Small Industries Development Bank of India

Request for Proposal (RfP)

For
Concurrent Audit of

Operations of Branch Office, SIDBI

Small Industries Development Bank of India
Audit Vertical
4th FLOOR, SIDBI TOWER,
15, ASHOK MARG,
LUCKNOW – 226001
Website : www.sidbi.in

Tender No. 2020OCT03/T000175423

THE INFORMATION PROVIDED BY THE BIDDERS IN RESPONSE TO THIS TENDER DOCUMENT WILL BECOME THE PROPERTY OF SIDBI AND WILL NOT BE RETURNED. SIDBI RESERVES THE RIGHT TO AMEND, RESCIND OR REISSUE THIS TENDER DOCUMENT AND ALL AMENDMENTS WILL BE ADVISED TO THE BIDDERS AND SUCH AMENDMENTS WILL BE BINDING ON THEM.

(THIS DOCUMENT SHOULD NOT BE REUSED OR COPIED OR USED
EITHER PARTIALLY OR FULLY IN ANY FORM)

Critical Information Summary

1) SIDBI reserves the sole right for carrying out any amendments/ modifications / changes including any addendum to this RfP. Such amendments / modifications / changes including any addendum to this RfP shall be notified on SIDBI’s website www.sidbi.in and these will be binding on the bidders.

2) Bidders are advised to study the tender document carefully. Submission of bids shall be deemed to have been done after careful study and examination of the tender document with full understanding of its implications.

3) Any clarifications from bidder or any change in requirement will be posted on SIDBI website. Hence, before submitting bids, bidder must ensure that such clarifications / changes have been considered by them. SIDBI will not have any responsibility in case some omission is done by any bidder.

4) In case of any clarification required by SIDBI to assist in the examination, evaluation and comparison of bids, SIDBI may, at its discretion, ask the bidder for clarification. The response / Clarification shall be in writing and no change in the price of substance of the bid shall be sought, offered or permitted.

5) Please note that all the information required as per the bidding document needs to be provided. Incomplete information in these areas may lead to non-selection.

6) Modification And/ Or Withdrawal of Bids:

Bids once submitted will be treated as final and no further correspondence will be entertained. No bid shall be modified after the deadline for submission of bids. No bidder shall be allowed to withdraw the bid, if bidder happens to be the successful bidder.

7) SIDBI has the right to reject any or all bids received without assigning any reason whatsoever.

NOTE:

SIDBI SHALL NOT BE RESPONSIBLE FOR NON-RECEIPT / NON-DELIVERY OF THE BID DOCUMENTS DUE TO ANY REASON, WHATSOEVER.

Schedule of events:

Sr. No. Bid Reference: Tender No. 2020 OCT03/T000175423
1 Purpose Concurrent Audit of Operations of Branch Office
2 No. of Envelopes (Non-window, sealed) to be submitted One (1) Envelope for 1 Branch office

1 set of Hard copy should be submitted in sealed single envelope for 1 Branch office.

3 Last date of submission of Bids November 06, 2019 at 2:00 p.m (Wednesday)
4 Venue, Date and Time of opening of Bids. November 06, 2019 (Tuesday) at 3:00 p.m at the address given at Sr. No. 8.
5 Date of pre-bid meeting October 22, 2019 (Monday) at 4:00 p.m
6 Response to clarifications sought /pre-bid meeting queries to be put on website. October 21, 2019 (Wednesday) at 5:00 p.m
7 Bid Validity 6 months from the last date of submission of Bids.
8 Address for submission of Bids The General Manager

Audit & Fraud Management Vertical

SIDBI, 4th Floor SIDBI TOWER,

15, ASHOK MARG, LUCKNOW – 226001

Ph : 0522-2288546-50

E-mail: auditvertical_ho@sidbiin

9 Contact Persons:
Name & Designation Phone e-mail
K.R Samuel [DGM] 0522-4259735 auditvertical_ho@sidbi in
Arup Kumar [M] 0522- 4259788 auditvertical_ho@sidbiin

If a holiday is declared on the dates mentioned above, the effective date would be the next working day at the same time specified above and at the same venue unless communicated otherwise.

Introduction and Disclaimers :

1.1 Purpose of RfP

The purpose of RfP is to shortlist experienced professional firm/ Limited Liability Partnership (LLP) of Chartered Accountants, for undertaking Concurrent Audit of Operations of Branch Office (BO) of SIDBI at the following locations.

Table – I

Sl. No. Branch Office
(BO)
Regional Office (RO) Direct Credit O/s
as on May 31,
2019
(` in Crore)
Tentative date for commencement of Concurrent Audit
1 AHMEDNAGAR BO PUNE 38.54 January 01, 2020
2 CHINCHWAD BO PUNE 114.62
3 JALLANDHAR BO CHANDIGARH 34.17
4 JODHPUR BO JAIPUR 129.89
5 KISHANGARH BO JAIPUR 101.21
6 KOCHI BO CHENNAI 147.23

1.2 Information Provided:

The Request for Proposal document contains statement derived from information that is believed to be relevant at the date but does not purport to provide all the information that may be necessary or desirable to enable an intending contracting party to determine whether or not to enter into a contract or arrangement with SIDBI. Neither SIDBI nor any of its employees, agents, contractors or advisors give any representation or warranty, express or implied, as to the accuracy or completeness of any information or statement given or made in this document. Neither SIDBI nor any of its employees, agents, contractors, or advisors has carried out or will carry out an independent audit or verification exercise in relation to the contents of any part of the document.

1.3 Disclaimer:

Subject to any law to the contrary, and to the maximum extent permitted by law, SIDBI and its officers, employees, contractors, agents and advisors disclaim all liability from any loss or damage (whether foreseeable or not) suffered by any person acting on or refraining from acting because of any information including forecasts, statements, estimates or projections contained in this RfP document or conduct ancillary to it whether or not the loss or damage arises in connection with any negligence, omission, default, lack of care or misrepresentation on the part of SIDBI or any of its officers, employees, contractors, agents, or advisers.

