Audit Reports for the Some General Comments 40 th Quarterly Review Meeting of Finance Controllers on 30 th January 2014 New Delhi

Receipt of Audit Reports for the year till date (29 th January 2014) No. of StatesStates Upto October A&N Island, Assam, Chandigarh, D& N Haveli, Daman & Diu, Delhi, Gujarat, Madhya Pradesh, Manipur, Mizoram, Puducherry, Rajasthan, Sikkim, Tripura, Uttar Pradesh During November Andhra Pradesh, Bihar, Goa, Haryana, Karnataka, Kerala, Maharashtra, Tamil Nadu, During December Chhattisgarh, Himachal Pradesh, Jammu & Kashmir, Lakshwadeep, Meghalaya, Odisha, Uttarakhand During January Jharkhand, Punjab, Total32

There is marked improvement in the adherence to the timeline for submission of Audit Reports by the States.  Target for submission of Audit Reports is 1 st November  Issue appointment letter CA firm by March If new CA firm is to be engaged.  Complete the preparation of accounts by 30 th June 2014 or even earlier.  Commence Audit work by 1 st July 2014 or even earlier.

Outstanding Advances : Lot of stress is being laid by MHRD for early settlement of outstanding advances pertaining to the year In-fact recently held JRM has also recommended that all outstanding advances pertaining to year should be settled by 31 st March 2014 positively. Bihar, Madhya Pradesh, Chhattisgarh & Maharashtra have large amount as outstanding advances and they have to put in special efforts to achieve this target by 31 st March 2014.

Fraud Cases Reported by Statutory Auditors 1.Odisha : District Auditor M/s Mishra Badhai & Associates, who conducted Audit of books of accounts maintained in District Bolangir, has “Disclaimed his Opinion” due to serious irregularities due to non maintenance of records & books of accounts properly. Major deficiencies pointed out are.  BRS not prepared and balances are not matching with books of accounts.  Supporting evidence of expenditure of Rs crores not made available for audit.  Fraudulent withdrawal using cheques. FIR has been lodged with Police deptt. on 9 th May 2013.

It may please be noted that proper maintenance of books of accounts and producing the same for audit is the responsibility of the management. Fraud and Embezzlement of cash/funds detected in DPO-Bolangiri. Books of accounts not maintained properly and huge accounts of withdrawals not recorded in books of accounts. MHRD view such cases with concern. Apparently internal controls were not in place or have been ineffective. Please review the role of Internal Audit. A complete investigation report be submitted clearly bringing out system weaknesses and effective steps taken by the Management to plug these loopholes in this particular district as well as in other districts to prevent such reoccurrences. The detailed report be submitted within 2 month to MHRD.

2. Rajasthan : A sum of Rs.3 lakh paid as advance to three KGBV on , One contract employee Mr. Shahnawaj khan made correction in Bank TT and entered own account and deposited the amount in his SBBJ bank A/C A detailed investigation report be submitted immediately. Whether any system weakness has been identified and necessary action taken to prevent such recurrences. Internal Auditors be specifically instructed to keep watch/ monitor such occurrences.

3. Maharashtra : At Rajapur BRC-Ratnagiri, one withdrawal was made of Rs.10 lakhs vide cheque No in the name of Mr. V.S. Kodolkar. It was reported by the internal auditor vide in the flash report that this transaction was as fraudulent incident and the F.I.R. is filled against the alleged fraudulent people and investigation is currently in pursue. A detailed report be submitted bringing out steps taken to prevent such recurrences.

SSA-Society management is responsible to prepare and maintain proper books of accounts, which give true and fair view of the financial position of the society. Society is required to prepare accounts on basis of generally accepted accounting principles and guidelines stated in Financial Management & Procurement Manual. 1)Utilization Certificate (Annexure–XIX) 2)Consolidated Annual Financial Statement (Annexure–XX) 3)Consolidated Balance Sheet (Annexure–XXI) 4)Consolidated Income & Expenditure Account (Annexure– XXII) 5)Consolidated Receipt & Payment Accounts (Annexure– XXIII)

6) Management letter 7) Procurement Audit Certificate in the format sent under this Ministry’s letter No. 15/2/2003-SSA(PR) dated 29 th September ) FMRs– I, II & III duly filled in 9) Para on Settlement of outstanding/ Previous years Audit objections 10) Para on Coverage of Audit of VECs receiving grants of more than Rs.One lakh per year. Some deficiencies were observed in the Audit Report submitted by the States societies.

Format of Utilization Certificate / Balance Sheet/Expenditure & Income Account/ Receipt & Payment accounts, FMR-I, II & III and Consolidated Annual Financial Statement should be as given in the Financial Management & Procurement Manual. Large number deviation have been observed. Some states are using different format for preparing these statements. Mismatch of Data: Utilization Certificate / Balance Sheet/ Expenditure & Income account and Receipt and payment accounts are basic documents and should be finalized first while FMR-I, II & III and consolidated annual financial statements are derived information / records. Data in all these statements should be consistent and uniform.

