RSHDP WB Fin Mannual 13 May

Rajasthan State Highways
Development Programme
Financial
Management
Manual
PPP Dn ,Public Works Department, Government of
Rajasthan
Date: September5, 2013
Rajasthan State Highways Development Programme

Financial Management Manual
Table of Contents
About the Manual..........................................................................3

Chapter 1: INTRODUCTION............................................................4
Chapter 2: PROJECT STAFFINGAND CAPACITY BUILDING................7
Chapter 3: BUDGETING...............................................................11
Chapter 4: FLOW OF FUNDS........................................................14
Chapter 5: PROJECT ACCOUNTING...............................................16
Chapter 6: FINANCIAL REPORTING AND DISBURSEMENTS...........19
Chapter 7: ELIGIBLE EXPENDITURE.............................................21
Chapter8: INTERNAL CONTROL...................................................22
Chapter9: INTERNAL AUDIT.........................................................23
Chapter 10: EXTERNAL AUDIT.....................................................24
Chapter 11: TRANSPARENCY AND DISCLOSURE...........................25
ANNEXURES:-..............................................................................26
A. Interim Unaudited Financial Reports....................................26
B. Terms of Reference for Project External Audit......................26
C. Terms of Reference for Internal Audit...................................26
D. Chart of Component/sub-component wise budget heads.....26
E. Job Control register..............................................................26
F. Format of IFR4 to be filled by Divisions................................26

About the Manual

The Rajasthan State Highways Development Programme is being
financed through World Bank loan. The financial management
arrangements for the Programme have been framed in this manual.
This manual is intended for the use by the officials working on the
Projects under RSHDP. It outlines the financial management
arrangements those would be required for the successful
implementation of this RSHDP Programme. This Financial Manual shall
be the integral part of the Operations Manual. Any modification to the
Operations Manual or Financial Management Manual shall take place
only with the consent of the World Bank and approval by competent
authority in GoR.
For the internal control of the Highway projects during execution and
operations, the provisions of PWF&AR, GF&AR, Rajasthan Transparency
in Public Procurement Act-2012 and subsequent Rules and this financial
management manual (FMM) shall be applicable. In case of any conflict
between these rules and FMM, the provisions of FMM will prevail.
Other related key documents which may be referred along with this
Manual are:
i.
ii.
iii.
iv.
Financing and Project Agreements

Disbursement Letter
Project Appraisal Document (PAD)
Operations Manual including the
Manual (PM)
Procurement

Chapter 1: INTRODUCTION
The Government of Rajasthan has sought assistance from the World
Bank for preparing and implementing the Rajasthan State Highways
Development Programme (RSHDP).
Objective of the Project: .RSHDP has been taken up by the Govt. of
Rajasthan for Strengthening, upgrading and widening of all State
Highways to Two-Lane standards and also to improve Road Safety by
way of improving Road Geometry and introducing IT based Intelligent
Transport Systems.
1.1 Project Implementing Agency:. The Additional Chief engineer
(PPP) will be responsible for the execution of this ambitious
programme. He will work under the guidance of CE (NH) and ACS
,PWD. There are two high power committees for framing and
sanction of policy decisions on PPP project and infrastructure related
issues. These are Empowered Committee on Infrastructure
Development (ECID) headed by the chief secretary and the apex
committee Council for Infrastructure Development (CID) headed
by Honble Chief Minister of Rajasthan. Additional chief engineer
(PPP) will be supported by fleet of engineers both in office and field
as shown in organization chart appended herewith.
1.2
The world bank project related activities like issuing of EOI, NIT, RFQ
, RFP and receiving, opening, evaluating with the help of financial
consultants, awarding etc. will be managed by Superintending
Engineer, Executive Engineers and Assistant Engineers working
under the overall supervision of ACE(PPP).
Seven project
implementing units located at appropriate Headquarters and
headed by Executive Engineers will be responsible for all field
related activities of the projects. Each of these PIU will be assisted
by 1-2 Assistant Engineers depending on work load.
1.3 Project Description:
Component A:
4

