Weak Accounting System
• Non-availability of copies of FMP Manual at
•
•
•
•
•
District/Block Level.
Non-availability of VEC Manual at Schools.
Inadequate accounts staff.
Accounts staff not being trained properly.
Non-maintenance of Books of Accounts like
Cash Book, Ledger, Journal, Cheque issue
register, Stock register, Asset register,
Advance register etc.
Cash books not being maintained on double
entry system.
2
Contd./• Bank reconciliation statement not
being prepared regularly.
• Treating advances as expenditure.
• Large outstanding advances.
• Delay in submission of utilization
certificate.
• Weak internal audit system.
• Delay in submission of statutory audit
reports.
• Delay in audit report compliance.
3
Contd./• Diversion of funds.
• Other financial irregularities.
• Excess expenditure over and above the
•
•
•
approved targets.
Keeping funds under Fixed Deposit to
avoid lapse of funds.
Delay in transfer of funds to District and
Sub-District level units.
E-Transfer not being followed where
facilities exist
4
Strengthening of Accounting
System
Measures
FMP 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.
5
Contd./Staffing –
• Para 83 of the Manual provides indicative
•
•
staffing structure at SPO and DPO.
Also provide account staff at block level
to provide resource support to Cluster,
VEC/School.
Fill up all vacant positions by September,
2009.
6
Contd./Capacity Building
• Para 84 of the Manual provides training
•
•
to the accounts staff.
Provide minimum 5 days mandatory
training in a year to accounts staff at all
levels.
Mainly focus on accounting aspects,
maintenance of double entry system of
cash book, bank reconciliation,
procurement etc.
7
Contd./• Hire the services of CA to impart training
•
•
on double entry system
The accounts staff trained at district level
should impart training to staff
maintaining accounts at sub district level
units
Also impart training on accounting and
procurement procedure at VEC/ School
level
8
Contd./Books of Accounts -
• Para 50 of the Manual provides the list of
books of accounts, registers etc. to be
maintained
• Ensure that the prescribed books of
accounts, particularly cashbook, ledger,
journal, registers for cheque issue,
advance, stock, asset, etc. are
maintained at all levels wherever
expenditure is incurred
• Ensure annual physical verification of
stock and asset
9
Contd./Cash Book on Double Entry System –
• Para 77 of the Manual provides detailed
•
•
•
procedure for maintenance of cash book
including double entry system
Ensure that the prescribed procedure is
followed
It may not be possible to maintain double
entry system of cash book at cluster and
VEC / School level
Simple system of cash accounting may be
followed at these levels
10
Contd./Accounting Software -
• Most of the states have introduced
accounting software / tally software
• Remaining states should also introduce
this system of accounting early to
improve the accounting system
• Maintenance of manual system of cash
book can be dispensed with in such cases
provided print out of the daily cash
transactions are taken out and kept on
record, each entry duly attested by the
DDO
11
Contd./Bank Reconciliation Statement -
• Para 82 of the Manual provides preparation
•
•
of monthly bank reconciliation statements
Ensure that the same is prepared at all
levels wherever bank accounts are
operative
Take immediate action to cancel all stale
cheques and credit the same to SSA
accounts.
12
Contd./Asset Register –
• Mostly, not being maintained or if
•
•
•
maintained not in the prescribed format
Ensure maintenance of asset register in
the format given in Annex-V of the
Manual at all levels
Also ensure physical verification of assets
annually
Detailed procedure for the maintenance
of asset register is given in Para 62 of the
Manual
13
Contd./Advances Treated as Expenditure -
• Para 72 of the Manual provides that
funds released to districts on sub district
level units are initially classified as
advances and these are adjusted on
receipt of utilization certificate /
expenditure statement
14
Contd./• Para 73.1 of the Manual envisages that
advances released on account of school
grant, teacher grant, TLE, maintenance
grant, civil works by community,
teachers salary, EGS / AIE (salary &
materials), teacher’s training and
contingency grant to BRC/ CRG are
treated as expenditure for the purpose
of reporting only.
