1 Meeting of Education Secretaries and State Project Directors Of Sarva Shiksha Abhiyan 31 st July 2009

2 Organization of the presentation ► Systems for Financial Management under SSA  FM structure and Fund Flow arrangements ► Status across different parameters ► Action required for strengthening financial management systems ► Financial Status as on 31 st March 2009

3 Manual on Financial Management & Procurement ► Developed and implemented from 2004  Substantial fund flow from  To keep track of financial indicators  Standardizations/ Compilations  To promote transparency  Guidance for States/UTs specially non-DPEP ► Status: Adopted by all States/UTs

4 Manual on FM&P contd/- Covers: ► Norms ► Accounting ► Reporting ► Auditing ► Procurement

5 Finance and Accounts Structure SIS (Finance & A/c Unit) DPOs (Fin & A/c Unit) BRC/CRC (BRCC/CRCC/Accountant) VECs (Head Master/Sarpanch)

6 Systems for Financial Monitoring ► GOI level  CAG Audit  Quarterly Review Meetings of FCs  Concurrent Financial Reviews (IPAI)  Field visit  JRM  Independent MIs  Special Audit as per need ► State level  Statutory Audit  Internal Audit  State Accountant General audit  Quarterly/ Monthly Review Meetings  Field visit

7 State level Financial Monitoring Statutory Audit ► Annual ► Mandatory as per Societies registration Act ► Coverage of all VECs/SDMCs receiving more than Rs. 1 lakh per year in a three year cycle. ► By C&AG / State AG empanelled list of CA firms ► Report mandatory for GOI releases of next year

8 State level Financial Monitoring Statutory Audit cont… ► Status:  Received from all except Chhattisgarh and J&K.  Compliance awaited from some States States (J&K and Mizoram) States (Jharkhand & Mizoram) States (Aru. Pr, AP, Bihar, Haryana, HP, Jharkhand, Chhattisgarh, J&K, Mizoram, Manipur and Nagaland) States (Aru Pr, AP, Bihar, Chhattisgarh, Chandigarh, Jharkhand, Haryana, J&K, Karnataka, Kerala, MP, Manipur, Meghalaya,Nagaland, Puducherry, Sikkim, Tamil Nadu, Tripura) States (Assam, AP, Aru Pr, Bihar, Chandigarh, Delhi, D&D, D&N Haveli, Goa, Jharkhand, HP, Haryana, Karnataka, Kerala, Lakshadweep, MP, Maharashtra, Meghalaya, Nagaland, Puducherry, Rajasthan, Sikkim, TN, Tripura & Uttrakhand)

9 ► Action required:  Statutory Audit reports to be submitted on time. Approval of EC/GC must be obtained before forwarding to GOI  Non submission can lead to suspension of disbursals against SSA expenditures in defaulting States eg CG and J and K.  Audit reports to be complete in all respects  Ensure audit coverage of VECs >1 lakh  Submit quarterly audit compliance reports State level Financial Monitoring Statutory Audit cont…

10 Internal Audit ► Continuing and internal system ► For mid course correction ► Option for methodology as per availability  in-house auditors  Chartered Accountant firm  taking help from line Departments. ► Status :  Started in all States /UTs State level Financial Monitoring

11 ► Action taken :  issued instructions on 17 th September 2007, 1 st October 2007, 18 th June 2008 and 27 th May 2009 to strengthen the system  Status reviewed quarterly  Good practices shared ► Issues :  Still needs strengthening in many States/UTs  Coverage in terms of units and duration State level Financial Monitoring Internal Audit cont…

12 Internal Audit cont… Action required:  Ensure optimal coverage through internal audit  Reports to be reviewed by SPDs as a feedback on existing internal control systems and for effective financial management

13 National level Financial Monitoring Concurrent Financial review ► Overall implementation review with focus on finance and accounts ► Hired the services of IPAI ► Status :  1 st phase all States/UTs completed by 31 st March  2 nd phase – reports received for 12 States (Assam, Gujarat, Haryana, HP, Karnataka, Maharashtra, Punjab, Rajasthan, Tamil Nadu, UP, Uttarakhand and West Bengal)  Remaining States will be completed by 31 st March 2010.