Improvement of State Highways: (USD

million) the
component will support improvement / up gradation of priority sections
of SHs/ MDRs to improve the highway environment, efficiency of road
network, smooth flow of traffic with optimum travel time. This in turn
will facilitate regional integration and enhance overall social and
economic wellbeing of the community.
This component will consist of rehabilitation / improvement
/ up gradation of state highways / MDRs through PPP (Annuity) and EPC
mode of procurement for about 3000 kms of highways. The feasibility
studies for most of the highways under this component have been
completed.
The improvement standards have been proposed to
confirm IRC standards. Procurement for construction activities will be
carried out based on standard bid documents prepared by planning
commission, Government of India, duly concurred by the World Bank.
This will also include:
a) Demonstration of new technologies to promote cost effective,
modern, climate proof and environment friendly road
construction.
b) Project preparation, supervision, management and monitoring
support.
c) Resettlement and Rehabilitation assistance to project-affected
people.
One of the salient feature of this component will be assured
satisfactory maintenance of the road surface with reasonable
riding surface of the highway for the entire concession period of
10 years.
Component B:
Institutional Development:
The aim of this component is to increase the efficiency of working
of the Public Works Department. This will include the capacity to design
and implement PPP Projects for which PWD needs job training and
study tour opportunities for staff implementing the project. In order to
achieve this, a comprehensive web portal would be required to
strengthen the institutional capacity of the PPP to efficiently manage
the project. Potentially the portal will have role-based access to
multiple application including an integrated Grievance Management
system that will help PPP Division capture grievances related to all
aspects of PPP Projects including land acquisition, resettlement,
vigilance, road issued from PPP concessionaires etc., through an
engagement process with citizens. The web portal will also support eRAP (Electronic Resettlement Action Planning) application that would
5

help PPP Unit better manage the Land acquisition and resettlement
process using mobile-based, transparent, and holistic RAP Information
in real-time. The third major application to be supported on the Web
portal would be the PPP Contracts Management Tool (PCMT), a web
used application that is intended to be owned, operated, and
maintained by RSHDP PPP unit as a tool to measure the performance of
Concessionaires that would maintain the Project roads through
performance-based PPP contracts.
In the areas of Social and Environmental Management, the
capacity of the institution is proposed to be strengthened through
outsourcing of suitable skill set.
Component C:
Road Safety Management Plan: This component will support
the strengthening of road safety management systems in Rajasthan
with the objective of reducing the number of fatalities and serious
injuries from traffic accidents in the state. The existing highway
alignment will be technically evaluated for its engineering design by
the feasibility consultant during planning stage, IE /AE at the
construction phase with expert inputs from the safety consultant. The
intervention levels, type, adequacy and the time lines will be decided
and monitored for their effectiveness regularly by the independent
safety consultant through periodic safety audits.
This will also be accomplished through:
1. Intelligent transportation systems (ITS)
2. Development of Road Accident Data Management System
(RADMS).
3. Developing Trauma Centers along the highways to provide
medical aid to the accident victims in golden hour thereby
reducing the number of fatalities.
4. Road Safety Education and Awareness Programs along the
highways.
5. Support to states other stakeholder department such as Police
Department. Transport Department for procurement of Road
safety Equipment and related training.
6. Development of ITS intervention in a coherent manner for road
safety with Police, Transport etc.
7. Rehabilitation of project affected persons (PAPs).

Chapter
2:
PROJECT STAFFING AND

CAPACITY BUILDING
2.1 Project Staffing:

(i) State Level:
1. Additional Chief Engineer (PPP) in charge RSHDP
2. Financial Advisor (PPP)
3. Superintending Engineer PPP (World Bank)
4. Executive Engineer PPP (World Bank)-4 nos.
5. Assistant Engineer (World Bank)-4 nos.
6. Senior Account Officer
7. Clerical Staff- As required
(ii) PIU Level:
1.
2.
3.
4.
Executive Engineer
Assistant Engineer1 or 2 nos.
Accounts Personnel
Support staff as per requirements

