ANNUAL REVIEW REPORT ON THE WORKING OF TREASURIES IN THE STATE OF ANDHRA PRADESH FOR THE YEAR 2018-19 PRINCIPAL ACCOUNTANT GENERAL (A&E) ANDHRA PRADESH, HYDERABAD PREFACE The Treasuries are primarily responsible for preparation and correctness of initial and subsidiary accounts as well as ensuring regularity of financial transactions in accordance with applicable codes, manual and administrative procedures relating to such accounts and transactions. To ensure internal controls in financial reporting and compliance to rules and regulations in financial transactions, inspection of District Treasuries is periodically undertaken under Section 10, 13 and 17 of CAG’s (DPC) Act, 1971 read with Regulations on Audit and Accounts 2007. This Annual Review Report on the working of Treasuries in the State of Andhra Pradesh for the year 2018-19 is prepared as required under Paragraph 20.17 of Manual of Standing Orders (A&E) Volume I. The Report includes deficiencies noticed during compilation of accounts and local inspections of treasuries conducted during 2018-19 for improving the functioning of treasuries. The review is intended to draw the attention of the State Government and Departmental Authorities to the delays in rendering of accounts, short comings in maintenance of initial accounts, other defects noticed during the course of compilation of accounts. I hope the Government and the Director of Treasuries and Accounts will take appropriate remedial measures to improve the functioning of Treasuries and Accounts Department by exercising effective internal controls. (i) TABLE OF CONTENTS Page Sl.No Contents No. i) Highlights (iii) Part-1 ii) 1 Introduction Part-II iii) 6 Defects noticed during compilation and verification of accounts Part-III iv) Defects and other irregularities 13 noticed during inspection of treasuries (ii) HIGHLIGHTS SI. No Gist of Para Para No 564 inspection reports containing 2,349 paras were outstanding 1 3.1.3 by the end of 31-3-2019 54,900 items of vouchers amounting to 3172.44 Crore are 2 2.1.2 wanting from various Treasuries Delay in adjustment of advances on 3,048 items of AC bills 3 2.2 amounting to 1243.01 Crore Adverse balance under Deposit Accounts amounting to 1467.50 4 2.3.1 crore Misclassification under MH 8009 Regular GPF Account –353 items 5 of Class IV GPF, CPS, ZPPF debits amounting to 4.04 Crore and 2.5.3 7183 items of credits amounting to 22.43Crore Irregular transfer of outstanding balances from CINB to 6 3.2.1(III) P.D.Accounts – 14.22 Crore 7 Non-lapsing of Civil Deposits under‘B’Category - 22.50crore 3.3.1 8 Unadjusted balances and irregularities in Contributory Pension 3.3.9(II) Scheme(CPS) – 8.25 Crore 9 Diversion of Funds from CPS Account into the Personal saving 3.3.9(III) Account to a tune of 10.45 lakh 10 Excess payment of pensions amounting to 140.59 lakh was 3.4.1 noticed in Sub-Treasuries 11 Excess payment of Family Pension beyond the date of remarriage 3.4.2 7.49 lakh 12 Fraudulent Drawl of Family Pension by submitting fake Life 3.4.3 Certificate (Annual Verification Certificate) – 9.70 lakhs 13 Non-Recovery of Medical Premium amounting to 9.87 lakh 3.4.9 14 Diversion of funds to the P.D.Account of CPO, Ananthapur from 3.6.7 Huzur Sirstadar, Ananthapur to the tune of 1.2 Crore (iii) Annual Review Report for the year 2018-19 PART – I INTRODUCTION Treasuries and Sub-treasuries in Andhra Pradesh function under the administrative control of the Director of Treasuries and Accounts (DTA), Andhra Pradesh, Ibrahimpatnam, Vijayawada under the Finance Department of the State Government of Andhra Pradesh. In addition to the treasuries, the following authorities also attend to treasury functions and/or render accounts to this office. Pay and Accounts Officer (PAO), Ibrahimpatnam. Pay and Accounts Officer (Andhra Pradesh Bhavan), New Delhi. 1.1 ORGANISATIONAL SET-UP The Treasuries and Accounts Department was carved out of the Revenue Department on 1.4.1958, with the mandate of upholding financial propriety in state public financial operations. The Department has two wings—Treasuries and Accounts. While the Treasuries operate at the district and below district levels, through District and Sub Treasuries located at the erstwhile Taluk level, Accounts Branches assist at the Heads of Departments level, in the capital region. Figure 1 Districts of Andhra Pradesh Page 1 Annual Review Report for the year 2018-19 Presently, there are 13 District Treasuries, 197 Divisional and Sub Treasuries along with AP Capital Region Treasury (APCRT) functioning under Director of Treasuries and Accounts (DTA) in the field, whereas nearly 27 Accounts branches out of 183 HODs are operating at the Headquarters. The hierarchical structure of the Department of Treasuries and Accounts is as follows Finance Department Director of Treasuries and Accounts (DTA) District APCRT Treasuries (13) Sub Divisional Sub Treasuries Treasuries (42) (154) All the 13 District Treasuries, 197 Divisional and Sub Treasuries along with AP Capital Region