Technical Education Quality Improvement Programme

1
Technical Education Quality Improvement Programme

• Workshop on Programme Financing

2
Focus of Workshop

• Accounting of Programme Finance
• Reporting of Financial Progress
• Preparation of correct reimbursement claims
• Financial Management Report (FMR)
• Financial Audit

3
Credit No Important Dates

• IDA Credit No. 3718 IN
• Project Effectiveness 12-03-2003
• Project Completion 31-12-2007
• Project Closing 30-06-2008

4
Preparation of Estimates

• Categories of Expenditure under Project
  Components
• INVESTMENT COST
• Civil Works (limited to 10 of total cost)
• Equipment
• Furniture
• Vehicle
• Books and LRs
• Consultancy and research studies/audit fee
• Training/fellowship/study tours/workshops
• INCREMENTAL OPERATING COST (limited to 15 of
  total cost)
• Salaries of agreed key additional staff
• Consumables
• Operation and maintenance

5
Types of Civil Works

• Repairs/Modifications
• Extensions to existing buildings
• New Construction (Only essential)
• All the above are to be related to Academic
  Excellence Sub Component

6
Release of Funds

• MHRD releases funds to Centrally Funded
  Institutions
• State releases to SPFU and State Institutions
• SPFU should facilitate in release of funds to the
  institutions
• Preferably through SPFU
• Directly by State Finance Department
• Maximum in 3 to 4 installments- lesser number of
  installments is also acceptable
• Release 20 of Project-life allocation of
  approved Concise Institutional Proposal
• Next installment should be released on 70
  utilization (actual committed) of previous
  installment

7
Accounting of Programme Finance
8
Accounting System to be Followed

• Separate Bank account to be opened
• Separate Books of Accounts for Programme Funds
  (Refer PIP 3.5.1 at Page 53)
• Standard books of Accounts to be maintained with
  supporting documents
• Depreciation not to be charged on Assets acquired
  under the Programme.
• FMRs should match with Accounting records
• Periodic check and Internal Audit
• Monthly Statement of Expenditure to be prepared
  (PIP 3.7.3 Page 54)
• Internal Review of financial status (Exp.,
  Reimbursement, pending bill etc.)

9
Necessity of Separate Bank Account

• MOU has clause 2(d) and 4(a) to have separate
  bank account
• Benefits of separate bank account
• Funds are used for Project activities only
• Easy to identify Project Expenditure
• Easy to prepare reconciliation
• Helps in ascertaining unspent balance of the
  Project funds
• Helps auditor to make assessment on utilization
  of funds for Project purpose
• Helps in providing proof of payment to the World
  Bank against particular applications, if asked
  for

10
Standard Books of Accounts

• Accounting Books and Statements
• Cash Book
• Bank Book
• Journal
• Ledger
• Bank Reconciliation Statement- monthly
• Others
• Stock Register (Consumable and Asset)
• Fixed Asset Register

11
Expenditure

• Expenditure pertaining to Institutional
  Development under TEQIP will be covered
• Expenditure should be against allocations
  finalized for each category
• All expenses for attending Workshop/meeting at
  NPIU, Training at NIFM etc. are to be booked
  under TEQIP
• The following expenses are not treated as
  expenditure
• Payment of advances (except mobilization or
  secured advances)
• Security deposit

12
Expenditure Planning

• Institutions to prepare yearly procurement plan
  for civil works and goods - with clear
  understanding of the methods to be followed
• Estimate year wise expenditure as per procurement
  plan and other requirements
• Yearly plan should be prioritized on quarterly
  basis
• Procurement plans and estimates of expenditure
  should be supported by SPFUs
• Remember that payments are released in time for
  Procurement, small works, training, and other
  incremental operating cost
• Methods of Procurement of Goods and Services
  should be followed

13
Expenditure- Methods of Procurement
14
Need and steps for Timely Expenditure

• Need
• To utilize funds in time
• For Supporting procurement and other plan
• Reducing loss to GOI in earning foreign exchange
• Keeping Project performance high
• Steps
• Ensure timely receipt of goods and material
• Avoid delay in stores entries
• Follow up with suppliers / consultants and firms
  for submission of bills
• Process for payment without receiving reminders

15
Reporting Financial Progress
16
Reporting of Financial Progress

• It is required to monitor expenditure trend
• To monitor expenditure with of total Project
  allocations
• To compare reimbursement with expenditure
• To project future utilization of funds
• To inform MHRD
• To report to other concerned agencies

