Recommendations of the 13th JRM on

Financial Management & Procurement

28h Review Meeting of State FCs- Gandhinagar(3rd- 4th February 2011)

Annexure R

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• Held from January 17-31, 2011.

• Undertook field review in 10 States of Andhra Pradesh (with financial specialist)BiharJharkhandKarnataka (with financial specialist)Madhya Pradesh (with financial specialist)ManipurOrissaUttar Pradesh (with financial specialist)Uttarakhand

13th JRM recommendations on FM&P

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• District Level FM staffing: District level FM staffing is a cause for concern since the staffing for certain key states has been low and stagnant for over a year. From the current vacancy status of 54% for select 8 states the vacancy should be constantly monitored and states should be required to submit an action plan in this regard. The action plans should at a minimum reduce vacancies by 10% till July 2011 and by 25% in January 2012.

• A preliminary report on the implementation of accounting software in States should be given during the July 2011 JRM and all ten states brought on board by January 2012 JRM.

13th JRM Key Recommendations on FM&P (National)

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• GoI to seek clarifications from SSA MP for not following the SSA FM&P requirements and take decisions whether the claims for procurement since the amendment to FM&P Manual will be permissible for reimbursement. GoI may also issue further clarifications on applicability of the procedure to all agencies involved in procurement in states.

• The Mission feels it is time to carry out a critical review of the procurement planning and monitoring process and how this get integrated to project management process. GoI and TSG need to orient the state teams on the usefulness of the plans and its role in project monitoring. It is recommended that periodic review require states to link the physical and financial progress details to procurement plan progress.

Key Recommendations on FM&P (National)

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• GOI shall expedite the development process and start piloting the procurement MIS in at least 3-4 states by the next JRM.

• GoI to commission a group of text book developers, printing technologists and procurement experts to review and develop a model specifications for paper, printing qualities and binding requirements for text books to be procured under SSA.

• States to undertake pre-delivery and post-delivery Inspection of text books.

Key Recommendations on FM&P (National)

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Fund Flow• In case of Karnataka and Haryana funds are

being transferred partly by electronic transfer and partly by cheques from district to sub-district level.

• Kerala, however, continued to transfer funds to district to sub-district level by cheques.

• Andaman & Nicobar Islands and Sikkim are transferring funds from SPO to district level and district to sub-district level only through cheques.

• 15 States have started Web based monitoring of funds, however, States like Daman & Diu, Delhi, Goa, Haryana, J&K, Lakshadweep, Manipur, Mizoram, Nagaland, Puducherry, Sikkim, Tripura, Uttarakhand are either in the process or yet to start.

Key Observations (National)

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Training and Capacity Building• Training is restricted to state level and at most

some district level accounts officers.

• Training for staff below this level may be inadequate.

• There is a great need to react out to all district level staff, BRC/CRC Coordinators, VEC functionaries.

• These key persons need to be provided awareness on SSA Financial Management & Procurement guidelines, their questions responded to and some element of handholding support provided.

• This could be done either by hiring consultants or through in-house staff.

• In the medium term, this will lead to better FM results on the program.

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Finance and Accounts Staff• Shortage of staff has been mentioned in recent JRMs.

• This is important since year on year SSA outlays are increasing significantly.

• SSA Manual provides indicative staffing structure for staff at district level and also one accountant at block level for every 50 schools.

• The possible risk in SSA funds due to the shortages at district level in high spending SSA States needs urgent attention.

• In several States, the sanctioned strength is not equal to indicative staffing structure.

• The desire to obtain staff only on deputation basis seems to be an impediment in this regard.

• States should open to hiring contractual staff e.g. accounts assistants at district level.

• States have not even filled all of the sanctioned posts even though the number of sanctioned posts is often below the indicative norms.

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Readiness of the system to take on the increase in allocations

• On account of RTE implementations, the outlays under SSA will be increased every year.

• Readiness of the system on the increase in allocations is necessary.

• Issues such as financial management capacity, use of financial software become more critical in this context.

• Significantly, low utilization of management cost must also be monitored and highlighted as a cause for concern.

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VEC level issues• Display board indicating head-wise financial

information of receipts, uses and balances at a public place not available in many of the school visits.

• VEC bank accounts and records are sometimes being used for several schemes which should be discouraged and at least the accounting records for all the schemes should be bifurcated.

