22

Weak Accounting SystemWeak Accounting System• Non-availability of copies of FMP Manual Non-availability of copies of FMP Manual

at District/Block Level.at District/Block Level.• Non-availability of VEC Manual at Non-availability of VEC Manual at

Schools.Schools.• Inadequate accounts staff.Inadequate accounts staff.• Accounts staff not being trained Accounts staff not being trained

properly.properly.• Non-maintenance of Books of Accounts Non-maintenance of Books of Accounts

like Cash Book, Ledger, Journal, Cheque like Cash Book, Ledger, Journal, Cheque issue register, Stock register, Asset issue register, Stock register, Asset register, Advance register etc.register, Advance register etc.

• Cash books not being maintained on Cash books not being maintained on double entry system.double entry system.

33

Contd./- Contd./- •Bank reconciliation statement not Bank reconciliation statement not

being prepared regularly.being prepared regularly.

•Treating advances as expenditure.Treating advances as expenditure.

•Large outstanding advances.Large outstanding advances.

•Delay in submission of utilization Delay in submission of utilization certificate.certificate.

•Weak internal audit system.Weak internal audit system.

•Delay in submission of statutory Delay in submission of statutory audit reports.audit reports.

•Delay in audit report compliance.Delay in audit report compliance.

44

•Diversion of funds.Diversion of funds.

•Other financial irregularities.Other financial irregularities.

• Excess expenditure over and above Excess expenditure over and above the approved targets.the approved targets.

• Keeping funds under Fixed Deposit Keeping funds under Fixed Deposit to avoid lapse of funds.to avoid lapse of funds.

•Delay in transfer of funds to District Delay in transfer of funds to District and Sub-District level units.and Sub-District level units.

• E-Transfer not being followed where E-Transfer not being followed where facilities existfacilities exist

Contd./- Contd./-

5555

MeasuresFMP Manual•Ensure that FMP manual with all

amendments is reissued upto block level.

VEC Manual•Modify the VEC Manual as per the FMP

manual on accounting system and issue the same to all VECs/Schools.

Strengthening of Strengthening of Accounting SystemAccounting System

6666

Staffing –Staffing –• Para 83 of the Manual provides Para 83 of the Manual provides

indicative staffing structure at SPO indicative staffing structure at SPO and DPO.and DPO.

• Also provide account staff at block Also provide account staff at block level to provide resource support to level to provide resource support to Cluster, VEC/School.Cluster, VEC/School.

• Fill up all vacant positions by Fill up all vacant positions by September, 2009.September, 2009.

Contd./- Contd./-

7777

Capacity BuildingCapacity Building• Para 84 of the Manual provides Para 84 of the Manual provides

training to the accounts staff.training to the accounts staff.• Provide minimum 5 days mandatory Provide minimum 5 days mandatory

training in a year to accounts staff training in a year to accounts staff at all levels.at all levels.

•Mainly focus on accounting aspects, Mainly focus on accounting aspects, maintenance of double entry system maintenance of double entry system of cash book, bank reconciliation, of cash book, bank reconciliation, procurement etc.procurement etc.

Contd./- Contd./-

8888

•Hire the services of CA to impart Hire the services of CA to impart training on double entry systemtraining on double entry system

• The accounts staff trained at district The accounts staff trained at district level should impart training to staff level should impart training to staff maintaining accounts at sub district maintaining accounts at sub district level unitslevel units

• Also impart training on accounting Also impart training on accounting and procurement procedure at VEC/ and procurement procedure at VEC/ School level School level

Contd./- Contd./-

9999

Books of Accounts - Books of Accounts - • Para 50 of the Manual provides the Para 50 of the Manual provides the

list of books of accounts, registers list of books of accounts, registers etc. to be maintained etc. to be maintained

• Ensure that the prescribed books of Ensure that the prescribed books of accounts, particularly cashbook, accounts, particularly cashbook, ledger, journal, registers for cheque ledger, journal, registers for cheque issue, advance, stock, asset, etc. are issue, advance, stock, asset, etc. are maintained at all levels wherever maintained at all levels wherever expenditure is incurred expenditure is incurred

• Ensure annual physical verification Ensure annual physical verification of stock and assetof stock and asset

Contd./- Contd./-

10101010

Cash Book on Double Entry System – Cash Book on Double Entry System – • Para 77 of the Manual provides Para 77 of the Manual provides

detailed procedure for maintenance of detailed procedure for maintenance of cash book including double entry cash book including double entry system system