17
Reporting format Category wise(Proform A)

• Reporting Month
• Total Project Allocation
• Cumulative expenditure i.e expenditure since
  inception of the Programme and up to previous
  month of reporting
• Expenditure during the month
• Total expenditure (This will become cumulative
  for the next month and will be reflected in Col.
  3.)
• Committed expenditure (Goods and Works for which
  Purchase / Work order has been placed)
• Reimbursement claimed out of total expenditure
  reported for the month
• This format must reach to SPFU by 10th of
  every month and after compilation reach NPIU by
  15th of every month. NITs to submit by 10th of
  every month to NPIU

18
Reporting format Component wise (Proforma A-1)

• Promotion of Academic Excellence - Sub Total A
• Networking of Institutions - Sub Total B
• Services to Community
• Economy Sub Total C
• The above figures to be derived from monthly
  progress report Proforma - A

19
Preparation of Reimbursement Claims
20
Reimbursement

• Reimbursement means, receipt of foreign exchange
  (US ), equivalent to Rupee expenditure incurred
  by the SPFU and institutions from the funds
  provided by the State Govt. and Govt. of India
• The expenditure incurred in Indian Currency is
  reimbursed to the Govt. of India
• Reimbursement does not mean that the amount spent
  by SPFU and institutions should be paid back to
  them by State Govt. /Govt. of India, because the
  funds are made available in advance to the SPFU
  and institutions

21
Reimbursement Process

• Funds are received by SPFU and Institution
• SPFU and institution incur expenditure
• State institutions prepare claims and send to
  SPFU and SPFU consolidate all institutions
  claims in one and send to CAAA through NPIU
• NITs send claims to NPIU for consolidation and
  NPIU sends to CAAA
• CAAA scrutinizes the claims and forwards to
  World Bank, Chennai
• The World Bank reimburses to CAAA and CAAA
  sends advise to Project Management Unit (PMU) in
  DEA about receipt of funds

22
Reimbursement Process

• PMU advises Plan Finance-I of the Department of
  Expenditure to release funds in the form of ACA
  to the States
• Plan Finance-I authorizes Chief Controller of
  Accounts to effect the transfer of Funds
• The Chief Controller of Accounts advise the RBI,
  Nagpur to debit Central Govt. Account and Credit
  State Govt. A/C for the Amount
• The State Govt. receives this amount in the ratio
  of 70 loan and 30 Grant
• SPFU should facilitate in release of ACA
• Advance ACA is also released to the State Govt.
  to incur initial expenditure

23
Reimbursement Claim

• Expenditure incurred by institution for all the
  activities as detailed earlier to be claimed
  under
• Category -1 Institutional Development
• At a flat rate of 80

24
Reimbursement Claim by SPFU

• SPFU will Claim reimbursement under following
  categories
• Goods - Category-2
• Books LRs - Category-3
• Consultant Services
• including Audit fee - Category-4
• Training Workshop / Study
• Tour - Category-5
• Incremental Operating
• Cost - Category-6

25
Reimbursement Percentage for SPFU
only
26
Forms for Reimbursement Claim

• Form 1-B Summary Sheet requiring documents
• This is used for expenditure equal to or more
  than
• US 300,000 for Civil works Goods
• US 100,000 for consulting firms
• US 50,000 for individual consultant
• Fill up form accurately - Top portion
• Payment period to be written as dd/mm/year to
  dd/mm/year
• Date of claim dd/mm/year
• IDA credit no. 3718 IN
• Application No. - to be allotted by CAAA
• Summary Sheet No. 1 for First Sheet, 2 for Second
  Sheet and so on

27
Forms for Reimbursement Claim

• Middle portion (Amount in Rs. in Million up to 3
  decimal point)
• Col.1 Serial No.
• Col.2 Write one Cat No. (from 1 to 6)
• Col.3 Institutions to write Institutional
  Development SPFU to write Goods,
  Consultancy etc.
• Col.4 Contractor Name Address
• Col.5 Complete Reference No. of Contract
  and Date
• Col.6 Full value of Contract approved by the
  World Bank
• Col. 7 Cumulative amount including current
  Payment

