Reply to Comments - Bokaro Power Supply Company Pvt. Ltd.

REPLY TO THE COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 619(4) OF THE COMPANIES ACT 1956 ON THE ACCOUNTS OF BOKARO POWER SUPPLY CO. (P) LIMITED FOR THE YEAR ENDED 31ST MARCH 2009

Item No.	Comments of the Comptroller & Auditor General of India	Reply to C & AG Audit Memo No.1
A.	The preparation of financial statements of Bokaro Power Supply Company (P) Limited for the year end ed 31 March 2009 in accordance with the financial reporting framework prescribed under the Companies Act , 1956 is the responsibility of the management of the company. The statutory auditor appointed by the Comptroller and Auditor General of India under Section 619(2 ) of the Companies Act, 1956 are responsible for expre sing opinion on these financial statements under section 227 of the Companies Act, 1956 based on independent audit in accordance with the auditing and assurance standards prescribed by their professional body the Institute of Chartered Accountants of India. This is stat ed to have been done by them vide their Audi t Report dated 14 September 2009. I , on the behalf of the Comptroller and Auditor General of India have conducted a supplement ry audit under section 619(3)(b) of the Comp anies Act, 1956 of the financial statements of Bokaro Power Supply Company (P) Limited for the year ended 31 March 2009. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the accountingrecords. Based on my supplementary audit, I w ould like to highlight the following significant matters under section 619(4) of the Companies Act, 1956 which have come to my attention and which in my view are necessary for enabling a better understanding of the financial statements and the related Audit Report.	A. i) Building schedule are notional for making pa yments to the parties as per terms of the contract. Liability dose not accrue on the basis of the bills raised as per the billing schedule but on the completion of the job in totality as per the terms of the contract. Hence question of creating provision of liability on the basis of bill does not arise. As per Clause No. 6.5 of payment terms, all pr ogressive payments (interim) shall be regard ed as payments by way of advance against the final payment only and not as payment for the w rk completed till the date of progressive payment. The progressive payment made shall not exonerate the Contractor from liability to finally complete the work strictly in accordance with the reconstruction or re-erecting faulty work. The matter is now under review and necessary effect will be given in 2009-10 on commissioning of the project. A. ii) Billing schedule are notional for making payments to the parties as per terms of the contract. Liability does not accrue on the basis but on the completion of the job in totality as of creating pro vision of liability on the basis of bill does not arise. Project bills are considered for provision only on bills in hand due for payment but not paid within 31st march. As per our terms of payment all progressive payments (interim) shall be regarded as payments by way of advance against the final payment only and not as pa yment for the work completed till the date of progressive payment.
	Contd...	Contd...