The Additional Chief Engineer (PPP), is responsible for ensuring project

implementation. He will be responsible for implementing the project
under the overall guidance of the CE (NH) and the Additional chief
Secretary, PWD and will apprise the progress and seek approval of
policy issues from ECID and CID, whenever required.
PPP Dn. will also engage Independent engineer for each annuity project
and consulting firms as authority s Engineer for each EPC project. PPP
Dn. will engage financial Transaction advisor, social consultant,
environmental consultant, legal consultant and other consultants as
required
for
procurement,
contract
management,
social,
environmental, financial management, computerization, institutional
development, governance accountability, and road safety. PPP Dn. will
have the overall responsibility of project implementation, all project
related procurements, and coordination with various units of PWD and
GOR offices.
Finance wing of PPP office will be supervised by an officer of the rank
not below Financial Advisor (FA). He will work under ACE(PPP) and will
be responsible
for all financial management aspects (overall
responsibility of project financial management arrangements) i.e.,
receiving
project
funds
from
the
finance
department,
scrutiny/examining project payments, accounting and financial
reporting, and project audit. FA will be assisted by an officer of the rank
CAO/Sr. AO/AO.
There would also be a multidisciplinary team engaged by PPP Dn,
called as Project Management Consultant (PMC). The PMC, besides
other technical functions, will also undertake half-yearly project
performance audits of the overall project. A cell consisting of 1-2
persons is tasked with the coordination of monitoring, evaluation and
reporting functions. The Individual consultants as stated in above may
also be engaged as part of PMC, if required.
(iii) Quality Control:
These projects are primarily output performance based projects.
Project concession agreement entrusts responsibility of Quality
assurance to the Independent Engineer in the Annuity projects. Quality
8

assurance will be the responsibility of Authoritys Engineer in the cases

of EPC contracts. However PIU concern will be considered empowered
to witness the completion tests as the authority representative.
2.2 Organization Chart

Council for Infrastructure Development (CID)
Empowered Committee of Infrastructure Development (ECID)

Additional Chief Secretary, PWD
Chief Engineer (NH)
Additional Chief Engineer (PPP)
SE (PPP) world bank

others
FA (PPP)
SE (PPP) ADB &
PIU-1
AE-1
AE-2
DAO
CAO (PPP)
PIU-2
AE-1
AE-2
DAO
9

..
A.O (PPP)
PIU-7
AE-1
AE-2
DAO
The ACE (PPP) office is administrative office while the PIU are
implementation Offices, each assigned with specific role and
responsibilities. The PIUs are responsible for implementation of all
project related activities including LA, Utility shifting, and statutory
permits/ licenses etc.in the field, accounting and financial reporting,
and project audit.
10

Tabular presentation of Implementation Arrangements

CID
ECID
ACE(PPP)
SE PPP WB
PIUs
Apex body for policy decisions and santion of

projects beyond 500 crores.
Decisions on framing, packaging, selection of bidding
model, approval RFQ, RFP, DCA and all other project
parameter related issues.
Overall administrative in-charge of PPP Dn. Decisions
on Bidding for feasibility consultants, RFQ and RFP of
projects, signing of agreements, issuing LOC for
payments to contractors/concessioners, Budgeting
and monitoring progress and all other functions
related to implementation of RSHDP.
Progress of feasibility studies, formulation and
preparation of projects, bidding documents, works,
utility shifting, securing permits and approval of
GADs etc. Assisting ACE (PPP) for smooth execution
of RSHDP.
Execution of projects in field with the help of AEn s
and Staff.
Securing NOCs, permissions and approvals for GAD,
Tree cutting, utility shifting, land acquisition, budget
proposal preparations, payments to contractors and
concessioners.
FA
CAO
PMC
2.3 Training:
The Financial Management staff working on the project will be
suitably trained on Bank FM, contract management, maintaining of
contract data, procurement procedures, and disbursement
procedures and on other FM areas that will help them to rendering
their responsibilities.
11

12

Chapter 3: BUDGETING
3.1 Budget Preparation
Preparation of proper budget plays an important role in timely
implementation of a project. Budget involves identifying specific tasks /
objectives of the project to be achieved in a given time frame.
Budget will be prepared by PIUs for demanding funds for their
requirements according to the works awarded in their jurisdiction and
send to the ACE (PPP) office for compilation in the overall budget of the
PPP Dn as per the programme decided by ACE (PPP) /ECID/GOR in
specified formats provided in budget manual.
ACE (PPP) will submit the budgetary proposal to FD in due course.
It would be mandatory on the part of the State Government to make
sufficient provision in their budget to meet the project expenditures to
be incurred during the financial year. The budget should be separate
for this project.
3.2 Time lines of budget preparation:
The budget process, including reviews and approvals, will follow the
existing system followed in RPWD generally according to the following
schedule.
i.
ii.
iii.
iv.
v.
PIU will send budget estimates for next year and revised estimate
for current financial year in the month of September / October of
the year The ACE (PPP) office.
ACE (PPP) office will review and compile the budget on the basis
of outlay conveyed by the Planning Department GOR in month of
October / November.
Then the budget is uploaded on the IFMS in the month of
November / December.
The budget estimates uploaded on IFMS will be discussed in
Budget Finalization Committee (BFC) in FD, GoR on the dates
schedules by FD.
The FD, GoR will place the budget in the legislature and shall be
approved in February / March.
13

