PREPARATIONS AND
COMPLETION OF AUDIT
FOR THE YEAR 2009-2010
The preparations for the conduct of audit of the accounts of SSA,
SIS for the year 2009-2010 were initiated by the Ministry of HRD
in June 2010.
A letter was issued by name to all the SPDs of SSA States/UTs on
4th June 2010 in which the need for timely completion of accounts
and accounts records properly was emphasized. Attention of the
State Project Directors was drawn to the Schedule of Audits as
contained in the Manual on Financial Management & Procurement.
They were also requested to appoint CA firms for the conduct of
audit immediately if the same had not already been done. It was
also requested that the account and Financial Statements for the
year 2009-2010 complete in all respects should be made over to the
auditor for commencement of Audit work by the end of June 2010
so as enable the CA firm to complete the audit work in a proper and
timely manner.
In order to avoid recurrence of audit observations timely,
completion of audit work and submission of audit reports by the due
date, the following steps were advised.
(i) Appointment of Statutory Auditor latest by 1st April 2010;
wherever, the auditors are not engaged, the same may please be
done immediately. (Para 109.1 (2) of Manual.)
(ii) Timely adjustment of advances and obtaining receipt of all the
outstanding UCs from the sub-districts level before the accounts are
finalized at DPO level. The State must ensure that advances against
which expenditure has been incurred during the year should be
adjusted at the close of the accounts for the year.
(iii) Proper maintenance of the books of accounts and finalization
of annual account statements before 30th June each year. The steps
should be taken to make these available to the CAs for audit in time.
(iv) Compliance and settlement of audit observations of previous
audit report. The current audit report should necessarily contain a
paragraph on compliance of previous years’ audit objections /
observations.
(v) Adequate coverage of procurement process and reflection of
same in the audit report, as a separate paragraph, as per the format
prescribed by this Ministry’s letter No.15/2/2003-SSA (PR) dated
29th September, 2006, on Procurement Audit.
(vi) Compulsory coverage of audit of 1/3 of VECs or its equivalent
that have received more than Rs. 1 lakh in a given year. For the
purpose, SPO / DPO should give particulars of such VECs to CA.
The audit reports should clearly indicate coverage of such VECs
reporting on number of such VECs and the amount covered during
the audit.
(vii) Certification of only those expenditures, which are supported
by expenditure Statements/Utilization Certificates/ Vouchers etc. as
per the provisions of Para 74.1 of the Manual (Revised) and budget
allocation for the same exists in the approved AWP&B for the year
2009-10. It may also be ensured that the expenditure certified by the
audit is as per the activity heads under which allocation has been
approved by PAB.
(viii)
The audit report should clearly state the details of
unadjusted advances. These should not be certified as expenditure
but as advances only.
It was also requested to draw a calendar for audit activities to
monitor the audit work. The following documents, which are
required to be submitted along with the audit reports, were also
listed in the above letter.
(a) Utilization Certificate (Annexure–XIX)
(b) Consolidated Annual Financial Statement (Annexure–XX)
(c) Consolidated Balance Sheet (Annexure–XXI)
(d) Consolidated Income & Expenditure Account (Annexure XXII)
(e) Consolidated Receipt & Payment Accounts (Annexure–XXIII)
(f) Management letter
(g) Procurement Audit Certificate in the format sent under this
Ministry’s letter No. 15/2/2003-SSA(PR) dated 29th September
2006.
(h) FMRs – I, II & III duly filled in
(i) Para on Settlement of outstanding/ Previous years Audit
objections
(j) Para on Coverage of Audit of VECs receiving grants of more
than Rs. One lakh per year.
To facilitate the monitoring of audit process and timely
completion of audit a suggestive implementation Schedule was
also developed and sent to the State Project Directors on 23rd
July
2010
for
their
convenience
as
under:-
IMPLEMENTATION SCHEDULE FOR AUDIT
S. No.
Activity
Time line
1.
Invite EOI from Auditors
By 5th January
2.
Draw the panel
By 10th February
3.
EC’s approval for engagement of
Auditors
15th February
4.
Appointment of CA Firm
15th March
5.
Appointment of lead Auditors
By 15th April
Ap
poi
ntm
ent
and
Ori
ent
atio
n
of
aud
itor
6
7.
8.
9.
10.
11.
Review of previous year audit
compliance (in the meeting for
closing of financial year)
Instruction of Closing of account by
30th June
By 30th April
Orientation of Statutory Auditor by
GOI/State
By 30th June
Collection of Expenditure
Statements/UCs from sub-district
level
Adjustment of advances in accounts
to be completed
By 15th May
Liabilities of expenditures incurred
during the year but not paid for to be
provided in accounts
By 15th June
By 15th April
By 15th June
By 30th June
12.
Finalization of accounts and
annual financial statement
By 1st July
13.
Commencement of Audit
work
Within 3 days
of the Receipts
of Audit Memo
By 25th August
15.
