12.0 Brief Introduction:

As a part of the assignment, a spot check of Invoices pending with Finance Project & Services Section other than Naval Project (ONP)including MSME Vendor’s invoices as on 01Feb’ 18 was carried out. On preliminary scrutiny of the pending invoice following observations have been made viz:

a. Total No of Unpaid Bills -187 Nos (Excluding MSME bills).

b. Out of total 187 Nos of unpaid bills,25 Nos of bill were pending with Finance for more than 90 days.

c. MSME bills--84 Nos.

Further,15 Nos of bills (Unpaid bills, paid bills and Unpaid bills in respect of MSME vendors) have been randomly checked by Vigilance Team. It is understood from the scrutiny/checking of these invoices that the main reason for delay in certification of the Invoices which were pending with F(P&S) for more than 90 days are:

i. GRN’s were not prepared by the Material Inspection Dept.

ii. Purchase Orders were not amended in time prior to submission of bill where amendment is prerequisite for making payment.

iii. Invoice has been submitted to Finance Dept. without verification/scrutiny from the Service Provider Dept.

iv. Guarantee Certificate /Acceptance Report was not submitted.

v. Tax Issues.

vi. Discrepancy in Rate mentioned in the Invoice vis-à-vis PO Rate for particular items.

vii. Time required for conveying discrepancy/shortfall of documents etc.in between

Finance & Material Inspection Dept. and compliance thereof through vendor.

In order to authenticate the real facts and ascertain the ground reality, Vigilance Dept. carried out spot check in respect of pending invoices at Material Purchase (MP) Dept.& OTS Dept. Upon receipt of the updated status along with the suggestion for improvement in faster processing of invoices from both OTS as well as MP Dept. and in order to further verify the real facts pertaining to the submission made by Finance and MP Dept., Vigilance Dept. selected 18 Nos of Invoices for carrying out thorough scrutiny of the reasons for the delay indicated by MP/Finance Dept.

Accordingly, additional details pertaining to 18 Nos of selected invoices along with relevant supporting documents for verification and conclusion were sought from F (P&S) & MP Dept. Based on the reply received from Finance & MP Dept. and after carrying out thorough scrutiny and verification of the documents and recording of the statement of the concerned Executives, a concluding statement pertaining to 18 Nos of selected invoices is prepared by Vigilance Dept. and the report was submitted.

12.1 Background:

The scrutiny carried out by Vigilance Dept.in respect of 18 Nos of selected invoices indicates accountability of the delays based on the documentary evidences submitted by Finance, Reply submitted by MP Dept. etc. The statistics of the scrutiny is as follows:

i. Total No of Invoices selected for thorough scrutiny =18 Nos

ii. No of Invoices which have been rejected =1 No

iii. No of Invoices which have been delayed on account of Vendor for not submitting the required documents in time / compliance to the discrepancies pointed out by MP/Finance Dept.= 12 Nos

iv. No of Invoices which have been delayed by Finance Dept. on account of delay in communicating the discrepancies/ observations in time to MP Dept. and also not bringing out all the discrepancies at one go = 7 Nos.

v. No of Invoices which have been delayed by MP Dept. on account of delay in carrying out Amendment in PO, Changes to be carried out in Tax Code, delay in communicating the discrepancies/ observations in time to Vendor, not bringing out all the discrepancies at one go = 8 Nos.

vi. No of Invoices which have been delayed by Stores & Inspection Dept. on account of delay in creating the Goods Movement in respect of Invoices = 1 No.

vii. No of Invoices which have been delayed by EY-MTC on account of submission of incorrect acceptance report in respect of Invoices = 1 No.

viii. No of Invoices which have been delayed by F (SB-Billing) on account of delay in confirmation pertaining to receipt of buy back payment and retention to be made against buy back in respect of Invoices = 1 No.

12.2 Implementation:

The following systemic improvements have been suggested viz:

i. A compliance of supporting documents/certificates required for carrying out scrutiny of the invoice in accordance with PO Terms /Conditions shall be prepared by Vendor and it should form a part of submission of the invoice. The relevant clause to this effect shall be added in payment terms of all PO’s.

ii. A monthly meeting shall be arranged in between Finance Dept., MP Dept., F(SB-Billing), Stores & inspection Cell (where ever required) in order to address, resolve and take corrective action pertaining to the delays in certification of invoices. The minutes of the meeting shall be recorded and circulated amongst all concern for immediate action and speedy disposal of the pending invoices.

iii. Bank Guarantee shall be linked with PO in SAP for better monitoring.

12.3 Impact and Benefits:

Based on the above Spot Check and detailed investigation, Director (Shipbuilding), D(F) and Director (Submarine & Heavy Engineering) has issued a circular for implementation of the aforesaid systemic improvements suggested by Vigilance Dept. This would result in faster processing of vendor’s payment and shall avoid unwarranted situation of making interest payment for the delay in payment of MSME vendors than the stipulated period.

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