1.4 Costs to be borne by Applicants:

All costs and expenses incurred by Applicants in any way associated with the development, preparation, and submission of responses, including but not limited to the attendance at meetings, discussions, demonstrations, etc. and providing any additional information required by SIDBI, will be borne entirely and exclusively by the Applicant.

1.5 No Legal Relationship:

No binding legal relationship will exist between any of the applicants and SIDBI until execution of a contractual agreement.

1.6 Applicant Obligation to Inform Itself:

The applicant must conduct its own investigation and analysis regarding any information contained in the RfP document and the meaning and impact of that information.

1.7 Evaluation of Offers:

Each applicant acknowledges and accepts that SIDBI may in its absolute discretion apply selection criteria specified in the document for evaluation of proposals for shortlisting / selecting the eligible Concurrent Auditor(s). The RfP document will not form part of any contract or arrangement, which may result from the issue of this document or any investigation or review carried out by a Recipient.

1.8 Maintaining Secrecy and Confidentiality:

The applicant shall be liable to maintain secrecy and confidentiality of all the information / data /operations, etc. of SIDBI.

1.9 Errors and Omissions

Each applicant should notify SIDBI of any error, omission, or discrepancy found in this RfP document.

1.10 Acceptance of Terms

An applicant will, by responding to SIDBI for RfP, be deemed to have accepted the terms of this Introduction and Disclaimer.

2. Lodgement of RfP:

2.1 RfP submission:

♦ RfP document submission is required to be done by November 06, 2019 (2.00 PM) as under:-

Hard copy should be submitted at the following address in sealed single envelope superscribed at the top of the envelope – “Request for Proposal (RfP) for Concurrent Audit of Operations of BO”.

The General Manager

Audit & Fraud Management Vertical

Small Industries Development Bank of India (SIDBI) SIDBI Tower, 15- Ashok Marg,

Lucknow – 226001 (U. P.)

Telephones: (0522) 2288546-50

Email : auditvertical_ho@sidbi.in

RfP must be submitted on or before the aforementioned closing date and time.

  • Fax / e-mail copies of any submission are not acceptable and will be rejected by the Bank.
  • Copy of Bids and attachments must be provided in a sealed envelope.

The person(s) signing the Bids shall initial all pages of the RfP. The Bids shall contain no erasures or overwriting except as necessary to correct errors made by the applicant, in which case corrections shall be initialed by the person(s) signing the Bids.

If the submission does not include all the information required or is incomplete, the proposal is liable to be rejected.

All submissions, including any accompanying documents, will become the property of SIDBI. Applicants shall be deemed to license, and grant all rights to SIDBI to reproduce the whole or any portion of their submission for the purpose of evaluation, to disclose the contents of the submission to other Respondents and to disclose and / or use the contents of the submission as the basis for any resulting RfP process, notwithstanding any copyright or other intellectual property right that may subsist in the submission or accompanying documents.

2.2 RfP Validity Period:

The proposal must remain valid and open for evaluation according to its terms for a period of at least six (6) months from the time the RfP closes on the deadline for lodgment of RfP.

2.3 Cost of Bid Document

No cost has been prescribed for the RfP Document.

2.4 One Bid/application per applicant:

Applicant can submit application for engagement as concurrent auditor for branches where applicant has a regular office set-up, either Head Office or branch office, at respective locations of SIDBI branches (In case of Chinchwad 😯 and Kishangarh 8O, the applicants from Pune and Ajmer respectively shall also be considered).

As a matter of policy, SIDBI shall engage services of a firm/ LLP for carrying out concurrent audit of one branch only, at a time. Accordingly, in case, if the applicant applied for multiple branches and found suitable, they may be considered for one branch only, at the sole discretion of SIDBI.

Firms already engaged with SIDBI:

  • SID8I shall engage the services of a firm / LLP for carrying out Concurrent Audit of only one 8ranch Office (8O) at a time. Accordingly, in case the applicant has already been engaged as Concurrent Auditor by SID8I for any of its 😯 and / or HO Verticals, such Firm/LLP will not be eligible under this RfP.
  • Such firms/LLP only after completion of specific period (continuous three years), cooling period of one year would be observed for considering the services of the CA firm again for its 😯 or HO Vertical, subject to fulfilling eligibility criteria by such firms/LLP.

2.5 Late Applications:

Any RfP/application received after the deadline for submission of the RfPs ! applications will be treated as “Late Application” and such late applications shall not be considered at all for competitive consideration.

2.6 Request for Proposal (RfP)

SIDBI may, in its absolute discretion, seek additional information or material from any applicants after the RfP closes and all such information and material provided must be taken to form part of that Applicant’s response.

Applicants should provide details of their contact persons, Fax, Telephone, email and full address(s) to ensure that replies to Bids could be conveyed promptly.

If SIDBI, in its absolute discretion, deems that the originator of the question will gain an advantage by a response to a question, then SIDBI reserves the right to communicate such response to all Applicants.

SIDBI may, in its absolute discretion, engage in discussion or negotiation with any Applicant (or simultaneously with more than one Applicant) after the Bids closes to improve or clarify any response.

2.7 Notification:

SIDBI will notify all short-listed Applicants in writing as soon as practicable about the outcome of their Bids. SIDBI is not obliged to provide any reasons for any such acceptance or rejection.

Disqualification

Any form of canvassing ! lobbying ! influence ! query regarding shortlisting, status, etc. will lead to disqualification.

3. About SIDBI

3.1 Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of Indian Parliament, is the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co­ordination of the functions of the institutions engaged in similar activities.

