Procurement Audit of IDCOL’s Partner Organizations (POs)

The objective of the assignment was to ensure that the procurement process of the program and enlisted POs was undertaken and completed correctly, in accordance with the general procurement guidelines and established procurement practices in the country. The specific objectives of the consultancy were:

• To ensure that procurement procedures were in compliance with general procurement guidelines;

• To value for money was considered throughout the procurement process;

• To review inventory turnover reports and year-end purchases to ensure the proper management of inventory;

• To ensure that the POs were doing business with responsible, reliable and legitimate vendors;

• To determine whether a requisition was prepared by the requester and approved by the appropriate authority;

• To check the completeness of the requisition. All fields had to be completed e.g., authorized signature of the appropriate authority and the requester’s supervisor etc.;

• To ensure that for each requisition; at least four quotations were received;

• To determine if the lowest (financial and technical) acceptable offer and which had scored the highest adjudication points was accepted;

• To determine if the receiving person signed the delivery note/invoice as evidence of checking items received;

  
  
  
  

To determine if the function of authorization, ordering and receiving was adequately segregated. Our team of consultants were working on the following:

The audit was to cover at least 15% of the awarded contracts during the FY 2011-2012 and FY 2012-2013. The firm audited contracts of the 47 identified POs. In conducting the procurement audit, special attention had to be paid to the following.

• Procurement and contracting policies, procedures and process followed for all activities. This included include providing assurance that the procurement and contracting processes were carried out in accordance with the general procurement guidelines and current procurement practice established nationwide; if not, that otherwise sound administrative principles and practices were followed, and the expected value for money (economy, efficiency and effectiveness) was achieved;

• Assessed achievement of procurement activities against the procurement plan (PP) targets, and highlight risk area (s);

• Reviewed Physical completion and cost competitiveness of the contracts;

• Determined, to the extent possible, whether:

  • Identified non-compliance with general procurement guidelines and practices and inappropriate practices or questionable decisions / actions were related to corrupt practices;

  • Comment on whether the exercise of judgment was reasonable when procurement or processing decisions were on subjective judgment

  • Identified contracts with serious deviations from general procurement guideline and practices justifying consideration for remedial actions.

• Reviewed the capacity (availability and utilization, and other resources) of implementing agencies in handling procurement efficiently;

  • Commented on the quality of procurement and contracting actions/decisions;

  • Identified reasons for delays, if any;

  • Determined whether adequate systems were in place for procurement planning, implementation and monitoring; and

  • Determined whether documentations were maintained as per required standards and can be relied upon.

• Investigated the contracts which were subject to allegations of irregularities referred to by IDCOL, and made recommendation from the findings of such inquiry.

• Identified ways of improving the procurement and contracting process in the light of deficiencies;

• Assessed and evaluated the timely conduct of procurement / contracting process. Where there were excessive delays, identified reasons at source, and recommended ways to overcome delay in the procurement activity, if any.

For each contract package, the consultants were giving special emphasis to:

• Verify eligibility;

• Verify compliance with the procurement procedures as indicated in the Participation Agreement. When deviations or judgment was exercised, the Consultants commented on whether these were reasonable. The Consultants also identified contracts with serious deviations warranting consideration for declaring improper procurement;

• Establish whether the documentation and record keeping systems were adequate and in place. At locations, where a complete record of contracts was not being maintained, assisted them in starting a system to meet this important requirement. Also identified general issues related to the procurement process and systems with recommendations for improvement.

• Verify whether goods and works exist at intended locations and were being used for the purposes they were acquired.

• The awarded contracts, whether audit was based on a representative sample basis. From the proposed sample, the representative samples was finally selected by the consultant in consultation with IDCOL.

• For verification of assets, the representative sample was selected by the consultant from the preliminary list provided, at the PO Office while reviewing the contracts. At least 15% of assets acquired (i.e. inventory) under the contracts was reviewed through site visits. This selection was influenced by the following factors:

  • Level of comfort obtained during the review of contract [s];

  • Nature of asset [s];

  • Value of asset [s]; and

  • Geographical spread and accessibility of the location of asset