3.3
Budget Formats:
Budget formats specified in budget manual of GoR will used for

preparation of budget.
3.4
Approval of Budget:
The budget will placed by FD, GoR before the Legislature and
approved by Legislature in the month of February / March.
3.5
Budget Monitoring:
Budget monitoring will done in ACE (ppp) office/CE (NH) office as

per existing procedures.
3.6
Supplementary Budget:
The ACE (ppp) will submit supplementary budget (if required) to

FD, GoR for approval and incorporate in revised budget for the year.
3.7
Budget Heads:
The budget for the project will be prepared under project specific
components and sub components wise budget heads.
Project funds shall be budgeted under separate project specific
budget line(s) with separate sub heads for each project component.
This will help in simplifying budgeting, accounting and reporting for
the project. The budget heads created for the project are provided in
the following table:Component
A-
Improvement
of State
Highways
Budget Heads to be approved by FD, GOR for RSHDP

Demand No. 21
5054-Roads
&Bridges Capital
Exp.
04- Distt. & Other
roads
800- Other Exp.
(21)- World Bank
funded RRSMP
[01]Rural
Approach roads
74Exp.
On
Demand No. 51
5054Roads
&Bridges
Capital
Exp.
04- Distt. & Other
roads
789Specific
Component for SC
(12)World
Bank
funded RRSMP
[01]- Rural Approach
roads
Demand No. 30
5054- Roads &Bridges
Capital Exp.
04- Distt. & Other
roads
796- Tribal Area SubPlan (TASP)
(15)World
Bank
funded RRSMP
[01]- Rural approach
roads
74- Exp. On Const. of
14

Const. of Roads 74- Exp. On Const. of Roads

&
Bridges
& Bridges (Plan)
Roads
&
Bridges (Plan)
(Plan)
B
3054-Roads & Bridges
04- Distt. & Other roads
Institutional
800- Other Exp.
Development
(02)- Rural Roads
[05]- World Bank funded RRSMP( Modernization)
08- Exp towards Consultancy and special services
29- Training, Tour & Conference Exp.
62- Computerization and related communication expenses.
Demand No. 30
C
Road Demand No. 21 Demand No. 51
5054Roads 5054Roads 5054- Roads &Bridges
Safety
&Bridges Capital &Bridges
Capital Capital Exp.
Management
Exp.
Exp.
04- Distt. & Other
Plan:
04- Distt. & Other 04- Distt. & Other roads
roads
roads
796- Tribal Area Sub800- Other Exp.
789Specific Plan (TASP)
(21)- World Bank Component for SC
(15)World
Bank
funded RRSMP
(12)World
Bank funded RRSMP
[02]- Road Safety funded RRSMP
[02]Road
Safety
Management
[02]- Road Safety Management
74Exp.
On Management
74- Exp. On Const. of
Const. of Roads 74- Exp. On Const. of Roads
&
Bridges
& Bridges (Plan)
Roads
&
Bridges (Plan)
(Plan)
Incremental
3054-Roads & Bridges
Operating Costs
04- Distt. & Other roads
800- Other Exp.
(02)- Rural Roads
[04]-World Bank funded RRSMP(Incremental Operating Costs)
03- Travel Exp
05- Office Exp.
09- Rent, Rate & Tax/Royalty
11- Advertisement, Sale, Publicity & Transmission Exp.
29- Training, Tour & Conference Exp.
36- Hired Vehicle Exp.
38- Stationary Exp.
15