SIDBI provides its services through a network of Branch Offices located all over India. Detailed information on the functions of SIDBI is provided on the website, www.sidbi.in

3.2 SIDBI offers several financial products and services for catering the financial needs of Micro, Small and Medium Enterprises (MSMEs) through its field level offices. These include the following broad areas:

  • Direct Finance
  • Bills Finance
  • Refinance
  • International Finance
  • Promotion and Development
  • Micro-finance

4. Project Particulars

4.1 Project Objective and Scope of Operations of SIDBI’s Branches

SIDBI’s Branch Office(s) functions include credit dispensation under Direct Credit and other day to day operations of the Bank. The selected Chartered Accountants would undertake the concurrent audit of operations of the Branch (es) on daily/ regular basis and based on their findings also regularly suggest measures to improve the functioning of operations of Branch of SIDBI. Assignment would also include verification and confirmation on the adequacy of internal controls and IT system for sustaining operations. The staff deputed by the firm ! LLP of Chartered Accountants for carrying out the audit should be qualified Chartered Accountant and experienced in the area of work.

Concurrent Audit covers the Branch Operations including its core functions such as credit appraisal, pre-sanction and post-sanction supervision mainly under Direct Credit, Working Capital, Receivable Finance, Refinance and other day to day operations, various lists! statements being submitted to SIDBI towards finance availed by them and other Companies! Banks! Institutions covered under resource support business of the Bank. The objective and scope of the Concurrent Audit to be undertaken in the above centre are as under:

A. Objectives and Work areas of Concurrent Audit

The main objectives and Work areas of the concurrent audit are as follows:

a. Verifying whether sanctions for advances and disbursement thereof is obtained from competent authority.

b. Scrutinizing the completeness of documents submitted for availing advances and other facilities.

c. Ensuring compliance of laid down systems, procedures and policies.

d. Examining books of accounts, records and ! or registers to ensure that they are maintained in accordance with the prescribed systems! reconciled with general

e. Physical checking of stocks financed under working capital scheme at relevant

f. Detection and arresting of leakage of income, if any.

g. To follow up with authorities to ensure timely rectification of irregularities reported with regard to the operations of the branch and rectified on the spot! during audit period itself.

h. Verify prompt, timely and regular submission of the periodical and statutory returns.

i. Any violation of procedure is brought to light.

j. Reporting any irregularity in working which may result in financial or other loss to the Bank.

k. Feedback on regulatory compliances.

l. Physical checking of live Bills under MSME-Receivable Finance Scheme.

m. Verification of Daily Liability Register under MSME-Receivable Finance Scheme.

n. Physical verification of approvals granted for discounting of Bills under MSME­-Receivable Finance Scheme.

o. Any other areas on the operations of the Bank which are vital, in nature.

B. Scope

a) Whether the transactions or decisions are within the policy parameters laid down by the Head Office.

b) Sanction and disbursement of loans & advances are within the policy parameters laid down by the Bank. All the loan disbursements are to be checked/ verified by the concurrent auditors before actual disbursements and all the disbursement notes need to be signed off by the concurrent auditors (CA Partner/ Authorised Chartered Accountant)

c) Verify whether pre-sanction/pre-disbursement /post-disbursement visits are undertaken and reports are available on record.

d) Sanctions/disbursements are within the delegated authority.

e) Sanctions/disbursements do not violate the instructions or policy prescriptions of the RBI ! other regulators.

f) Compliance to RBI guidelines relating to defaulters list/Caution Advice/CIBIL List/IBA caution list for Third Party Entity/fraudulent borrowers list, KYC /AML, etc. is done satisfactorily.

g) DoP has been exercised properly and Post Sanction Reporting (PSR), wherever applicable, is sent to Post Sanction Reporting Authority (PSRA).

h) Security creation has been done properly. All the prescribed and necessary documents are collected from borrowers.

i) Verify whether all charges of SIDBI on the assets mortgaged/hypothecated are registered with Registrar of Companies (ROC)/CE RSAI.

j) Pre-disbursement conditions are duly complied with. Deviations made, if any, are within the guidelines issued from time to time.

k)Verify the end use of term loan disbursed by the Branch for the purpose it is meant for.

l) Undertake visits, wherever necessary, to the projects under implementation and observation, if any, in terms of time over-run! reasons for delay in implementation of the project, bring to the notice of the authority of the Branch.

m) All the receipts have been properly accounted for! appropriated as per Bank’s accounting policy.

n) All regulatory provisions! guidelines are duly complied with (e.g. areas including TDS and service tax ! professional tax! GST etc).

o) Whether in all cases where the statements! documents (stock statement, No-lien account statement, project completion report, final list of machinery, Balance Confirmation Certificate, Acknowledgment of Debt, Annual report etc.) are not received even after a reasonable time, prompt action is taken by the Branch to get the same.

p) Verify whether there is any mis-utilisation of the loans and whether there are instances indicative of diversion of funds.

q) Detection & prevention of revenue leakages in the operation of the Branch through close examination of income and expenditure.

r) Verify whether there are any borrowal accounts (other than those reported by the Branch) which are showing early warning signals or symptoms of sickness and/or can be classified as NPAs. If so, ascertain the reasons therefore and analyse the steps taken by the branch in the matter.

s) Verify whether the classification of loan assets of the Branch have been done properly and income recognition norms have been followed as per Bank’s guidelines and procedure/ RBI norms by the respective Branch.

t) Verify whether subsidy claims like CLCSS/TUFS etc. are as per the respective scheme and lodged timely with govt. authorities by the Branch through Head Office.

u) Verify whether claims submitted by Branch to CGTMSE and ECGC are in time.

v) Carrying out Credit Audit in respect of the eligible cases, as per the extant guidelines of the Bank.

w) Verify whether guarantee fee for coverage under CGTMSE is collected and deposited with Credit Guarantee Trust Fund.

x) Verify the ratings (including CART ratings) and submission of a certificate in writing that the ratings (including CART ratings) are found to be correct. The discrepancies, if any, should be brought to the notice of the bank.

y) Verify the updation of CIBIL data and report the status in the monthly audit report.

z) Verify the details of flow of applications, time taken for appraisal of proposals, pending applications etc. with Express Loan Service Centre (ELSC) of the RO concerned / located at the same place and report the status in the monthly audit report.

aa) Verify whether assets have been verified by the BO within 30 days from the date of classification of account as NPA.

bb) Verify whether the proposals covered under JICA Line of Credit – Scheme for Energy Saving Projects in MSME sector and KfW Energy Efficiency LoC – Assistance for Energy Efficiency Products, respectively have been properly flagged in the DFS/ Flex Package. Also to verify whether the requisite Annexures prescribed for the purpose have been obtained and kept on record.

cc) Verify whether interest rate is charged as per approved rate of Interest.

dd) To verify whether the Memorandum of Entry for creation of mortgage has been
prepared/ pasted on Register.

ee) Concurrent Auditors shall invariably look into updation of security value (primary and collateral – movable & immovable) in the (Recovery and NPA Management System) RNMS in respect of all loans.