• Releases to VECs are made electronically which poses a communication challenge.

• This needs attention and further analysis, effective method of communication like text messages through mobile phones, better communication through BRC/CRC Coordinators needs to be worked on.

• At present not adequate attention to VECs with less than Rs. 1 lakh expenditure.

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• Audit covered many BRCs, CRCs and VECs in Karnataka, Maharashtra and Uttar Pradesh.

• However, in Manipur the VECs could not be covered due to typical problem of the States viz. geographical terrain and law & order situation in villages.

• Audit books be brought to the block level for audits and random sample checks be undertaken for physical verification (only) difficult to reach areas.

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Accounts• Arrears on accounts and bank reconciliation

systems have been considerably reduced.

• In majority of the States, bank reconciliation statement till 30th September 2010 have been prepared.

• Improvement in the book keeping and capacity building are warranted.

• Maintenance of accounting records at VECs level in Karnataka has much to be desired.

Accounting Software• Tally financial accounting software has been

introduced in 36 districts in UP.

• The same software is being used in the DPOs of AP and Bihar.

• Standard software needs to be implemented in all States/ districts in a time bound manner.

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Audit and Internal control• Mission reviewed 16 Audit reports for 2009-10

In Karnataka 263 audit paragraphes are outstanding.

• Needs periodical review of outstanding paragraphs at the level of SPDs

• Major observations of Karnataka:

• Existing internal control measures in regard to transfer of funds, maintenance of accounts and records, periodical reconciliation of funds received and release, advance outstanding, analysis of budget vs actual need to be strengthened.

• Non-observance of guidelines regarding capitalization of assets.

• Books of accounts at DPO, BEO and VECs are not as per the prescribed procedures.

• Non-compliance of instructions regarding physical verification of assets.

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• Physical verification assets not carried out

• In Karnataka physical verification was carried out but the report was not available

• All the assets such as building, furniture etc are properly documented, physically verified and evaluated.

Teachers’ salary• Largest component of SSA, yet not audited

• SSA auditors certified as expenditure based on UCs received from the office transferring the funds.

• This is contrary to the provisions of FM&P Manual.

• In most cases this is left to audit by the State AG.

• MHRD taken up this issue with the State but not followed up.

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RecommendationsDistrict level FM staffing:

• A cause for concern since the staffing for certain key States has been low and stagnant for over a year.

• From the current vacancy status of 54% for select 8 States, the vacancy should be constantly monitored and States should be required to submit an action plan in this regard.

• The action plans should at a minimum reduce vacancies by 10% till July 2011 and by 25% in January 2012.

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RecommendationsAccounting Software:

• With large outlays and considering that several states have opted for fairly simple but sound software solutions, MHRD must monitor and ensure that any standard FAS is fully implemented at the State and district levels for each of the top ten largest spending States.

• (U.P, West Bengal, Rajasthan, Bihar, M.P., Jharkhand, Orissa, Tamil Nadu, Chattisgarh and Maharashtra)

• A preliminary report on this should be given during the July 2011 JRM and all ten States brought on board by January 2012 JRM.

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RecommendationsProcurement:

Mandatory Application of Procurement Procedures of SSA FM&P Manual

• Except for MP all States are following FM&P Manual.

• MP is following State Stores Purchase Rules which is against the latest amendments to the SSA FM&P Manual where mandatory use of the Manual is prescribed.

• Similarly, there is some degree of uncertainty among States about the applicability of SSA Procurement Norms to State level agencies like Electronics Development Corporations and Textbooks Corporations engaged for procurement by SSA Societies.

• It is essential to follow the FM&P procedures for all procurement under SSA

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Recommendations• GOI to seek clarifications from SSA, MP for not

following the SSA FM&P requirements and take decisions whether the claims for procurement since the amendment to FM&P Manual will be permissible for reimbursement.

• GOI may also issue further clarifications on applicability of the procedure to all agencies involved in procurement in States.

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Procurement Plan:• The use of procurement planning as a tool for

progress management of SSA activities in the States and district level has not taken place, as observed from various States.

• Most States have reported availability of a Procurement Plan except Manipur, however, periodic updating of the plans are not seen anywhere.

• Similarly, States that have adopted e-procurement have not linked the process to the procurement plan developed every year.

