Oil and Natural Gas Corporation Limited Internal Audit Manual - Volume II Audit Programs-Joint Venture – Non

-Operator Audit S.No Control Objectives #$O% %RO&P To eri!" #$et$er t$e Operator $as ad$ered to t$e rele ant pro isions o! Produ%tion &$aring Contra%ts 'P&C( ) Joint Operating Agreements 'JOA(* as regards to t$e preparation and su+missions o! t$e #or, programs and +udgets To eri!" #$et$er t$e Operator $as pro ided #it$ ade-uate and detailed +udget +rea, up ) s%$edules* #it$ appropriate assumptions and e.planations t$ereo! To eri!" t$at t$e +udget do%ument $as +een ade-uatel" -uestioned under all +udget line items +e!ore granting appro al Audit Steps SAP system or Manual Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate

1.

C$e%, #$et$er t$e +udget $as +een dra#n under t$e guidan%e laid do#n in t$e JOA )P&C. C$e%, #$et$er t$e +udget $as +een %ategori/ed in a%%ordan%e #it$ t$e JOA ) P&C. C$e%, #$et$er t$e Aut$ori/ation !or 0.penditure 1e-uest2s %o ering spe%i!i% %ategories mentioned in t$e JOA $a e +een %omplied #it$. C$e%, #$et$er ade-uate internal %ontrol e.ists #$ile appro ing Joint Venture +udgets. 0.amine t$e stru%turing and grouping o! +udget line items. C$e%, #$et$er t$e +udget is in s"n% #it$ t$e operational re-uirements. 1

penditures !or a !inan%ial "ear $a e not e. on t$e ade-ua%" o! t$e %ontra%tual 4 Manual . C$e%. To eri!" #$et$er t$e 31e ie# and Amendment3 o! +udgets are in order* and #$et$er is as per t$e P&C ) JOA pro isions To eri!" #$et$er t$e  Operator $as su+mitted t$e list o! -uali!ied +idders #it$ #$om t$e" propose to %ontra%t #it$* as per JOA pro isions  To eri!" #$et$er t$e Operator $as su+mitted t$e  Comparati e %ost anal"sis* #it$ appropriate te%$no e%onomi% %onsiderations  To eri!" #$et$er ade-uate -ueries $a e +een raised in %onne%tion #it$ t$e  To eri!" #$et$er %umulati e total o! all o er-e. 0. #$et$er t$e pro%urements are in %omplian%e #it$ t$e pro%edure outlined in t$e JOA)P&C C$e%.%eeded t$e pro ision as per t$e JOA)P&C Veri!" #$et$er t$e ONGC $a e +een pro ided #it$ a list o! entities !rom #$om operator proposes to in ite tender o! %ontra%ts* as per t$e JOA.amine t$e Operating Committee 'OC( appro al on t$e !inal list produ%ed.Oil and Natural Gas Corporation Limited Internal Audit Manual .No Control Objectives To eri!" #$et$er t$e internal appro al pro%ess o! t$e +udget is in order Audit Steps SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate  4.amine t$e amendments ) addendum to t$e a+o e list.Volume II Audit Programs-Joint Venture – Non-Operator Audit S. 0.

penditure 1e-uests( is ade-uate +( t$e a%ti it" under #$i%$ t$e A01 is prepared is under t$e am+it o! appro ed +udget and #it$in t$e amount spe%i!ied under t$e +udget %( timel" %ommuni%ation and appro al is sent to t$e Operator #it$in t$e P&C guidelines To %$e%. up gi en in t$e A01 is ade-uate and in line #it$ t$e pro isions o! t$e JOA)P&C. #$et$er an Aut$orit" 1esponsi+ilit" 5 . up in t$e A01 'Aut$ori/ation 0.ed on its utili/ation t$ereo! Manual    Manual Manual 7  C$e%.  Veri!" #$et$er t$e detailing and %ost +rea. Veri!" t$e a aila+ilit" o! +udget !or t$e A01 +eing raised or amended Veri!" #$et$er timel" %ommuni%ation and appro al is sent to t$e Operator #it$in t$e P&C guidelines Veri!" #$et$er t$e A01 is +eing tra%. SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate 5. t$e Internal %ontrols Audit Steps %lauses and #$et$er t$e stru%turing is #$olesome.Volume II Audit Programs-Joint Venture – Non-Operator Audit S.Oil and Natural Gas Corporation Limited Internal Audit Manual .No Control Objectives %omparati e +id anal"sis made +" t$e Operator To eri!" #$et$er t$e Operator $as ad$ered to t$e rele ant pro isions o! t$e JOA* #it$ respe%t to pro%urement o! ser i%es To eri!" #$et$er6 a( t$e detailing and %ost +rea.

