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Final Internal Audit Report – Kolkata Branch

Report No. IA/KOL/FR/FY 2014-15/03

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Confidential & Restricted Access1

Report No. IA/KOL/FR/FY 2014-15/03

Period Covered – April’14 to March’15

Report date: 25.05.2015

Head (KB)

For CMFM

Sub: Audit Observation - Review of Account of Kolkata Branch for the Financial Year 2014-15

1.0 The Internal Audit Department has conducted Review of Account of Kolkata Branch for the Financial Year 2014-

15.The audit were carried out during 20.05.2015 to 23.05.2015. The audit team consists of Mr. B. Harishankar,

CM (IA), Mr. A.K.Sinha, Dy. Manager (IA) and Mr. B.L.Das, Sr.Internal Audit Officer

2.0 The audit observations, based on the documents produced and the explanations received, are shown in Chapter

1 with the Management‘s views duly incorporated against thereon.

3.0 Annexure of the Audit Report has been shown in Chapter-2.

4.0 The Internal Audit Team is pleased to acknowledge the cooperation received from the concerned sectional

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4.0 The Internal Audit Team is pleased to acknowledge the cooperation received from the concerned sectional

Heads & their representatives in conducting the Internal Audit.

B Hari Shankar

Chief Manager(IA)

FOR GGM(RM & Audit)

Date: 24.05.2015

OIL India Ltd. Kolkata

Audit Team

Audit Areas

1 F&A – Balance Sheet and GL Review

Sub-process covered

Review of GL Accounts

Bank Reconciliation Statement

List of provisions taken as at 31.03.2015 with supporting documents

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Name Designation Role

Shri B.Harishankar CM(IA) Team Lead

Shri A.K.Sinha Dy. Manager (IA) Auditor

Shri B.L.Das Sr. Internal Auditor Auditor

Executive Summary

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Confidential & Restricted Access4 OIL India Ltd. Kolkata

Key ObservationsS. No. Observations Impact Auditee Comments

1 Provision for work done pertaining to

financial year 2014-15:

Rent (ICC) for contract No 6206079 is being paid in

advance, hence no provision is required. Further SES No-

1000410984 prepared for this contract is incomplete and

could not be processed.

For rest of contracts the Provision have already been

taken under the GL-200500 based on the feedback

received from user department.

Few old balance available under various vendor. Few

.


2 Prior Period Items – Income (665000) and

Prior Period Items – Expenses (875000)

Few old balance available under various vendor. Few

transactions relating to legacy system are also appearing.

Few cases are also of wrong entries. Therefore an

approval was taken from the competent authority to

settle these vendor accounts the amount was transferred

to Prior Period Items – Income (665000) and Prior Period

Items – Expenses (875000) as the case was.



3 Retention money (Liab To Othrs-Retention

Money-Recon A/C 205002):

Amount lying in retention account relating to

retention as per terms of purchase orders and DR

amount debited to vendors account. In respect of

retention in vendors account the amount will be

released on fulfillment of terms and conditions of

the orders.

In case of DR once replacement/recovery made

the G/L account will be adjusted accordingly.

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4 Review of Security deposits given by

OIL:(GL-550510)

Aforesaid securities deposits are against the exiting

contract and necessary to be maintained.

Point settled.



5 Review of Discrepancy Report:(560500) Kolkata office has no role in the raising of

DR, following up with the vendors for

replacement of discrepant items and

debit to vendors account.

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6.Reconciliation of Loans and advances Difference will be adjusted/reconciled in

current year.



7 Review of cost Centre ((KOLKLC0711). The concerned officer preparing budget

has been instructed to prepare budget

more realistically to cover all actual

expenses. However, from 2015-16 since

MAP is being implemented so system will

not permit expenses under any head to

exceed budgeted amount..

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8.GL 220000 ( Clearing Acct-GRIR-Stores And Spares):The a/c has

many old balances which are as below:

Purchase section has been provided with

list of P.Os to raise GRN to clear GR-IR

account



9 GL-201000::Stat Liab-TDS Payable-192-Salaries & Wages as on

31.03.2015 Rs (-)320,080/-

There is no balance in the ledger after

payment of tax for the month of March,

2015 except RS 108044/- which was

entered from Duliajan.

