1. Audit of Appropriation and Finance Accounts CGA prepares the Appropriation Accounts in respect of 99 Grants of Civil Ministries out of total grants 122 grants of GOI Audit of Appropriation Accounts of Union Government (Civil Ministries) is undertaken in different stages

2. General Financial Objectives Completeness Occurrence Measurement Disclosure Regularity

3. Public Funds lying outside Govt. Accounts Ministry of Finance in 2005 directed all Ministries to ensure that funds of regulatory bodies were maintained in the Public Account Contrary to these instructions the funds of many regulatory bodies are maintained outside Government Account (Public Account) E.g., SEBI, IRDA, PNGRB, PFRDA

4. Funding of the authorities outside Government account Article 12 of the Constitution defines what is a State which includes an authority Ministry of law and Justice had clarified that state includes an authority Attorney General of India interpreted the word authority to include person or body exercising power or command vested in it by virtue of provisions in the constitution or Acts passed by the Parliament or the State Legislatures. Instances of authorities funded outside Govt. accounts were noticed e.g (DGH)

5. Unnecessary creation of Funds Creation of specific funds unnecessarily for the purposes which could be covered by including them in the regular budgets GFR provisions relating to spending public money for the benefit of a section of people or individuals not complied Parliamentary control circumvented E.g. Income Tax Welfare Fund

6. Continued breach of article 114(3) The Department of Revenue both (CBDT) and (CBEC) classifies the interest on refunds of excess tax as reduction in revenue Payment of interest on refunds of excess tax is a charge on the Consolidated Fund No legal authority to withdraw money from consolidated fund towards interest on refunds without approval in the budgets

7. Non-crediting of balances of dissolved Funds to the CFI The balances lying in the specific funds created under a particular law or order should be credited back to the CFI as and when the Act according to which such a fund is established is repealed Instances of not complying with this was noticed (e.g. Coal Mines Labour Housing and General Welfare Fund, Drug price stabilisation fund, Cement Regulation Account etc)

8. Understated accounting of external Debt External debt of GOI is recorded at historical rate of exchange On account of subsequent changes in exchange value when repayment is done the amount repaid is always higher than the amount payable External debt gets understated due to netting of negative and positive balances

9. Incorrect transaction passing through CFI Money which was received by GOI from PSUs for acquiring land on their behalf was being taken in the Government Accounts as reduction of capital expenditure under CFI and the expenditure on acquisition of land on behalf of PSU was treated as capital expenditure of GOI as investment

10. Incorrect recording of expenditure on viability gap funding Financial assistance (in the form of viability gap funding) to infrastructure projects executed under PPP mode was booked in the Govt Accounts as Capital expenditure This violates rule 79 of the GFR and also Rule 31 of the Govt Accounting Rules 1990 The object head operated is 42 LS provision

11. Transaction occurring after closure of financial year A transaction of grants in aid to Hindustan insecticides limited dated 21 st May 2013 was considered in Appropriation Account for the year 2012-13 Suppl. Provision was obtained during the year 2012-13 The suppl. Provision was for non-cash (waiver of loan)

12. Misclassification of expenditure Classification of the transactions in the Government shall have closer reference to the functions, programmes and activities of the Government, rather than the department in which the expenditure occurs. Expenditure towards subsidy to haj pilgrims was recorded under Civil Aviation as Other expenditure

13. Misclassification of expenditure Expenditure representing the contributions made by the Government of India to African Development Fund, towards Multilateral Debt Relief Initiative for 33 Highly indebted poor countries (HIPC) in Africa was booked under the Capital section of the grant against the object head 54 investments (5466-00-205- 0100-54) contrary to the Rule 79 of the GFR

14. Time analysis of expenditure In 10 grants 26 per cent of total expenditure is incurred in the Month of March and even in the expenditure in the month of March 56 per cent of the expenditure was incurred on the last day of the Year There is a trend of lumping of expenditure under few object heads in the month of March

15. Transferring central plan funds to Abs and NGOs The Government of India had transferred an amount of more than a lakh crores of rupees of central plan assistance to State level and District level Autonomous Bodies, Authorities and NGOs directly without routing the funds through the Consolidated Fund of States The unspent balances with theses bodies and actual expenditure incurred in that year was not ascertainable

16. Misclassification of expenditure Various departments/Ministries misclassified the expenditure more particularly the revenue expenditure was misclassified as capital and vice-versa This has the effect of understating/overstating the Revenue and Capital expenditure This also resulted in understating the Revenue deficit

17. Augmentation of provision under Grants in Aid As per the existing instructions augmentation of provision under grants –in-aid requires approval of Parliament through Suppl. Grants It was noticed in audit that in 28 cases augmentation under grants in aid was done without the approval of Parliament in violation of the existing instructions The departments accepted the comment

18. Parking of funds outside Govt. Account Government accounts classify withdrawals out of consolidated funds as expenditure Funds are withdrawn from the consolidated fund and credited to the Public Accounts or transferred to the Public Sector Enterprises or Autonomous Bodies to avoid lapse of budget Huge cash balances with PSUs and AB (e.g. NHAI)

19. Expenditure of ABs booked under regular heads of accounts Expenditure (Rs.157.36 crore) incurred on the, salaries, TA, contingencies, etc of Khadhi and Village Industries Commission (an autonomous institution) was booked under the major heads 2851 Village and Small Industries against the object head ’20 Other Administrative Expenses. Since it is an AB it should have been booked as grants in aid and GIA for salaries

20. Expenditure of ABs not treated as GIA Expenditure incurred on the, salaries, TA, Medical claims etc of The National Manufacturing Competiveness Council (NMCC) (an autonomous institution) was booked under the major heads Head 2852.80.800-Other expenditure against the object head ’50 Other Charges”. Since it is an AB it should have been booked as grants in aid and GIA for salaries

21. Some Observations Inconsistency between Finance Accounts and Appropriation Accounts e.g. Investments accounted for in the Appropriation Accounts are not depicted in Finance Accounts Inconsistency between two statements of the Finance Accounts (Statement No.9 and 10 of Finance Accounts)- e.g. Amount transferred to RDF and amount booked as receipt in Public Account are not matching

22. Understatement of liablity The liability of GOI under small savings, PF etc. was shown in the accounts as Rs.9.88 lakh crores of rupees. It was noticed that actual liability was to the extent of Rs.10.59 lakh crores of rupees The understatement was on account of adjustment of liability of the Government to the accumulated deficit of NSSF

23. Some Observations Operation of discontinued Minor head (e.g. Minor head 111 Departmental Adjusting Account under 8658 suspense became inoperative from 1982-83 but balances as well as transactions appeared even in 2011-12 although the balances were supposed to be cleared by 2008-09. The transactions and balances pertain to 14 State Accountant Generals