#$et$er an" trans!er o! Operators$ip %lause e.ing.No Control Objectives e. To ensure t$at t$e insuran%e $as +een o+tained as per t$e terms o! JOA)P&C. To %$e%. #$et$er t$e premium pa"ment $as +een made regularl" and appli%a+le dis%ounts $a e +een a ailed.  Manual   OP'RA(OR A&")( . and e. #$et$er Non-operator audits $a e +een regularl" %ondu%ted as per t$e respe%ti e P&C2s and t$e Audit issues ) disputes $a e +een resol ed C$e%.Volume II Audit Programs-Joint Venture – Non-Operator Audit S. #$et$er a dispute resolution and an es%alation pro%ess e. To %$e%. 7 SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate  8 9.Oil and Natural Gas Corporation Limited Internal Audit Manual . Audit Steps matri. To re ie# t$e %lauses on Trans!er o! Operators$ip in JOA)P&C To eri!" t$at t$e Insuran%e %o erage o+tained.amine its #or.e%ution time lines e.  C$e%.ist to address unresol ed Joint Venture issues and e.ists as a part o! s"stems and pro%edures to deal #it$ Operators and $a e ade-uatel" +een ad$ered to.ists in JOA)P&C and t$e same $as +een %omplied #it$.isting #it$in t$e JVOG group.

ists +et#een Cas$ Call and JI:s To eri!" t$at t$e Cas$ Call is made on time To eri!" t$at t$e time allo#ed !or pa"ment is ad$ered to +" all parties. Veri!" #$et$er t$ere is lin. To %$e%. T$e reporting !ormat o! t$e JI: is as per t$e rele ant JOA.No 1.age e.Volume II Audit Programs-Joint Venture – Non-Operator Audit S. Manual   . Control Objectives To eri!" #$et$er6  a( In!ormation re-uirement in t$e +illing statements is as per t$e details spe%i!ied under t$e JOA  +( Mont$l" partner +illings are generated #it$  ade-uate a%%ount s%$edule To eri!" t$at t$e %as$ %alls  made +" t$e Operator are as per t$e pro isions o!  JOA)P&C  Audit Steps SAP system or Manual Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate Veri!" #$et$er t$e mont$l" JI:s 'Joint Interest :illings( are raised #it$ ade-uate in!ormation.Oil and Natural Gas Corporation Limited Internal Audit Manual .usted.%ess Cas$ Call re%ei ed and non-utilisation o! t$e same* interest on 8 4. t$e re%on%iliation +et#een t$e amount o! %as$ %alled and used is per!ormed +" t$e Operator To anal"se e. To eri!" #$et$er pre ious %as$ %alls made are ad.

No Control Objectives Audit Steps pending amounts et%.  To ensure t$at t$e in!ormation re-uirement in t$e %as$ %all statements is as per t$e details spe%i!ied under t$e JOA To %$e%.er%ised in Manual eri!i%ation o! in oi%e and supporting do%uments !or pa"ment #it$ respe%t to admissi+ilit" o! e. To o+tain t$e minutes o! all t$e OC and MC Manual meetings $eld.Oil and Natural Gas Corporation Limited Internal Audit Manual .Volume II Audit Programs-Joint Venture – Non-Operator Audit S. %ontra%tual pa"ments and pa"ment !or pro%urement o! goods and ser i%es. To %$e%. SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate  5. a%%ount in time. Manual o+ligation as pro ided in t$e P&C)JOA $as +een !ul!illed +" t$e Operator.  To eri!" #$et$er li-uidated damages $a e 9 .   7. all parties are depositing t$eir portion o! %as$ %all in t$e .penditure as per %ontra%t %lause. 8. To ensure t$at t$e de%isions appro ed in t$e OC and MC meetings are +eing ad$ered to.  To ensure t$at due diligen%e is e.  To %$e%. To ensure t$e !ul!illment o! Minimum <or. To ensure t$at t$e minutes o! Operating Committee 'OC( and Management Committee'MC( are ad$ered to. Programme +" t$e Operator.oint +an. #$et$er t$e minimum #or.

pat emplo"ees( To o+tain t$e met$od o! time #riting +eing !ollo#ed +" t$e Operator. #$et$er all emplo"ee related e.  To eri!" t$at all pro%urement related e.penditure 'in%luding tra el* 1etirement +ene!its* $ousing* loans and ad an%es et%.penditure is properl" allo%ated +et#een JV and NJV. 9.Oil and Natural Gas Corporation Limited Internal Audit Manual .penditure is #it$in t$e appro ed limits o! A01.penses to JV = NJV. To ensure t$at all emplo"ee related %osts are properl" allo%ated as per t$e terms o! t$e JOA)P&C  To eri!" #$et$er Time #riting o! Manual 0mplo"ees o! Operator is done !or allo%ation o! e. '!or National and 0.  To eri!" t$at t$e %ontra%tor $as %omplied #it$ all terms and %onditions o! Contra%t.  To ensure t$at t$e e. To %$e%.( > SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate   .No Control Objectives Audit Steps +een dedu%ted !or late deli er".Volume II Audit Programs-Joint Venture – Non-Operator Audit S. To re ie# t$e time #riting rates and an" re isions t$ereo!.