Chapter 4: FLOW OF FUNDS

4.1 Efficient funds flow has a critical role in smooth implementation
of project. Arrangement and placement of adequate funds at the
right time and the right place will result in timely achievement of
project objectives. Financial Management arrangements for the
project have been established taking into account the nature of
activities.
4.2 Each year the project plan will be budgeted under specified head
of budget by ACE (ppp) using the IFMS system. Funds will be
available to the Project in accordance with the Letter of Credit
(LoC) system followed in RPWD including fund drawl
authorizations accorded to concerned PIU based on the LoC
requirements submitted by PIU implementing the project. The
LoC system is on IFMS under a Works Account Monitoring Module.
The ACE(ppp)/ RPWD HO will ensure that LoCs for
sufficient value are issued to the PIU from time to time to
ensure
timely
payment
to
the
contractors
/concessioners .Clear instructions should be included in the
allocation letter to the effect that LoC for the Project will not be
used for any other purpose.
4.3 ACE(ppp) would be required to submit expenditure information to
the World Bank through Interim Unaudited Financial Reports
(IFRs) within 45 days from the end of the quarter. Reporting
through IFRs will have the advantages of (a) regular reporting of
expenditure information, thus ensuring timely monitoring (b)
regular reimbursement from the bank, thus timely receipt of the
loan funds.
16

4.4 The funds flow follows the route given below:-
World Bank
CAAA
Ministry of Finance (GoI)
State Treasury (RBI, Nagpur)
ACE (PPP) by FD GoR
PIU (through LoC)
Contractor/CONCESSIONERS
17

Chapter 5: PROJECT ACCOUNTING

5.1
Accounting Process: Accounting for the transactions

under the project will be done on cash basis using the
Government systems. Expenditure will be recorded and reported
at time of payments as per provisions of PWF & AR rules.
Adequate records will be maintained at all levels i.e. PIU level ,
PPP Dn level and State level and will include approvals, voucher,
invoices, cash books, ledgers. agreements register, assets
registers and other records as per provisions of PWF & AR.
4.2 Budget Heads for Accounts:

The specified budget Heads in State budget for the project are
provided in para 3.7 above.
5.3 Mode of Payment:
Payment will be released to the contractors/concessioners
through cheques/ e-payments as per available facility in the IFMS
system. The contract payment will be released through electronic
transfer if found acceptable to the contractors / concessioners.
Bill approval/Payment process shall be as follows:The payments shall be made to the contractors strictly as per the
provisions of concession agreement /contracts.
The contractor/concessioner shall raise and submit bill, when due, to
IE/ authoritys Engineers as the case may be with full details as
stipulated in agreement. The IE/ engineer shall check and
recommend the eligible payments to the PIU and in terms of
provisions and within timeframe given in agreement.
PIU shall make paymants as recommended by IE/ engineer after
deducting
any
recovery/amount
due
against
the
contractor/concessioner.
5.4 Delegation of Powers:
Delegation of powers for project will as per appendix XIII of PWF
& AR as amended from time to time.
18

19

5.5 Reconciliation:
Reconciliation will done at State level (PPP Dn.)with the
Accountant General (A&E) as per provisions in State system (on a
monthly and annual basis). The reconciliation should be completed
with 20 days of month end and 90 days of year end.
Reconciliation will done at PPP Dn level with Treasury as per
provisions in State system (on a monthly basis). The reconciliation
should be completed with 10 days of month end.
5.6 Assets Management:
Assets management will be done in accordance the provision on
PWF & AR and norms of RPWD in specified manner.
5.7 Monthly Compiled Accounts (MCA):
Monthly Compiled Accounts will be prepared and submitted by
the PIUs to ACE(PPP) and Accountant General (A&E) as per State
accounting system (IFMS) in specified Performa and time schedule
(monthly basis, to be submitted within 15 days of month end
5.8 IFMS System:
IFMS system is in place for demand and distribution of LOC and
payment to contractors in accordance with procedure laid down by
Finance Department, GoR and Rajasthan, PWD. The Works Accounting
Module which has been implemented from May 1, 2013 has various
functionalities like distribution of LoC through the system, e-payments
and preparation of Monthly Compiled Accounts.
5.9 Financial Reporting:
i. Financial reporting between PIU, ACE (PPP), Rajasthan PWD
and Accountant General (AG) will be as per provisions of
PWF & AR.
ii. Financial reporting between RPWD/ACE (PPP) and the Bank
will be by Interim Unaudited Financial Report (IFR). A copy
of reimbursement claim will also be sent to FD (W&M) GoR.
iii. IFR contains expenditure of the project during and total upto
expenditure on project.
iv. PIU will submit monthly expenditure to head office by 5 th of
every month and ACE (PPP) will compile and send to all
concerned as per above.
20

v.
vi.
Additional Chief Engineer (PPP) (incharge) will be

responsible for sending financial report to the bank within
prescribed time.
Refer chapter 6 on IFRs for details
5.10 Reimbursement of expenditure:

