1. Challenges in AG (A&E) offices Sushil Kumar AG (A&E) HP

2. Out Line  Introduction  Mandate of CAG of India  External Challenges  Internal Challenges

3. Introduction  Offices of AG(A&E) come into being as part of restructuring of cadres of Indian Audit and Accounts Department.  The objective being to develop organizational pattern suited to needs of audit and maintenance of accounts of the state government.

4. Mandate of CAG of India  Constitutional and Statutory  Article 149 facilitated enactment of statute to define the duties and powers of CAG  Article 150 provided that the accounts of states and union shall be kept in such form as President may on advice of CAG prescribe.  Article 279 states that CAG shall ascertain and certify the net proceeds of taxes and duties to be distributed to between state and union.

5. Provisions of DPC Act 1971  Section 10 of the Act states that CAG shall be responsible be responsible for compiling the accounts of Union and States from initial and subsidiary Accounts.  Section 11 of the Act mandates that CAG of India to prepare and submit annual accounts of receipt and disbursements of Union and States/ UTs as well as Annual Appropriation Accounts  Section 12 mandates the CAG to provide information and to render assistance in preparation of annual financial statements of the Government from the accounts which are maintained by him.,  Mandate for entitlement functions are neither constitutional nor statutory but purely conventional.

6. Entitlement functions in states  CAG carries out:  Pension Authorization in 18 States  GPF authorization in 19 States  GE function in 9 states  Management of Divisional Accountant Cadre in 19 states.

7. External Challenges  Challenges pertaining to mandate  debate on segregation of accounting and auditing functions dates back to 1924  Indian Audit and Accounts Order 1936 provided for separation of accounts and audit  Section 11 empowers the President / Governor to relieve the CAG of India of his accounting responsibilities  The UTs of Goa, Pondicherry and Delhi have accounting functions since these became fill fledged states  Its impact:  Union accounting functions separated in 1976

8. Computerization of Treasuries  Introduction of treasury computerization has posed the threat of redundancies  The dependency on accounts compiled by AG(A&E) for budgetary control has diminished  The information is easily available to State government  The IFMS is comprehensive system

9. IFMS  Some of the module of IFMS  Interface of treasury system with other internal systems of state and other stake holders like AG office, RBI, Agency Banks, for implementing single source of truth for all transactions.  On-line budget module for preparation, operationalization and monitoring of budget  Accounts module for generation of compiled accounts  Pension Pay Roll and pension management module  Fund flow management module  Electronic settlement of receipt and payment  Online treasury inspection and audit module

10. How to Proceed  Increase relevancy of office by:  Speedy functioning  Correctness in accounts  Professionalize to adopt new concepts  General more relevant and timely information for decision making  Compilers to validators  Better auditing

11. Customer satisfaction  Our customers:  State government  State Government employees  Recent drivers:  Emergence of IT  RTI Act  Public Service Guarantee Acts  General awareness

12. Accounting Reforms  GASAB ( Government Accounting Standards Advisory Board)  Advise on accounting standards for transition from rule based accounting to standard based accounting  Two series of standards:  IGAS (Indian Government Accounting Standard) for cash based accounting  IFRS (Indian Government Financial Reporting Standards) for accrual accounting  Till now three standards have been notified:  Disclosure of Guarantees  Accounting of Grants-in-aid  Accounting of Loans

13. Accounting Reforms  Migration to accrual based accounting  MoF constituted Apex Committee in 2007 to oversee the implementation of Cash to Accrual accounts  GASAB has prepared three Key Documents: Operational Framework of Accrual basis of Accounting, Roadmap and transition path for Accrual Accounting; and Operational Guidelines for accrual based financial reporting in government.  The transition is to carried out in five phases spread over ten to twelve years  Challenges in capacity building in human recourse as well as technology modification

14. Accounting Reforms  Modification in Finance Accounts  The format of Finance Account went material alteration in year 2009-10  At present the number of Statements and Appendices in Finance Accounts is 19 and 14 respectively.  Challenges  Bulkiness is not necessarily a desirable quality of Accounts  FA are beyond the average capability of average citizen to understand the accounts.  Accounts at Glance lacks legal backing  Annual Accounts data are collected from various sources

15. Accounting Reforms  Appropriation Accounts;  Need to make more compact  Norms of savings and excesses need revision

16. Accounting Reforms  Revision of List of Major and Minor Heads:  List of Major and Minor Heads has been substantially revised three times in 1962, 1974 and 1987 after first list was published in 1938.  The Government of India appointed a committee in 2009 under the chairmanship of Shri CR Sundaramurti to review the prevailing classification system.  The committee recommended a new classification based on seven segments: administrative, function, programme cum scheme, recipient, target, economic and geographical.  New scheme of classification requires adoption of 49 digits

17. Internal Challenges

18. Human Recourse Challenges  Staffing pattern in A&E office is a relic of pre-computerization period  Shortages in DEO cadre  No deputation allowance  No uniform standard for output.  Therefore output based standards for personnel dealing with verification of vouchers, scrutiny of accounts, verification of entitlement claims and their authorization is urgently needed both form a result based performance basement and effective cadre management in A&E offices.

19. Human Recourse Challenges  All India recruitment but required to function locally  IT knowledge a must

20. Hygienic Challenges  The AG (A&E) offices are repositories of vouchers, accounts, cheques, accounts, pension records and GPF records.  The estimated number of vouchers reaching A&E office is staggering 4.2 crore.  This has led to the problem of not only cleanliness but also cost of maintenance.

21. Hygienic Challenges  Non-revision of norms of preservation  The norms of preservation of records have not been revised in the context of amendment to Indian Evidence Act 1872 and Information Technology Act 2000.  Section 65(B) of Indian Evidence Act states that any information contained in an electronic record printed on a paper, stored and recorded or copied in optical or magnetic media produced by computer shall admissible in any proceedings.  Section 7 of Information Technology Act states that retention of information in electronic format satisfies requirement of retention of documents information as per any law.

22. Hygienic Challenges  Retention period needs review  Digitization of records.