• Ensure that the prescribed procedure Ensure that the prescribed procedure is followed is followed

• It may not be possible to maintain It may not be possible to maintain double entry system of cash book at double entry system of cash book at cluster and VEC / School levelcluster and VEC / School level

• Simple system of cash accounting may Simple system of cash accounting may be followed at these levelsbe followed at these levels

Contd./- Contd./-

11111111

Accounting Software - Accounting Software - •Most of the states have introduced Most of the states have introduced

accounting software / tally software accounting software / tally software

• Remaining states should also introduce Remaining states should also introduce this system of accounting early to this system of accounting early to improve the accounting systemimprove the accounting system

•Maintenance of manual system of cash Maintenance of manual system of cash book can be dispensed with in such book can be dispensed with in such cases provided print out of the daily cases provided print out of the daily cash transactions are taken out and cash transactions are taken out and kept on record, each entry duly kept on record, each entry duly attested by the DDO attested by the DDO

Contd./- Contd./-

12121212

Bank Reconciliation Statement - Bank Reconciliation Statement - • Para 82 of the Manual provides Para 82 of the Manual provides

preparation of monthly bank preparation of monthly bank reconciliation statementsreconciliation statements

• Ensure that the same is prepared at Ensure that the same is prepared at all levels wherever bank accounts are all levels wherever bank accounts are operative operative

• Take immediate action to cancel all Take immediate action to cancel all stale cheques and credit the same to stale cheques and credit the same to SSA accounts.SSA accounts.

Contd./- Contd./-

13131313

Asset Register – Asset Register – •Mostly, not being maintained or if Mostly, not being maintained or if

maintained not in the prescribed maintained not in the prescribed formatformat

• Ensure maintenance of asset register in Ensure maintenance of asset register in the format given in Annex-V of the the format given in Annex-V of the Manual at all levels Manual at all levels

• Also ensure physical verification of Also ensure physical verification of assets annuallyassets annually

• Detailed procedure for the Detailed procedure for the maintenance of asset register is given maintenance of asset register is given in Para 62 of the Manualin Para 62 of the Manual

Contd./- Contd./-

14141414

Advances Treated as Expenditure -Advances Treated as Expenditure -•Para 72 of the Manual provides that Para 72 of the Manual provides that

funds released to districts on sub funds released to districts on sub district level units are initially district level units are initially classified as advances and these are classified as advances and these are adjusted on receipt of utilization adjusted on receipt of utilization certificate / expenditure statement certificate / expenditure statement

Contd./- Contd./-

15151515

•Para 73.1 of the Manual envisages Para 73.1 of the Manual envisages that advances released on account that advances released on account of school grant, teacher grant, TLE, of school grant, teacher grant, TLE, maintenance grant, civil works by maintenance grant, civil works by community, teachers salary, EGS / community, teachers salary, EGS / AIE (salary & materials), teacher’s AIE (salary & materials), teacher’s training and contingency grant to training and contingency grant to BRC/ CRG are treated as BRC/ CRG are treated as expenditure for the purpose of expenditure for the purpose of reporting only.reporting only.

Contd./- Contd./-

16161616

• In the books of accounts, these will In the books of accounts, these will remain as advances and treated as remain as advances and treated as expenditure only on receipt of expenditure only on receipt of expenditure / utilization certificateexpenditure / utilization certificate

• Ensure that the utilization certificate / Ensure that the utilization certificate / expenditure statement is obtained expenditure statement is obtained within the time limit prescribed against within the time limit prescribed against each item as laid down in Para 73.1 of each item as laid down in Para 73.1 of the Manual the Manual

• In many states advances are treated as In many states advances are treated as expenditure and included in the audit expenditure and included in the audit report which should be avoided in report which should be avoided in futurefuture

Contd./- Contd./-

17171717

Advance Register - Advance Register - • Para 74 of the manual provides Para 74 of the manual provides

maintenance of an advance register maintenance of an advance register

• The format for the advance register is The format for the advance register is given in Annex-VI of the Manual given in Annex-VI of the Manual

• Presently, in many states this is not Presently, in many states this is not being maintained being maintained

• Ensure that all advances are noted in Ensure that all advances are noted in the register and necessary the register and necessary adjustments are carried out adjustments are carried out immediately on receipt of the immediately on receipt of the utilization certificate / expenditure utilization certificate / expenditure statementstatement