• Thus, procurement plans development remains as a function necessitated by the AWP process and ends with the FM department.

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Recommendations• It is time to carry out a critical review of the

procurement planning and monitoring process and how this get integrated to project management process.

• GOI and TSG need to orient the State teams on the usefulness of the plans and its role in project monitoring.

• Periodic review require States to link the physical and financial progress details to procurement plan progress.

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Procurement MIS:• One of the important aspect agreed with GOI as

part of 12 JRM was to implement an MIS for all procurement valued above Rs. 10 lakh.

• The same is not yet completed and the lack of contracts data in States visited at a single place and incomplete procurement plans further confirm the urgency for development and rolling out of procurement MIS.

Recommendations:• GOI shall expedite the development process

and start piloting the MIS in at least 3-4 States by the next JRM.

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Procurement of Textbooks and Quality Aspects:• Most of the States visited have brought forward

serious issues on the specifications for paper used, printing color text books and binding used.

• While States like AP and Karnataka had confirmed a process of quality checking, the observations on printing quality and durability raises concerns.

• Given that a large amount of SSA resources are allocated and spent for supplying textbooks and considering the academic relevance of quality printing, the Mission urges immediate attention of GOI and States in improving the process of developing designs and specifications for printing, paper and binding.

• Given the overall impression of products not meeting the required standards and specifications there is a need for States to initiate urgent actions for an indepth quality audit of the process.

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Recommendations• GOI to commission a group of textbook

developers, printing technologists and procurement experts to review and develop a model specifications for paper, printing qualities and binding requirements for textbooks to be procured under SSA.

Pre-Delivery Inspection:• Selection of text books based on the batch size

from print orders and checked as per quality sampling table of BIS/ISO or asspecified/discussed with GoI for paper and printing services.

• Check text books against the contract specification, final dummy of art work and other relevant documents.

• Verification of test reports submitted by printers for paper and other raw materials or witnessing of testing of raw materials.

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• Dimensional checks of text books against contract drawings and any relevant standard or specification. These checks would either be performed by the Inspector or performed by others and witnessed by the Inspector.

• Check the workmanship of the textbook printing, including finishing and robustness.

• Check the packing, size and shipping marks against shipping instructions specified in the Contract and approve/stamp the text books for shipment, when required, quantity-verification of textbooks shipped.

• Issue a Certificate of Inspection and Inspection Report for each consignment as shipped. Also should it be required under the terms of the Contract for Printing of Textbooks, a release note would be supplied to clear payment against terms of payment of order(s).

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Post Delivery Inspection:• Confirm the text books received by the consignee

are those dispatched by the printer.

• Confirm the quantities received by the consignee are in accordance with the contract.Report all damages observed at the consignee's site, including the extent, nature and cause of damage for future preventive measures.

• Confirm storage of the items is in accordance with the storage conditions stipulated by SSA or the printer.

• Quality Inspection and field observation on the quality and durability of textbooks.

• Issuance of Inspection Note.

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• State-wise key observations and recommendations on Financial Management & Procurement:

Andhra Pradesh

Key observations Conducted 100% of Audit of schools in 2008-09 and

2009-10 by appointing 13 CA Firms. Auditors visited 1137 BRCs, 6973 CRCs and 50445

schools. Advances are not treated as expenditure. Auditors verified all the UCs with supporting

vouchers. Adequate training given. Internal Audit is conducted through CA Firm. Social Audit display boards are available or will be

completed by June 2011.

13th JRM recommendations on FM&P

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VEC Manual is available in all schools. Training of HMs, Sarpanches, Committee Members

commenced and will be completed by June 2011. Salary of contract teachers paid through RTGS

system. Not reimbursed salaries of regular teachers from

2007-08 onwards for want of details from the State Government.

Operating single bank account at all levels. Online transfer of funds to BRCs, CRCs and

schools. Tally accounting software introduced at DPO. Manual books of accounts and computerized

records should be matched on a daily basis. Records should be kept upto date. Monitor advance registers on regular basis.

Andhra Pradesh

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Procurement – Key observations Following FM&P Manual. Tendering is not done at district level but on rate

contract basis. Computers are purchased through State Electronic

Corporation. Textbooks are not of good quality to last from one year

to the next in reasonable condition. Textbooks need to be printed in four colour but this is

not being followed. Procurement plan for 2010-11 is available on the

Website. Asset Register is maintained at SPO and DPO. AMC for equipment is in place. Delay in delivery of computers.

