Para 3.7.17 — MSO

E. Local audit of contracts, bills for purchases, etc. The following are the main types of cases that may be examined in local audit:

D. Audit of accounting of stores 3.7.17 It should be seen that the provisions contained in Chapters 8 and 9 and Appendices 8 and 9 of the General Financial Rules (Revised and Enlarged), 1963, and Schedule V of the Delegation of Financial Powers Rules, 1978, have been complied with.

(i) Acceptances of tenders, including Rate/Running Contracts and Supply Orders.

(ii) Amendments to Acceptances of Tenders.

(iii) Contracts placed from India directly on suppliers in UK, USA and other overseas countries.

(iv) Contracts placed by Indian Missions and Trade Commissioners abroad (other than those in UK and USA).

(v) Timber Purchase Orders.

(vi) Office orders and other instructions issued by the Purchase Organisation on incidence of sales tax, excise duty, etc.

(vii) Disposal contracts.

(viii) Arbitration cases. 3.7.19 The following are some of the points that should be kept in view and examined in local audit:

(i) Whether, so far as can be ascertained from the purchase files, demands received from other indenting officers received at the relevant time were consolidated and bulked as far as possible to secure the advantage of lower prices for bulk supplies and, if so, whether the aggregate of the quantities ordered for the individual indentors in the contracts entered into for the purpose was in excess of the quantities actually indented and so consolidated.

(ii) Availability of sanction of the competent authority for effecting purchases on the basis of a single tender or negotiations and of recorded reasons for resorting to this method of purchase.

(iii) Opening of all tenders on the due date and their authentication by the designated officer numbered and initialled with date by the officer opening them.

(iv) Availability on record of the comparative statement and whether it was verified with reference to the original tenders.

(v) Whether any tender received belatedly after the stipulated date had been included in the comparative statement and considered, and whether orders of the competent authority were obtained for doing so.

(vi) Whether the lowest offer was accepted in each case. In case this was not done, whether adequate justification adequate reasons had been provided in writing for rejecting the lowest offer should be examined; the difference between the lowest offer and that accepted should also be quantified.

(vii) In cases where more favourable or advantageous offers were rejected on the ground that the firms were untried, it should be examined whether the feasibility of placing a trial order on the firms was considered with a view to achieving economies and appropriate action taken.

(viii) Whether the successful tenderer had indirectly derived any advantage over the other tenderers because of the insertion of certain special conditions; it should be particularly examined whether acceptance of these special conditions resulted in any increase over the prices actually quoted.

(ix) Whether the difference between the purchase price finally accepted and that estimated in the tender is within the limits prescribed; if not, it should be examined whether confirmation about the availability of additional funds was obtained.

(x) Whether the contract was placed on a registered firm; in case this was not done, whether sanction of the competent authority was obtained and obtaining appropriate security, guarantees, etc. were insisted upon for adequately safeguarding government’s interests.

(xi) Whether, in the case of contracts placed directly on firms in the United Kingdom, payments in advance linked to progressive deliveries had been agreed to and, if so, this was done only after ascertaining the practice followed by the India Stores Department (India Supply Mission), London.

(xii) Whether the accepted rates/prices had been modified or revised in any case after the conclusion of the contract and, if so, whether this was done with the approval of the competent authority, and the reasons justifying the revision were adequate.

(xiii) In case any supplementary contract had been negotiated or payments authorised for any additional services required of the supplier subsequent to the acceptances of the tender, the appropriateness thereof should be examined from the competency and propriety angles.

(xiv) Whether the interests of Government were adequately safeguarded and protected in arbitration proceedings by the officers concerned with the defence of the cases.