Additional Chief Engineer (PPP) (incharge) will submit quarterly
reimbursement claim to the Bank on the basis of IFRs. In case of
excess expenditure in the quarter or need of more funds
reimbursement, ACE (PPP) may submit additional claim to the bank
even before the end of the quarter.
21

Chapter 6: FINANCIAL REPORTING AND

DISBURSEMENTS
6.1 The Interim Unaudited Financial Reports (IFR) shall be used both
for the purposes of project financial reporting and for obtaining
funds reimbursement from the World Bank. . The IFRs shall be
prepared on cash basis and shall be based on AG (A&E) reports.
The IFR formats shall also be used for the Monthly Progress
Reports (MPR) so as to make it a part of existing MIS system.
6.2 IFR Formats: Refer Annexure A for IFR formats.
IFR 1 :Expenditure sheet, classified component wise and

disbursement categories wise
IFR 2a: Contract progress monitoring sheet (Prior Review)
IFR 2b: Contract progress monitoring sheet (other than Prior

Review)
IFR 3: Reconciliation between IFR1 and IFR2a&2b
Supporting 1 : Monthly AG (A&E) Reports

6.3 IFR Preparation steps:
6.3.1 Role of PIU Offices: The PIU offices shall be responsible
for the preparation of the IFRs within 15 days of the end of
each month. The IFR4 shall be prepared using the AG(A&E)
reports. (The format of IFR 4 is provided as Annexure F). The
IFR2a&2b shall be prepared based on contract/project-wise
expenditure control sheet or on contractor Register
prepared for each project. The format of contract/projectwise expenditure control sheet is provided as annexureE.IFR 3 shall be prepared to ensure that expenditure
reported in IFR1 tallies with the contract wise information
reported in IFR2a& 2b. Similarly the Security deposit details
should
tally
with
the
said
IFRs.
The
Security
deposit/retention money recovered and released during the
life of the project and any outstanding balance at the end of
the project shall be deducted from the final claims
submitted by PWD.
22

6.3.2 Role of HO staff: The dedicated accounting staff at

ACE(PPP) office shall be responsible for compiling IFR
reports on quarterly basis ,based on the monthly IFRs
received from the PIU offices. They will prepare IFR1 using
the IFR4 reports provided by the PIU and the AG (A&E)
reports. The IFR1 shall also provide category wise details as
stated in legal/credit agreement. The ACE (PPP) staff will
review the reports for consistency and quality. They will also
provide the necessary guidance to the PIU staff where
needed. The IFR format 1, 2a&2b and 3 along with
supporting -1, compiled for the entire RSHDP on a quarterly
basis will be submitted to the Bank by ACE (PPP) office.
6.4 IFR time line for submission: Quarterly IFR should be
submitted to the Bank within 30 days from the end of every
calendar quarter.
6.5 Project Annual Financial Statements: The project annual
financial statements will include (a) IFRs for the fourth quarter (b)
any other statement agreed with the Bank.
6.6 Disbursements: All withdrawal claims, supported by IFR and
Bank TTLs NO Objection shall be submitted by the ACE(PPP)
office to the Office of Controller of Aid Accounts and Audit (CAAA),
Ministry of Finance (MoF), Government of India (GoI), for further
submission to the Banks Chennai office for disbursement
purposes. Based on these claims, funds will be disbursed to the
GoI and thereafter transferred to the state as per the standard
center-state fund transfer arrangements on a back to back basis.
IDA funds will be disbursed against eligible expenditures under
the disbursement categories provided in the legal/credit
agreement, subject to the allocated amount and the
disbursement percentage as provided therein.
6.7 Reimbursement method is the primary/prevalent method of
disbursement under the project. This implies that GoR will pre23

finance the project expenditures and thereafter seek

reimbursement from the Bank. However, any time during project
implementation, Government of Rajasthan may decide to have a
Designated Account advance for the purposes of the project
which shall be maintained by CAAA, as per the existing
procedures. The above IFR formats have been prepared based on
reimbursement method of disbursement. In case of advance
disbursement is sought from the Bank, the additional formats:
Sources and Uses of funds and Designated Account reconciliation
shall also be prepared by ACE (PPP) office.
Chapter 7: ELIGIBLE EXPENDITURE