Contd./- Contd./-

18181818

Outstanding Advances -Outstanding Advances -• At present no mechanism exists in At present no mechanism exists in

states to monitor outstanding states to monitor outstanding advances advances

•More focus should be given to the More focus should be given to the maintenance of advance register and maintenance of advance register and the adjustment of advancesthe adjustment of advances

• Large advances paid to Government Large advances paid to Government departments, NGOs and staff are departments, NGOs and staff are outstanding for a considerable period outstanding for a considerable period of time of time

• Ensure that all outstanding advances Ensure that all outstanding advances are adjusted immediately are adjusted immediately

Contd./- Contd./-

19191919

Delay in Submission of Utilization Delay in Submission of Utilization CertificatesCertificates

• Para 73.3 of the Manual envisages that Para 73.3 of the Manual envisages that UCs are obtained within the time limit UCs are obtained within the time limit prescribed in Para 73.1 of the Manual prescribed in Para 73.1 of the Manual

• The time limit is not strictly adhered to The time limit is not strictly adhered to in many cases resulting inordinate in many cases resulting inordinate delay delay

• Evolve a proper mechanism to obtain Evolve a proper mechanism to obtain the UCs from sub district level units in the UCs from sub district level units in timetime

Contd./- Contd./-

20202020

Internal Audit –Internal Audit –• Para 100 of the Manual envisages the Para 100 of the Manual envisages the

detailed procedure for internal auditdetailed procedure for internal audit

• The system is available in almost all The system is available in almost all states but the same needs states but the same needs strengthening strengthening

• Incase, in house arrangement is Incase, in house arrangement is insufficient hire the services CAs by insufficient hire the services CAs by using the TOR given in Annex – XIII of using the TOR given in Annex – XIII of the Manual the Manual

• Ensure that internal audit is carried Ensure that internal audit is carried out on a concurrent basis and suitable out on a concurrent basis and suitable follow up action taken on its reportsfollow up action taken on its reports

Contd./- Contd./-

21212121

Statutory Audit -Statutory Audit -• Para 101.9 of the Manual envisages Para 101.9 of the Manual envisages

that CA firm’s annual audit report is that CA firm’s annual audit report is made available by 30made available by 30thth September by September by every yearevery year

•Most of the states could not submit Most of the states could not submit the audit reports for 2007-08 in time the audit reports for 2007-08 in time

• Ensure that the audit report for Ensure that the audit report for 2008-09 is submitted in time2008-09 is submitted in time

• Ensure prompt follow up action on Ensure prompt follow up action on the compliance of the audit reportthe compliance of the audit report

Contd./- Contd./-

22222222

Diversion of Funds / Other Diversion of Funds / Other Financial Irregularities -Financial Irregularities -

• Para 86.1 of the Manual provides that Para 86.1 of the Manual provides that SSA funds are not diverted or re-SSA funds are not diverted or re-appropriated to meet any appropriated to meet any expenditure which was not expenditure which was not sanctionedsanctioned

• Ensure that no diversion or other Ensure that no diversion or other financial irregularities are taken placefinancial irregularities are taken place

• Take immediate action to recoup the Take immediate action to recoup the funds diverted or spent irregularly funds diverted or spent irregularly

Contd./- Contd./-

23232323

Excess Expenditure -Excess Expenditure -• Para 85.2 of the Manual provides Para 85.2 of the Manual provides

that total expenditure is kept within that total expenditure is kept within the limit of the budget provision the limit of the budget provision

• Excess expenditure reported under Excess expenditure reported under some interventions some interventions

• Re-appropriation of funds under the Re-appropriation of funds under the orders of state EC is envisaged in orders of state EC is envisaged in Para 86 of the ManualPara 86 of the Manual

• Any re-appropriation beyond this Any re-appropriation beyond this limit should be approved by PAB at limit should be approved by PAB at the national level the national level

Contd./- Contd./-

24242424

Fixed Deposit -Fixed Deposit -• Fixed Deposit under SSA is not Fixed Deposit under SSA is not

permittedpermitted

• Ensure that no fixed deposit is made Ensure that no fixed deposit is made

• Any fixed deposit made should be Any fixed deposit made should be withdrawn immediately and credited withdrawn immediately and credited to SB account to SB account