14 National level Financial Monitoring Concurrent Financial review cont.. ► Action taken  Observations are followed till settlement  Follow up action of 12 States are completed (1 st Phase report)  Follow up in progress for 23 States/UTs. (1 st Phase report)  Follow up in progress for 12 States (2 nd Phase report)

15 Concurrent Financial review cont.. Key observations from IPAI reports:  Maintenance of books of accounts specially at sub district level.  Release of advance and its settlement  Submission of UC/Expenditure Statement  Bank reconciliation  Procurement  Diversion of funds

16 Concurrent Financial review cont.. Action required: IPAI reviews are sample reviews of two districts in a state. These can be taken as a reflection of the general status of accounts and financial management in other districts also, requiring close examination and corrective action. Compliance/Comments on IPAI reviews should be sent to GOI and corrective measures must be taken, as warranted. IPAI reviews are sample reviews of two districts in a state. These can be taken as a reflection of the general status of accounts and financial management in other districts also, requiring close examination and corrective action. Compliance/Comments on IPAI reviews should be sent to GOI and corrective measures must be taken, as warranted.

17 National level Financial Monitoring Performance Audit by CAG  crore to be recouped to SSA accounts  1.99 crore pertain to other financial/procedural iregularities(1.46 crores from Haryana) Quarterly Review Meetings  21 meetings held  Status on various financial indicators reviewed e.g. exp, staff position, capacity building, external audit, internal audit, UC, bank reconciliation, shortfall in State releases, etc.  Ensure participation of F.C.s esp CG,Manipur,UP etc

18 Manual Availability ► Adopted by all States/UTs ► Translated to Hindi by GOI ► Translated in local languages by States ► VEC manual developed and disseminated Financial Indicators

19 Action required from States/UTs ► Ensure FMP Manual availability at all SIS and DPOs ► Ensure VEC Manual availability at all VECs/PTAs ► FMP /VEC manuals to be updated, incorporating amendments made so far Financial Indicators Manual cont…

20 Staffing of Accounts Personnel Staff Position ► Vacant posts at SPO in some states (14no.)  AP (4), Aru. Pr (1), Assam (4), Bihar (3), Haryana (6), Karnataka (1), Maharashtra (1), Meghalaya (1), Puducherry (1), Punjab (1), Rajasthan (2), Tripura (1), Uttarakhand (4) and WB (2). ► Vacant posts at DPOs in some states (14nos)  AP (2), Assam (21), Bihar (34), Gujarat (11), Haryana (16), MP (12), Maharashtra (163), Nagaland (3), Orissa (13), Punjab (4), Rajasthan (34), TN (4), Uttarakhand (14) and WB (23). ► Information is not available from 12 States  A&N, Chhattisgarh, D&D, Goa, HP, J&K, Kerala, Lakshadweep, Manipur, Mizoram, Sikkim and UP. Financial Indicators

21 Action required from States: ► all vacant posts at SPO and district levels to be filled by September, ► 9 States have provided Accounts staff at sub district level; other states/UTs to examine this approach for feasibility and adoption Financial Indicators Staffing cont…

22 Capacity building of accounts staff ► 5 days mandatory training in a year ► suggested to hire the services of CA specially on double entry system of accounting ► support provided by GOI’s TSG ► Some lagging States/UTs (5 nos) : Haryana, Lakshadweep, Meghalaya, Nagaland and Puducherry Financial Indicators

23 Action required by States/UTs Action required by States/UTs  All States/UTs must provide training to accounts staff on a regular basis, especially covering areas where amendments have been made in the FMP manual.  Audit reports, concurrent review reports by IPAI must be discussed to point out the areas for improvement and corrective action.

24 Innovative initiatives taken up E- transfer for speedy funds flow  GOI’s funds remitted by electronic transfer. where branches of accredited bank are not available remittance of funds to other nationalized / scheduled bank by RTGS.  In all states upto district level, except Meghalaya, Sikkim and Tripura  Upto sub district level 9 States 100% wherever feasible. (AP, Aru.Pr, D&D, Goa, Gujarat, Jharkhand, Karnataka, Lakshadeep, Orissa, TN, UP, WB) Action required  States/UTs advised to adopt e transfer if feasible, upto sub district levels

25 Innovative initiatives cont… Web based Monitoring  Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Haryana, Jharkhand, Karnataka, Kerala, M.P., Maharashtra, Manipur, Puducherry, Punjab, Rajasthan and Tamil Nadu covering 264 districts. E-procurement  Started in Gujarat

