Para 3.7.13 — This paragraph provides a comprehensive 15-point c

3.7.13 Important points to be verified while auditing Acceptances of tenders (ATs), contracts or agreements are as follows:

(i) Complete particulars of quantities and rates/prices should have been furnished, the rates/prices stipulated being firm.

Note: Particulars of contracts containing a price variation clause or provisional rates should be sent to local audit for further examination.

(ii) Important and material clauses relating to delivery schedule, place of delivery, inspection of stores, despatch instructions, particulars of consignee, etc. should have been clearly specified and not omitted.

(iii) Normally, the AT/purchase order should have been signed by an authority competent to enter into contracts. If, however, this has been signed by an authority not competent to enter into the contract, it should be verified that a certificate to the effect that the competent authority has approved the purchase is recorded thereon, mentioning also the designation.

Note: The Purchase Officer concerned should sign in ink all copies of the AT, Supply Order, etc. including all attachments containing details of the rates/prices and other important conditions.

(iv) If the AT provides for payment to a party other than the contracting firm, a power of attorney should already have been registered in the books of the office.

(v) Provisions relating to payment of sales tax, excise duty, etc. should be checked with reference to the instructions issued by the Government from time to time. Vague provisions such as "sales tax will be paid, if legally leviable" should be objected to and the contracting officers asked to state in definite terms whether sales tax, excise duty, etc, are payable and, if so, the rates, basis of payment, etc.

(vi) ATs issued in the latter part of a financial year should be specially scrutinized and any tendency on the part of the department to resort to rush of expenditure brought to notice.

(viii) If the AT provides that the supplier should furnish a solvency certificate for the contractual amount, Audit should verify that there no facts have been suppressed in the documents connected with the solvency certificate and that the financial interests of Government have been adequately protected.

(ix) The contract should have been sanctioned by a competent authority and signed for and on behalf of the President of India, Governor of a State, Administrator of a Union Territory or the Chairman or any other authorised official of a quasi-public body, as the case may be.

(x) In respect of contracts entered into with a firm, each one of the partners, or the duly constituted attorneys in the case of absent partners, should have signed all the documents constituting the contract. In the latter case, the original powers of attorney duly registered in a court of law will be verified and an attested copy obtained for audit purposes.

(xi) The contract should not have been entered into by or on behalf of a minor.

(xii) Security deposit, if any, should have been furnished in the appropriate form and of the correct amount and within the period stipulated in the contract.

(xiii) All the conditions and requirements printed on the contract form should have been complied with.

(xiv) Penalties leviable under the terms of the contract should have been enforced in the event of any default or breach of the conditions.

(xv) Requests for despatch of heavy goods by passenger train involving payment of freight charges disproportionate to the value of the materials should be reported to the local audit party for detailed examination. In such cases, the party should examine whether higher rates of freight charges were also agreed to on earlier occasions on grounds of urgency and whether the circumstances really justified the additional expenditure.

What This Means

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Key Points

• 1Complete particulars of quantities and firm rates/prices must be furnished
• 2Contracts with price variation or provisional rates need local audit examination
• 3Signing authority must be competent to enter into contracts
• 4Sales tax and excise duty provisions must be definite, not vague
• 5Year-end rush purchases must be specially scrutinized
• 6Security deposits must be in correct form and amount
• 7All partners of a contracting firm must sign (or have power of attorney)
• 8Contracts must not be entered into by or on behalf of a minor
• 9Penalty clauses must be enforced in case of default

Practical Example

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.