Andhra Pradesh

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Recommendations Audit reports need to be followed up to ensure

necessary corrective action is taken. Procurement agencies should adhere to FM&P

Manual procedure. Procurement plan needs to be reviewed on a regular

basis. Asset identification numbers to be assigned to all

assets at all levels. Stock Registers should be kept upto date. Printing quality needs to be improved Carry out proof reading prior to bulk printing Major portion of the procurement is on a

decentralized manner at school level. E-tendering is done at the State level. Intimate time frame for settlement of advances

clearly to all staff. Vacancies at Mandal level to be filled.

Andhra Pradesh

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Key observations District offices visited suggested that funds

released to sub-district level units were deemed as expenditure.

No concerns were expressed about delays in provision of funds.

Following National procurement guidelines using competitive tenders.

Large procurement through Government agencies.

District and block level procurement is through local shopping.

Internal audit completed for 2009-10 through CA Firms.

Bihar

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Audit of School Committees spending more than Rs. 1 lakh is currently under way by 35 CA Firms.

State has provided a standard format and the audit will cover a two year period.

The Mission appreciated the efforts taken by the Accounts staff at SPO level for the efficient disbursement of funds, procurement of goods, pursuing of Financial irregularities in some districts, selection of Assistant Accountant/Data Entry Operators, providing capacity building etc.

Bihar

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Concerns Non-carrying out of audit of BRCs, NGOs and

KGBVs. Third party review of textbook printing and distribution not fully in line with the recommendations of the 11th JRM. Non-auditing of salary payments of BRC/CRC staff and teachers both on contract basis and on regular basis. Weakness in keeping asset management registers. High value equipments not assigned asset numbers. Large vacancies of Finance and Accounts staff

remain unfilled. Remuneration and other service condition are not attractive to retain staff of sufficient caliber.

Bihar

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Recommendations The Third party evaluation on distribution of textbooks should also look into the contract specifications pertaining to weight of paper, quality of binding and printing, compliance with the FM&P Manual on sub-contracting. Audit of BRCs, NGOs and KGBVs. Periodic pay roll checking Expansion of HR initiatives through agencies for

recruitment of other staff. Make the package of SSA staff more attractive. Audit of BRC should cover attendance register, food

invoice training programme, DRG inspection report etc.

Preparation of Annual Procurement plan and its monitoring.

Provide display board in schools.

Bihar

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Key observations TOR of statutory auditors included coverage of

sample BRC and CRC. Almost 80% audit of schools/VECs have been

covered in the last three years. 3 Audit Staff at SPO available to pursue audit

report compliance. 63 Vacant posts of Finance and Accounts Staff

unfilled. Training of Accounts staff conducted by the

divisional offices. Social Audit display boards not available in

schools visited. FC not conducted monthly meetings of district

Accounts Officers for the last three months.

Jharkhand

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On-line transfer of funds to BRCs, CRCs and schools.

Recommendations Avoid multiple bank accounts and operate through

single bank account. Conduct regular meetings to review the progress

to accelerate expenditure. Fill all the vacancies to facilitate smooth

implementation. Obtain UCs and adjust the advances to reduce

the high advances Strengthen the VEC capacity on financial

systems.

Jharkhand

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Procurement – Key observations Following SSA FM&P Manual VEC Manual in Hindi prescribing accounting,

procurement procedure, including financial limit is printed and available.

Not started e-procurement. Procurement plan prepared but not updated. 50% delay during the year on procurement. Tendering process followed on printing of textbooks

and the quality is ensured. All the books are laminated. The Textbooks were received and distributed on

time. Asset registers maintained manually.

Jharkhand

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Asset numbers assigned at SPO but not at DPO-

In-house training provided to Master Trainers.

Procurement – Recommendations

Assign asset identification numbers to all assets at all levels.

Review procurement plan regularly to avoid slippages.

Asset register is not computerized.

Jharkhand

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Key observations While good efforts has been made in the

maintenance of the books of accounts at the SDMC level, the quality needs further improvement.

Separate cash book has not been maintained for each year and in some places cash book of 2003-04 is still continuing for the subsequent years.

While payment side entries are being attested, the receipt side entries are not being attested.