C. Accounting

a) The maintenance and balancing of accounts, ledgers and registers is proper.

b) Bank reconciliation – Verification of transaction both credit and debit is based on legitimate instruments. Comments/Confirmation on whatever reconciliation undertaken by the dealing offices is in order.

c) Independently verify the transactions and accounts viz. receipts & payments validated through instruments, verify the process of reconciliation undertaken by BO of various sensitive accounts viz. Sundry, Suspense, Receipts Pending Appropriation, bank reconciliation etc., instead of reporting merely based on the certificates / statements by the branch officials.

d) Early reconciliation of entries outstanding in the Branch with regard to inter-branch and inter bank accounts, Suspense Account, Sundry Deposits Account, etc. Ensure early adjustment of entries in the Branch.

e) To ensure that all the transactions viz. receipts, payments, journal vouchers are validated by proper instruments! approval note, etc.

f) To ensure that all the accounting transactions are carried out in accordance with the extant guidelines of the Bank.

g) To scrutinize quarterly trial balance codes and verify the quarterly closing returns prepared by the Branch Office and sign off.

h) To examine and verify the appropriations done by the branch office for the repayments received during the month. The objective is to ensure that the appropriations done by the branches are correctly captured in the system and are in order so that correct position of overdues ! dues ! RPA etc. is reflected at the time of quarterly and annual closing of accounts as on March 31.

D. Additional Scope for Working Capital Cases:

    • To ensure that margin on stock! book debts; Rate of Interest & Drawing Power is considered ! fixed as per the terms of sanction.
    • To ensure that the limits have not been made operational beyond the validity period, without approval of the competent authority for extension of the validity period.
    • To ensure that the periodic visits to the borrower units have been undertaken as per the Scheme guidelines. The auditor may also undertake some sample visits along with BO officials on random basis and! or on the basis of criticality of the account.
    • To ensure that the monthly stock statement from the borrower is obtained in time and duly updated in the system.
    • To scrutinize the monthly stock statements to ensure correct valuation! calculation of drawing power (e.g. by exclusion of non-moving ! obsolete stocks for calculation of DP and by excluding old & doubtful book debts, margins. etc.).
    • To ensure that the inventories! fully paid stocks as mentioned in the Stock statement furnished by borrowers for calculating drawing powers are correct and as per the books of borrower.
    • To ensure that the CA certified book debt statements from the borrowers are obtained on half-yearly basis.
    • To ensure that stocks are adequately insured as per the extant guidelines of the bank and
      are in the joint names ! with bank clause and the policies are renewed on timely basis.
    • To ensure that Quarterly Information System (QIS) statements & other financial statements are obtained, wherever applicable and indicate the observations on the general business operations ! profitability etc.
    • To ensure that stock audit is undertaken, wherever applicable and to ensure that the compliance of stock audit observations are met.
    • To check the correctness of upfront fee, interest ! penal interest, etc.
    • To examine the overdue accounts closely (in terms of operations in the a!c, Stock & Book Debt statement, Credit Summation, QIS & other statements, Renewal, Cheque Bouncing ).
    • To ensure compliance of extant guidelines, in case of multiple current accounts and / or multiple banking arrangement.
    • To verify the correctness of security (primary & collateral), Legal compliance, ROC search etc.

E. Additional Scope for MSME-RFS Cases

    • To ensure end use by undertaking visits & verification of documents of the MSME seller
    • To verify MSME category of vendors & verify seller’s certificates including KYC
    • To ensure that the visits to the vendors’ units have been undertaken as per the extant guidelines of the bank. The auditor may also undertake some sample visits along with BO officials on random basis and / or on the basis of criticality of the transactions.
    • To verify, due date-wise, live Bills under MSM E-Receivable Finance Scheme.
    • To verify whether Daily Liability Register is showing correct picture under MSME­Receivable Finance Scheme.
    • To undertake visit to purchaser companies to verify the invoices under Trade Receivables Engine for E-discounting (NTREES).
    • To verify seller / KYC documents under Trade Receivables Engine for E-discounting (NTREES).
    • Safe custody verification as per extant guidelines.

F. Further Scope for Letters of Credit (LC) / Bank Guarantee (BG)

    • Check whether LCs are for genuine trade transactions and necessary vouchers reflecting LC opening are passed by BO.
    • Check whether the Letters of Credit issued by the branch are within the delegated
    • Check that LC commission is taken correctly and necessary vouchers passed.
    • Check whether LCs are retired in time and necessary reversal vouchers are passed by BO.
    • Check whether Guarantees are issued after vetting by Legal Department and guarantee number is auto generated from Direct Finance System.
    • Check whether bank guarantees issued are properly worded and recorded in the register of the bank. Whether they have been promptly renewed on the due dates.
    • Check that correct Guarantee commission is taken and necessary vouchers passed and Guarantee commission is appropriated quarterly.
    • Check that Guarantees are closed and reversed in time as per extant guidelines.

G. Scope for Follow up & Monitoring

    • Verify whether Registration of charge(s) under Central Registry for all eligible cases has been done.
    • Verify whether RAM / CART ratings are approved and printouts of the same are available on record.
    • Verify whether Annual Review and Re-rating of the accounts as per guidelines has been done.
    • Verify whether demand advices are raised correctly and sent in time as per extant
    • Verify whether Safe Custody verification is being carried out by BO as per the extant
    • Verify whether insurance cover for the assets charged to SIDBI has been obtained/
    • Verify whether validation of sanction / review of undisbursed sanctions has been carried out as per extant guidelines.
    • To verify / review the interim disbursements / final security creations. The above areas of operation are illustrative and not exhaustive.

