Para 3.17.10 — MSO (Audit)
Original Rule Text
3.17.10 The agreements for loan/development credit entered into by the International Bank for Reconstruction and Development and International Development Association with the Government of India for financing development projects to be implemented by departments of the Central Government, States Governments, Public Sector Undertakings and Autonomous Bodies, etc. include specific covenants for Accounts and Audit. These covenants inter alia provide that the Government of the Project entity shall;
(a) maintain records and accounts adequate to reflect, in accordance with sound accounting practices, the operations, resources and expenditures in respect of the Project,
(b) have the records and accounts of the project for each fiscal year audited in accordance with appropriate auditing principles consistently applied by independent auditors acceptable to the Bank,
(c) furnish to the Bank within 9 months or earlier of the close of the financial year a certified copy of the report of audit referred to in the paragraph at
(b) by said auditors, of such scope and in such detail as the Bank shall have reasonably requested, and
(d) for all expenditures in respect of withdrawals made on the basis of Statement of Expenditure (without documentation), furnish the report of audit referred to in this paragraph as containing a separate opinion by the independent auditors as to whether the Statements of Expenditure together with the procedures and internal controls involved in their preparation, can be relied upon in support of such withdrawals.
What This Means
World Bank and IDA loan agreements with the Government of India include specific requirements for accounting and audit of funded projects. The borrower must maintain proper accounting records, get them audited annually by independent auditors acceptable to the Bank, and submit audit certificates within 9 months of the financial year-end. For expenditure claimed through Statements of Expenditure (SOE), the auditor must give a separate opinion on whether the SOE procedures and internal controls are reliable.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Loan agreements mandate proper accounting records reflecting project operations and expenditure
- 2Annual audit by independent auditors acceptable to the World Bank is required
- 3Audit certificates must be furnished within 9 months of the financial year-end
- 4SOE-based expenditure requires a separate auditor's opinion on procedures and internal controls
- 5These covenants apply to all implementing entities: Central/State departments, PSUs, and autonomous bodies
Practical Example
A National Highway Authority project funded by an IDA credit of $200 million uses Statements of Expenditure for withdrawals under $1 million. At year-end, the CAG's office must provide two things: a general audit certificate on the project accounts, and a separate opinion specifically confirming that the SOE procedures and internal controls are reliable enough to support the $180 million claimed through SOEs during the year.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the difference between IBRD loans and IDA credits?▼
Why does SOE-based expenditure need a separate audit opinion?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.