Stock register is being maintained at SDMC level but asset register is not maintained.

Physical verification of asset not carried out. Asset identification number not assigned on assets. Assets donated by community not entered in the

asset register.

Karnataka

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Donated assets are not being included in the schedule of assets in the annual accounts, as the value was not known.

This should be included in the schedule at no value. The above issues should be included in the

capacity building of SDMC staff. SDMCs receiving more than Rs. 1 lakh per year are

not covered under internal and statutory audit. In 2010-11, internal audit covered 20 districts and

119 blocks. Large number of outstanding Paras of internal and

statutory audit are to be settled from 2002-03 onwards.

This needs to be geared up on priority. Efforts need to be made to fill the vacant posts of

Finance and Accounts Staff.

Karnataka

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SDMCs are not provided training in Finance and Accounting.

Expenditure has not been indicated on the social audit display board.

Social audit display boards are fixed in HM Room and not being served as a public domain.

Recommendations SDMCs should be provided capacity building on

Finance, Accounting and Assets registration. Monthly/quarterly review of outstanding audit paras

of internal and statutory audit by SPD to accelerate the progress of its settlement.

Display board should be provided at some prominent place outside the room of the head master.

Karnataka

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Procurement - Key Observations Following FM&P Manual at all levels. Following e-procurement at State level. Printing of textbook is outsourced to Karnataka

Textbooks Society. Review of the quality of the textbooks printed

revealed that the same has not been carried out as per technical specifications.

The penalty levied not proportionately passed on to SSA.

Computers for upper primary schools are procured at State level and copies of the purchase orders are not being endorsed to any of the users resulting in the users not able to verify the specifications at the time of receipt and difficulty in subsequent maintenance.

Karnataka

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Procurement - Recommendations

The penalty levied on textbooks by the Karnataka Textbook Society should be passed on to SSA on pro-rata basis for textbooks printed for aided school children under SSA.

Copies of the contract/purchase orders on computers should be endorsed to the users.

Karnataka

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Key observations No bottlenecks in fund flow upto block level

which is on e-transfer basis. Expected to extend the facilities upto village

level by the end of this financial year. Followed State Purchase Rules and SSA FM&P

Manual. Concurrent audit is carried out at district and

block level. Need to strengthen the maintenance of books of

accounts, asset register, preparation of bank reconciliation statement at village level.

Action to fill up vacancies is already under way. Persons in position received training.

Madhya Pradesh

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For RTE implementation more financial staff will be required and a rational evaluation will be made for getting the extra posts sanctioned at all level.

Personal advances are outstanding for a number of months which should be reviewed and necessary action taken for its settlement.

UCs outstanding from long periods and needs to be reviewed and necessary action taken for its settlement.

Financial rules and delegations available for the SIS.

Madhya Pradesh

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Internal Audit • Conducted concurrently by CAs from 2008-09

• Reports not submitted to EC

• The Committee chaired by Principal Secretary, Finance is empowered to monitor audit reports and internal audit reports.

• Internal audit reports suggested training and improvement of other accounting procedures.

Procurement - Key Observations

VECs are instructed through a booklet and training in all matters of procurement.

Madhya Pradesh

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State purchase rules are followed in all cases of procurement.

MOU should be entered into with MPLUN for the purchase of computers.

While purchasing computers value aided items like speakers were got from the supplier through an oral arrangement.

Since purchase is made on DGS&D Rate Contract this arrangement is not correct.

The practice of life time costing in the comparative statements prepared for procurement will be kept in mind for future cases so will the system of according weightages were required.

Some cases of mis-procurement reported of which a few are covered within the procurement rules and the rest are under consideration.

Madhya Pradesh

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Key observationsThe expenditure against outlay was 48.2%, while

against funds it was 74.3% as on Dec 2010.Great variation in spending pattern at district-

wise and intervention-wise.17% utilization under SC/ST and strategy for

meeting the needs strengthening.VECs spending more than Rs.1 lakh per year

are audited.Large vacancies at all levels which impede the

progress of implementation.294 accounts persons trained 5 days in 2010-11.Teachers’ salary paid through Zilla Parishad and

audit is conducted by Local Fund Audit Department.

Maharashtra

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Key observations Internal audit conducted concurrently by CA

firms engaged by following the prescribed procedure.