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10.GL-201001:Stat Liab-TDS Payable-194 C-Contractors Adjustment/reconciliation will be made

in the current year.



11. GL-201002::Stat Liab-TDS Payable-194 I-Rent

Balance as on 31.03.2015 (-)53,669/-

This amount will be adjusted in the current year.

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12.GL-202060:Stat Liab-Professional Tax Payable

Account- Balance as per ledger 2,732.00(Dr)

Adjustment/reconciliation will be made in the

current year.


Detailed Observations

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Confidential & Restricted Access11 OIL India Ltd. Kolkata

Internal Audit Department reviewed the provision taken for the SES posted after 31.03.2015 for the work carried

out for the financial year 2014-15. Internal audit reviewed the data generated on 13.05.2014 from the Transaction

Code ZFISESPROV (customized for the purpose of taking provision).We have reviewed that the SES have been

prepared against the various contracts executed for work done was also within 31.03.2015.The approximate value

of such SES comes to Rs 10.66 lakhs. Contract wise details are Given in:

1. Provision for work done pertaining to financial year 2014-15:

Category

Financial a

Operational

Statutory Non Compliance

Root Cause

Risk rating

Critical

Major

Moderate a

SL.No Contract No Amount

1 6206079 450,087

2 6203259 144,329

3 6203218 77,747

4 6206265 74,187

5 6205131 56,279

6 6203217 55,595

7 6205024 52,897

8 6204820 34,425

9 6203233 30,080

SL.No Contract No Amount

11 6205198 15,000

12 6108621 12,396

13 6205608 11,865

14 6204706 7,700

15 6205649 6,600

16 6203239 4,990

17 6205130 4,225

18 6205612 3,219

19 6205184 2,000

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Auditee Remarks- Rent (ICC) for contract No 6206079 is being paid in advance, hence no provision is required.

Further SES No-1000410984 prepared for this contract is incomplete and could not be processed.

For rest of contracts the Provision have already been taken under the GL-200500 based on the feedback received

from user department.

Person responsible: CMFA (KB)

Target date: 25.05.2015

Implication

Recommendation


9 6203233 30,080

10 6206253 19,271 19 6205184 2,000

20 6205197 1,784

21 6104987 1,477

Internal Audit Reviewed booking made under the GL 665000 and 875000. It was observed that there was booking

of Rs 5.25 Crores and Rs 64.49 lakhs respectively. It was further observed that there had been no booking for

last few years in these under GLs. It was also observed that the old balance of vendor accounts were settled

(Write-off/write back) using the GL 665000 and 875000.

.

2. Prior Period Items – Income (665000) and Prior Period Items – Expenses (875000)

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major a

Moderate

.


Auditee Remarks- It has observed that there has been few old balance available under various vendor. Few

transactions relating to legacy system are also appearing. Few cases are also of wrong entries. Therefore an

approval was taken from the competent authority to settle these vendor accounts the amount was transferred to

Prior Period Items – Income (665000) and Prior Period Items – Expenses (875000) as the case was.

The approval of competent authority is attached here with.

Person responsible: CMFA (KB)

Target date:25.05.2015

Implication

Recommendation

Reason for operating these GLs

may be furnished to the audit

along with the approval of

competent authority for clearing

the vendor ledger (write-off)

with these GLs


Retention money to the extent of Rs 7.02 crores where lying open under the GL 205002 for quite long time.

Some of items are very old in nature. CMFA explained that all old retention money have already been adjusted

and only the retention money for live POs/WOs are being kept. It was requested IA Department to provide vendor

wise retention money further review at his end.

Accordingly the vendor wise list of Retention money under GL 205002 has been given as annexure-2.

3. Retention money (Liab To Othrs-Retention Money-Recon A/C 205002):

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major a

Moderate

Annexure

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Auditee Remarks- Amount lying in retention account relating to retention as per terms of purchase orders and DR

amount debited to vendors account. In respect of retention in vendors account the amount will be released on

fulfillment of terms and conditions of the orders.

In case of DR once replacement/recovery made the G/L account will be adjusted accordingly.