To re ie# t$e !ee)o er$ead* i! an"* to +e paid to Parent Compan" !or its Operators$ip and ensure t$at t$e pa"ment is as per t$e pro isions o! JOA)P&C. To eri!" t$e %ost allo%ation and apportionment o! %ommon o er$eads is +ased on sound prin%iple #$en t$e Operator $as %ommon o!!i%e !or more t$an one ? SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate >.Volume II Audit Programs-Joint Venture – Non-Operator Audit S. To as%ertain #$et$er t$ere is a %eiling on t$e Manual e.penditure reim+ursa+le to parent %ompan" as per JOA)P&C.  To %$e%.No Control Objectives Audit Steps are allo%ated to JV = NJV as per Time #riting.penses o! Operator $a e +een properl" allo%ated to JV.     .Oil and Natural Gas Corporation Limited Internal Audit Manual . To audit t$e JOA pro isions regarding t$e allo%ation o! Parent Compan" o er$eads. To eri!" #$et$er t$e $ead o!!i%e e. t$e pro ision related to allo%ation o! Top management %osts o! t$e Operator to JV a%ti it" and ensure t$at t$e same $as +een ad$ered to.

Oil and Natural Gas Corporation Limited Internal Audit Manual .en +" t$e Operator !or materials as per t$e pro isions o! JOA)P&C. To re ie# t$e trial +alan%e o! JV operations. To re ie# t$e %omplian%e o! t$e pro%edure !or mont$l" a%%ounts %losure.plorator" and de elopment <ells @ Manual   @.Volume II Audit Programs-Joint Venture – Non-Operator Audit S. To eri!" t$at t$e Insuran%e %o erage o+tained +" t$e Operator is as per t$e pro isions o! JOA)P&C6  +lo%. To re ie# and s%rutini/e t$e  A%%ounts o! JV operations    .)JV. To eri!" t$e insuran%e %o erage $as +een Manual ta.No Control Objectives Audit Steps SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate ?.penditures are properl" allo%ated to e. To o+tain a list o! Assets #$ere non operator $ad not agreed to pa" premium and ensure t$at t$e premium $as not +een %$arged to JV. #$et$er t$e premium pa"ment $as +een made regularl" and appli%a+le dis%ounts $a e +een a ailed. To re ie# all t$e ma. To %$e%. To ensure t$at t$e e.or a%%ounts o! t$e JV operations.

penditure.No Control Objectives Audit Steps SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate  To ensure t$at proper %lassi!i%ation $as +een done !or %apital and re enue e.ploration p$ase* t$en t$e e. t$at t$e e.penditure prior to t$e .ed #it$ a%%ura%" and properl" allo%ated to JV and NJV'nonJV( To %$e%. t$at proper a%%ounting)%al%ulation $as +een done !or impairment* depre%iation* depletion and a+andonment %osts. To eri!" #$et$er t$e Joint enture e.Oil and Natural Gas Corporation Limited Internal Audit Manual .oining o! ONGC in t$e +lo%.penditure $a e +een +oo. To re ie# t$e a%%ounting o! sales and de+tors. is not %$arged to ONGC To ensure t$at i! ONGC $ad no)redu%ed Parti%ipating Interest 'PI( during t$e e. To %$e%.penditure is not %$arged or is %$arged as per t$e PI o! ONGC.ploration e.Volume II Audit Programs-Joint Venture – Non-Operator Audit S. 1A      .