7.1
Eligible Expenditure: All expenditure relating to project which

are in line with the financing/legal/credit agreement and
disbursement letter are an eligible expenditure.
7.2
Ineligible Expenditure: The following expenditure are treated

as ineligible expenditure:Retention money/security deposit retained*.
Expenditure prior to retroactive period.
Expenditure after the closing date.
Expenditure not in line with project description in legal
agreement.
Procurement not in line with agreed procurement procedures
Land costs1 and expenditure on R & R
Expenses disallowed by auditors, and
Expenses found ineligible during bank review.
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
*Using country systems approach, instead of dis-allowing

retention money/security deposit for each bill, a detailed
monitoring sheet as part of the IFR will be maintained through
the life of the project and any outstanding balance at the end of
1Wherever land is to be acquired, the same will be acquired through the District
Administration following the provisions of the Land Acquisition Act,
2013(RFCTLARR_2013).
24

the project shall be deducted from the final claims submitted by

PWD
25

Chapter8: INTERNAL CONTROL

8.1 Internal control system is a tool to check irregularities of a
project, hence it should be adequate and effective.
8.2 For internal control of the project, the provisions of PWF&AR,
GF&AR, Rajasthan Transparency in Public Procurement Act -2012 ,
Rules and this financial management manual (FMM) will be
applicable. In case of any conflict between these rules and FMM,
the provisions of FMM will prevail.
8.3 The controlling offices (ACE (PPP), SE-PPP (WB)) shall provide the
oversight function over the PIU.
8.4 The Audit Standing Committee comprising of state Dy. Auditor
General, Joint Secretary (Audit) from the state Finance
Department and the Secretary of the department shall monitor
the open audit paragraphs from the state Accountant Generals
(AG) audit report. The said committee which meets on a quarterly
basis shall also monitor the open audit paragraphs for this
project.
26

Chapter9: INTERNAL AUDIT

9.1
9.2
9.3
9.4
9.5
9.6
Objectives: The overall key objectives of internal audit are to

a)
Provide an independent assessment and assurance - (i) that
the internal controls
established by management are
designed appropriately; and (ii) on the continuing
implementation and effectiveness of the internal control
procedures both the above in respect of the Financial
Management & Procurement Systems including Contract
Management prescribed for the Project, and adequacy
thereof;
b)
Internal audit of Project accounts and financial reports ;
c)
Comply with the project legal agreements, manuals,
applicable rules and regulations as per the Rajasthan PWD
Code.
Principles: Based on the audit, the auditor will provide
suggestions for improvement. Internal Audit should not be a fault
finding exercise but should play a role in assisting management
in bringing a systematic, disciplined approach to evaluate and
improve the effectiveness of project risk management, control
and governance processes. The report of the internal auditors will
form the basis for Management action.
Internal Audit: The internal audit of the project shall be carried
out either through the accounts and audit wing of PWD or by a
consultancy firm hired on a competitive basis, if needed.
Follow-up: The internal audit report shall be addressed to ACE
(PPP) who will request the officials responsible for the areas of
procurement, financial management and contract management
to address the specific observations.
Frequency: The audit shall be carried out on biannual basis in a
manner that each PIU is audited .Every six month compliance of
the audit report shall be monitored at ACE (PPP) level, however
the controlling officeof SE-PPP (WB) shall also monitor the open
audit observations.
ToR: The internal audit ToR is provided as Annexure C.
27