Contd./- Contd./-

25252525

Interest -Interest -• Para 89.4 of the Manual provides Para 89.4 of the Manual provides

detailed procedure for accounting of detailed procedure for accounting of interest interest

• The interest accrued on the savings The interest accrued on the savings bank accounts of school, CRC, BRC bank accounts of school, CRC, BRC level is not being accounted for in the level is not being accounted for in the SSA accounts and not reflected in the SSA accounts and not reflected in the annual accounts annual accounts

• Ensure that interest credited at these Ensure that interest credited at these levels are also included in the annual levels are also included in the annual accountsaccounts

Contd./- Contd./-

26262626

Delay in Transfer of Funds -Delay in Transfer of Funds -• Para 89.3 of the Manual provides Para 89.3 of the Manual provides

transfer of funds to districts and transfer of funds to districts and from districts to sub district level from districts to sub district level units within 15 days of its receiptunits within 15 days of its receipt

• Ensure that funds are transferred Ensure that funds are transferred within this time limit within this time limit

Contd./- Contd./-

27272727

E-Transfer of Funds-E-Transfer of Funds-• Para 89.5 of the Manual provides Para 89.5 of the Manual provides

electronic transfer of funds at all electronic transfer of funds at all levels wherever such facilities exist levels wherever such facilities exist

•Many states have adopted this Many states have adopted this system system

•Other states should also adopt this Other states should also adopt this system by 30system by 30thth September 2009 September 2009 wherever such facilities existwherever such facilities exist

Contd./- Contd./-

28282828

Defects noticedDefects noticed•Not followed Levels of procurement in Not followed Levels of procurement in

terms of Para 107 of the Manualterms of Para 107 of the Manual

•Made procurement of goods and services Made procurement of goods and services not included in the procurement plannot included in the procurement plan

•Not followed the method of procurement Not followed the method of procurement envisaged in Para 109 of the Manualenvisaged in Para 109 of the Manual

•Non-availability of procurement Non-availability of procurement documentsdocuments

• Procured goods in excess of the Procured goods in excess of the requirement and lying in stockrequirement and lying in stock

ProcurementProcurement

29292929

• Engaged NGOs without following the Engaged NGOs without following the selection procedureselection procedure

• Computers purchased under CAL are Computers purchased under CAL are lying idle for want of space, power lying idle for want of space, power connection, trained teachers, connection, trained teachers, software etcsoftware etc

• Procured computers without inviting Procured computers without inviting tenders or under the rate contracts tenders or under the rate contracts of DGS&D/Stateof DGS&D/State

• Procured printers for schools Procured printers for schools without ascertaining its utilitywithout ascertaining its utility

Contd./- Contd./-

30303030

•Not entered into MOU with Not entered into MOU with purchasing agency prescribing purchasing agency prescribing terms and conditions like cost, terms and conditions like cost, delivery date, inspection, liability of delivery date, inspection, liability of the seller during warranty period, the seller during warranty period, liquidated damages for delay in liquidated damages for delay in delivery, rate of commission, delivery, rate of commission, payment terms etc. payment terms etc.

• Cost of goods purchased through Cost of goods purchased through purchasing agency was in excess of purchasing agency was in excess of the market ratethe market rate

Contd./- Contd./-

31313131

• Part payment made for part supply Part payment made for part supply without provision in the agreement to without provision in the agreement to avoid lapse of budget provision avoid lapse of budget provision

• Injudicious purchases in the month of Injudicious purchases in the month of March to avoid lapse of budget provision March to avoid lapse of budget provision

• Penal provisions in contracts not Penal provisions in contracts not enforcedenforced

• While submission of sample was While submission of sample was mandatory along with the bids, contract mandatory along with the bids, contract awarded to firm who failed to submit awarded to firm who failed to submit samplessamples

• Goods accepted and payments made Goods accepted and payments made without inspection and certification without inspection and certification

Contd./- Contd./-

32323232

• Text books procured in excess of the Text books procured in excess of the requirement requirement

•Delay in distribution of text books Delay in distribution of text books

• Feasibility of printing of text books Feasibility of printing of text books through state government press not through state government press not ascertained before inviting tenders ascertained before inviting tenders from private printersfrom private printers

• TDS not recovered at the time of TDS not recovered at the time of payment payment

•Delay in construction of civil worksDelay in construction of civil works

Contd./- Contd./-