Transcript Welcome to the Session on Financial Management and Procurement

Recommendations of the 15th JRM
on
Financial Management & Procurement
33rd Review Meeting of State FCs- Delhi
(24th - 25th May 2012)
15th JRM recommendations on FM&P
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Held from January 16-30, 2012.
Undertook field review in 10 States of Assam,
Chhattisgarh, Gujarat, Haryana, J&K, Kerala,
Rajasthan, Tamil Nadu, Tripura and West Bengal.
Aide Memoire relating to FM&P is enclosed.
Key recommendations on FM&P
(a) Fill up the existing vacancies in the Finance
Wing and
(b) Capacity building through intensive training
given by professionals at all levels should be
arranged through a need based gap analysis.
The JRM feels that the strengthening of the
Financial Wing at state, district and subdistrict levels is essential to face the
challenges of sustaining a robust financial
management system in a complex and multi-2
tiered delivery system.
15th JRM recommendations on FM&P
(c) Implementation of the online procurement
monitoring software should be fast tracked,
as this is a very useful monitoring tool for
MHRD and the States.
General Recommendations on FM&P
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To face the challenges of sustaining a robust
financial management system in a complex and
multi-tiered delivery system, the Finance Wing at
State, district and sub-district levels need to be
considerably strengthened in the interest of the
stakeholders.
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15th JRM recommendations on FM&P
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The approach should be twofold:
(a) urgent steps need be taken to fill up the
existing vacancies in the Finance Wing and
(b) capacity building through intensive training
given by professionals at all levels should be
arranged through a need based gap analysis
District level FM staff shortages have been
highlighted by last 3 – 4 JRMs, but the progress is
not satisfactory. States must fill vacancies of FM
staffing, including at district and sub-district level,
at the earliest.
The mission recommends that Controllers’
Meeting should particularly focus on FM staffing in
states at district and sub-district level.
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15th JRM recommendations on FM&P
FM Training
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The training module needs to be drawn up by
experts in the area.
In the states where structured Finance and
Accounts services exist, officers from those
services may be suitably utilised on deputation
basis for efficient running of the SSA programme.
It must be remembered that the materiality and
significance of fiscal parameters in a flagship
programme like SSA cannot be over-emphasised.
The officers in the Finance Wing should be well
versed in budgeting, accounting (both cash and
mercantile
systems),
financial
reporting,
government rules and procedures and the
provisions of Manual on Financial Management
and Procurement (FM & P Manual) of SSA.
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15th JRM recommendations on FM&P
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In case suitable personnel are not available from
within the government system, qualified
Chartered Accountants or persons with proven
experience in the field of financial administration
at different levels may be inducted.
Apart from completing mandatory training of 5
days in a year for accounts staff at
state/district/block level, states should pay equal
attention to training of VEC/SMC and heads of
schools.
As computerized accounting is a relatively recent
development in many states, particularly at
district and block level, training on computerized
accounting should be organized on a regular
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basis for state/district staff.
15th JRM recommendations on FM&P
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FM training of staff may also include
dissemination of findings of internal audit and
statutory audit to district/sub-district staff, so that
staff are made aware of specific areas of concerns
and can take necessary corrective action.
States may consider developing a cadre of Master
trainers on finance and accounts.
Also, states must implement measures for
assessing effectiveness and relevance of FM
training at all levels
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15th JRM recommendations on FM&P
Accounting and Disclosure Issues
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It is recommended that critical issues like noninclusion of disaggregated figures of grants
under each component, GOI and State Share
including interest and district level balances in
the consolidated balance sheet, booking of
advances
as
expenditure,
nonavailability/maintenance of display boards in
schools and non-opening of bank accounts in
some schools and drawing funds from the Bank
Accounts of other schools, are addressed
expeditiously by the states.
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15th JRM recommendations on FM&P
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It will be useful to agree a format for social audit
display boards at the SPO level itself, which can
be shared with all the districts to ensure that
financial information is consistent, visible and
adequate.