Number of statements to be included in the Audit Report (i) Utilization Certificate for  13 th Finance Commission Grants  SSA+NPEGEL Grants  KGBV  Consolidated for the entire programme (SSA, NPEGEL & KGBV) (ii) Balance Sheet / Expenditure and income accounts/ receipts and payment accounts  SSA+NPEGEL Grants  KGBV  Consolidated for the entire programme (SSA, NPEGEL & KGBV) (iii) Utilization Certificate Separately for Capital Head and General Head

Format as given in FM&P annexures generally not being followed. Many states have different or evolved their own format. Mismatch of Data: (i) Advances details of outstanding advances as on 31 st March 2013 has mentioned in Utilization Certificate and Balance Sheet is given below:

S. No.Name of the State/UTs Outstanding Advances as on (as per UC) Outstanding as per Balance Sheet as on A& N Islands Andhra Pradesh Arunachal Pradesh Audit Report Awaited 4. Assam Bihar Chandigarh (UT) Chhattisgarh

S. No.Name of the State/UTs Outstanding Advances as on (as per UC) Outstanding as per Balance Sheet as on D&N Haveli Daman & Diu Delhi Goa Gujarat Haryana Himachal Pradesh

S. No.Name of the State/UTs Outstanding Advances as on (as per UC) Outstanding as per Balance Sheet as on Jammu & Kashmir Jharkhand Karnataka Kerala Lakshadweep Madhya Pradesh Maharashtra

S. No.Name of the State/UTs Outstanding Advances as on (as per UC) Outstanding as per Balance Sheet as on Manipur Meghalaya Mizoram Nagaland Audit Report Awaited 26. Odisha Puducherry Punjab

S. No.Name of the State/UTs Outstanding Advances as on (as per UC) Outstanding as per Balance Sheet as on Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttarakhand West Bengal Audit Report Awaited

Outstanding advances as per UTILIZATION CERTIFICATE on is MORE / EQUAL/ LESS as compared to outstanding advances indicated in the BALANCE SHEET as on

Unspent Amount: Unspent amount, cash in bank and hand and outstanding advances as per Utilization Certificate as on is for the 35 States/UTs: S. No. Name of the State/UTs Outstandin g Advances as on (as per UC) Unspent Amount as on (as per UC) Cash in Bank/Hand / Transit as on (As per Balance Sheet) Relationship between Cash in Hand / Bank & Unspent Balance 1. A& N Islands No 2. Andhra Pradesh No 3. Arunachal PradeshAudit Report awaited

S. No. Name of the State/UTs Outstandin g Advances as on (as per UC) Unspent Amount as on (as per UC) Cash in Bank/Hand / Transit as on (As per Balance Sheet) Relationship between Cash in Hand / Bank & Unspent Balance 4. Assam No 5. Bihar Unspent Balance = Cash in Hank/ Bank + Outstanding Advances - Liabilities 6. Chandigarh (BS) No

S. No. Name of the State/UTs Outstandin g Advances as on (as per UC) Unspent Amount as on (as per UC) Cash in Bank/Hand / Transit as on (As per Balance Sheet) Relationship between Cash in Hand / Bank & Unspent Balance 7. Chhattisg arh Unspent Balance = cash +outstanding advances 8. D&N Haveli No 9. Daman & Diu No 10. Delhi No 11. Goa (BS) No

S. No. Name of the State/UTs Outstandin g Advances as on (as per UC) Unspent Amount as on (as per UC) Cash in Bank/Hand / Transit as on (As per Balance Sheet) Relationship between Cash in Hand / Bank & Unspent Balance 12. Gujarat No 13. Haryana (CAFS) No 14. Himachal Pradesh No 15. Jammu & Kashmir No 16. Jharkhand

S. No. Name of the State/UTs Outstanding Advances as on (as per UC) Unspent Amount as on (as per UC) Cash in Bank/Hand / Transit as on (As per Balance Sheet) Relationship between Cash in Hand / Bank & Unspent Balance 17. Karnataka Kerala Lakshadweep Madhya Pradesh No 21. Maharashtra No

S. No. Name of the State/UTs Outstanding Advances as on (as per UC) Unspent Amount as on (as per UC) Cash in Bank/Hand / Transit as on (As per Balance Sheet) Relationship between Cash in Hand / Bank & Unspent Balance 22. Manipur No 23. Meghalaya / 24. Mizoram Unspent Balance = Cash in Bank + Outstanding Advances

S. No. Name of the State/UTs Outstanding Advances as on (as per UC) Unspent Amount as on (as per UC) Cash in Bank/Hand / Transit as on (As per Balance Sheet) Relationship between Cash in Hand / Bank & Unspent Balance 25NagalandAudit Report awaited 26Odisha Puducherry No 28Punjab 29Rajasthan Sikkim cash + outstanding advances (approx)

S. No. Name of the State/UTs Outstanding Advances as on (as per UC) Unspent Amount as on (as per UC) Cash in Bank/Hand / Transit as on (As per Balance Sheet) Relationship between Cash in Hand / Bank & Unspent Balance 31. Tamil Nadu No 32. Tripura No 33. Uttar Pradesh No 34. Uttarakhand West Bengal Audit Report awaited

Unspent amount / unspent balance / un-utilized amount terms are used in the Utilization Certificate. How this un-utilized amount is worked out  Un-utilized amount = Bank Balance (Bank + Cash)  Un-utilized amount= Bank Balance +Outstanding Advances  Un-utilized amount= Bank Balance+ Outstanding advances – current liabilities Sikkim has adopted its own method of calculation i.e.

Unspent Balance More than / Equal to /less than Bank Balance (Bank+Cash) Further amount which has been utilized for the purpose for which it was sanctioned (as stated in Utilization Certificate) normally means expenditure incurred during the year as per books of accounts but in some states this amount does not tally with expenditure incurred during the year.