15
Contd./• In the books of accounts, these will
•
•
remain as advances and treated as
expenditure only on receipt of
expenditure / utilization certificate
Ensure that the utilization certificate /
expenditure statement is obtained
within the time limit prescribed against
each item as laid down in Para 73.1 of
the Manual
In many states advances are treated as
expenditure and included in the audit
report which should be avoided in future
16
Contd./Advance Register -
• Para 74 of the manual provides
maintenance of an advance register
• The format for the advance register is
given in Annex-VI of the Manual
• Presently, in many states this is not
being maintained
• Ensure that all advances are noted in the
register and necessary adjustments are
carried out immediately on receipt of the
utilization certificate / expenditure
17
statement
Contd./Outstanding Advances -
• At present no mechanism exists in states
to monitor outstanding advances
• More focus should be given to the
maintenance of advance register and the
adjustment of advances
• Large advances paid to Government
departments, NGOs and staff are
outstanding for a considerable period of
time
• Ensure that all outstanding advances are
adjusted immediately
18
Contd./Delay in Submission of Utilization
Certificates
• Para 73.3 of the Manual envisages that
•
•
UCs are obtained within the time limit
prescribed in Para 73.1 of the Manual
The time limit is not strictly adhered to in
many cases resulting inordinate delay
Evolve a proper mechanism to obtain the
UCs from sub district level units in time
19
Contd./Internal Audit –
• Para 100 of the Manual envisages the
detailed procedure for internal audit
• The system is available in almost all
states but the same needs strengthening
• Incase, in house arrangement is
insufficient hire the services CAs by using
the TOR given in Annex – XIII of the
Manual
• Ensure that internal audit is carried out
on a concurrent basis and suitable follow
up action taken on its reports
20
Contd./Statutory Audit -
• Para 101.9 of the Manual envisages that
•
•
•
CA firm’s annual audit report is made
available by 30th September by every
year
Most of the states could not submit the
audit reports for 2007-08 in time
Ensure that the audit report for 2008-09
is submitted in time
Ensure prompt follow up action on the
compliance of the audit report
21
Contd./Diversion of Funds / Other Financial
Irregularities -
• Para 86.1 of the Manual provides that
•
•
SSA funds are not diverted or reappropriated to meet any expenditure
which was not sanctioned
Ensure that no diversion or other
financial irregularities are taken place
Take immediate action to recoup the
funds diverted or spent irregularly
22
Contd./Excess Expenditure -
• Para 85.2 of the Manual provides that
total expenditure is kept within the limit
of the budget provision
• Excess expenditure reported under some
interventions
• Re-appropriation of funds under the
orders of state EC is envisaged in Para 86
of the Manual
• Any re-appropriation beyond this limit
should be approved by PAB at the
23
national level
Contd./Fixed Deposit -
• Fixed Deposit under SSA is not permitted
• Ensure that no fixed deposit is made
• Any fixed deposit made should be
withdrawn immediately and credited to
SB account
24
Contd./Interest -
• Para 89.4 of the Manual provides
•
•
detailed procedure for accounting of
interest
The interest accrued on the savings bank
accounts of school, CRC, BRC level is not
being accounted for in the SSA accounts
and not reflected in the annual accounts
Ensure that interest credited at these
levels are also included in the annual
accounts
25
Contd./Delay in Transfer of Funds -
• Para 89.3 of the Manual provides transfer
•
of funds to districts and from districts to
sub district level units within 15 days of
its receipt
Ensure that funds are transferred within
this time limit
26
Contd./E-Transfer of Funds-
• Para 89.5 of the Manual provides
•
•
electronic transfer of funds at all levels
wherever such facilities exist
Many states have adopted this system
Other states should also adopt this
system by 30th September 2009
wherever such facilities exist
27
Procurement
Defects noticed
• Not followed Levels of procurement in
•
•
•
•
terms of Para 107 of the Manual
Made procurement of goods and services
not included in the procurement plan
Not followed the method of procurement
envisaged in Para 109 of the Manual
Non-availability of procurement
documents
Procured goods in excess of the
requirement and lying in stock
28
Contd./• Engaged NGOs without following the
•
•
•
selection procedure
Computers purchased under CAL are
lying idle for want of space, power
connection, trained teachers, software
etc
Procured computers without inviting
tenders or under the rate contracts of
DGS&D/State
Procured printers for schools without
ascertaining its utility
29
Contd./• Not entered into MOU with purchasing
•
agency prescribing terms and conditions
like cost, delivery date, inspection,
liability of the seller during warranty
period, liquidated damages for delay in
delivery, rate of commission, payment
terms etc.
Cost of goods purchased through
purchasing agency was in excess of the
market rate
30
Contd./• Part payment made for part supply
•
•
•
•
without provision in the agreement to
avoid lapse of budget provision
Injudicious purchases in the month of
March to avoid lapse of budget provision
Penal provisions in contracts not enforced
While submission of sample was
mandatory along with the bids, contract
awarded to firm who failed to submit
samples
Goods accepted and payments made
without inspection and certification
31
Contd./• Text books procured in excess of the
•
•
•
•
requirement
Delay in distribution of text books
Feasibility of printing of text books
through state government press not
ascertained before inviting tenders from
private printers
TDS not recovered at the time of
payment
Delay in construction of civil works
32