28
Forms for Reimbursement Claim

• Col. 8 Payment made during the month
• Col. 9 80 for institutions
• varying percentages for SPFU
• Col. 10 For institution 80 amount figure of
  Col. 8
• For SPFU varying of figure in Col. 8
• Col. 11 12 Leave blank (to be filled by CAAA)
• Col. 13 WBR No. as assigned by World Bank,
  must be mentioned
• Bottom Portion
• Total of Col. 8 and 10 must be filled
• Signatures of Authorized signatory with Rubber
  Stamp in English

29
Forms for Reimbursement Claim

• Form 1-C Summary Sheet without documents
• This is used for expenditure less than
• US 300,000 for Civil works Goods
• US 100,000 for consulting firms
• US 50,000 for individual consultant
• All expenditure pertaining to Books LRs,
  Training, Workshop, Incremental Operating Cost

30
Forms for Reimbursement Claim

• Top Portion
• Payment period to be written as dd/mm/year to
  dd/mm/year
• Date of claim dd/mm/year
• IDA Credit no. 3718 IN
• Summary Sheet No. 1 for First Sheet, 2 for Second
  Sheet etc.
• Middle Portion

• Col.1 Serial No.
• Col.2 Category No. from 1 to 6
• Col.3 Institutions to write Institutional
  Development SPFU to write Goods,
  Consultancy etc.
• Col.4 write India

31
Forms for Reimbursement Claim

• Col.5 Eligible expenditure amount
• Col.6 80 for institutions varying percentages
  for SPFU
• Col. 7 For institution 80 amount figure of Col.
  5
• For SPFU varying amount figure in Col. 5
• Col. 8 9 Leave blank( to be filled by CAAA)
• Col. 10 Write Each contract value does not
  exceed the SOE Limit

• Bottom Portion
• Supporting document Retained at (Name of the
  institution) and address SPFU to write, Short
  form of institutions city and also SPFU
  and Name of State
• Signature of Authorized signatory with rubber
  stamp in English

• Note Please do not alter form 1 B, 1 C and
  Abstract Sheet

32
Abstract of Summary Sheet

• This is a consolidation of Summary Sheets
• Top Portion
• State / Institution Mention name
• Name of the Project Technical Education
  Quality Improvement Programme
• Application No. To be filled by CAAA
• IDA credit No. 3718 IN
• Date dd/mm/year
• Reference period dd/mm/year to
  dd/mm/year

33
Abstract of Summary Sheet

• Middle Portion
• Col.1 Summary Sheet No. of Form 1B/1C
• Col.2 1 for Institution 2 to 6 for SPFU
• Col.3 Total of Summary Sheet
• Col.4 80 for Institutions
• varying percentages for SPFU claim
• Col.5 Write amount of Col. 3
• Total Ensure accuracy
• Bottom Portion
• Project Authority To be signed by Authorized
  signatory with Rubber Stamp in English
• For Govt. of India Leave Blank and do not alter
  it

34
Documents required for Reimbursement Claim

• Documents required with form 1-B (3 Sets)
• First and last page of Running Account (RA) bill
  indicating Contract No. and city
• Invoice
• Proof of Payment Receipt with revenue stamp
• Bank Guarantee in case of mobilization advance
• Indenture Bond in case of secured advance
• Calculation sheet of eligible amount for
  reimbursement
• Bill of Lading / Airways bill for imported Goods
• Original documents are to be retained with the
  payment vouchers at the institution / SPFU as the
  case may be.

35
Important Points for Lodging Claims

• Claim must be filed on monthly basis
• Amount to be mentioned in Rs. in Million upto 3
  decimal points
• Claim should be submitted only on A4 size paper
• Signature on claim should be in blue ink (black
  ink not allowed to ascertain originality)
• All SOEs and Abstract Summary sheet should be
  signed originally and not photo copied
• Separate summary sheet for each Category of
  expenditure
• Separate summary sheet for claim in foreign
  currency

36
Important Points for Lodging Claims

• Total should be checked on Abstract of Summery
  sheet and matched with the each SOE
• Correction in form should be avoided, otherwise
  should be countersigned
• Claim should not be older than 6 months. If so,
  give reasons for delay in remarks column in form
  1-B, 1-C and Abstract Sheet
• Wherever reimbursement for goods is 100 under
  SOE of the eligible expenditure, furnish a
  certificate that expenditure claimed does not
  include local taxes duties in Remarks Col.
• All attached documents should be in English,
  otherwise duly attested English translated
  copies.