VEC/SMC level Issues
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VEC/SMC training to include modules on
maintenance of minutes of VEC/SMC meeting.
The minutes of meeting to include information on
grants received; expenditure and balance of each
grant; cash and bank balance; and major
decisions regarding procurement, payments etc.
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15th JRM recommendations on FM&P
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Controllers’ meeting to monitor development of
FM training material for community level and
training of VEC/SMC members.
Accounting Software
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States have made considerable progress in
implementation of financial accounting software.
 The process needed to be expedited in the state
of Madhya Pradesh, as it is the only state among
ten largest states in which the software has not
been implemented in all districts.
 MHRD should also focus on monitoring whether:
(a) manual record-keeping is continuing along
with the software at state and district level;
and
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15th JRM recommendations on FM&P
(b) basis of audit i.e., manual records or accounting
records as per accounts produced from
computerized system.
 A report on this should be presented during the July
2012 JRM.
Internal Audit Concerns
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An annual plan for internal audit with red flags for
identified and measured risk areas will strengthen
administration and enhance the confidence of
stakeholders.
Risk identification and measurement can be done
through statistical and scientific audit sampling,
since manpower is a limited resource.
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15th JRM - Recommendations on FM&P
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This ‘control of all controls’ can identify the gaps in
financial management system and reduce ‘noises
in the population’ by addressing such issues like
adjustment of high value outstanding advances
with age-wise analysis of the same, bottlenecks in
fund flow system and many performance snags.
MHRD should act in tandem with the state
governments for inducting professionalism in
internal audit system.
Reports of Institute of Public Auditors of
India (IPAI)
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MHRD may like to monitor the IPAI reports closely,
particularly when the internal audit system is at the
take-off stage in many states.
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Recommendations on FM&P
Procurement
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MHRD may investigate the specific contracts
highlighted in the PPR and also identify states
where more focused oversight and attention is to
be provided.
MHRD may suggest specific checklists for review
of procurement as part of the ToR for internal and
external audit and the ToR shall prescribe the
percentage of purchase transactions/contracts
that need to be reviewed by the auditors and
reported on.
MHRD should re-emphasise that all states should
adhere to the SSA FMP manual and that repeated
non adherence to the manual shall be dealt with
appropriate actions including declaring mis13
procurement as provided for in the FMP Manual.
Recommendations on FM&P
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It may also provide clarification on the applicability
of the FMP provisions to all entities that procure
on behalf of the SSA program.
The procurement monitoring software which was
agreed as an important action point at the 12th
JRM is yet to be implemented.
This remains a serious concern for the mission as
many states still report non adherence to the FMP
Manual.
It is suggested that Implementation of the online
procurement software be fast tracked, as this is a
very useful monitoring tool for MHRD and the
states.
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Recommendations on FM&P
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Since majority of the procurement under SSA is
being done at the community level, it is
recommended that all states print and distribute
SMC (School Management Committees) manuals
with sections on Financial Management and
Procurement in the vernacular to all SMCs.
Regular Training and frequent briefings on
procurement procedures may be provided to SMC
members in order to increase effectiveness,
efficiency and economy in procurement.
It is recommended that Comprehensive Annual
Maintenance contracts (Parts / Labor / Onsite) be
entered into for all equipment procured under the
SSA program
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Recommendations on FM&P
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The 13th JRM had suggested measures for
improvement in text book printing.
The Action taken on the recommendations have
been reported in the 14th JRM, but there is still
scope for improvement.
The Missions suggests the following for further
improvements in text book printing:
(i) Specifications (e.g. quality, size and thickness of
the paper etc) of each book should be printed
somewhere in the opening pages of the books;
(ii) Use of Bar code on Text books would help in
preventing duplication in the market.
