1. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) PRESENTATION ON AUDITED ACCOUNTS & AUDIT REPORTS 2009-10 By : U.K. VERMA Consultant (Financial Management) TSG, EdCIL, New Delhi

2. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Requirements under Para 106 of FMP Manual:  Annual Accounts of the SIS to be audited by Chartered Accountant Firm(s) appointed by Executive Committee as Auditors each year;  Audit Report & Audited Accounts duly approved by the State Executive Committee, along with other documents, i.e Utilization Certificate, Annual Financial Statement, Procurement Audit Certificate, Management Letters, FMR I,II & III, status of compliance / settlement of previous audit observations etc to be submitted to MHRD on or before 1 st November every year  To ensure timely completion of Audit, adherence to the Audit Calendar under Para 109 of the FMP manual suggested; particularly appointment of Auditors in April and closing of books of accounts by 30 th June every year.

3. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Revised Audit Calendar to be followed : 1.Date of EC’s approval for engagement of AuditorsFeb each year 2.Date of appointment of CA firmApril each year 3.Collection of Expenditure Statements/UCs from sub-district levelBy 15 th May each year 4.Adjustment of advances in accounts to be completedBy 15 th June each year 5. Liabilities for expenditures incurred during the year but not paid for to be provided in accounts By 15 th June each year 6.Finalization of accounts and annual financial statementBy 30 th June each year 7.Commencement of Audit work1 st July each year 8. Reply to Preliminary Audit Memos State/ at District/ Sub-District Level Within 3 days of the Receipts of Audit Memo 9.Submission of draft Audit Report to the SPO / DPO by CABY 31 st August each year 10.Discussion on draft audit report to be completed by SPO/DPOBy 15 th September each year 11.Submission of Final Audit Report to SPO30 th September each year 12.Approval of audited accounts & audit report by State Govt./EC15 th October each year 13Despatch of Audit Report to GOIBy 1 st November each year

4. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) SlStates / UTs2008-092009-10 1A&N Island 2Arunachal Pradesh 3Andhra Pradesh 4Assam 5Bihar 6Chandigarh 7Chhattisgarh 8Daman & Diu 9Dadra & Hagar Haveli 10Delhi 11Goa 12Gujarat 13Haryana 14Himachal Pradesh 15Jammu & Kashmir 16Jharkhand 17Kerala 18Karnakata SlStates / UTs2008-092009-10 19 Lakshdweep 20 Madhya Pradesh 21 Maharastra 22 Meghalaya 23 Manipur 24 Mizoram 25 Nagaland 26 Orissa 27 Punjab 28 Puducherry 29Rajasthan 30 Sikkim 31 Tamil Tadu 32 Tripura 33 Uttar Pradesh 34 Uttarakhand 35West Bengal 12 States22 states Performance of States in 2008-09 vis a vis 2009-10 :  Defaulter States not submitted Audit Report & Annual Accounts before 31 st December

5. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) SlStates / UTs MHRD Comment sent on State’s Reply received 1A&N Island16-11-1029-11-10 2Arunachal Pradesh08-02-10 3Andhra Pradesh13-12-10 4Assam12-11-1005-01-11 5Bihar 6Chandigarh02-11-1025-11-10 7Chhattisgarh27-12-10 8Daman & Diu14-12-10 9Dadra & Hagar Haveli27-04-11 10Delhi- 11Goa21-01-11 12Gujarat21-12-10 13Haryana11-01-1108-04-11 14Himachal Pradesh27-04-11 15Jammu & Kashmir 16Jharkhand12-01-11 17Kerala29-04-11 18Karnakata27-12-10 SlStates / UTs MHRD Comment sent on State’s Reply received 19 Lakshdweep29-04-11 20 Madhya Pradesh01-02-11 21 Maharastra01-02-11 22 Meghalaya03-01-11 23 Manipur24-01-11 24 Mizoram 25 Nagaland 26 Orissa07-01-11 27 Punjab 28 Puducherry27-01-11 29Rajasthan01-12-10 30 Sikkim22-10-1029-11-10 31 Tamil Tadu25-10-10 32 Tripura 33 Uttar Pradesh02-11-10 34 Uttarakhand06-12-10 35West Bengal25-10-1027-01-11 06 states Status of Communication of MHRD Comments on Audit Report:

6. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) SlStates / UT Date of signing of Audit Report 1 Chandigarh21.06.2010 2 Andhra Pradesh18.09.2010 3 West Bengal20.09.2010 4 Sikkim24.09.2010 5 Tamil Nadu30.09.2010 6 Assam30.09.2010 7 Delhi11.10.2010 8 A&N Island12.10.2010 9 Uttar Pradesh26.10.2010 10 Uttarakhand01.11.2010 11 Manipur09.11.2010 12 Haryana10.11.2010 13 Rajasthan16.11.2010 14 Dadra & Hagar Haveli20.11.2010 15 Chhattisgarh26.11.2010 16 Gujarat30.11.2010 SlStates / UT Date of signing of Audit Report 17 Lakshwadeep01.12.2010 18 Nagaland02.12.2011 19 Daman & Diu07.12.2010 20 Meghalaya08.12.2010 21 Karnataka16.12.2010 22 Goa17.12.2010 23 Jharkhand18.12.2010 24 Madhya Pradesh21.12.2010 25 Orissa29.12.2010 26 Mizoram30.12.2010 27 Puducherry11.01.2011 28 Maharashtra24.01.2011 29 Arunachal Pradesh28.01.2011 30 Kerala07.02.2011 31 Bihar21.02.2011 32 Himachal Pradesh06.04.2011 Not yet Sent : Punjab State’s Position in order of Date of Signing of Audit Report : *Audit Report of Tripura & Jammu & Kashmir received on 4 th & 6 th May ‘2011 respectively

7. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Findings of Audit For the purpose of this presentation, important points from the State’s Audit Reports of similar nature or identical thereto have been highlighted, grouped and focused for discussions. It may not be construed to be the complete audit observations of the State for the purpose of compliance. The State FCs are suggested to go through the detailed Audit Report and Management Letters of their respective State for all purposes of Compliance & Reporting.

8. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Some procedural deficiencies in Annual Accounts:  Uniform Accounting System not followed in all states. Some states still follow Cash basis of Accounting instead of Accrual basis as prescribed in FMP Manual; (Andhra Pradesh, Dadar & Nagar Haveli,Gujarat,Uttarakhand, Himachal Pradesh, Karnataka, Kerala, Manipur, Lakshadweep, Puducherry)  Closing balance of unspent grant from last year not brought forward in the Income & Expenditure Account by some states whereas being taken in other cases;  Statutory Provisions under the Income Tax Act, 1961, EPF (MP) Act,1952, VAT etc. are not properly complied with.  Exp. in respect of previous year and even year before previous year have been taken in the Income & Exp. A/c of 2009-10 (Andhra Pradesh, Assam, Jharkhand, Lakshadweep, Tamil Nadu)  Separate set of books of accounts in respect of SSA, NPEGEL & KGBV are not maintained. (Gujarat, Himachal Pradesh )

9. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Some procedural deficiencies in Annual Accounts:  Realization against sale of old fixed assets are fully credited to the Income & Expenditure A/c without giving effect to the Fixed Assets Schedules ( Kerala)  No Schedule /details of Cash & Bank Balance, Outstanding advances / liabilities forming part of Balance Sheet or Activity wise expenditure under any component has been annexed with annual accounts (Kerala)  The Balance Sheet as at 31st March 2010 shows no fixed assets as on the date in some cases. It probably means that all fixed assets like office furniture, Equipments, Office automations, Vehicles etc. procured out of SSA management cost have not been treated as “Fixed Assets“ and are being written off during the year of its procurement (Dadar & Nagar Haveli, Kerala)

10. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Some procedural deficiencies in Annual Accounts:  Receipt of unspent balance from sub-district level / SMC / VECs or amount not related with SSA funds have been credited in the Income & Expenditure Account under Miscellaneous / Other Receipts ( Andhra Pradesh, Assam, Gujarat, Karnataka, Madhya Pradesh, Meghalaya, Tamil Nadu)  Figures shown in the Utilization Certificate / Consolidated Annual Financial Statements / FMRs, Receipt & Payment Account are not in agreement with each other. (Andhra Pradesh, Assam, Chandigarh, Daman & Diu, Gujarat, Karnataka, Lakshadweep, Rajasthan, Sikkim, Tamil Nadu, West Bengal)  Expenditure for the year under different head(s) exceeds the budgetary provisions which requires specific approval of PAB or regularized by the respective state (Andhra Pradesh, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Meghalaya, Rajasthan, West Bengal)

11. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Some procedural deficiencies in Annual Accounts:  Operation of multiple Bank Accounts under SSA / NPEGEL & KGBV (Himachal Pradesh)  Books of Accounts are kept opened even after 9-12 months after close of the financial year which should be closed on or before 30 th June every year after making necessary adjustments and incorporating the same in the books.(Himachal Pradesh)  Bank Reconciliation Statement not prepared properly and un- presented Cheques appearing in the Bank reconciliation statements not considered to be properly treated either for transferring in state cheques or expenditures to be written back in the books of accounts. Interest / Bank Charges appearing in the BRS not accounted for (Andhra Pradesh, Gujarat, Himachal Pradesh, Jharkhand,, Karnataka, Madhya Pradesh, Manipur, Meghalaya)  Outstanding Advances not reconciled, confirmed and poor progresses in adjustments (Assam, Bihar, Himachal Pradesh, Orissa)

12. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Some procedural deficiencies in Annual Accounts:  Utilization Certificate not in Annexure-XIX prescribed under para 106.17 of the Financial Management & Procurement Manual (Assam, Chhattisgarh, Dadar & Nagar Haveli)  Procedural lapses in procurement procedures like Non publication of tenders in required manner, Non – evaluation of responsiveness of the technical and financial bids, awarding the works without prior approval of the Purchase Committee and settlements of claim without quality certifications; (Assam, Kerala, West Bengal)  The Auditing Firm has not furnished its Partner’s Membership No and Firm Registration No. (FRN) while signing the Audit Report which is now mandatory as per guidelines of ICAI. (A & N Island, Haryana, Meghalaya, Sikkim, Tamil Nadu, Uttarakhand)  Non- Coverage of NPEGEL & KGBV Account under Audit (Karnataka)  Stock Register not maintained, Physical verification of stores not done (Assam, Rajasthan)

13. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Some procedural deficiencies in Annual Accounts:  Advance paid for implementation of activities charged as expenditure without supporting of UC / SoE/ in violation of the provisions of Para 75.1 of the FMP Manual (Andhra Pradesh, Daman & Diu, Haryana, Jharkhand, Madhya Pradesh, Rajasthan, Sikkim, Uttarakhand, West Bengal)  Missing Documents, i.e., Consolidated Financial Statement, FMRs, Management Letter of Auditors, yet to be submitted (Goa, Haryana, Jharkhand, Madhya Pradesh, Maharastra, Manipur, Orissa, Puducherry)  The Statutory Auditors have made no mention about coverage under audit of SMCs / VECs – SIS yet to disclose the facts with necessary certification by the Auditors;(Assam, Bihar, Orissa, Puducherry, Rajasthan, Sikkim, Uttarakhand)  Compliance of Previous Audit Observations have not done. The Current Years Auditors either have expressed displeasures over the progresses of compliance or there is no mention on status of compliance in the Audit Report / Notes on Accounts. (Assam, Bihar, Gujarat, Orissa, Puducherry, Rajasthan, Sikkim, Uttarakhand, West Bengal)  Previous years figures are not given in some of the state Annual Accounts (Kerala);

14. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) ASSAM  Instead of reconciling the difference of Rs.47503.00 lakhs between fund transferred to DPOs and the funds actually received by DPOs, has charged this as expenditure. CHHATTISGARH  Booking of expenditure as shown in FMR under following heads : (Rupees in Lakhs) STATE’S SPECIFIC ISSUES INVITING INTENSIVE CARE : Sl. No. ActivitiesSSANPEGELKGBV 1Decrease in Advance Recoverable 21140.51 2Increase in Advance repayable 361.92514.4432.20 3Increase in Suspense 7.9770.070.87 4Increase in Current Liabilities -37.7336.95

15. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) CHHATTISGARH (cont…)  Salaries for the month of April’ 2010 & May’ 2010 paid in advance and booked as expenditure for the year 2009-10  Computer purchased for Rs.779.03 lakhs transferred to other departments.  In district Sarguja, Purchase of Photocopier Machine, Stabilizer, Trolly booked against “Remedial Teaching Funds “ GOA No efforts for rectification of Rs. 1,80,249/- wrongly debited by bank Haryana Exp. Of Rs. 614.86 lakhs in SSA A/c which is relating to State Govt. HIMACHAL PRADESH SSA Funds of Rs.105.06 lakh kept under Fixed Deposit; STATE’S SPECIFIC ISSUES INVITING INTENSIVE CARE :

16. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) KERALA  Difference of Rs. 50.00 lakhs in Fund Transfers to DPOs included in BRC Account.  Procurement of Vehicles without obtaining permission of MHRD over and above the budgetary provision and also exceeding the sanction accorded by state executive committee RAJASTHAN : Expenditure of Rs. (-) 28.89 lakhs under TLE; Unauthorised Exp of Rs.1.78, 1.31 and 31304.00, lakhs, Unjustified & Irregular Exp. Of Rs.0.24, 0.91,0.31, 15.71,64.70, 4.64, 5.43, 24.21 lakhs and Wasteful exp. Of Rs. 0.22 lakh reported by Auditors SIKKIM School Grants of Rs.97.35 lakh released on 31 st March 2010 treating as expenditure for 2009-10 STATE’S SPECIFIC ISSUES INVITING INTENSIVE CARE :

17. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) STATE’S SPECIFIC ISSUES INVITING INTENSIVE CARE : UTTARAKHAND Fund Transferred to Sub-District Level is still being shown as expenditure without complying with Para 74.1 of manual on FMP. WEST BENGAL  In the Utilization Certificate an amount of Rs.1561.55 lakhs on account of un-reconciled opening balance as per last year has been shown as utilized.  Maintenance Grant of Rs.68 lacs has been wrongfully disbursed twice in the district of Purulia, this has lead to deviation with their budgeted expenditure (NPEGEL) In one district it was observed that the interest component at circle level has been utilized for purchasing of fixed assets over and above the Budget allocation.

18. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) World Banks birds eyeview on Audit Reports of some states : (i) Chhattisgarh : Audited accounts of districts for period ending March 31, 2008 were rectified and reconciled and revised financial statements were drawn, but not certified either by statutory auditors or re- certification auditors.; Payments by bearer cheques in many districts and blocks and the auditor was unable to comment on propriety of expenses.; In many districts teachers’ salary is disbursed against sanctioned posts to CEO Janpad panchayat/ BEO, but no claim is received for the release. DPOs could not provide names of teachers appointed against sanctioned posts; VEC audit of schools for receiving grants in excess of Rs.1 lakh in FY 2009-10 was not conducted; Bank Balances of 7 DPOs and many blocks are subject to reconciliation.; No compliance of observations of previous audit reports. (Letter no D.O.No.17/1/2010-SSA(DIS) Dated: 13th April 2011 sent to State’s SPD for replies)

19. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) World Banks birds eyeview on Audit Reports of some states : (ii) Jharkhand : Settlement of advances relating to civil works and programme expenditure was very poor. Fresh advances were given without adjusting previous advances.; Bank Reconciliation Statement (BRS) is either not prepared or not prepared properly; Fixed Asset Registers not maintained in several districts. (iii)Orissa : Huge amounts of un-reconciled balances have remained unadjusted since a long time in BRSs. Large advances remain unadjusted in the State Office since a long time. Fixed Asset Register was not maintained as per the manual and physical verification of assets was not conducted. (Letter no D.O.No.17/1/2010-SSA(DIS) Dated: 13th April 2011 sent to State’s SPD for replies)

20. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) World Banks birds eyeview on Audit Reports of some states : (iv) Rajasthan : Non-production of records by some BRCFs and DPCs; Details of pending UCs were not produced in 6 DPCs and 1 KGBV; Pending UCs for salary in some districts for funds given to BEEOs. (v) West Bengal : Several observations indicating that control procedures continue to be weak. VECs maintenance of accounting and other records not satisfactory; Advance to Circles by districts booked as expenditure instead of advance. Maintenance of UCs and their control at district levels not adequate; Unsatisfactory accounting at circle level. Certain portion of total fund is distributed by cash and monitoring is not adequate; System of obtaining Audited Accounts of NGOs is not in force. (Letter no D.O.No.17/1/2010-SSA(DIS) Dated: 13th April 2011 sent to State’s SPD for replies)

21. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Salary : Uniform policy is required for drawal of Salary of Zila Basic Shiksha Adhikari, as in some cases funds allocated under SSA are used, and sometimes from government treasury. Flow of Funds : Proper reconciliation of funds transferred at various levels is needed. More than two bank accounts have been opened at district level in some cases. Delay in release of funds and instructions to the next level by DPOs/DIETs. UCs: Many BRCs, NPRCs, VECs/Schools do not comply with directions regarding submission of UCs. TEXT Books : Reconciliation of receipts and distribution of books at various levels (DPOs, BRCs and Schools) is yet to be introduced. Staffing: Coordinators of 878 BRCs and 8249 Nyay Panchayat Resource Centers were relieved from their posts as part of administrative overhaul. Alternative arrangements to be made to avoid gaps in record keeping and financial management. Civil Works : Generally weak management of civil works. World Banks birds eyeview on Audit Reports of some states : (vi) Uttar Pradesh :

22. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Status of pending Compliance Reports of earlier years: 2005-06 Andhra Pradesh, Arunchal Pradesh, Bihar, Chhattisgarh, Haryana, Himachal Pradesh, Manipur, Mizoram & Nagaland (9 States) 2006-07 Andhra Pradesh, Arunachal Pradesh, Bihar, Chhattisgarh, Haryana, Karnataka, Kerala, Madhya Pradesh, Manipur, Mizoram, Nagaland, Meghalaya, Puducherry, Sikkim, Tripura & Tamil Nadu, (16 States) 2007-08 Arunachal Pradesh, Bihar, Chhattisgarh, Haryana, Himachal Pradesh, Meghalaya, Karnataka, Kerala, Manipur, Nagaland, Punjab, Rajasthan, Tripura & Tamil Nadu (14 States) 2008-09 Assam, Andhra Pradesh, Arunachal Pradesh, Bihar, Chandigarh, Chhattisgarh, Dadra & Nagar Haveli, Daman & Diu, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Mizoram, Meghalaya, Nagaland, Punjab, Rajasthan, Tripura, Uttar Pradesh, Uttarakhand & West Bengal (28 States) The following States UTs have not furnished Compliance on Audit Reports of CAs Audit of the years prior to 2009-10.

23. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Audit Observations Classified (2007-08 & 2008-09): Sl. No. Nature of Audit Observations 2007-08 (States/UTs) 2008-09 (States/UTs) 1 Accounting Irregularities Andhra Pradesh, Arunachal Pradesh, Bihar, Chandigarh, Chhattisgarh, Goa, Karnataka, Kerala, Lakshadweep, Mizoram, Nagaland, Orissa Rajasthan, Tamil Nadu & Tripura Assam, Bihar, Chhattisgarh, Dadra Nagar Haveli, Himachal Pradesh, Kerala, Lakshadweep, Manipur, Mizoram & West Bengal 2 Improper / irregular Bank Reconciliation Andhra Pradesh, Bihar, Jharkhand, Kerala, Maharashtra, Puducherry, Rajasthan, Uttar Pradesh & Uttarakh Assam, Bihar, Chhattisgarh, Dadra Nagar Haveli, Himachal Pradesh, Kerala, Lakshadweep, Manipur, Mizoram & West Bengal

24. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Audit Observations Classified (2007-08 & 2008-09): Sl. No. Nature of Audit Observations 2007-08 (States/UTs) 2008-09 (States/UTs) 3 Advances/ Releases/ Treated as expenditure Andhra Pradesh, Arunachal Pradesh, Bihar, Goa, Haryana, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Meghalaya, Nagaland, Tamil Nadu, Tripura, Uttar Pradesh & Uttarakhand Bihar, Haryana, Himachal Pradesh, Madhya Pradesh, Maharashtra, Manipur, Nagaland, Orissa, Tripura, Tamil Nadu, Uttar Pradesh, Uttarakhand & West Bengal 4Weak Internal Controls / Internal Audit Jharkhand, Karnataka, Nagaland & West Bengal A& N Island, Bihar, Gujarat, Chhattisgarh, Karnataka, Kerala, Lakshadweep, Madhya Pradesh, Manipur, Mizoram, Nagaland, Punjab & West Bengal 5Huge Outstanding advances/ Non adjustment of Advances Andhra Pradesh, Assam, Bihar, Chhattisgarh, Delhi, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa, Punjab, Tamil Nadu & West Bengal Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Kerala, Orissa, Maharashtra, Tamil Nadu, & West Bengal

25. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Audit Observations Classified (2007-08 & 2008-09): Sl. No. Nature of Audit Observations 2007-08 (States/UTs) 2008-09 (States/UTs) 6Misappropriation of Funds / Diversion of Funds Daman & Diu & Lakshadweep, Himachal Pradesh Bihar, Haryana, Himachal Pradesh (4 cases) & West Bengal 7Fixed Assets Register not Maintained / Improperly Maintained Assam, Goa, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Sikkim, Tripura & West Bengal Assam, Bihar, Karanataka, Himachal Pradesh, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Rajasthan, Sikkim & Tripura 8Prior years Expenditure Adjusted but Activity wise details not Available Assam, Haryana & Tamil NaduAssam,Himachal Pradesh, Maharashtra, Tamil Nadu 9Irregular / Excess Expenditure Arunachal Pradesh, Karnataka, Meghalaya & Rajasthan Assam, Chandigarh, Daman & Diu, Gujarat, Himachal Pradesh, Karnataka, Chandigarh, Madhya Pradesh, Mizoram, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh & West Bengal

26. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Audit Observations Classified (2007-08 & 2008-09): Sl. No. Nature of Audit Observations 2007-08 (States/UTs) 2008-09 (States/UTs) 10Negative Balance in Term Deposits / Bank Account : Bihar & Mizoram 11Default in deduction of Statutory dues Bihar, Jharkhand & Tamil Nadu 12Non compliance to Procurement Procedures: Bihar, Jharkhand & Tamil Nadu Himachal Pradesh, Haryana, Jharkhand, Kerala & Madhya Pradesh 13Non- maintenance / Improper Maintenance of Accounts Records Bihar, Goa, Karnataka, Kerala, Meghalaya, Nagaland, Rajasthan & Uttarakhand Bihar, Chhattisgarh, Karnataka, Kerala, Madhya Pradesh & Manipur 14Records not Produced for Audit KarnatakaChhattisgarh, Karnataka, Meghalaya & Mizoram

27. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Audit Observations Classified (2007-08 & 2008-09): Sl. No. Nature of Audit Observations 2007-08 (States/UTs) 2008-09 (States/UTs) 15Outstanding UCsGoa, Jharkhand, Karnataka, Puducherry, Rajasthan & Uttarakhand Chhattisgarh, Goa, Gujarat, Meghalaya, Rajasthan, Puducherry, Uttar Pradesh & Uttarakhand 16Receipts of Unspent amounts Treated as Misc. Income Andhra Pradesh, Jharkhand, Maharashtra reversal of advances & Uttar Pradesh Assam, Chhatisgarh, Haryana, Kerala & Maharashtra 17Embezzlement /Fraud etc Andhra Pradesh, Himachal Pradesh Haryana, Himachal Pradesh 18Audit Reports found un- acceptable ChhattisgarhChandigarh, Dadra & Nagar Haveli & Meghalaya

28. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Review by IPAI Team Ministry of Human Resource Development (MHRD) has initiated review of Financial performances of SIS at state, district and sub-district level by independent audit teams of Institute of Public Auditors of India (IPAI). Such exercises of financial review have been done so far in three phases. All the SIS FCs must have shared the observations of their respective state by IPAI Team. General Observations of IPAI :  The Meetings of General Body Council and State Executive Committee are not conducted as required by the Bye laws / Rules of the SIS;  In many states, funds of SSA have been diverted for the purposes other than those approved by PAB in AWP & Bs;  Books of Accounts are not maintained at state and sub-district level offices as prescribed in the FMP Manual;

29. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Review by IPAI Team - General Observations  State shares under SSA/ NPEGEL / KGBV are not released by State Government on regular basis and within the time frame. Generally, funds are released at flag end of the financial year resulting huge unspent balance at year end;  In most of the cases, fund released against School Development Grant, Repair & Maintenance Grant and TLM Grants are booked as expenditure without collecting Ucs / SoEs from the end users;  Completion rates of Civil Works are very poor due to lack of effective supervision & Monitoring, prompt fund transfer system, training of SMCs / VECs people and even technical supports from district level offices;  Asset Register for civil works acquired out of SSA fund has not been maintained in DPO or SPO;

30. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Review by IPAI Team - General Observations  Advance Register are either not maintained or head wise outstanding balance is not reconciled with financial ledger;  Procurement Plans are not prepared at any level and while making decisions on procurement, procedural lapses are witnessed. Lack of transparency in the procurements;  Unavailability of adequate skilled accounts staff at district and sub-district level offices.  Lack of capacity building exercises / training of accounts personnel;  Expenditure in excess of budgetary provisions and/or even without budgetary provisions in some states;

31. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Review by IPAI Team – Some State’s Specific Observations Andhra Pradesh : Several cases of diversion of SSA funds, like IssuesAmount SSA funds diverted for non SSA activities 2005-06 to 2008-09Rs.796.17 lakhs School grant diverted towards printingRs.2236.36 lakhs Expenditure incurred on IX & X class girl students living in KGBVRs.1999.00 lakhs Funds spent on c of SIEMAT building without approval of PAB.Rs.179.47 lakhs Steel Almirah were purchased out of Maintenance grant fundsRs.141.17 lakhs Delhi : Advance payment without a BG to M/s IL & FS for setting up 20 Kiosks-work which was to be completed by March 2009 not started till July 2009 (Rs.21.60 lakhs), 100% advance payment of Rs.1.52 crore made to M/s Mac Milan for supply of Meena Material. Orissa : Extra expenditure Rs.1.62 crore incurred during 2007-2008 & 2008-2009- Discount not claimed & payment of transport charges on Text Books; Punjab : Supply of work books to non entitled category of students Rs.772.03 lakhs., Loss due to excessive purchase of books -Rs. 97.66 lakhs, Avoidable expenditure of Rs. 12.37 lacs in Purchase of computers, In fructuous expenditure of Rs. 4.80 lacs in the purchase of 2400 kits for EG

32. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Review by IPAI Team – Some State’s Specific Observations Rajasthan : Excess expenditure on Training of community leaders Rs.23.204 lakhs Haryana : Loss of interest amounting Rs.1.77 lakhs due to Bank drafts were prepared at the fag end of the year and subsequently cancelled, In-fructuous expenditure on a Non-viable & futile project-Sarva Shiksha Abhiyan Netra paid to the NGO Rs.40 lakhs, Payment of to CADAM for conducting Shiksha Abhiyan Yatra (SAY) Rs.129.19 lakhs Payment to M/s Rajas Enterprises, Ambala Cantt. For playway kits for Bachpanshalas, Payment to Utkarsh Un- authorized payment Rs.50 lakhs to Director, Antarkash corporation Rs.30.96 lakhs, Excess expenditure under CWSN Rs.126.92 lakhs Uttar Pradesh :No reimbursement claims were received from the Financial Controller in respect of actual payments made to the Teachers recruited under SSA-Rs.279623.44 lakhs West Bengal: DPO Hooghly borrowed Rs. 5 crore from SSA to make payment of wages under NREGS in the month of March and April 2008. However the amount was refunded to SSA in June 2008., A computer and a printer value Rs. 0.96 lakhs and Rs. 0.71 lakhs respectively were procured from out of budget of SPO during 2006-07 actually installed in the chamber of MIC(SE), West Bengal. Other states have also to see the report and submit replies to MHRD………

33. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Prompt Settlement of Audit Objections - Suggestions Pre-Audit Measures : 1.Minimize the objections before its inclusion in Auditor’s Report : (a) FCs to take stocks of probable audit queries during the course of audit on regular basis; (b) Have detailed discussions with Auditors with all documentary evidences and supporting papers and take remedial action where ever necessary; (c) Get all such points deleted which could have explained satisfactorily ; Post -Audit Measures : 1.Classify the Audit Objections in different groups : (a) Deficiencies in Books maintenance; (b) Errors of Omission, Bank transactions, Bank Reconciliation; (c) Wrong booking of expenditure, exp. Not supported by UCs, Outstanding advances, (d) Internal audit, internal Control system, Monitoring & Supervision, and (e) Financial irregularities, Misappropriation / Diversion of funds

34. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Prompt Settlement of Audit Objections - Suggestions Post -Audit Measures (continued…..) : 2. Share the Audit Objections with all programme functionaries of SPO, District Programme Co-ordinators and Accounts Officer of DPOs in a joint meeting in presence of SPD; 3. Forward copy of the component wise audit objections to the respective Component In-charge at SPO and seek their comments within a prescribes time frame; 4. Take effective administrative / legal action for the financial misappropriations, if any detected ; 5. Prepare Compliance Report / ATR for approval of the State Executive Committee; 6. Send Replies /Compliance Report / ATR to MHRD

35. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Commitment by Finance Controllers to for submission of the Replies / Compliance Report / ATR on the Audit Report 2009-10  Submission of Compliance Report / SIS Management Replies supported by ATR is as such important as Audit of Accounts.;  Till Date the Ministry has received Replies from 6 (six) states, ie. A & N Island, Assam, Chandigarh, Haryana, Sikkim and West Bengal which are under examination and further scrutinizes by TSG  Finance Controllers of remaining states / UTs are to record their commitment for submission of this important documents to the Ministry …………

36. Annexure-D 29 th Quarterly Review Meeting of Finance Controllers-SSA 12 th – 14 th May 2011 - Shimla ( Himachal Pradesh) Thank You ….