1. 37 th Quarterly Review Meeting of Finance Controllers, New Delhi Settlement of Advances under SSA (Audit Reports FY-2011-2012) 1

2. Settlement of Advances under SSA Para–74.1 of the Manual on Financial Management & Procurement under SSA provides that all funds releases to districts and sub-district level units are to be classified as advances and the same shown in the books of accounts as advances. These advances are to be adjusted as expenditure based on the Expenditure Statements /Utilization Certificates received from the implementing units of having spent the funds. Advances if not actually spent for which accounts have not been settled are to be shown as advances and NOT AS EXPENDITURE. 2

3. The Audit Report for the year 2011-2012 so far received indicate that fund releases are still being shown as expenditure instead of advances. a)Release of funds being treated as expenditure instead of advances. b)Contingency grants given to PTAs, EGS, Schools, CRCs have been accounted for on the basis of compiled expenditure details certified by DPC. 3

4. c)Funds for construction works are classified as capital works in progress instead of advances. d)Many Districts have booked the funds released as expenditure. e)Fund released to SMCs are treated as expenditure before execution of works. 4

5. f)Many Districts are treating payment of funds as expenditure instated of advances. g)Most of the Districts have treated the funds released for Civil Works as expenditure instead of advances. h)The Utilization Certificates/ Expenditure Statements from schools etc. have not been received / submitted in time. Therefore, they are unable to certify the end use of funds as they have not been able to verify utilization. 5

6. Para-74.2 of the Manual further provides that advances are to be adjusted in the financial year to which the grant relates. For this purpose. Expenditure Statements / Utilization Certificates are required to be submitted by the units incurring the expenditure against the advances as soon as the event for which advance is given is over. 6

7. However in Para-75.1 of the Manual it is provided that all the Utilization Certificates / Expenditure Statements against the advances should be submitted within One month of the close of the financial year. This is the maximum time limit. It does not mean that expenditure Statements/ Utilization Certificates have to be submitted by the spending units only after the close of the financial year. 7

8. The disbursing units need to follow up the un-adjusted advances to obtain the Expenditure Statements / Utilization Certificate / accounts of the advances for adjusting the same in the same year before finalization of the accounts for the year. Para-106.10 of the Manual provides that accounts for financial year are to be finalized by 30 th June each year. 8

9. However review of the Annual Audited Accounts FY-2011-2012 submitted by the SIS indicate that huge amount of advances remain un- adjusted with SIS each fiscal year as would be seen from the following details. Statewise outstanding advances at end of FY-2010-2011 and FY-2011-2012 as per the audited accounts. 9

10. Sl. No. Name of the State Advances as on 31.3.2011 Outstanding Advances as on 31.3.2012 1.A& N Island79.81 2.Andhra Pradesh56666.62 3. Arunachal Pradesh- 99.59 4.Assam1457.25 1004.56 5.Bihar487200.88 586304.81 6.Chandigarh- 7.Chattisgarh144610.94 (Rs. in lakhs) 10

11. Sl. No. Name of the State Advances as on 31.3.2011 Outstanding Advances as on 31.3.2012 8. D&N Haveli 207.37 9. Daman & Diu 139.48 10 Delhi 1367.92 11. Goa - 979.00+221.48 (for civil works) 12. Gujarat 502.16 13. Haryana 26467.74 28936.71 14. Himachal Pradesh 1163.11 (Rs. in lakhs) 11

12. Sl. No. Name of the State Advances as on 31.3.2011 Outstanding Advances as on 31.3.2012 15. Jammu & Kashmir66062.30 16.Jharkhand- 112802.83 (as per UC) 17.Karnataka162673.30 18300.962 18.Kerala3158.20 4227.67 19.Lakshadweep- 20. Madhya Pradesh386091.82 214604.57 (Rs. in lakhs) 12

13. Sl. No. Name of the State Advances as on 31.3.2011 Outstanding Advances as on 31.3.2012 21.Maharashtra- 35931.36 22.Manipur2081.55 5189.63 23.Meghalaya1917.19 24.Mizoram143.82 249.01 25.Nagaland- 26.Odisha49680.85 102743.45 27.Puducherry- (Rs. in lakhs) 13