4.2 The CA will have to submit the following reports to the Management:

(A) Reports relating to Operations in Branch

(i) Monthly reports covering Branch’s day-to-day operations including its core functions such as credit appraisal, pre-sanction and post-sanction supervision mainly under Direct Credit, Working Capital, Receivable Finance and other operations towards finance availed with regard to their correctness, compliance to the terms and conditions of sanction, post disbursement, supervision, documentation, review/renewal of limits, bills discounting, KYC norms, monitoring of business risks, compliance of Delegation of Powers, etc.

Monthly reports shall cover comments on adherence to regulatory, internal policy, procedure, guidelines, compliance of Delegation of Powers and areas of audit as indicated at para 4.1.

(ii) Any other related report as may be required by SIDBI from time to time.

(iii) The CA shall be accountable, on its part, for wrongly verifying any document or signing off disbursement notes or such other important documents based on which the Bank takes a decision.

The above reports with regard to operations of the respective Branch Office in the area of credit dispensation and other day to day operations shall be submitted in the following manner to the Regional Offices concerned.

Sl. No. Name of the Branch Office (BO) Name of the
Regional Office (RO)
Remarks
1 Ahmednagar BO Pune i. Monthly Concurrent Audit Report shall be submitted in the Audit Software by 7th of the following month.

ii. Duly signed hard copy shall be submitted to BO and RO.

iii. Scanned copy of duly

2 Chinchwad BO Pune
3 Jallandhar BO Chandigarh
4 Jodhpur BO Jaipur signed and stamped report shall be forwarded to A&FMV by mail i.e.
auditvertical_ho@sidbi.in
5 Kishangarh BO Jaipur
6 Kochi BO Chennai

Details of operating guidelines will be provided to the concurrent auditors. Necessary training! consultation required would be provided to them for enhancing the quality of the audit. They would be made aware of the guidelines and circulars issued subsequent to commencement of assignment and having impact on the concurrent audit, to keep them abreast of the changes in the operational and regulatory guidelines.

SIDBI will prescribe structured formats for the audit reports and also stipulate the time limits for submission of the reports. The audit formats would be reviewed on annual basis. The firm! LLP should strictly adhere to the format and the time limit. SIDBI may prescribe different periodicity for different reports of the same branch.

5. Fixed Fee Structure

  • The fee structure/inclusion / exclusion of the BOs under this mechanism are based on the outstanding portfolio of the BO as at the end of previous financial year. The award of contract to CA firms / LLPs to undertake concurrent audit will be as per fee structure issued by the Bank from time to time. The present five slab fee structure, based on the outstanding portfolio size, is indicated below:
Outstanding Portfolio (MSME Direct Credit) Basic Fee Payable Per Month
(excluding GST)
BOs covered
under each slab
Upto ` 100 crore ` 15,000!- Ahmednagar, Jallandhar
Above ` 100 crore –
upto ` 150 crore
` 20,000!- Chinchwad, Jodhpur, Kishangarh Kochi.
Note:

i. Maximum upto 5% annually enhancement in remuneration may be considered, if the Direct Credit balance outstanding of the BO is within the existing slab and the contract is renewed, after one year, provided the performance is found satisfactory.

ii. The professional fee thus fixed will continue till the next renewal. At the time of renewal, any increase or decrease in direct credit balance outstanding of the BO will be reckoned for fixing the professional fee.

No out of pocket expenses or traveling allowance ! halting allowance would be paid to the concurrent audit firm ! LLP for carrying out the audit. However, the service tax, education cess!GST, etc. would be paid by the Bank, as applicable, in addition to the basic fees. The payment to the concurrent auditors would be subject to deduction of tax at source, at applicable rates.

The Outstanding Portfolio (MSME Direct Credit) of the BOs are given at Table – I at Para 1.1

6. Selection Criteria for Concurrent Audit of BOs.

6.1 Selection Process:

This RfP will be assessed on the following Selection process: –

Invite Request for Proposal (RfP) wherein Technical Evaluation is submitted in sealed envelope.

Technical evaluation:

a) The Applicant is required to submit the details of its proposal in a sealed envelope. The envelope should be superscribed “For Technical Evaluation” for the said Concurrent Audits and should contain detailed statement giving the various technical particulars of the proposal covering aspects of the applicant like name and location, year of establishment, names of its partners, staff, their qualification / experience, registration number of the firm / LLP, details of ICAI membership / Certificate of Practice details, methodology proposed and all other such relevant particulars in the format given in Annexure I.

b) A pre-evaluation meeting would be held to clarify on points, if any, if desired by the intending applicants.

c) After the expiry of time for submission of Bids / application, the envelope containing the compliance on the “Technical Evaluation” would be opened in respect of all the applicants to verify the compliance of the applicants with the prescribed Technical Evaluation

d) The Technical Evaluation of Bids/ Application would be carried out by SIDBI. The list of technically qualified applicants would be short listed.

Pre-Requisite for Applying:

The Applicant should:

  • furnish proof of Valid registration / Certificate of Practice from the Institute of Chartered Accountants of India (ICAI).
  • be a Partnership firm/ LLP of Chartered Accountants with minimum 3 partners of which at least 2 partners should be FCA(s). At least one partner should have a continuous association with the firm of a minimum of 5 years and another partner should have a continuous association with the firm of a minimum of 3 years.
  • has minimum five years of previous track record of carrying out concurrent audits in other Financial Institutions / Public/private Sector Banks mainly in the area of credit dispensation under Direct Credit and other day to day operations of the bank (with documentary proof).
  • CA firm should get Min Score – 50 Marks in Rating Chart.
  • CA firm has its HO or Branch office at SIDBI’s Branch location (In case of Chinchwad BO and Kishangarh BO, the applicants from Pune and Ajmer respectively shall also be considered).