28

Chapter 10: EXTERNAL AUDIT

10.1 The Annual accounts or the project financial statements (PFS) of
the RSHDP will be audited by Comptroller and Auditor General of
India (C&AG). The Accountant General, (Civil) Rajasthan will carry
out the audit of accounts of the project implementing entities and
shall issue a project audit report.
10.2 This audit will be as per the standard terms of reference (ToR)
agreed with the C&AG for all World Bank funded projects in India.
A copy of ToR is provided as Annexure B.
10.3 Staff in the PIU offices shall work towards settlement of audit
observations. ACE (PPP) staff will review the audit findings and
follow up with PIU offices to ensure necessary corrective action
including timely settlement of observations. ACE (PPP) staff shall
compare / analyze reported expenditure with audited expenditure
and monitor all disallowances.
10.4 The external audit report will be submitted to the Bank within six
months from the close of the financial year i. e. by September 30.
10.5 The AG audit observations which are not resolved within the
reasonable timeline may be treated as expenditure ineligible for
Bank financing.
29

Chapter
11:
TRANSPARENCY
DISCLOSURE
AND
11.1OBJECTIVE
The objective is to ensure accountability & transparency in all
aspects of Financial Management during the Project
implementation.
11.2 DISCLOSURE ON PROJECT WEBSITE
The following information and documents (pertaining to Financial
Management) should be disclosed on the project website.
a.
Project Appraisal Document
b.
Annual Audited Financial Statements
30

ANNEXURES:A. Interim Unaudited Financial Reports

B. Terms of Reference for Project External Audit
C. Terms of Reference for Internal Audit
D. Chart of Component/sub-component wise budget heads.
E. Project Control register
F. Format of IFR4 to be filled by Divisions
31

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Rajasthan State Highways

Date: September5, 2013

Rajasthan State Highways Development Programme

About the Manual..........................................................................3

Rajasthan State Highways Development Programme

About the Manual

Financing and Project Agreements

Rajasthan State Highways Development Programme

Rajasthan State Highways Development Programme

Improvement of State Highways: (USD

Rajasthan State Highways Development Programme

Rajasthan State Highways Development Programme

PROJECT STAFFING AND

2.1 Project Staffing:

Rajasthan State Highways Development Programme

The Additional Chief Engineer (PPP), is responsible for ensuring project

Rajasthan State Highways Development Programme

assurance will be the responsibility of Authoritys Engineer in the cases

2.2 Organization Chart

Empowered Committee of Infrastructure Development (ECID)

SE (PPP) world bank

SE (PPP) ADB &

Rajasthan State Highways Development Programme

Rajasthan State Highways Development Programme

Tabular presentation of Implementation Arrangements

Apex body for policy decisions and santion of

Rajasthan State Highways Development Programme

Rajasthan State Highways Development Programme

Rajasthan State Highways Development Programme

Budget formats specified in budget manual of GoR will used for

Budget monitoring will done in ACE (ppp) office/CE (NH) office as

The ACE (ppp) will submit supplementary budget (if required) to

Budget Heads to be approved by FD, GOR for RSHDP

Rajasthan State Highways Development Programme

Const. of Roads 74- Exp. On Const. of Roads

Rajasthan State Highways Development Programme

Chapter 4: FLOW OF FUNDS

Rajasthan State Highways Development Programme

4.4 The funds flow follows the route given below:-

Ministry of Finance (GoI)

State Treasury (RBI, Nagpur)

ACE (PPP) by FD GoR

PIU (through LoC)

Rajasthan State Highways Development Programme

Chapter 5: PROJECT ACCOUNTING

Accounting Process: Accounting for the transactions

4.2 Budget Heads for Accounts:

Rajasthan State Highways Development Programme

Rajasthan State Highways Development Programme

Rajasthan State Highways Development Programme

Additional Chief Engineer (PPP) (incharge) will be

5.10 Reimbursement of expenditure:

Rajasthan State Highways Development Programme

Chapter 6: FINANCIAL REPORTING AND

IFR 1 :Expenditure sheet, classified component wise and

IFR 2a: Contract progress monitoring sheet (Prior Review)

IFR 2b: Contract progress monitoring sheet (other than Prior

IFR 3: Reconciliation between IFR1 and IFR2a&2b

Supporting 1 : Monthly AG (A&E) Reports

Rajasthan State Highways Development Programme

6.3.2 Role of HO staff: The dedicated accounting staff at

Rajasthan State Highways Development Programme

finance the project expenditures and thereafter seek