14. Sl. No. Name of the State Advances as on 313.2011 Outstanding Advances as on 31.3.2012 28.Punjab- 10856.13 29.Rajasthan7890.73 30.Sikkim885.60 31.Tamil Nadu21324.36 32.Tripura7025.65 12795.41 (Rs. in lakhs) 14

15. Sl. No. Name of the State Advances as on 31.3.2011 Outstanding Advances as on 31.3.2012 33.Uttar Pradesh31344.69 34.Uttarakhand8402.22 13045.67 35.West Bengal169876.20 69261.00 (Rs. in lakhs) 15

16. Para-47 of the Manual provides that if in a particular year an outlay approved is not spent fully, the same becomes outlay saved. Normally outlay saved under non recurring activity heads is taken as spillover activities for the forth coming year. Spillover allows a district to continue activities of non-recurring nature such as Civil Works, one time grant of TLE, furniture grant for BRC, CRC etc. which could not be completed during the year. Each district needs to prepare a spillover plan every year alongwith AWP&B for approval by the PAB.

17. It, therefore, follows that the advances relating to spillover activity only can be carried forward to the forth coming year only if approval of PAB is taken for the spillover of incomplete activities as provided in Para -74.3 of the Manual for which approval of spillover activities is approved by PAB. The advances will thus become advances for the current year and there will be no difficulty in their adjustment in the current year as the AWP&B approved for the current year will include the unspent allocation for spillover activities.

18. It is, however, observed from the PAB ’ s approvals of AWP&B for the year 2011-2012 & 2012-2013 that the many States having huge amount of un-adjusted advances are not drawing up their spillover Plans properly. The advances given for recurring activities remaining unspent are required to be refunded by the units before the close of the financial year and are to be adjusted in accounts before finalization of annual accounts. In case any such advances have been incurred as expenditure goods & services for which were received before the close

19. of the financial year but due to certain reasons bills / expenditure statements could not be submitted may be included in the accounts as liabilities by debiting the expenditure to the relevant activity head and crediting bills payable account. On receipt of vouchers/ bills expenditure statements necessary adjustment entries by debiting Bills payable account & crediting advance account shall be made in the accounts.

20. All the Finance Controllers are requested to ensure that the advances are adjusted in accounts as soon the event for which the advance was granted is over for non recurring or recurring expenses by obtaining bills / vouchers Utilization Certificates / Expenditure Statements as the case may be. In case the grantee of the advance fails to submit the accounts relating to recurring expenses action to recover the advance has to be taken. In respect of non recurring expenditures it is to be ensured that a proper spillover Plan in respect of all unspent / partly spent advances is prepared alongwith the AWP&B for obtaining PAB ’ s approval each year.

21. Attention of the Finance Controllers is also drawn to the clarifications obtained from the Chief Controller of Accounts (CCA) MHRD obtained in the above context and conveyed to them in the MHRD letter No.15/5/2003- SSA(PR) dated 1 st July 2010, which are reproduced below:

22.  Specific reasons to book the expenditure of earlier years in current year have not been specified. In terms of Para-75.1 of FM&P Manual, advances are to be adjusted as expenditure on receipt of expenditure statements / Utilization Certificates. This para provides time limit of submission of these certifying documents for expenditure. The documents may be obtained before closing of account of the financial year so that advances are adjusted in the relevant financial year.

23.  The reason that “ due to late receipt of UCs ” is not sustainable. The expenditure Statements / Utilization Certificates need to be obtained as per time prescribed in Para-75.1 of the Manual. Timely receipt of UCs has been emphasized in Para-75.3 also.  The amount of advance remained unspent due to receipt of grant at the fag end of the previous year may be treated as follows:

24. a)In Case there is prior period liability of earlier years, the unspent balance may be included in the grant of the current year with the approval of PAB and in the accounts it should be shown as prior period adjustment to explain the excess expenditure over and above the PAB approved outlay. b) In case there is no liability of earlier years, the unspent balance may be adjusted / reduced from the grant of current year.

