Para 3.17.19 — MSO (Audit)
Original Rule Text
3.17.19 The expenditure should be incurred as per terms and conditions of the World Bank which inter-alia requires:
(i) Utilisation of loan for the purpose projected and sanctioned for
(ii) Consideration of economy and efficiency, extra avoidable expenditure may therefore be objectionable for reimbursement from World Bank Loan. Cost over run due to non-completion of work in stipulated time may also be disputable claim for reimbursement from the Bank.
(iii) Non denial of pre-qualification to a firm for reason unrelated to its capacity to supply the goods/services in question except if the borrower country commercial relation with that country to which that firm relates provided the bank is satisfied that such exclusion does not preclude effective competition.
(iv) Award of any contract is required to be strictly in accordance with loan agreement or guidelines.
(v) Implementing agency not agreeing to any material modification or waiver of the terms and conditions of contract or extension of the stipulated time of performance which would effect the contract inconsistent with the provision of loan agreement.
(vi) Procurement of goods and services inconsistent with agreed procedure.
What This Means
All expenditure under World Bank-funded projects must strictly follow the Bank's terms and conditions. This includes using funds only for the sanctioned purpose, avoiding wasteful spending, following proper procurement procedures, not modifying contracts without authorization, and ensuring all contractor selections comply with loan agreement guidelines.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Loan must be utilized only for the projected and sanctioned purpose
- 2Extra avoidable expenditure and cost overruns due to delays are objectionable
- 3Pre-qualification of firms cannot be denied for reasons unrelated to capacity
- 4Contract awards must strictly follow loan agreement or procurement guidelines
- 5No material modification or waiver of contract terms without Bank compliance
- 6Procurement must follow agreed procedures
Practical Example
A highway project funded by the World Bank experiences a two-year delay in completion, causing a 40% cost overrun. The auditor flags the additional cost as a disputable claim for reimbursement, since the overrun resulted from the implementing agency's failure to complete work within the stipulated time rather than from unforeseen circumstances.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Can a firm be excluded from bidding if the borrowing country has no trade relations with that firm's country?▼
What happens if the implementing agency extends a contract deadline without approval?▼
Are cost overruns always objectionable?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.