Person responsible: CMFA(KB)


Implication

Recommendation

It is recommended to review the

retention money and take

suitable action, if required to

clear the GL.


Internal Audit Department has reviewed the security deposit maintained Kolkata Branch. The list of Security

Deposit are as under:

4. Review of Security deposits given by OIL:(GL-550510)

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major

Moderate a

Sl.NoDocument No Posting Date Amounts. Text

1 8806036707 02/02/2007 36,000.00 CHANDITALA FLATS SD FOR ADDL POWER CONSUMPTION

2 2607001205 01/04/2007 100,000.00 SD with Woodlands

3 2607001205 01/04/2007 113,644.00 SD with ICC for Electricity

4 2607001205 01/04/2007 2,000.00 SD with Director, Cal Airport

5 2607001205 01/04/2007 6,928.00 SD for Brooklyn Depo on 01.4.2003

6 2607001205 01/04/2007 46,738.61 SD for Golf Link Apart, Lee Road & Brookelyne Depo

7 2607001205 01/04/2007 300,000.00 SD with Mr S.N.Roy for Lee Rd

8 2607001205 01/04/2007 15,000.00 SD with AO,CIT II CAL TEL for Shipping Office

9 8607001570 11/05/2007 500,000.00 SD FOR ADDLPOWER PAID TO CESC THRUGH ICCESC THR

10 8807015313 01/08/2007 150,000.00 INDIAN CHAMBER OF COMMERCE - Pmt Doc 1107006945

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Auditee Remarks- Aforesaid securities deposits are against the exiting contract and necessary to be maintained.


Target date: Point settled.

Implication

Recommendation

Review the aforesaid old security

deposit and suitable action to be

taken to clear the GL.


10 8807015313 01/08/2007 150,000.00 INDIAN CHAMBER OF COMMERCE - Pmt Doc 1107006945

11 8807033868 03/01/2008 2,579.00 PMT. OF ADL. SECURITY DEPOSIT TO CESC FOR TOL

12 8809018180 18/08/2009 40,000.00 SEQURITY DEPOSIT FOR ADDL. 10 KW LOAD

13 2610013033 31/03/2011 1,132,785.00 INTT-FREE SECURITYDEPOSIT(ICC)ADJ.FRM RENT(31/8/15

14 8811010336 19/01/2012 304,000.00 BAL.SEC.DEPOSIT

Total 2,749,674.61

Internal Audit Department has been reviewing the amount lying under the 560500 (Claim against Discrepancy

report) on continuous basis. However it has been observed that still an amount of Rs 5.60 crores are lying open

against various POs. The most of Discrepancy are against the foreign POs. The year wise break -up of the

amount under discrepancy report are as under:

5. Review of Discrepancy Report:(560500)

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major a

Moderate

Financial Year Amounts

2008-09 165,780

2009-10 4,606,452

2010-11 14,959,524

2011-12 7,146,698

2012-13 305,612

2013-14 7,457,665

2014-15 21,447,722

Total 56,089,453

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Auditee Remarks- Once the materials are received in Duliajan Materials godown the same is being checked

physically by user and materials department. In case of any discrepancy in the materials so received, the supplier

is being intimated by MM department and DR is raised which is then valued and debited to vendor account by

Duliajan Accounts.

From the above it is clear that Kolkata office has no role in the raising of DR, following up with the vendors for

replacement of discrepant items and debit to vendors account



Implication

Recommendation

liaise with Duliajan Material and

Finance department to settle the

amount lying under the Business

area WB01.


The loans and advances outstanding in respect of employees as on 31.03.2015 has been scrutinized and

compared with the amount of outstanding as per HR module and we found that there have difference in few of the

advances as shown below:

6. Reconciliation of Loans and advances:

Category

Financial a

Operational


Root Cause

Risk rating

Critical a

Major

Moderate

Type of Loan Loan Type

GL

Head As per GL

As per payroll

(PC00_M99_CLOG )- Overview

of Company Loans

Difference

(Rs)

Festival advance 3011 560303 6,80,423 6,58,756 21,667

Medical 3018 560301 6,655 1,692 4,963

.


Auditee Difference will be adjusted/reconciled in current year.


