GeM - Sla CA

6/6/23, 11:36 AM GeM
Service Level Agreement And Packages

FINANCIAL AUDIT SERVICES
Special Terms and Conditions (STC) for Financial Audit Service
1. Preamble
A. All the Financial Audit Service contracts placed through GeM shall be governed by the following set of
Terms and Conditions:
I. General terms and conditions for Goods and Services.

II. Service STC contained in this document.
III. BID / Reverse Auction specific ATC
B. The above terms and conditions are in reverse order of precedence i.e.ATC shall supersede Service-
specific S TC which shall supersede the GTC, in case of any conflicting provisions.
C. This document represents a Special Terms and Conditions (“STC”) / the Service Level Agreement (SLA)
governing the contract between the Buyer and Service Provider. The purpose of this document is to
outline the scope of work, the Stakeholder’s obligation, and the terms and conditions of all services
covered as mutually understood and agreed by the stakeholders.
2. Objectives and Goal
The objective of this document is to record that all the contractual terms and conditions are in place
and to ensure consistent delivery of the services to the buyer by the service provider. The goals of this
agreement are to:
⦁ Provide clear reference to service ownership, obligations, accountability, roles, and responsibilities of
both parties.
⦁ Present a clear, concise, and measurable description of services offered to the Buyer by the service
provider.
⦁ Establish terms and conditions for all the involved stakeholders, it also includes the actions to be taken
in case of failure to comply with conditions specified.
⦁ To ensure that both the parties understand the consequences in case of termination of services due to
any of the stated reasons.
The document will act as a reference document that both the parties have understood the above-
mentioned terms and conditions and have agreed to comply by the same.
3. Stakeholders
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The main stakeholders associated with this agreement are:

a. Buyer: The buyer is responsible to provide clear instructions, approvals, and timely payments for the
services availed.
b. Service Provider: The service provider is responsible to provide all the required services in a timely
manner. The service providers may also include seller supplier/ bidder/contractor, any authorized
agents, assignees, successors, and nominees as per the context and as described in the agreement.
The responsibilities and obligations of the stakeholders have been outlined in this document. The
document also encompasses payment terms and penalties in case of non-adherence to the defined
terms and conditions.
4. Service Scope
4.1 Financial Audit - Objective examination and evaluation of the financial statements of an
organization to make sure that the financial records are a fair and accurate representation of the
transactions they claim to represent.
4.2 Scope of Work –

Financial Audit will get covered under two categories – Statutory Audit and Internal Audit. Buyer to
specify the same while selecting filters.
Statutory Audit -Scope of this service includes as:

⦁ Review of financial statements – a detailed study of financial statements of the Buyer
⦁ Financial reporting framework – preparing reports in accordance with the financial reporting
framework to define whether financial statements are in line with the framework
⦁ Audit report – prepare a financial audit report for the buyer as per the audit conducted
Provision to upload additional scope of work defining the course details, additional requirements will be
provided to buyer.
Internal Audit -
⦁ The objectives of internal audit in the public sector are often broader than expressing an opinion on
the financial statements, e.g. few buyers would ask for additional review of expense reports, bank
transactions, fraud, governance, review of system and processes, etc. whereas few buyers would want a
review of treasury operations, bank reconciliation statements, etc. Different buyers will have a different
scope of work and it is not possible to define it upfront.
Provision to upload additional scope of work defining the course details, additional requirements will be
provided to buyer.
5. Terms & Conditions –
5.1 Buyer’s Obligations –
1. Buyer may advise the service provider to disengage any of its staff from service, with 24 hours prior
intimation, in case of any negligence on the part of that particular staff.
2. The Buyer shall have the right, within reason, to have any personnel removed who is considered to be
undesirable with proper reasoning or otherwise.
3. Buyers cannot procure financial advisory services under audit, or there will be a conflict of interest.
4. Price Variation Clause:
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"It is advisable to include Price Variation Clause in the long term contracts to take care of the
increase/decrease in prices of various ingredients which majorly affect the overall price of the service.
Buyers are therefore advised to include the Price Variation Clause (PVC) in the bid document through
ATC for long term contracts. The additional payment, if any, on account of PVC can be done offline till
such time online functionality is developed on GeM."
5.2 Service Provider’s Obligations –

1. The Service Provider shall be totally responsible for the conduct of the personnel engaged for the
service and the management shall not be responsible for their conduct at any point in time.
2. The Service Provider shall provide a suitable substitute well in advance if there is any probability of
the person leaving the job due to his/ her own personal reasons. The payment in respect of the
overlapping period of the substitute shall be the responsibility of the Service Provider.
3. No partner in the Service Provider firm should be related to either Managing Director, or chief
executive officer or manager and in their absence, a whole-time director within the meaning of section
2(77) of the Companies Act, 2013
4. Neither the Service Provider firm nor its partner(s) or associates should have any interest in the
business of the Buyer’s business/organizational activities.
5.3 Standard Terms & Conditions for the service