Treasury (APCRT) functioning under Director of Treasuries and Accounts (DTA) in the State are Banking Treasuries (Details vide Annexure 1.1 and 1.2) 1.1.1 ROLE OF THE TREASURIES AND ACCOUNTS DEPARTMENT a. Expenditure regulation: Ensures economy in expenditure in the State Government. Handles major share in the total State budget. b. Handles 40,000 P.D. Account operations in the entire State. c. Pension Disbursement to nearly 3.55 lakh pensioners. d. Operation of Contributory Pension Scheme covering 1.74 lakh employees. e. Operations of Strong Room as a custodian of all Government departmental valuables. f. Acts as Fund Manager in respect Class-IV GPF in the State. g. Upholds financial propriety for all financial operations in the State by following Financial Rules, Fundamental Rules, Treasury Rules, Statutory Rules, and cadre management. h. Renders advisory support to State Government in respect of Public Finance Management and acts as Financial Advisor for HODs through the functioning of Account Branches. Page 2 Annual Review Report for the year 2018-19 1.1.2 POSITION OF TREASURY STAFF The Treasuries/Sub-treasuries including the Directorate of Treasuries and Accounts has total Men-in-Position of 2022 against Sanctioned Strength of 2545 as on 31.3.2019. Cadre wise details are given below- Sanctioned Men in Designation strength position Director 1 1 Addl. Director 1 0 Joint Director 2 1 Dy. Director/CAO 17 14 DTOs 9 7 Asst. Director/AO 17 13 AAO/ATO 92 81 STOs 376 341 Junior Accounts Officer 82 60 Senior Accountant 1328 1161 Junior Accountant 618 343 U.D. Steno 1 L.D. Steno 1 Total 2545 2022 1.1.3 INFORMATION REGARDING NUMBER OF PERSONS TRAINED IN CFMS Information regarding number of persons trained in CFMS is not available with this office. 1.1.4 STAFF POSITION VIS-A-VIS VOLUME OF WORK, NUMBER OF BILLS/STAFF There is a shortage of 523 officers/officials in the Treasuries and Sub-Treasuries including DTA establishment in the state of Andhra Pradesh. 1.2 COMPUTERIZATION 1.2.1. STATUS OF COMPUTERIZATION OF TREASURIES Vide GO Ms. No.192 Dt. 10.07.2016 and GO Ms. No.203, Dt.21-10-2016, Finance Department had initiated the process for implementing the Comprehensive Finance Management System (CFMS), a SAP based ERP system for the Government of Andhra Pradesh. Page 3 Annual Review Report for the year 2018-19 The Comprehensive Financial Management System aimed at covering all processes relating to carrying out of financial transactions in Government offices i.e., both collection of receipts as well as expenditure including rendering of accounts to the AG and report requirements to all stakeholders. The CFMS, being the key stakeholder for the project, deployed several key resources to act as the project core team on fulltime basis. The project primarily covers receipts; expenditure including PD accounts management, budget, human resources, accounting and reporting areas. The government launched receipts module w.e.f. 01.03.2018 and expenditure module w.e.f. 02.04.2018 as phase I of the project. As a part of modernization, instead of replicating manual processes electronically, it has re-engineered several business processes and implemented the system. The main objectives of CFMS in AP are: Seamless workflow with flexibility at the head of the office level to define the maker/ checker/ approvers for their office. No movement of paper bills across offices to treasuries (except M-books, for now). Integration of mandatory Aadhar based approvals and digital signatures at all submission and approval levels. Streamlined business processes to facilitate budget checks, FIFO based processing and payments. Single source of truth for all transactions. All offices, (including non-DDO offices) as unique Organizational Units(OU) including the Position to Person, Person to Person, Person to OU and OU to Organizational Units relationships/hierarchies. Integration of all Autonomous Organizations seamlessly into the structure along with the PD accounting process. Transparency to the stakeholders like Citizens/Vendors to view real-time status of their data Migration of Works & Forest Accounts and Capital Region PAOs and its sub-units (like AP Bhavan, Legislature) to the Treasury mode of accounting along with discontinuing the use of transitory accounts, integrated budget management activities for additional ties, re-appropriations, surrenders and distributions along with a seamless integration between budgeting and expenditure. 1.2.2. STATUS AFTER IMPLEMENTATION OF CFMS Paperless audit: Eliminated hard copies of bills in full. DDOs present bills electronically with digital signatures and the same are processed in Treasuries. Transparency at all levels: Any transaction can be tracked any time by all stakeholders, online in CFMS portal. Page 4 Annual Review Report for the year 2018-19 Electronic Accounts: All accounts are generated automatically on closure of month from CFMS and the same are submitted to AG, saving huge volume of papers and transportation costs.