Empanelment of Forensic Auditor for Jammu and Kashmir Bank

Online Request for Quotation (e-RFQ) for Engagement of external Auditors for conducting Forensic Audit of 01 (One) borrower group of the bank covering the period from year 01.01.2002 to 31.03.2013 in Fund Based Working Capital account and Non-Fund Based facilities. The borrower company is having its operations at Jammu & Ludhiana and registered office(s) at Ludhiana, Punjab.

e-RFQ Ref. No.: JKB/S&C/Forensic-Audit/2022-391
Dated: 26-08-2022

Request for Quotation for Engaging Auditors

Introduction:

The Jammu and Kashmir Bank invites Request for Quotation (RFQ) from IBA approved Audit firms for Forensic Audit of loan assets having exposure below Rs.50.00 crore for conducting Forensic audit of one borrower group of the bank covering the period from year 01.01.2002 to 31.03.2013 in Fund Based Working Capital account and Non-Fund Based facilities.

Note:

• The RFQ is non-committal in nature.
• The Bank has the discretion to quash the RFQ containing any deviation.
• The information provided by the bidders in response to this RFQ document will become the property of the Bank and will not be returned. The Bank reserves the right to amend, rescind or reissue RFQ and all amendments will be advised to the bidders and such amendments will be binding on them. All Bidders must ensure that such amendments/ modifications have been considered by them before submitting the bid. Bank will not have any responsibility in case some omission is done by any Bidder. The Bank also reserves its right to accept or reject any or all the responses to this RFQ without assigning any reason(s) whatsoever.

Objective of Audit:

As per requirement, the Bank is required to conduct the forensic audit in 01 (one) borrower group of bank having exposure of below Rs.50.00 crore covering the period from year 01.01.2002 to 31.03.2013 in Fund Based Working Capital account and Non-Fund Based facilities to ascertain Diversion of funds, Money trail, Detection of financial statement fraud, Abnormal trade transactions, Verifying receivables and Other aspects covered under Forensic Audit. The borrower company is having its operations at Jammu & Ludhiana and regsitered office(s) at Ludhiana, Punjab.

Scope:  

a) Capacity to pay: Examine as to whether the borrower has defaulted in meeting its payment/repayment obligations to the Bank even when it had the capacity to honour the same.

b) Ascertaining the Money trail & end use of funds lent by the Bank.

c) Diversion of funds: Diversion of funds on the part of borrower would be construed in any of the undernoted occurrences:

• • Utilization of short term working capital funds for long term purposes not in conformity with the terms of sanction;
  • Deploying borrowed funds for purposes / activities or creation of assets other than those for which the loan was sanctioned.
  • Transferring borrowed funds to the subsidiaries / group companies or other Corporate/s by whatever modalities.
  • Routing of funds through any bank other than the lender bank or members of consortium without prior permission of the bank/lenders.
  • Investment in other companies by way of acquiring equities / debt instruments without approval of bank/lenders.
  • Shortfall in deployment of funds vis-à-vis the amounts disbursed / drawn and the difference not being accounted for.

d) Detection of Financial Statement Fraud.

e) Siphoning of funds: Siphoning of funds on the part of borrower would be construed to occur if funds borrowed from Bank are utilized for purposes other than the one for which the credit facility was sanctioned, to the detriment of the financial health of the entity or of the Bank.

f) Capital Structure: Tracing the source of contribution by promoters, partners, proprietors, etc. as the case may be by analyzing equity/debt infused into the entity.

g) Abnormal trade transactions: Commenting on transactions of substantial amount, which seem not to be normal trade transactions.

h) Sales: Verifying revenue from operations including checking sale order, invoices and controls in billing process. The focus should be on inflated turnover / fictitious sales and / or Sales on Return (SoR) basis where profit has been booked and sales returned in the subsequent accounting period leading to writing off of stocks / debtors and reversal of booked profits. The sustainability of sales in future years should be co- related with Techno Economic Viability (TEV) study.

i) Escrow / Trust & Retention Account (TRA): Commenting on adherence to Escrow / Trust & Retention Account (TRA) arrangements made with various banks. Also commenting on details of all transactions with banks outside the consortium.

j) Concentrating transactions – sole customer, sole supplier, major transactions with related parties / group companies, analysis of relationship in two-way deals with the same party or indirect payments made by customers of the borrower to the vendors of borrower.

k) Movements in unsecured loans during specified period.

l) Details of substantial debts (debt raising the DER beyond the desired level) raised in sister / associate / group companies either through corporate guarantee of borrower or against security of promoter’s or their family assets as per Credit Policy of the Bank.

m) Verifying receivables thoroughly as there have been cases where the units have shown reciprocal receivables against each other, especially in case of related parties.

n) Finding details of assets of unit / its promoter (s) / partners to ensure recovery of loans granted by banks as there would be cases where some assets are not reported in financials of the unit / promoters / partners.

o) Examining chain of transactions pertaining to unit / promoters / partners to ensure genuineness of the dealings as there could be cases of bogus family/other transactions.

p) Examining stocks / inventory & purchase transactions in particular with related parties / sister concerns.

q) Identifying the type of fraud committed, since how long is/was it being committed, and how has it been concealed.

r) Identifying the perpetrator(s) / fraudster(s) involved.

s) Quantifying the financial loss suffered by the Bank.

t) Gathering evidence to be used in court proceedings.

u) Providing advice to prevent the reoccurrence of the fraud.

The list is indicative only and a Forensic Auditor may carry out the examination / evaluation of other aspects also within the ambit of Forensic Audit. The bank shall be free to add to the above list of scope of audit.

The Forensic audit should inter alia cover full gamut of financial and non-financial area of the borrowal account including related events / transactions whether direct or indirect and provide clear inference / conclusion in the report. The investigation has to be conducted from fraud classification or otherwise and should provide a conclusive report of the findings without disclaimers.

The report must be free from any ambiguity/conjectures and conclusion should be adequately supported by evidences/proof and the firm should stand by comments and conclusion made in the report. The report must categorically conclude stating that either there is fraud or otherwise and inconclusive reports with disclaimer will not be accepted.

Remuneration: Fee Structure as per Forensic Audit Policy of the Bank is appended below:

Note: Exposure shall mean Principal Balance Outstanding in NPA accounts, for Standard accounts it shall be sanction Limit and Balance Outstanding in Term Loan Accounts.

Download Full details – https://www.jkbank.com/pdfs/tenders/1789.zip