1. The persons deployed shall, during the course of their work, will have access to classified documents,
which they are not supposed to divulge to third parties. Any breach of this condition shall make the
service provider liable for penal action under the applicable laws besides action for breach of contract.
2. All the document receipts during the course of the audit should be returned after completion of the
audit and it shall be Service Provider’s responsibility to ensure that all documents and information will
be used exclusively for internal audit purposes and should be kept confidential and not to be disclosed
to the third party at any point of time.
3. The audit personnel for the audit period should not be changed so that continuity and consistency is
maintained. The Service Provider shall conduct appropriate due diligence before employing any person
who will be entrusted with the work of conducting the audit. The Service Provider is also responsible for
any commission and omission of its employees which may cause and or likely to cause any loss/
damage to the Buyer.
4. In case of any serious financial irregularity and points relating to grave deficiencies, if found, the same
may be communicated to the senior management of the Buyer immediately without waiting for the
time of submission of the report.
5. The auditors will also be asked to give a presentation on finding in the Audit Reports to the Finance
Committee/Board/relevant forums of the Buyer.
6. Payment Terms
i.The Payment Procedure shall be as specified in the General Terms and Conditions of GeM and the
Payment Schedule will be as defined by the Buyer.
ii. The payment will be made to the Service Provider as defined by the Buyer on submission of the bill
by the Service Provider and after deducting penalty amount, if any.
7. Formula Used
7.1 Total –
Total price = A
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Where,
A = Lump-sum price quoted by the Service Provider (to be quoted by the service provider) for Financial
Audit service
8. Breach of Contract and Penalties

(i) Breach of SLA is defined as performance lower than requisite performance in this agreement. The
following conditions shall specify breach of contract and the buyer shall have the right to immediately
terminate the contract.
a) Cumulative penalties reach 10% of the contract value.
b) Repeated breach of SLAs beyond 3 instances in the entire contractual period.
c) Subcontracting or outsourcing of the contract, in part or whole.
(ii) Penalties will be levied on the service provider, for the violation of the Service Level Agreement of the
contract as mentioned below:
Sr. No Particulars Financial Implications
1 Delay in the submission of audit report 1st instance – 0.05% of the contract
2nd instance – 0.1% of the contract
3rd instance – 0.2% of the contract
OR
0.5% per month from the due date of

completion of the audit
2 Non-deployment of total manpower 0.5% of overall contract value for every

mentioned in the contract as per the week of delay in deployment of
Schedule manpower
3 If the employee of Service Provider is Termination of contract

found responsible for any leakage of
information, lobbying, bribing, etc.
4 If cumulative penalties reach 10% of the Termination of contract

contract value
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9. Additional Terms & Conditions

Additional conditions which are optional in nature for this service in case buyers may further want to
exercise their discretion are as following –
1. Any transactions of serious nature which is unusual/ not normal to the usual course of business or
any other un-healthy practices, persistent irregularities, observed during the physical verification,
transactions of fraudulent nature, other serious irregularities like disbursements without proper
sanction/ incomplete documentation/ irregularities as per guidelines, as a whole on a monthly basis
may however be reported immediately by way of a separate letter.
2. The serious irregularities, if any, noticed shall be covered exhaustively in the executive
summary/periodic reports to be submitted.
3. The audit will be carried out in accordance with Engagement & Quality Control Standards (Audit &
Assurance Standards) issued by the Institute of Chartered Accountants of India in this regard. The
auditor should accordingly consider materiality when planning and performing (except where a certain
minimum coverage of implementing units is specified) the audit to reduce the risk to an acceptable level
that is consistent with the objective of the audit. In addition, the auditor should specifically consider the
risk of material misstatements in the financial statements resulting from fraud.
4. The observations in the management letter must be accompanied by the implications, suggested
recommendations from the auditors, and management comments/ response on the Observations/
recommendations have to be obtained and reported along with the Audit report.
5. Payments of all travel claims shall be made by the client based on actual expenses.
6. The Service Provider will be entitled to reimbursement of out-of-pocket expenses like conveyance,
lodging/boarding charges, etc. incurred while carrying out the audit on an actual basis i.e. on the
production of evidence of incurring such expenses subject to the overall upper limit of 30 % of the audit
fee.

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6/6/23, 11:36 AM GeM

Service Level Agreement And Packages

Special Terms and Conditions (STC) for Financial Audit Service

I. General terms and conditions for Goods and Services.

The main stakeholders associated with this agreement are:

4.2 Scope of Work –

Statutory Audit -Scope of this service includes as:

4. Price Variation Clause:

5.2 Service Provider’s Obligations –

5.3 Standard Terms & Conditions for the service

8. Breach of Contract and Penalties

Sr. No Particulars Financial Implications

2nd instance – 0.1% of the contract

3rd instance – 0.2% of the contract

0.5% per month from the due date of

2 Non-deployment of total manpower 0.5% of overall contract value for every

3 If the employee of Service Provider is Termination of contract

4 If cumulative penalties reach 10% of the Termination of contract

9. Additional Terms & Conditions

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