To Audit t$e ser i%es pro ided +" t$e A!!iliates o! t$e Operator and ensure t$at t$e" are as per t$e pro isions o! t$e JOA)P&C. To ensure t$at t$e prior-period e.penses are paid a!ter proper due-diligen%e. Manual To %$e%. To ensure t$at onl" t$e %ost o! ser i%es 11  1A.%$ange %on ersion met$od and ensure t$at it is as per t$e JOA)P&C. To Audit t$e management o! In entor" +" t$e Operator.   .Oil and Natural Gas Corporation Limited Internal Audit Manual .Volume II Audit Programs-Joint Venture – Non-Operator Audit S.No Control Objectives Audit Steps SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate  To re ie# t$e a%%ounting pro%edure !or Boreign 0. #$et$er appro al is re-uired !rom Non Operator !or ser i%es pro ided +" A!!iliates o! Operator as per JOA and t$e same $as +een ta. To ensure t$at t$e pro isions in respe%t o! non-mo ing in entor"* and aluation o! in entories is as per generall" a%%epted a%%ounting prin%iples.en.    11. To ensure t$at Material eri!i%ation is done as per t$e pro ision o! JOA and dis%repan%ies are settled. To eri!" i! t$e in entor" is not piling up and Manual t$e in entor" turno er is reasona+le.

To o+tain a list o! %onsultants $ired +" t$e Operator !or t$e JV operations. !or ad erse %omments in t$e audit report issued on trial +alan%e o! JV +" 14 17  .%lusi e operations +eing done +" an" one or more o! t$e partners is not +eing +oo.%lusi e operations are not allo%ated to JV. In %ase* t$e %onsultant $as #or.  To re ie# t$e Audit report o! 0.Volume II Audit Programs-Joint Venture – Non-Operator Audit S.ed to t$e JV a%%ount.ternal auditors and Go ernment auditors !or an" ad erse %omments.ternal Auditor as per t$e pro isions o! JOA)P&C. To eri!" t$at t$e !inan%ial statements o! t$e Manual Joint Venture $a e +een audited regularl" +" 0.ed to JV a%%ounts 14.No Control Objectives Audit Steps pro ided !or t$e Joint Venture are +eing +oo. I! "es* to ensure t$at t$e %osts o! e. To ensure t$at t$e pa"ments  made to %onsultants $ired +" t$e Operator are onl" !or t$eir ser i%es rendered to t$e Joint  Operations.o+ +" one or more JV partner.Oil and Natural Gas Corporation Limited Internal Audit Manual . C$e%.ed on an" non-JV assignment* ensure t$at t$e e-ui alent %ost $as not +een +oo. Manual SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate 15. #$et$er JOA pro ides !or Manual e.  To eri!" t$at all t$e pa"ments made to t$e %onsultants are in relation to t$eir ser i%es to t$e JV.%lusi e operation in %ase o! non a%%eptan%e o! %ertain . To ensure t$at t$e %ost o! an"  e.ed to JV To %$e%.

 Manual   . To re ie# t$e Oil produ%tion* Gas produ%tion and %ondensate produ%tion statements and tall" t$e opening and %losing +alan%es.Volume II Audit Programs-Joint Venture – Non-Operator Audit S.e ro"alt"* %ess* e. list %o ering t$e important pro isions o! DC&0 and %$e%.%ise dut"* P0L !ee* ML !ee et%.No Control Objectives Audit Steps SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate 18. t$e allo%ation o! -uantities to arious JV partners)Go ernment. 15 Manual 19    1> To eri!" t$e allo%ation o! produ%tion -uantities and pro ision regarding t$e sales to arious parties as per t$e terms o! P&C)JOA. t$e sales o! t$e produ%ts is +eing made as per t$e pro isions o! JOA)P&C or an" ot$er agreement +et#een t$e parties. To %$e%. To %$e%. To s%rutini/e t$e arious statutor" penalties paid due to t$e !ailure on t$e part o! Operator. t$e %al%ulation o! all statutor" pa"ments li. To eri!" t$e %al%ulation and pa"ment o! all statutor" pa"ments  e.ternal auditors and go ernment auditors as pro ided in JOA.Oil and Natural Gas Corporation Limited Internal Audit Manual . To %$e%. To ensure t$at all t$e statutor" pa"ments are made on time. To eri!" #$et$er t$e Operator $as %omplied #it$ t$e important regulations and pro isions relating to C&0. Manual Veri!" #$et$er t$e operator $as a %$e%. #$et$er t$e Operator $as %omplied #it$ t$em.

Oil and Natural Gas Corporation Limited Internal Audit Manual .No Control Objectives Audit Steps SAP system or Manual Report WP Completed Reviewed Ref Review y! "ate y! "ate  1? To eri!" t$e %al%ulation o!  %ost re%o er")%ost petroleum)Pro!it petroleum as per t$e JOA)P&C. To ensure t$at t$e %ost petroleum)pro!it petroleum is allo%ated to t$e parties as per t$e terms o! JOA)P&C.  To ensure t$at t$e rele ant terms o! CO&A)G&A are +eing ad$ered to. To eri!" t$e %al%ulation o! %ost petroleum)Pro!it petroleum as per t$e JOA)P&C. Manual 17 .Volume II Audit Programs-Joint Venture – Non-Operator Audit S.

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