Kolkata Branch Period Covered ’ 2014 to June’ 2014 ... · Shipping, Purchase, Accounts & Administration 2.0 Period under Audit: April’14 to June’14 (QTR-1-2014-15) 3.0 Duration

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



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


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)


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.


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.


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.


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



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




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.


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.




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



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.


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.




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.



Chapter 3 (Part b)

Detailed Audit Observations of Kolkata Audit for QTR-1 of 2014-15

Sl.

No.

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)


Sl.

No.


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.


Sl.

No.


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.


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)


Sl.

No.


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.


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)


Sl.

No.


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.


Plan and actual expenses

difference will be taken care

of while preparing revised

budget for the current year.

b) Implementation

Timeline:


c) Implementation

responsibility:

CMFA (CB)


Sl.

No.


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.


The point noted for future

action.

b) Implementation

Timeline:


Sl.

No.


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


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.


Contract stipulates PF/ESI

clause.

Last PF/ESI deposit

documents submitted by

vendor along with the

current bill.

The point noted.

b) Implementation


Sl.

No.


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:


c) Implementation

responsibility:

Manager (Admin)


Sl.

No.


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.


Matter has been taken up with Material Department (Foreign Purchase) requesting them to taking necessary action for further improvement.

b) Implementation

Timeline:


c) Implementation

responsibility:

CMM (Shipping)


Sl.

No.


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.


Transfer to Prior Period

Items made in consultation

with/ due concurrence of

the Statutory Auditors since

these balances were quite

old.

b) Implementation

Timeline:


c) Implementation

responsibility:

CMFA (CB)


Sl.

No.


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.


Sl.

No.


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)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.


Sl.

No.


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:


c) Implementation

responsibility:CMFA(CB)


Sl.

No.


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.


The accounts have since

been closed.

b) Implementation

Timeline:


c) Implementation

responsibility:

CMFA (CB)


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


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


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


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


SBOP/BB/50474/BG/11-12/037 7904637 31.08.2014



SBOP/BB/50474/BG/11-12/039 7904636 31.08.2014



SBOP/BB/50474/BG/14-15/002 7906488 15.01.2016


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


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


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


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


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.


Audit Report Period- July 2012 to Sept 2012 Reportno -IA/kol/FY- 2012-3/Q2Followupreportno:007

Sl

No


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


Audit Report Period- Oct 2012 to Dec 2012 Report No -IA/kol/FY-2012-13/Q3 Follow up Report No:008

Sl

No


Implemented

Not

Implemented


(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.


Audit Report Period–Jan’ 2013 to Mar 2013 Report No -IA/kol/FY-2012-13/Q4 Follow up Reportno:009

Sl

No


Implemented

Not

Implemented


(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


(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


Sl

No

Observation Impleme

nted

Partly

Implemented

Not

Implemented


(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.