Without compliance of the above pre-requisites, the applicant will not be eligible for applying.

The Rating Chart is given below:

Sl. No. Criteria Maximum
Marks
(Weightage)
i
  • Year of establishment of Chartered Accountant firm/ Limited Liability Partnership (LLP) of Chartered Accountants.

> Upto 5 years- 10 Marks

> 5 to 10 years – 12 Marks

> 10 to 15 years-15 Marks

> More than 15 years-20 Marks

20
ii.
  • Firms/Liability Partnership (LLP) of Chartered Accountants with minimum 3 partners of whom at least two should be FCA. At least one partner should have a continuous association with the firm of a minimum of 5 years and another partner should have a continuous association with the firm of a minimum of 3 years. (20 Marks)
  • In addition to the above, firm having a retired commercial banker as Partner / Employee. (With Documentary proof)

> (One Banker – 6 marks)

> (2 Bankers – 8 marks)

> (3 or more Bankers – 10 marks)

  • Experience of key personnel assigned (as per the curriculum viate)

> 1.5 marks to be awarded for each additional partner (over and above 3 partner) of the firm and 01 mark for full time CA employee (Maximum marks-10)

40
iii
  • Minimum five years of previous track record of carrying out such audits in other Financial Institutions / Public/private Sector Banks mainly in the area of credit dispensation under Direct Credit and other day to day operations of the Financial Institution / bank (with documentary proof). – 15 Marks
  • In addition to the above, firm having previous track record in the area of credit dispensation under MSME – Additional 5 marks.
20
iv. Whether the firm/ LLP empanelled with RBI as

  • Statutory Central Auditor – 10 Marks
  • Statutory Branch Auditor (Category I) – 7 Marks
  • Statutory Branch Auditor (Category–II)– 5 Marks
10
v. Availability of suitable infrastructural facilities including office set up, adequate manpower who are specialized in the area of audit of Branch Operations mainly in the area of credit dispensation under Direct Credit and other day to day operations of the Bank. Presence in India-number of offices and permanent manpower along with regular set-up, either Head Office or full-fledged Branch Offices, at respective locations (locally) of SIDBI branches (In case of Chinchwad 😯 and Kishangarh 8O, the applicants from Pune and Ajmer respectively shall also be considered).

Branch (locally) – 5 marks

  • Head Office (locally) – 10 marks
10
Maximum technical score 100
  • The applications received would be examined by “Applications Opening and Evaluation Committee” which would be constituted at Head Office Level at
  • All applicants scoring 50 marks and more (in technical Evaluation) will be selected as the Technically Qualified Applicant. The top 3 applicants as the case may be getting the maximum marks in Technical Evaluation will be given
  • Due diligence will be carried out for the top three applicants getting the maximum marks.
  • Preference would be given to the applicants where the partners themselves are ex-bankers with requisite experience and exposure and the firms having qualified Information System Auditor (CISA! DISA) with necessary exposure of systems audit.
  • On the recommendation of the Committee, name of the successful applicant would be identified and empanelled for the Branch.
  • The final selection of the successful applicants from the technically qualified applicants will be done, based on marks scored in Rating Chart and due diligence carried out by SIDBI.
  • In case the applicant with the highest marks declined the assignment for concurrent Audit or discontinued the contract for whatsoever reasons by the Bank, the next applicant with second highest marks would be assigned/empanelled from the empanelled list.

7. Terms of the contract:

  • The selected firm! LLP of Chartered Accountant would initially be assigned the contract for a period of one year upto June 30, 2020 extendable for further two more years (extended for one year, at a time), provided the performance is found to be satisfactory on review and on sole discretion of SIDBI, with not more than 5% increase in professional fee. The proposed assignment would be subject to periodical review at the discretion of SIDBI and is liable to be terminated at any time, if not found satisfactory, by giving a written notice of 15 days.

8. Terms & Conditions:

  • The applicant appointed as concurrent auditor shall nominate a CA or retired bank officer who will head the concurrent audit team as the “Designated Auditor” duly authorised by the FCA partner of the CA firm! LLP to act on behalf of the firm. The Designated Auditor would be required to submit his!her identity proof and address proof together with specimen signatures with a request to be allotted biometric enabled unique login ID for access to the system. The Designated Auditor would require to log in and log out of the system each working day. The Designated Auditor would require to surrender the login ID on completion of the concurrent audit tenure or on any change in the Designated Auditor by the firm! LLP.
  • The audit team composition for Concurrent Audit and attendance requirements should be specified as under:

a) The designated FCA partner of the firm / LLP who shall visit the branch office at least 4 days in a month.

b) Chartered Accountant / Retired Bank Officer who shall visit the branch preferably on all working days but for a minimum of 20 days in a month.

c) Chartered Accountant /Retired Bank Officer who lead the concurrent team should have the authority to sign off the disbursement notes.

d) Audit assistant who shall visit the branch preferably on all working days but for a minimum of 20 days in a month.