District-wise CA firms appointed for maintaining school accounts.

Meetings held at divisional headquarters (eight) in last quarter for all district Accounts Officers to review account and audit matters.

Monthly meeting of all district and Municipal Corporation account staff in first week of each month.

Procurement Plan for 2010-11 is available but its implementation is not on realistic basis.

Prepared Monthly Expenditure Plan for RTE.ATR on IInd phase of IPAI financial review

submitted to GOI.

Maharashtra

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Procurement - Key observations All procurements needs to be taken up as per

revised FM&P Manual. While the text books are found to be of

reasonable good quality and in four colours, the audit of the quality may be carried out through independent agencies.

No social audit display boards in schools visited. Joint signatory savings bank accounts at school

level. Community deeply engaged in monitoring of the

works and other procurement related issues. VEC Manual in Marathi circulated. Asset Registers maintained and updated at all

level. Equipments carry asset numbers assigned by

SSA.

Maharashtra

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RecommendationsLittle utilization of funds in critical areas that

impact quality like teacher training. Further, innovation component was also under utilized, showing need for greater attention to issues of SC/ST and minorities. Take steps to ensure that robust systems and planning processes are in place to address this area.

Social audit display boards at the school level are not available. Need to issue instructions to all schools to ensure that the boards with latest data are available with immediate effect.

Filling up of vacancies under Finance and Accounts.

Maharashtra

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Key observations Undertaken Institutional Strengthening by

recruiting 9 DPMs and 9 AOs. Process is on for further recruitment of 24

Engineers, 35 System Analysts and 78 Accountants by February 2011.

Provided 10 days induction training to all newly recruited staff followed by 5 days Tally training and 3 days training to all finance and accounts staff by Administrative Training Institute, Manipur.

Internal audit completed for 2008-09 & 2009-10. On concurrent basis from 2010-11.

E-transfer directly to VECs wherever facilities exist and through bank advices in other places

SPO to procure quality paper for printing of free text books.

Manipur

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State is aware of the audit of VECs receiving more than Rs 1 lakh per year in a cycle of 3 years and taking suitable action.

Auditors not visited BRCs/CRCs and Schools Releases are treated as advances till the UCs

are received. Salaries of SSA teachers are being paid by

State Education Department and reimbursed by SSA on quarterly basis. Details are intimated to AG on quarterly basis to carry out audit.

Display boards with receipt and payment are available in all schools visited.

Need to orient teachers, HMs and VEC on various types and grants and its purpose.

Manipur

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State is planning to provide accounting and record keeping training to VECs/SDMCs.

VEC Manual is under revision and expected to be completed by Feb-March 2011.

Recommendations State needs to define its agency for conducting

VEC audits once in 3 years for those spending more than Rs.1 lakh.

Monitoring and supervision mechanism needs considerable strengthening at various levels especially at the level of villages and schools. Now that the State is expected to appoint additional Audit Officers (State) and accounting staff at district and block levels, the State will be in a better position to work out its monitoring plan.

Manipur

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Orientation at the local level are important. VECs/SMDCs and School heads and teachers need orientation on different types of grants and the purposes for which they are released. Close supervision and monitoring on utilization of funds will be required as per defined objectives and purpose of grants.

Adequate training on book keeping and accounting will need to be taken up expeditiously at local levels. This has remained one of the challenging areas in Financial planning.

Manipur

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Procurement – Key observations Follows SSA FM&P Manual State corporations follow State Govt. Financial

Rules. VEC Manual lacks procurement procedures to

be followed at VEC level. Not prepared procurement plan for 2010-11 Not initiated e-procurement. Issues of using substandard quality of paper in

printing of textbooks. State is planning to directly procure quality

paper for printing of textbooks. Asset register is maintained but not updated. Not assigned asset numbers

Manipur

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Procurement – Recommendations Needs to pay special attention for proper

maintenance of asset register and assigning asset numbers on assets.

Needs to prepare revised procurement plan for 2010-11.

VEC Manual needs updation with procurement procedure.

Manipur

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Key Observations Adopted FM&P Manual. Finance Staff are efficient and seem to be some

of the best both at the State and district level. Absorption of funds within the year seems to be

an issue for the last couple of years.