Target date:

Implication

Recommendation

Reconciled the differences.


Internal Audit Department reviews the booking under the aforesaid cost centre and It was observed that there

were few cases where the corresponding budgets were not available against the expenditure. There were also the

cases where the actual expenditure were quite high than the budgeted amount.

List of Cost Element without budget estimate for the financial year 2014-15 (KOLKL0711)

7. Review of cost Centre ((KOLKLC0711).

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major

Moderate a

Sl.No

Cost

Element Cost Element

Act. Costs

(2014-15)

Plan Costs

(2014-15)

1 703001 Emp Costs-Medical 13,335,211.15 0

2 780078 Scholarships 215,650.00 0

3 714302 Stationery-Man Ent 158,696.00 0

4 714501 Food Stuff - Man Po 135,348.00 0

5 732008 Cont-Hiring-Others 86,000.00 0

6 733000 Cont-Civil-Const W 62,603.35 0

7 731051 Cont-Ser-Tech Stds 62,557.23 0

8 732006 Cont-Hiring-Eqpts 39,966.96 0

9 735000 Contract Others 39,452.00 0

10 731010 Cont-Ser-Inst & Co 19,330.00 0

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Auditee Remarks- The concerned officer preparing budget has been instructed to prepare budget more

realistically to cover all actual expenses. However, from 2015-16 since MAP is being implemented so system will

not permit expenses under any head to exceed budgeted amount.


Target date:

Implication

Recommendation

The budget should be prepare in

more realistic manner.


10 731010 Cont-Ser-Inst & Co 19,330.00 0

11 710800 Consptn-Ot Pps&Fit 12,500.00 0

12 714300 Stationery 9,564.00 0

13 732006 Cont-Hiring-Eqpts 5,618.00 0

14 731090 Cont-Ser-Printing 2,600.00 0

15 751001 Other License Fees 1,600.00 0

7. Review of cost Centre ((KOLKLC0711).

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major

Moderate a

List of cost element having cost variance with reference to budget for the financial year 2014-15.

Sl.No

Cost

Element Cost Element

Act. Costs

(2014-15)

Plan Costs

(2014-15)

(Variance)

plan to actual Var.(%)

1 735001 Cont Casual Labour 5,485,008.96 630,000.00 4,855,008.96 770.64%

2 751001 Other License Fees 1,547,270.73 180,000.00 1,367,270.73 759.59%

3 703004

Leased

Accommodation

18,204,356.9

1

2,575,569.0

0

15,628,787.9

1 606.81%

4 731031 Cont-Ser -Off Eqp 310,062.71 70,000.00 240,062.71 342.95%

5 731032 Cont-Ser-Other Mai 939,586.94 312,200.00 627,386.94 200.96%

6 721500 Electricity Expens 2,152,771.04

1,290,500.0

0 862,271.04 66.82%

7 703009 Trav Exps- India 1,052,549.00 860,000.00 192,549.00 22.39%

8 780190 Petty Cash Expense 376,454.00 320,000.00 56,454.00 17.64%

.


Implication

Recommendation

The budget should be prepare in

more realistic manner.


8 780190 Petty Cash Expense 376,454.00 320,000.00 56,454.00 17.64%

9 780050 Other Freight 373,650.00 320,000.00 53,650.00 16.77%

10 750001 Motor Veh Policy 9,083.00 8,000.00 1,083.00 13.54%

GL 220000-Clearing Acct-GRIR-Stores And Spares has not been reconciled since long The GL has many old

balances which need to be clear. The year wise break-up has been given below:

8. GL 220000 ( Clearing Acct-GRIR-Stores And Spares):

Category

Financial a

Operational


Root Cause

Risk rating

Critical a

Major

Moderate

FY Amount

2011-12 86,773.20

2012-13 51,082.36

2013-14 (107,608.91)

2014-15 441,507.30

Total 471,753.95

.


Auditee Remarks- Purchase section has been provided with list of P.Os to raise GRN to clear GR-IR account.



Implication

Recommendation

The GL need to be reconciled

and regularized.


The account is showing still debit balance of Rs 1,08,044/- in the month of April’15. It appears this amount is not

reconciled. (Ref Document no 2614011617 dt 31.03.2015).