  • A declaration to be furnished by the applicant that credit facilities availed by the firm or partners or firms in which they are partners or directors including any facility availed by a third party for which the firm or its partners are guarantor/s have not turned or are existing as non-performing assets as per the prudential norms of RBI. In case the declaration is found incorrect, the assignment would get terminated besides the firm being liable for any action under ICAI / RBI guidelines.
  • The applicant must submit an undertaking that the firm / LLP does not have any professional relationship with any of the borrowers of SIDBI nor will it in future accept professional relationship with any of the borrowers of SIDBI during the period during which the firm / LLP acts as the concurrent auditor for SIDBI.
  • On appointment, the Applicant shall execute an undertaking of fidelity and secrecy on its letterhead in the format prescribed by the Bank.
  • The concurrent auditor should adhere to the audit coverage strictly as per the scope as may be decided by the Bank from time to time.
  • The concurrent auditors should not undertake any other activities / assignment on behalf of the branch without obtaining the concurrence of the Audit & Fraud Management Vertical at Head Office, in writing.
  • The CA should attend Preventive Vigilance Committee (PVC) in the Bank which discusses and deliberates on various operational and administrative aspects concerning Vigilance administration in the ROs/ BOs. The meeting of the PVC takes place at least once in a quarter in the succeeding month of every quarter at the concerned Regional Office of the Bank.
  • The concurrent auditors will co-operate with investigative body, regarding processing or execution of the consultancy contract or any matter related with discharge of contractual obligations.
  • No out of pocket expenses or traveling allowance / halting allowance would be paid to the concurrent auditors for carrying out the audit. However, the service tax, education cess / GST etc. would be paid as applicable from time to time in addition to the basic fees. The payment to the concurrent auditors would be subject to deduction of tax at source at appropriate rates.
  • The concurrent auditors would give rating or grade to the Branch, if desired by
  • Necessary arrangement would be made for providing space, workstation and access to systems (viewing rights only) to the concurrent auditors for ensuring smooth conduct of the audit. This would be the responsibility of the The Branch In-charge will shoulder the responsibility of the arrangements.
  • The Applicant shall ensure that the audit firm/ LLP or any sister / associate concern, is not conducting the statutory audit of the Bank or any of its branches.
  • The Applicant shall ensure that the audit be carried out in a professional manner and in case of any misconduct & negligence, the Bank may approach the concerned professional bodies with complaints of professional misconduct, if any, on the part of any professional engaged by the Bank. Accordingly, we may also recommend their name to ICAI / RBI /IBA or any other authority, for suitable action thereon by them.
  • The Applicant shall ensure that it will not sub-contract the audit work assigned to any outside firm/ LLP or other persons even though such persons are qualified Chartered Accountants.
  • The concurrent auditor shall be granted read only access to the systems at the branch office.
  • The concurrent audit report shall be pre formatted and available on the SIDBI’s systems to the Designated Auditor who shall be required to enter the audit findings into the system on a day-to-day basis.
  • The concurrent auditor shall not be allowed to carry any mass storage device such as pen drive/flash drive/thumb drive or any lap top inside the branch premises as these devices will not be required for the job. Concurrent auditors shall be provided with computer system with disabled USB ports by the concerned branches
  • The concurrent auditors are required to plan the audit that it results in gradual shortening of the interval between a transaction and its examination by an independent person. The concurrent auditor shall perform substantive checking in key areas and emphasis should be on ‘on the spot’ rectification of deficiencies. The concurrent auditor shall daily go through all the vouchers and books of the branch for the previous day and identify areas to be scrutinised in detail.
  • Should maintain and keep back up papers in support of observations made.
  • Any other terms and conditions of the assignment would be decided by the Bank on a case-to-case basis.

9. Guidelines & Instructions

i. SIDBI will endeavour to make available all relevant information in the RfP. In case of need of any further information or clarification during the application period, the applicant must contact only the Contact Officer named above. On no account should the Applicants communicate directly with any other SIDBI personnel. Failure to comply with this requirement may result in the disqualification of the applicant from this process of bidding.

ii. Government Tax

Applicants are responsible for establishing the status of the Services for the purpose of any government tax including GST, cess etc.

iii. Alterations to Application

Any manuscript or other alteration to the RfP / Application must be countersigned and dated by the person submitting the RfP / application.

iv. Letters and Declaration to Accompany Applications:

The RfP / Application must be accompanied by a letter on Firm/ LLP letter head showing the full registered name(s), registered office address of the applicant. It should be signed by a person of suitable authority to commit the applicants to a binding contract.

v. Packaging and Delivery of Applications:

Applications must be delivered in a double sealed envelope clearly labeled with the following:

1. Selection of CA for operations at________BO.

2. Application Due Date

3. Applicant’s Name

SIDBI accepts no responsibility for the premature opening of any incorrectly marked Applications.

Applications must be received at Audit & Fraud Management Vertical, Small Industries Development Bank of India, SIDBI Tower, 15, Ashok Marg, Lucknow – 226001 (U. P.) for the attention of The General Manager by 2.00 PM on the due date. Late applications will not be accepted under any circumstances and will be returned unopened. No special pleadings will be accepted. Fax or e-mail applications will not be accepted.

vi. Conflict of Interest:

Applicants must disclose in their application, details of any circumstances, including personal, financial and business activities that will, or might, give rise to a conflict of interest; this includes any sub-contractor, if they were awarded this contract. Where applicants identify any potential conflicts they should state how they intend to avoid such conflicts. SIDBI reserves the right to reject any application which, in SIDBI’s opinion, gives rise or could potentially give rise to a conflict of interest.

vii. Disclosures:

The applicant must disclose:

a. If they are or have been the subject of any proceedings or other arrangements relating to bankruptcy, insolvency or the financial standing of the applicant including but not limited to the appointment of any officer such as a receiver in relation to the applicant’s personal or business matters or an arrangement with creditors or of any other similar proceedings.

b. If they are OR any of the applicant’s staff have been convicted of, or are the subject of any proceedings, relating to:

      • a criminal offence or other offence, a serious offence involving the activities of a criminal organisation or found by any regulator or professional body to have committed professional misconduct.
      • corruption including the offer or receipt of any inducement of any kind in relation to obtaining any contract, with SIDBI, or any contracting authority.
      • failure to fulfill any obligations in any jurisdiction relating to the payment of taxes or social security contributions.

Disclosure extends to any entity in the same group of the applicant (including but not limited to parent subsidiary and sister companies, and companies with common shareholders whether direct or indirect and parties with whom the applicant is associated in respect of this application ! RfP).