37
Ineligible Expenditure

• Taxes and duties in case of 100 reimbursement
• Security deposit recovered from
  contractor/supplier
• Arbitration charges and Adjudication fee
• Liquidated damages/penalty imposed
• Cost of land
• Temporary advance

38
Sequence of Forms for Submission of Claim

• Four set of reimbursement claim (3 sets with
  copies of documents)
• Abstract of Summery sheet
• Form 1-B, if applicable
• Form 1-C category wise
• Documents related to form 1-B only (photocopies)
• Calculation sheet of eligible expenditure
• Certificate by Authorized signatory about
  verification of claim, reflecting expenditure in
  books of accounts and correctness of information
  (single copy with first set)

39

Requirements of Reimbursement

• DPRs are drawn in accordance with PIP
• Must have institutional networking as per Project
  Design
• MOU between Institution and State Govt is signed
  and sent to NPIU (Performa in PIP, Annex-XI
  XII)
• World Bank Norms of procurement are strictly
  followed
• Specimen signature of Authorized signatory are
  sent to NPIU (Institution Head/SPFU Head)
• Quarterly FMRs Annexure- VIII of PIP are sent to
  SPFU / NPIU
• Timely submission of Audit Certificate
• Settlement of Audit observation before closing of
  next Financial year

40
Financial Management Report (FMR)
41
Financial Management Report (FMR)

• It is a legal covenant to submit FMR to World
  Bank
• Format is given in PIP (Annex VII page 78)
• Filling up of Format
• This is quarterly
• Component I to be filled by Institution
• Component II to be filled by SPFU
• Actual Expenditure
• Current Quarter
• Cumulative Expenditure since inception
• Planned Expenditure (How much was planned for the
  quarter)
• Variance Difference between Planned and Actual

42
Financial Management Report (FMR)

• For Quarterly Requirement Cash Forecast
• Requirement of next quarter (bills in
  processexpected payment to be made)
• Requirement of next second quarter (expected
  payments to be made)
• Total requirement of next six month is total of 1
  and 2 Col.
• 4th Col. To be deleted
• Govt. World Bank financed expenditure is total
  requirement of next six month
• Eligible is 80 for institution and varying
  percentage for SPFU
• Eligible requirement is percentage value of next
  six month requirement

43
Financial Management Report (FMR)

• Withdrawal during the quarter
• Eligible is 80 for institution and varying
  for SPFU
• Actual expenditure of the quarter
• Eligible expenditure for reimbursement
• Other columns not to be filled
• SPFU to compile component I of all
  institutions and prepare one statement.

44
Financial Audit
45
Financial Audit

• Self audit
• Monthly reconciliation of Accounts by Finance
  deptt and Nodal officer
• Quarterly Internal Audit by External Auditor at
  SPFU / NIT only for Comparison of Statement of
  expenditure with Annual budgetary allocations of
  SPFU and Institution under Programme Components
  and categories of disbursement
• Annual Audit of Programme Accounts
• Appointment of auditor (Chartered Accountant firm
  empanelled with CAG/State AG for audit of
  Programme fund accounts

46
Financial Audit

• Only one firm to be appointed for SPFU and State
  institutions by SPFU and by individual NIT on
  yearly basis which can be renewed every year
• Follow Proper process of hiring Professional
  Services (Page 76 and 77 of PAD) based on TORs
  approved by the World Bank
• Entire fee for audit of SPFU institutions to be
  paid by SPFU
• No approval of NPIU is required for appointment
  of auditor (Chartered Accountant Firm)
• Statutory Audit Institution / SPFU
• Statutory audit of institution/SPFU by CAG/AG
  will be carried out as usual

47
Constituent of Audit Certificate

• Audit Certificate will consist
• Audit Report and Statements should be in English,
  otherwise translated English copies duly
  attested.
• Audit Report
• Financial Statements
• Balance Sheet
• Income and Expenditure Account
• Receipt Payment Account
• Utilization Certificate
• Management letter
• Schedule of monthly SOE withdrawals with amount
  reconciled with advice issued by CAAA

48
Audit Schedule

• Close accounts on 31st March each year
• Audit must commence not later than 15th May each
  year
• Complete Audit of SPFU and Institution by 31st
  July or earlier
• Audit Certificate (Consolidated) should be
  submitted by Auditor to SPFU by 16th August
• SPFU should submit it to NPIU by 15th September
• NITs must submit to NPIU by 16th August
• Last date for submission to World Bank by 30th
  September

49

50
We hope the Workshop has focused on all issues
of Programme Financing
Thanks