Recommendations Better utilization of funds at the right time could

be part of the fiscal plan for the coming year. Ensuring that key staff positions are filled across

various levels will make it possible for money to be absorbed steadily over the year and better financial controls to be established through intensive training.

Orissa

58

Positive Developments Training on financial management aspects (5

day session) was provided to 75 SPO and DPO staff during the month of November 2010. This covered book keeping, grant management, advances, statutory deduction etc.

Improvement in recording of advances/coverage of VECs.

DPOs are maintaining spreadsheets which record releases to VECs and receipt of UCs.

Balances, if any, is recorded as advance and this amount gets core related with the books of the VEC as well; this is then reviewed and confirmed by the auditors.

This will lead to increased accuracy in reporting of SSA expenditure.

Uttar Pradesh

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Considerable improvement in audit coverage of VECs receiving more than Rs. 1 lakh per year.

List of such VECs audited are available in district audit reports.

Tally financial accounting software has been introduced and is in operation in 36 districts which is useful in generating various financial reports.

A team of 6 auditors has been hired in the past two years for internal audit and it covered more than 3600 locations in the previous year. 26 districts covered in the current year.

The reports are shared with the auditee and corrective action sought for.

A monitoring committee at the state level reviews the findings and confirms whether the necessary corrective action has been taken.

Uttar Pradesh

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Concerns Shortage of staff 95 posts were found to be vacant (45%) in 2009. Currently the vacancies are 102 posts (48.6%).

This poses a significant risk to program implementation, since staff is consider inadequate as compared to SSA indicative staffing structure.

The State has not yet sanctioned even the minimum required the FM Staff.

While three districts (Kashiram Nagar, Sant Kabir Nagar and Siddharth Nagar) have no accounts staff at all, several districts are working with one staff in position (Ambedkar Nagar, Azamgarh, Kannauj, Kanpur Dehat, Kaushambhi, Mathura, Rae Barelly, Rampur etc.)

Uttar Pradesh

61

SSA Norm now provides Accountant at block level but no block level accounts have been sanctioned or appointed as yet.

Roll out of Financial Accounting Software The Software needs to be implemented at all

districts in a time bound manner.Audit While the advances at various levels have been

documented and correctly presented as part of the Annual Financial Statements, the treatment of the same in the subsequent financial year is not clear.

The opening balances of advances need to be considered while providing releases in the next FY.

Uttar Pradesh

62

However, this adjustment is being done only when SPO releases funds to the DPO.

Understanding of guidelines regarding treatment of opening balances are not clear at the district level.

Moreover, various formats relating to UCs also do not take opening balances into account.

This needs to be remedial in the form of adequate guidance to district level staff and required modifications in formats.

Capacity Building/ Training Capacity building efforts though appreciated need

to be significantly enhanced. Training needs to cover all staff at the district

level including all district level accounts staff, DIET/KGBV Accountants.

Uttar Pradesh

63

The current setup proves insufficient to provide any support to the VECs in managing of funds and record keeping. BRC level accountants could provide the necessary support.

Recommendations Existing vacancies need to be filled urgently. With increased outlays, there is need for staff at

the block level which is now allowed under SSA norms.

They can play an effective role in BRC accounting as well as monitoring of activities at BRCs, CRCs and School.

Provide Tally Accounting Software to all districts quickly making this the de-facto standard and discontinuing with the manual book-keeping.

Uttar Pradesh

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This will go a long way in improving internal controls and quality and timeliness of financial reporting.

The system that is in operation at 36 locations should be rolled out to all the districts within this calendar year.

Users need to be provided continuous training and support on the software, a helpdesk and regular support to the districts will be very important.

Data submission from the district to the State and consolidation should be done using this FAS as the base.

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Key Observations The State is facing some challenges in recruiting

staff at the sub-district level. The Audit observations of 2008-09 and 2009-10

have been complied with. All DPOs are reported to be collecting UCs from

VECs and other relevant agencies. VECs are following single entry system and

keeping proper supporting vouchers.

Uttarakhand

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Concern Few districts are currently preparing bank

reconciliation statement on a monthly basis and bank-wise, including at the sub-district levels, as reflected in the audit reports 2009-10.

The delay in procuring computers under innovative activity has been the main concern as few were interested in the participating in the bids. However, the State is in the process of completing the procurement process.

Vacant positions of staff at SPO (23%), district (10%) and block level (45%) need to be filled.

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