If an applicant or related entity or any individual discloses details of any previous misconduct or complaint, SIDBI will seek an explanation and background details from them. At the sole discretion of SIDBI and assessment as to whether the applicant will be allowed to submit an application, decision will then be made by SIDBI.

viii. Indemnity

The successful applicant shall exercise reasonable skill, care and diligence in the performance of the assignment and indemnify and keep SIDBI indemnified in respect of any loss, damage or claim howsoever arising out of or related to breach of contract, statutory duty or negligence by the firm! LLP or its staff, agents or sub-contractors in relation to the performance or otherwise of the Services to be provided under this Contract.

ix. Assigning to Others

The successful applicant shall not, without the prior written consent of SIDBI, assign or transfer or cause to be assigned or transferred, whether actually or as the result of take over, merger or other change of identity or character of the CAs, any of its rights or obligations under the Contract or any part, share or interest therein. Upon any such assignment or transfer, this engagement may forthwith be terminated by SIDBI.

x. Termination

SIDBI may, at its sole discretion and at any time after giving 15 days notice can terminate the Contract and inform the CAs of SIDBI’s decision by written instruction to that effect. In the event of the Contract being so terminated, the firm! LLP shall take such steps as are necessary to bring the Services to an end, (including terminating any sub-contracts placed by the firm! LLP) in a cost effective, timely and orderly manner. No further correspondence will be entertained in this regard.

**************

Annexure I

Technical Evaluation for Concurrent Audit of Branch Operations

A) Audit Firm / LLP Details:

Sl. No.
Requirements
Remarks
1
Name of the Chartered Accountant Firm/ LLP with year of establishment.
2
Registration Number / Certificate of Practice from the Institute of Chartered Accountants of India (furnish documentary proof, Registration should be valid).
3
Knowledge and experience in carrying out audit of Branch Operations mainly in the area of credit dispensation under Direct Credit and other day to day operations.
4
Details of every partner including experience, qualification etc. and their Registration number with CA Institute (furnish a detailed list of all the partners)
Sl. No.
Name of the
Partner
Age
Educational Qualification
Experience
Period of
Association with
the firm
5
Previous track record of carrying out such audits in other Financial Institutions / Public Sector /Private Sector Banks mainly in the area of credit dispensation under Direct Credit/MSME for last 5 Financial Years and other day to day operations of the Financial Institution / bank (furnish documentary proof)
6
Whether the firm/ LLP empanelled with RBI (furnish documentary proof).
7
Availability of suitable infrastructural facilities including office set up (Branch office/ Head office at location of SIDBI’s Branch may be specifically indicated), adequate manpower who are specialized in the area of audit of Branch Operations mainly in the area of credit dispensation under Direct Credit and other day to day operations of the Financial Institution / bank. Competence and qualification of key professional staff who shall carry out the assignment in a time bound manner (furnish a detailed list of all the skilled / semi skilled employees / staff).
8
Whether the firm has a retired commercial banker as Partner/ Employee. If ‘YES’ furnish details as under :-
Sl. No.
Name of
the
Partner/
Employee
Name of the bank
from
where
retired
Designation
at the time
of
retirement
Presen t Age
Qualification
Experience
Period of
Associatio
n with the
firm
9
Whether the audit firm/ LLP or any sister / associate concern is conducting the statutory audit of SIDBI or Concurrent Audit in any of SIDBI branches.

Note:

1. All the relevant details & documentary evidences are to be furnished. The above is only a format. Information may be submitted in additional sheets.

2. The following declaration/ undertaking shall be furnished by the firm

a) The firm/ LLP shall agree to execute undertaking of fidelity and secrecy on its letterhead in the format prescribed by the Bank, if the contract assigned.

b) A declaration to be furnished by the firm that credit facilities availed by the firm or partners or firms in which they are partners or directors including any facility availed by a third party for which the firm or its partners are guarantor/s, have not turned or are existing as non-performing assets as per the prudential norms of RBI. In case the declaration is found incorrect, the assignment would get terminated besides the firm being liable for any action under ICAI / RBI guidelines.

c) The firm / LLP must submit an undertaking that the firm / LLP does not have any professional relationship with any of the borrowers of SIDBI nor will it in future accept professional relationship with any of the borrowers of SIDBI during the period during which the firm / LLP acts as the concurrent auditor for SIDBI.

B) Details of Concurrent Audit of Branch Operations mainly in the area of credit dispensation done in banks / FIs.

1. Details of Statutory Branch Audits (Category – I / II) of various banks’ branches

Sr. No. Name of the Bank Branch Year of Audit / Period (From – To) [Data required for the past 10 years of your firm]

2. Details of Concurrent Audits of various banks’ branches

Sr. No. Name of the Bank Branch Year of Audit / Period (From – To) [Data required for the past 10 years of your firm]

3. Details of Statutory Central Audits (Category – I) of various Banks

Sr. No. Name of the Bank Branch Year of Audit / Period (From – To) [Data required for the past 10 years of your firm]

Declaration
(to be furnished in the letter head of the firm/ LLP)

We hereby declare that the information submitted above is complete in all respect and true to the best of our knowledge. We understand that in case of any discrepancy or inconsistency or incompleteness is found in the information submitted by us, our application is liable to be rejected.

Date: Authorised Signatory

Declaration of Eligibility
(to be furnished in the letter head of the firm/ LLP)

I/We________________________ Chartered Accountants hereby declare that I/We comply with the eligibility conditions specified established under the Chartered Accountants Act, 1949, and I/We declare that:

None of the Partners of the firm have any disciplinary proceedings under the Chartered Accountants Act, 1949 pending against him/her or any disciplinary action under the Chartered Accountants Act, 1949 / penal action under any other law taken / pending against him/her.

It is further confirmed that the firm is not the Statutory Auditor of Small Industries Development Bank of India (SIDBI).

None of the Partner of the firm holds any shares or other securities (including options or futures) in Small Industries Development Bank of India (SIDBI).

Our firm will continue to satisfy the eligibility norm for appointment of Chartered Accountants as Concurrent Auditors as prescribed by the Bank from time to time.

I/ We understand that any breach of the provisions regarding eligibility shall be considered as gross negligence and may result in appropriate action under the Chartered Accountants Act, 1949.

For _____________
Chartered Accountants

Place:

Date:

Partner

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