Auditee Remarks- There is no balance in the ledger after payment of tax for the month of March, 2015 except RS

108044/- which was entered from Duliajan.


9. GL-201000::Stat Liab-TDS Payable-192-Salaries & Wages as on 31.03.2015 Rs (-)320,080/-

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major

Moderate a

.




Implication

Recommendation


and regularized.


Balance as on 31.03.2015 (-)19,507/-. We observed TDS amount of Rs 10,289/- deposited for March’15 in

April’15 and still there is a balance of Rs (Cr)9,218/- in the a/c which need to be reconciled.

Auditee Remarks- Adjustment/reconciliation will be made in the current year.


10.GL-201001:Stat Liab-TDS Payable-194 C-Contractors:

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major

Moderate a

.




Implication

Recommendation


and regularized.


We observed still there is a balance of Rs.58/- outstanding for long period which need to be reconciled.

This was informed in earlier audit reports but no action taken till now

Auditee Remarks- This amount will be adjusted in the current year.


11. GL-201002::Stat Liab-TDS Payable-194 I-Rent Balance as on 31.03.2015 (-)53,669/-

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major

Moderate a

.


Target date: 25.05.2015Implication

Recommendation


and regularized.


We observed still there is a balance of Rs.662/- outstanding for long period which need to be reconciled.

This was informed in earlier audit reports but no action taken till now

12. GL-202060:Stat Liab-Professional Tax Payable Account- Balance as per ledger 2,732.00(Dr)

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major

Moderate a

.





Implication

Recommendation


and regularized.


The GL has not yet been reconciled. We observed still there is a balance of Rs.31,108/- outstanding for long

period which need to be reconciled. This was informed in earlier audit reports but no action taken till now.

13. GL-201005:Stat Liab-TDS Payable-195 -Foreign Payments Balance as on 31.03.2015 (Dr) 31108/-

Category

Financial a

Operational


Root Cause

Risk rating

Critical

Major

Moderate a

.





Implication

Recommendation


and regularized.


We observed there are following two amounts credited in Vendor a/c as per details below:

8814005519 KZ 13.11.2014 Rs 3,000/-

8813001793 KZ 27.05.2013 Rs 1,960/-

The reasons of outstanding payments need to be explained to audit.

14. Vendor Code : OTAAA09 (One Time Vendor)

Category

Financial a

Operational


Root Cause

Risk rating

Critical a

Major

Moderate

.


Auditee Remarks- The amount outstanding will be adjusted in the current year.



Implication

Recommendation


and regularized.


On scrutiny of the a/c we noted there is debit entry of Rs 15,828/- vide document no 2714096367 dt 31.03.2015

. The reasons of passing such entry couldn’t be explained to audit.

15. GL 522031 (Allahabad Bank-Kolkata-A/C No. CA 712223-Issue)

Category

Financial a

Operational


Root Cause

Risk rating

Critical a

Major

Moderate

.


Auditee Remarks- Necessary correction entry will be passed in the current year



Implication

Recommendation


and regularized.


There has been negative balance in the Advance GL since the financial year 2012-13. It is requested to review

and clear the GL. Details are as under:

16. Negative balance in GL- 560309 (Adv To Emp-Official)- Rs 5800/-

Category

Financial a

Operational


Root Cause

Risk rating

Critical a

Major

Moderate

Assignment Document No Posting Date Amount(Rs) Text

7001359 1406030362 17.11.2006 2,633

REFUND AGAINST ADV FOR PURCHASEOF MED.

FOR DJN

7001751 1406024707 10.10.2006 590

REFUND AGAINST ADVANCE OF RS 4000/-

TAKEN ON 10/7/

7001881 1406016393 02.08.2006 1,837

REFUND AGAINST ADV FOR EXECUTIVE

COUNCIL MEETING

7001881 1407016181 27.08.2007 740

REFUND AGAINST ADV FOR INDEP.DAY

CELEBRATION

Total 5,800

.


Auditee Remarks- The entries will be reviewed and necessary correction entry, if required will be passed in the

current year.



Implication

Recommendation


and regularized.


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