(iii)Consider and share the good practice models
found in states e.g., qualification criteria in line
with Maharashtra tender documents and
specifications
as
per
Karnataka
tender
documents;
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Recommendations on FM&P
(iv) While printing, specify ‘FOR FREE SUPPLY’ on the
cover to save time on manual stamping of books
by the authorities, as is being practiced by most
states;
(v) Consider withdrawing the practice of providing
positives and charging for the same in view of the
current industrial printing practice viz. Computer To
Plate (CTP)
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Recommendations on FM&P of STATES
ASSAM
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A follow-up discussion on the internal audit
mechanism should be done with MHRD for a
common understanding on the same and an
update be provided on cost items that have
significant under utilization of funds.
CHHATTISGARH
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Delays continue to be there in the initiation and
completion of civil works projects.
This was attributed in part to the conflict in LWE
areas and partly to a delay in the receipt of funds
from GoI.
The second instalment from the Central
Government has not yet been received.
No civil work sanctioned for 2011-12 has been18
completed till date.
Recommendations on FM&P of STATES
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Though there are 4778 works which are under
progress throughout the state.
Fund flow mechanisms from the GoI to state and
from state to districts and below need to be
streamlined on an urgent basis.
It is important to urgently address staffing and
capacity building at all levels.
Although the state has initiated training on the
FM&P Manual at district and block level,
awareness and utilisation could be further
strengthened.
The state is finding it difficult to fill the vacant
posts because of the lack of qualified accountants
within the state.
The state needs to find a solution to this issue as19
the implementation is suffering on this count.
Recommendations on FM&P of STATES
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The Mission came across certain issues that are
barriers to RTE but do not necessarily find their
places in the present SSA guidelines.
It would be important for MHRD to consider
having a component of flexible fund which can be
given to states on the basis of the proposal
prepared separately to address such specific
needs.
GUJARAT
• Staffing
(i) The state must review the new arrangement of
Block level accountants continuously to
ensure that it is working effectively e.g.,
sample visit and checking of reports by next
higher level (BRC accountant for SMC and20
CRC accountant).
Recommendations on FM&P of STATES
• FM Guidelines/Manuals and Training
(i) Existing FMP manual in Gujarati needs to be
updated as per the version of FMP issued in
2010 and BRC guidelines in Gujarati should
be updated.
(ii) The state may also consider scheduling FM
training after each cycle of internal audit and
statutory audit, to disseminate key findings of
the audit.
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Flow of Funds
(i) The state may consider the use of mobile
phones for sending information about
releases of funds to SMCs through CRCs, to
speed up the flow of information.
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Recommendations on FM&P of STATES
(ii) Also, as soon as schools have computer labs
and internet facility, all correspondence to
SMCs/CRCs/BRCs can be done through
electronic mail.
(iii)This would also lead to effective use of
infrastructure provided to schools.
(iv)Computers have already been delivered in
some schools in December 2011.
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Accounting and Internal Controls
(i) Fixed Asset Register to be as per the format in
FMP at all levels.
(ii) BRCs to print and sign monthly accounts and
BRS from Tally.
(iii)The state may also consider having joint
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signatories for bank accounts at BRCs.
Recommendations on FM&P of STATES
• Monthly Financial Reporting from
district and sub-district level
(i) To include additional aspects e.g., large cash
withdrawals and cash payments at SMC level.
• Audit
(i) State to clear backlog of internal audit at the
earliest. Block Accountants and CRC
accountants to monitor compliance of audit
observations for their respective offices and
compliance of audit observations by SMCs.
• SMC
(i) SMC Minutes to include information on grants
received; expenditure and balance of each
grant; cash and bank balance; and major
decisions regarding procurement, payments23
etc.
Recommendations on FM&P of STATES
(ii) Also, the woman community member, who is a
co-signatory of SMC account, should also sign
vouchers and not just cheques.
Haryana
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The major issue in terms of staffing in FM
department is at the BRC level. 180 Accountants
posts are currently lying vacant.
