acceptable as per delegation of financial

powers Rules.


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NAME OF AUDIT ENTITY: PUBLIC HEALTH ENGINEERING

AUDIT PERIOD:

AUDIT COMPONENT: CONTRACT IMPLEMENTATION

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.

I. ExecutionII. Variation / change orders in original contracts / work orders.III. Measurement of works.IV. Non-imposition of liquidated damages in late completion of worksV. Failure and termination of contracts.VI Escalation claim of the contractors.

VII Violation of contract clauses.

VIII Non-encashment of performance bonds / bank guarantees.

IX Recoveries as per contract.

I Execution

Check that work was started within the time mentioned inacceptance letter.

Check that performance bonds secretary were obtainedwithin time period.

Check that work schedule was submitted by thecontractor.

Check that the work was executed as per scopespecification of approved work by the competent

authority as provided in administrative approval/TSE.

Check additional bank guarantee obtained @ 5 10 % incase of tender accepted below TSE cost

Check that items/quantities of work done are as peragreement.


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II Variation/Change in original contracts

Check that the variation order was approved by thecompetent authority as mentioned in para 2.7, 2.12, 2.86

of B&R Code.

Check that the engineer (nominated consultant) of thecontract recommended variation (where applicable).

Check that the cost of variation order was prepared inaccordance with the terms and conditions of the contractagreement.

Check the prior approval of the competent authority, whoaccorded the technical sanction/Admn. Approval sought.

III Measurement of Works

Check the arithmetic accuracy of calculations booked inthe 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 themeasurement book and check proper action was taken

against the responsible officials.

Check that measurement book properly issued to theconcerned engineer and duly entered in the measurementbook register.

Check that certificate of SDO/XEN for execution of workas per specification, secured advance, and advancepayment 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 accordingto contract drawing and T.S.E.

IV Non-imposition of Liquidated Damages in Late Completion

of Works

Check the progress reports and acceptance letter toascertain the date of completion.

Check that the competent authority had granted extensionin time limit on genuine grounds.

Check that the extension had been granted on therecommendations of Sub-divisional Officer.

Check that no price variation paid where the contractor


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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 offailure of contractor for completion of work properly.

Check that security was forfeited under clause 60 andrecovery of risk & cost under clause 61.

Final measurements for work done by defaultercontractor and award of balance work.

VI Escalation claims of the contractors.

Payment of escalation to the contactors will be checkedwith reference to provision of relevant clauses in thecontract agreement.

Check that escalation was not paid to the defaultedcontractor who had been granted extension after

imposition of some penalty or with warning.

Check base and prevailing rates as per website/FDcircular.

Check that price variation paid within the contingencyprovision of TSE of work/Project.

Check that no payment of price variation allowed onM&R work without revision of TSE.

In case of payment of escalation on labour, bricks, POLetc. it may be checked that payment was made as percontract agreement/provision provided in contract

agreement.

VII Violation of contract clauses

Check the provisions of the contract agreement andcompare 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.VIII Non-encashment of performance bonds / bank guarantees.

Check that performance bonds/bank guarantee were gotenchased due to recession of contract.

Check that performance bonds/bank guarantee was gotrenewed before the expiry date otherwise un-cashed.


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IX 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.


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NAME OF AUDIT ENTITY: PUBLIC HEALTH ENGINEERING

AUDIT PERIOD:

AUDIT COMPONENT: CONTRACT PAYMENTS (VOUCHERS)

Audit Objectives:-

To check that the payments of contracts are made according to the rules & procedures laid down

and payments are not materially misstated.

Audit procedure

Done

by

WP

Ref.

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 insuspense head Misc. P.W. advances as recoverable fromdepartmental officials was as per rules and its

adjustment/recovery made within financial years as perbudget manual.

Check that paid voucher for release of security deposit wasprepared 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 budgetaryallocations.

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 localscheduled banks and forfeited in case of defaulter contractors

Check secured advance payment against indenture bond, on


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the certificate of SDO and recovered with interest in case of

contractors default.

Check voucher for advance payment of work done but notmeasured as per laid down instructions

Check work done in case of risk and cost, necessaryadjustment of risk and cost made. Security deposit forfeited

Check rates / quantity in vouchers correctly paid i.e. as percontract/ MRS.

Check vouchers passed/payment made by SDO waspreaudited by DAO

Check muster roll/Casual labour rolls against properappointment and against provision in TSE.

Check that tendered rates were not paid in violation ofcontract clause 47-A and FD Notification.

Check that financial statement on RTSE/Final or last billprepared 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) dated23-7-2007 and 13-5-2008.

Check that entries of temporary advance/imprest and theiradjustment were correctly made.

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