25. It may be ensured that all prior period expenditures are regulated in accordance with the above clarifications.

26. 26 Observations made by the Statutory Auditor regarding settlement of Advances 1. Assam  Huge amount of advances given in earlier years since 2002-2003 are yet to be adjusted in SPO/DPOs. This need to be taken up in right earnest and recovered early.

27. 27 2. Goa :  Large amount of advances given by DPO- North and DPO-South amounting to Rs.6.95 crores and Rs.1.97 crores outstanding as on 31.3.2012 3. Tripura:  It is noticed, in many cases, advance taken against expenses are being settled very late.  Advances are being given pending settlement of earlier advances.

28. 28 4. Jharkhand :  Project is having an advance of Rs.1094.92 crores as on 31.3.2012 (Rs.1128.02 crores as per UC). In many cases Advances are pending adjustment since many years. Inspite of huge unadjusted old advances, fresh advances have been given during the year.  There is un-reconciled difference of Rs.3.70 lakhs between Ranchi and Khunti District.

29. 29  Advances of Rs.135.33 lakhs paid to BRCs of Khunti district before its bifurcation from Ranchi is pending adjustment.  In Garhwa district advance given to NGO for conducting bridge course Rs.89.38 lakhs has neither been recovered nor has been any Utilization Certificate received. 5. Madhya Pradesh :  Huge amount of outstanding advances are under PTA.

30. 30  In many cases record maintained by DPO & block offices do not reveal the PTA wise as well as year wise advances outstanding.  For effective monitoring and early adjustment of long period outstanding entries, yearwise and PTA wise outstanding advance register should be maintained at DPO.

31. 31 6. Manipur :  Advances paid to the Staff and others are not being properly recorded in the Advance Register where maintained. Majority of district are not maintaining. Advance ledger for funds transferred to Block/Cluster  As a result details and period of outstanding is not available. Follow up for adjustment of outstanding advances is not there in the districts as well as in SPD office.

32. 32 7. Karnataka:  Large amount of outstanding advances are with BEOs, DPOs and individual employees.  An early action is to be taken to recover these advances.  Advances have to be periodically analyzed and taken up for recovery. 8. Odisha:  Huge amount of advances lying unadjusted for a long period.

33. 33 9.Kerala :  An amount of Rs.10 lakhs relating to loss of money at Kottayam DPO for year 2006-2007 is included in unsettled advances. Case is pending. 10. West Bengal:  Many advances are pending to be adjusted for more than 1 year.

34. 34 11. Punjab:  Register of advances at District /Block offices for the funds released to sub-district levels and VECs not maintained. 12. Bihar:  Loans & Advances as 1.4.2012 Rs.586304.81 lakhs and another Rs.1459.87 lakhs towards errors /omissions of earlier years parked pending reconciliation.

35. 35  Efforts have been made for adjustment of no. of advances, but still some very old balances under some head of balances are pending.  Advances to DSE office / DPO for Teacher Salary Rs.33786.80 lakhs.  Advance for Teachers Learning Equipment Rs. 357.64 lakhs.  Advance for Additional Teachers Salary Rs.1541.38 lakhs  Individual wise breakup of advances was not received.

36. 36  Payment of advances given to VSS was not acknowledged.  Some recipient organizations have closed, but advances still being carried over the years.  SIEMAT : Rs.18.47 lakhs  SPEED : Rs.21.04 lakhs  Renovations of SLO Offices : Rs.93.45 lakhs

37. 37 13. Uttarakhand:  Advances of Rs.8402.22 lakhs made to Gram Nidhi in FY-2010-2011 yet to be adjusted.  Advances of Rs.7083.21 lakhs made to School Management Committees, yet to be adjusted. Many SMCs not produced records/document during audit.

38. Key Performance Indicator Performance Indicator = Advances Outstanding's as on 31.03.20xx including Civil works / Expenditure Incurred during the year. Performance Indicator = Advances Outstanding's as on 31.03.20xx excluding Civil works / Expenditure Incurred during the year. Oldest outstanding advance pending settlement, yearwise breakup of the outstanding advances and maintenance of advance registers at DPO level. 38