Annexure 23

the implementing agencies.
 2)  Scope of External Audit:
The external audit of non BDS funds , at MSAMB, ATMAs, training institutes and beneficiary contribution held in separate bank accounts opened by DDRCs will be carried out in accordance with the auditing standards promulgated by Institute of Chartered Accountants of India. The auditor should accordingly consider materiality when planning and performing the audit to reduce audit risk to an acceptable level i.e consistent with the objectives of audit.  Although the responsibility for preventing irregularity, fraud or the use of credit / loan proceeds for intended purposes as defined in the legal agreement remain with borrower, the audit should be planned so as to have a reasonable expectation of detecting material misstatement in the project financial statement. The external auditor should accordingly evaluate and will include such tests and controls as the auditor may consider necessary under the circumstances. In conducting the audit special attention should be paid to the following.
a)   All funds have been used in accordance with the conditions of the relevant legal agreements and only for the purposes for which the financing was provided. Relevant legal agreement includes the Financing Agreement, the Project Agreement and the Minutes of Negotiation.
b)   The Quarterly Interim Financial Reports submitted by the agencies vis-à-vis funds received
c)   The procurement procedure adopted, for works, goods and consultancy services should be reviewed by the external auditors and it should be ensured that correct procedure have been  followed for each procurement.
d)   It should be ensured that the records of all procurement, agreements, work/purchase orders, invoices, receipts, stock registers etc are properly maintained, duly linked and retained.
e)   The project account have been prepared in accordance with the accounting principles defined in the project financial manual and present fairly, in all material respect, the financial situation of the project at the

Dept/Cell: 
Finance