26 Computerisation of Accounts:  Introduced in at least 17 States ► Gujarat, Karnataka, Kerala, MP, Maharashtra Rajasthan and UP ► Assam, Bihar, Delhi, Haryana, Jharkhand, Nagaland, Orissa, Punjab, TN, and Uttrakahnd Tally software Web Portal by NIC  Financial report at district and State level Action required:  States/UTs to upload the information, regularly Innovative initiatives cont…

27 Procurement ► Decentralized procurement advocated ► Detailed procedure provided in the manual ► Procurement audit check list prepared and disseminated ► Revised Financial ceilings communicated

28 Procurement cont. Status of procurements  Not as per requirements of FMP Manual in some States.  procurement plans not available for all States.  Possible excessive procurement of unrequired items.  Need to select NGOs/Consultant organizations on the basis of feasible TORs and monitoring actual quality of delivery

29 Procurement cont. Action Required: ► Procurement plans to be uploaded on State SSA website ► All procurements to be done as per FMP Manual ► Post review of procurement being carried out by the DPs in 8 states for FY (TN, Punjab, CG, Kerala, Bihar, WB, Gujarat and Orissa)-MUST SUBMIT LIST OF PROCUREMENT CONTRACTS IN THE FINANCE CONTROLLERS MEETING ON 10 TH AND 11 TH AUGUST 2009 ► Statutory Audits to ensure coverage of procurements ; procurement audit check list to be available with all auditors.

30 Provision of Funds – XIth Plan ► Provided Rs. 71,000 crore for GOI Share. ► Releases by GoI Rs Cr in , Rs Cr in Rs Cr in (up to 30 th June 2009) ► States providing corresponding provision as per sharing pattern ► For 8 NE States 90:10 during the entire XIth Plan period. Year Sharing Pattern (GoI:State) to : : : :50

31 FINANCIAL PROGRESS

32 Financial Progress cont… ► – Total Reported expenditure Rs Cr against outlay of Rs crore (78.61%) Ach>90%9 States Punjab (98%), Karnataka (94%), Kerala (94%), TN (94%), Aru Pr. (93%), Tripura (93%), Chhattisgarh (91%), Rajs (91%), and Maharashtra (86%), 90% 80% 8 States Assam (89%), U.P (88%), Puducherry (87%), H.P (85%), M.P (83%),Uttarakhand (81%), A &N (80%) and Orissa (80%) 80% 70% 6 States Sikkim (79%, Mizoram (78%) Goa (76%), Jharkhand (73%) WB (72%) and Haryana (70%) Ach< 70% 12 States Gujarat (68%),Lakshadweep (66%), Meghalaya (65%), Delhi (64%), Bihar (62%) AP (60%), Nagaland (56%), Chandigarh (56%), D&N (56%), J &K (54%), D&D (47%) and Manipur (20%)

33 State Share Sharing Pattern 65:35 (90:10 for NE States) 60:40 (90:10 for NE States) AWP&B (Rs. in Crs) ► Even with increase in sharing pattern  21 States/UTs released excess State share.  Excess release of Rs. 874 Cr as on 31st March ► Adhoc/1st installment by GOI released in May/June.

34 State Share cont.. ► No backlog of previous year ► Backlog of State Share as on 31 st March 2009 : (Rs. in lakh) A&N Island Arunachal Pradesh A.P J&K Chhattisgarh356.29Meghalaya Maharashtra434.65Orissa Mizoram961.21Punjab Puducherry80.67Sikkim Rajasthan Uttarakhand Tripura23.42

35 Refund of unspent balances  In pre-project activities of SSA. Refunds due from : Assam, Bihar, Jammu & Kashmir, MP, Manipur, Meghalaya, Mizoram Assam, Bihar, Jammu & Kashmir, MP, Manipur, Meghalaya, Mizoram  In DPEP. Refunds due from: Bihar, CG, Jharkhand, HP, MP, Orissa, UP, Rajasthan Bihar, CG, Jharkhand, HP, MP, Orissa, UP, Rajasthan

36 Diversion of funds and other irregularities Details from concurrent financial reviews, CAG and statutory audits, State reports are provided in annexure 1 to 10

37 Diversion of funds and other irregularities cont.. Action required:  Diverted funds to be recouped to SSA accounts  MHRD to make required adjustments against State share  In cases of fraud/embezzlement etc, action against officials should be initiated and speedily concluded; recoveries should be effected and credited to SSA accounts  Comments on IPAI reports (Phase-II) indicating such instances should be speedily furnished to GOI  FM systems to be strengthened overall

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