Most schools visited the Mission did not have an
Expenditure information display board. Where
ever it was seen (4/20 schools visited by the
Mission), the board has not been updated for
more than 2 years, or not filled/ updated; in some
places, it mostly had information on maintenance/
beautification grants received.
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Recommendations on FM&P of STATES
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SMC members seem to be not aware of TLM/
TLE grants. School staff/ SMC members are not
trained for accounting and record keeping. There
are no printed materials distributed to school
levels functionaries guiding them on how to
maintain accounting and record keeping.
JAMMU & KASHMIR
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State needs to expedite the process of auditors
and audit firm appointment.
The posts of internal auditors created at District
level are also being filled up for furtherance of
effectiveness of internal audit.
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Recommendations on FM&P of STATES
KERALA
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The State needs to ensure that a mechanism for
transferring funds electronically is put in place
immediately.
The pace of fund utilization has been rather slow in the
current financial year, which has mainly been due to
non-recruitment of teachers sanctioned in the year's
plan.
RAJASTHAN
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It will be useful to agree a format for social audit
display boards at the SPO level itself which can then
be shared with all the Districts to ensure financial
information is consistent, visible and adequate.
The large number of vacancies in Accounts needs to
be addressed urgently. The State has been employing
retired accounts personnel to fill up vacancies on
contract basis and increased use of such consultants26
should be considered.
Recommendations on FM&P of STATES
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The mission recommends that Training for
Headmasters and teachers on basic accounts and
record keeping be provided.
The mission suggests that SMCs be regularly
briefed on procurement methods and procedures as
a large proportion of procurement activities are
conducted through them.
TAMIL NADU
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Internal Audit is a control function which examines
and evaluates the adequacy and effectiveness of
other controls in the system. In fact, it has been
defined as ‘control of all controls’.
The vacancies in Internal Audit be filled up
expeditiously in consultation with director of LF
Audit, failing which Chartered Accountants may be
engaged for the work under the provisions of FM
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and Procurement Manual.
Recommendations on FM&P of STATES
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Urgent steps need to be taken to strengthen the
Finance Wing, particularly at the field level.
The consolidated balance sheet should have
adequate disclosure under the capital fund.
Audit objections need to be settled quickly.
Similarly, the third phase report IPAI needs
attended to expeditiously.
Steps need to be taken to adjust the outstanding
advances. Particular attention needs to be given
for obtaining the pending UCs. More loss of time
may prove to be risky in getting the required
documents necessary for adjustment of the high
value advances.
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Recommendations on FM&P of STATES
TRIPURA
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Third party evaluation of civil works needs to be
carried out urgently.
Many of the recommendation of the IPAI report
need to be implemented and action taken report
need to be sent to MHRD urgently.
Finance Officer/Coordinators and Accounts
officers post need to be filled up urgently before
disbursement of next tranche or by beginning of
the next financial year.
Along with filling up posts, regular training and
hand holding support to all relevant officials, Head
masters, CRCs and BRCs on finance and
accounting guideline and practices need to be
conducted.
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Recommendations on FM&P of STATES
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More number of Master trainers on finance and
accounts need to be developed and deployed.
Strengthening of internal audit system with
required manpower is necessary to ensure more
frequent
audits
and
action
taken
on
recommendation.
Financial accounting software needs to be rolled
out urgently.
WEST BENGAL
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It is desirable that provision of Para 74.1 of the
Manual
on
Financial
Management
and
Procurement are strictly followed, and the
incorrect practice of booking Advances as
expenditure discontinued forthwith.
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Recommendations on FM&P of STATES
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Furthermore, detailed analysis of the unreconciled amount of Rs 15.33 cr needs to be
undertaken on priority basis to resolve the
discrepancy.
There is also need to examine, whether all
primary schools at VEC level can be authorized to
have separate Bank Accounts, so that handling of
cash is minimized.
In the absence of Headmaster, it needs to be
considered whether Headmaster of a neighboring
school along with Teacher-in-charge of the school
can be authorized to operate a separate Bank
account.
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