Reply to Preliminary Audit
Memos State/at District/SubDistrict level
Discussion of draft Audit
Report to the DPO by CA
16.
Submission of Draft Audit
Report to State
By 5th
September
Discussion on draft audit
report to be completed by
SPO/DPO
By 15th
September
each year
14.
17.
Pr
ep
ara
tio
n
of
Au
dit
30th September
18.
Submission of Final Audit
Report to SPO
15th October
19.
Approval of audited accounts &
audit report by State Govt. /EC
By 1st November
20.
Despatch of Audit Report to
GOI
Fin
ali
zat
ion
of
Au
dit
It was also requested to ensure that audit reports complete in
all respects are submitted within the prescribed time i.e. by 1st
November 2010.
So far audit reports from the following States on the dates
shown against each have been received.
1.
2.
3.
West Bengal
Tamil Nadu
Sikkim
=
=
=
6.10.2010
12.10.2010
18.10.2010
A scrutiny of the audit reports received reveals that the situation has
not improved. As in all the reports the auditors pointout that:-
(i) Funds released have been certified as expenditure instead of
advances (all the 3 reports)
(ii) (a) Bank Reconciliation statement are not prepared on
monthly basis. (Sikkim)
(b) Bank accounts of DPO have not been reconciled for many
years (Coimbatore District Tamil Nadu)
(c) Monthly Bank Reconciliation requires improvement in most
of the Districts (West Bengal)
(iii) Fixed Asset Register is not maintained (Sikkim) not properly
maintained in most of the Districts (West Bengal)
There are deficiencies / discrepancies in the audited accounts &
audit report.
(i) Auditor has not indicated his Membership No. while signing
the report (Sikkim & Tamil Nadu)
(ii)
Para on settlement of previous years audit objections is found
missing (Sikkim, Tamil Nadu & West Bengal)
(iii) Para on audit coverage of VECs getting Rs. One lakh &
above in the year found missing (Sikkim)
Apart from the above deficiencies / discrepancies have been
observed in the audited accounts statements which are :(i)
Variation in expenditure figures in the various financial
statements.
(ii) Unspent balance is not worked out correctly.
(iii) Expenditure exceeds the budget allocation for the year.
(iv) Adjustment of advances given in previous years shown in the
current year’s expenditure without approval for spill over
having been obtained from PAB.
(v) Funds for grants released on 31st March of the year and treated
as expenditure to avoid lapse of funds.
Presumably the reports have not been examined critically by
the Finance Controllers and discussed with the auditor’s before
finalization.You are, therefore requested to ensure that the draft
audit report is critically examined / discussed with the Auditors
before finalization to avoid repetition of the old objections and
discrepancies / deficiencies in the audited documents.
Statutory Audit Reports
The following States UTs have not furnished
Compliance on Audit Reports of CAs Audit.
20052006
Andhra Pradesh, Arunachal Pradesh,
Bihar, Chhattisgarh, Haryana, Himachal
Pradesh, Manipur, Mizoram & Nagaland
20062007
20072008
Andhra Pradesh, Arunachal Pradesh,
Bihar, Chhattisgarh, Haryana, Karnataka,
Kerala, Madhya Pradesh, Manipur,
Mizoram,
Nagaland,
Meghalaya,
Puducherry, Sikkim, Tripura & Tamil
Nadu
Arunachal Pradesh, Bihar, Chhattisgarh,
Haryana, Himachal Pradesh, Meghalaya,
Karnataka, Kerala, Manipur, Nagaland,
Punjab, Rajasthan & Tripura, Tamil Nadu
20082009
Assam, Andhra Pradesh, Arunachal Pradesh,
Bihar, Chandigarh, Chhattisgarh, Dadra &
Nagar Haveli, Daman & Diu, Goa, Gujarat,
Haryana, Himachal Pradesh, Jammu &
Kashmir, Jharkhand, Karnataka, Kerala,
Madhya Pradesh, Maharashtra, Manipur,
Mizoram, Meghalaya, Nagaland, Orissa,
Punjab, Rajasthan, Tripura, Uttar Pradesh,
Uttarakhand & West Bengal
QUARTERLY REPORT ON THE POSITION OF
SETTLEMENT OF AUDIT OBJECTIONS / PARAS
The SIS is required to furnish a quarterly report on the position of
settlement of outstanding audit objections in the format provided at
Annexure–XXV (Para –110.5) of the Manual on Financial
Management & Procurement. The report is to be submitted by 15th
of the month following the close of the quarter. Many states are not
sending this report regularly. Report for the quarter ending April –
June 2010 has been received from the following States only despite
issue of reminder to all the States on 22.3.2010.
1.
2.
3.
4.
5.
6.
7.
8.
Delhi
Karnataka
A& N Islands
Uttar Pradesh
Punjab
Rajasthan
Kerala
Tamil Nadu
The quarterly report for the Quarter Ending 30.9.2010
has been received only from One State- Uttar Pradesh.
It is requested that the above report may please be
submitted to the Ministry every quarter on a regular basis.