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20th Review Meeting of

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On financial management and procurement, the Mission made some serious ... creation and filling of additional sanctioned peripatetic accountant/clerk posts ... – PowerPoint PPT presentation

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Title: 20th Review Meeting of


1
20th Review Meeting of State Finance
Controllers 1-2 Febuary 2009 Hyderabad
2
Financial Management
9th Joint Review Mission (JRM)
  • 9th JRM was held from 16-29 January 2009
  • JRM visited 11 States, viz, Bihar, Chandigarh,
    Gujarat, Jharkhand, Karnataka, Kerala, Madhya
    Pradesh, Nagaland, Punjab, Uttar Pradesh and West
    Bengal and reviewed the progress of SSA
    implementation.
  • On financial management and procurement, the
    Mission made some serious observations which are
    as follows
  • - Funds flow
  • E-transfer of funds from SPO to DPO DPO to Sub
    District level not affected in many states.

3
Contd/-
  • - Expenditure
  • Slow progress of expenditure in some states.
  • Slow progress of expenditure in some sates is
    linked to delays in teacher recruitment, delay in
    civil works , in addition to funds flow issues
    etc.
  • - Accounting
  • Weak accounting system, at the district and
    sub-district levels.
  • Inadequate record keeping, cash book lack
    details.
  • Non-maintenance of advance register, asset
    register etc.
  • Non-reconciliation of bank accounts regularly.
  • Non-monitoring / review of outstanding advances
    and utilization certificates which were also
    observed by earlier Missions.
  • Lack of trained staff at district and
    sub-district level.

4
Contd/-
  • Treating of advances as expenditure.
  • Non availability of simplified accounting
    guidelines in local language at VEC level.
  • - Transparency
  • Non maintenance of Display board indicating
    receipt and payment at school level.
  • - Staffing Training
  • Non-filling of vacant posts of accounts staff at
    SPO, DPO and sub-district level.
  • Inadequate capacity building of accounts staff.
    Need training for more staff to re-enforce
    implementation and monitoring of financial
    management and accounting practices.

5
Contd/-
  • - Audit
  • Non-submission of Audit Reports for 2007-08 by
    majority of States.
  • Due for submission of consolidated audit report
    to Development Partners by December 31 of each
    year.
  • Auditors were unable to cite how many VECs were
    covered by audit presumably due to low level of
    fee prescribed which was not commensurate with
    the load of work.
  • Non maintenance of record on the audit coverage
    of VECs receiving more than Rs 1 Lakh per annum.
  • Follow up action on audit compliance by states
    needs to be more systematic.

6
Contd/-
  • - Internal Audit
  • In many States internal audit is in arrears .
  • Need to strengthen internal audit mechanism by
    in-house arrangement or by engaging CA firms.
  • TOR prescribed in Annex XIII of FMP Manual be
    used for all internal auditors.

7
Contd/-
  • - Procurement
  • Not following procurement procedure laid down in
    FMP Manual by State Departments and other
    organizations while carrying out procurement for
    SSA.
  • Non-adherence of the validity period, value
    thresholds for various methods of procurement,
    public opening, negotiations, liquidated damages
    etc.
  • Lack of minimum standard of quality of
    construction and inadequate technical staff for
    supervision in the case of VEC construction of
    civil works.

8
Contd/-
  • - Recommendations
  • Financial Management
  • MHRD should request States to ensure that all
    offices responsible for financial management and
    procurement at state, district, and sub-district
    levels have copies of the FMP Manual, and
    abstracts of the same in vernacular should be
    re-distributed to all VECs to ensure awareness
    and compliance of financial norms.
  • All States should be encouraged to adopt
    electronic banking channels for fund transfers
    beyond districts wherever this is possible,
    preferably by September 30, 2009
  • Existing finance and account officer staff
    vacancies, particularly at district and
    sub-district levels, should be filled as quickly
    as possible

9
Contd/-
  • SSA and the States may consider creation and
    filling of additional sanctioned peripatetic
    accountant/clerk posts at sub-district (block and
    cluster) level, given the huge number of
    financial transactions at decentralized levels.
    This may require reemphasizing MHRD instructions
    issued in this regard which indicate the
    possibility of SSA financing these positions
  • All States should ensure orientation and
    additional in-service training for sub-district
    accounts officers, ideally trained jointly with
    community members (as per SSA Implementation
    Framework)
  • MHRD should obtain specific confirmation from
    each state that only those expenditures for which
    utilization certifications have been received
    from the implementing entity (VEC, BRC, DIET,
    etc.) will be certified by external auditors.

10
Contd/-
  • Statutory Audit Implementation of requirement
    relating to coverage of VECs needs to be
    monitored closely, responsibility may be fixed on
    Financial Controller of each state.
  • While internal audit systems have been
    strengthened over the past two years, there is a
    need to further enhance their performance, speed,
    and use for review/implementation of financial
    management systems
  • Instructions from MHRD to the States should be
    issued again to ensure that all schools/VECs post
    financial information on school display boards
    disclosing funds received and used on a timely,
    updated basis

11
Contd/-
  • In recognition of the excellence of their
    performance and the primacy of local
    identification of needs, we encourage the State
    Governments to utilize the flexibility in the SSA
    programme to the greatest extent. Recognition of
    some of these leads states / UTs as a possible
    resource group for the others can serve the
    double benefit of maximising of internal
    capacities and motivating the achievers to do
    more.
  • - Procurement
  • The States need to follow tender documents of
    State Governments as laid down in para 110.5 of
    the FMP Manual and to require the State level
    procurement organizations to follow procedures
    laid down in Chapter IX of the FMP Manual.

12
Contd/-
  • In order to ensure that FMP Manual requirements
    are followed by all States, GoI/TSG should carry
    out mandatory post review of procurement as per
    para 121 of FMP Manual undertaken on an annual
    basis and those not following the requirements
    should be declared as misprocurement as per the
    provisions in the manual.
  • There is a need to continuously reiterate the
    minimum standards of designs and specifications
    which should be shared with the community and
    followed up through engineering support.
  • Where appropriate, the concept of total cost of
    ownership (TCO, which includes purchase costs,
    operating cost, maintenance cost, and remaining
    value) should be increasingly used for goods
    (e.g. computers), rather than simple purchase
    cost.

13
Thank You
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