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Report of the Examiner of Local Accounts, Bihar For

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Report of the Examiner of Local Accounts, Bihar For REPORTOF THEEXAMINEROFLOCALACCOUNTS,BIHAR FORTHEYEARENDED 31STMARCH2009and2010 PANCHAYATRAJINSTITUTIONS GOVERNMENTOFBIHAR i TABLEOFCONTENTS Particulars Paragraph Page No. PrefaceVII OverviewIX CHAPTERͲI:IntroductiontoPRIsintheStateofBihar Background 1.1 1 StateProfile 1.2 1 OrganisationalStructureofPRIs 1.3 3 PowersandRolesofStateGovernmentinrelationto 1.4 4 PRIs DelegationofFunctionstoPRIs 1.5 5 BestPractices 1.6 6 AuditArrangement 1.7 6 AuditCoverage 1.8 7 StatusofRecoverybySurchargeProceedings 1.9 7 Impactofaudit 1.10 7 CHAPTERͲII:FinancialManagementandReporting FundFlowArrangement 2.1 8 NonͲrealisationofrevenue 2.2 9 Lossof` 1.34lakhduetoirregularremissionbythe 2.3 11 ChiefExecutiveOfficer Misappropriationof`0.23croreinPanchayatSamiti, 2.4 12 Punpun Advancesof`104.18crorelying 2.5 12 unadjusted/unrecovered Expenditureonidlestaff 2.6 12 MaintenanceofAccountsbyPRIs 2.7 13 Upkeepofrecords 2.8 14 StatusofpresentationofGPFSinPRI 2.9 15 Recommendation 2.10 16 CHAPTERͲIII:InternalControlMechanism Internalcontrols 3.1 17 i Commonlapsesinmaintenanceofrecordsrelatingto 3.2 17 executionofworks SegregationofDuties 3.3 18 Monitoring 3.4 18 InternalAudit 3.5 20 ExternalAudit 3.6 21 Poorresponsetoauditobservations 3.7 21 PersistenceofIrregularities 3.8 22 AnnualAdministrativeReport(AAR) 3.9 23 Recommendation 3.10 23 CHAPTERͲIV:ExecutionofSchemes SGRYschemes 4.1 24 IrregularitiesinSGRYschemesmeantforSC/ST 4.1.1 24 community IrregularitiesinExecutionofschemes 4.1.2 25 IrregularitiesrelatedtoFoodGrainsinSGRY 4.1.3 27 NationalRuralEmploymentGuaranteeAct/BREGS 4.2 28 UnfruitfulExpenditure 4.2.1 28 DoubtfulExpenditure 4.2.2 30 ExcessPayment 4.2.3 31 OtherIrregularities 4.2.4 32 MusterRolls 4.3 32 SuspectedFraud 4.3.1 33 DoubtfulMusterRollduetofakedistributionofFood 4.3.2 33 Grain DoubtfulMusterRollsinZP,Nawadaduetofake 4.3.3 33 distributionofgrain. ImplementationofXIIthFinanceCommission 4.4 34 Delayedreleaseoffund 4.4.1 34 Non/shorttransferoffund 4.4.2 34 NonͲtransferofinterestamount 4.4.3 34 Utilisationcertificate 4.4.4 35 Infructuousexpenditureof` 1.84lakh 4.4.5 36 Executionofineligibleworks 4.4.6 36 Recommendation 4.5 36 ii List of Appendices Appendix Details Page number Number Appendix -I Detailsoffunctionsdevolvedby20DepartmentstoPRI 37 Appendix -II DetailsofactivitiestransferredtoPRIs 38 Appendix -III Statementshowingadvancepaidbutworksnotstarted 40 Appendix -IV StatementshowingdiversionofGrant 42 Appendix -V Statement showing diversion of 22.5% of Grant under 43 SGRY Appendix -VI Statementshowingdetailsoffruitlessexpendituredue 44 tononͲcompletionofworks(SGRY) Appendix -VII Statement showing details of Infructuous expenditure 45 incurredonschemes Appendix -VIII Statement showing details of stock of food grain lying 46 withPDSdealers Appendix -IX Statementshowingdetailsoffruitlessexpendituredue 47 tononͲcompletionofworks(MNREGS) Appendix -X Statement showing details of Muster Rolls with same 48 names Appendix -XI Statement showing expenditure of 12th F.C. grant 50 towards Repair/Renovation of Zila Parishad/Block Offices etc. Appendix -XII Glossary of Abbreviation 53 iii PREFACE The Examiner of Local Accounts, Bihar, Patna heads the Local Audit Department (LAD) under the supervision of the Principal Accountant General(Audit),Bihar,Patna.TheGovernmentofBiharhasappointedthe ELAasstatutoryauditorofPRIsvidenotificationdated:18.10.2006.TheELA conductsAuditofalltheLocalBodiesinaccordancewithprovisionsunder LocalFundAudit(LFA)Act,1925oftheBiharStateandvariousotheractsof theBiharGovernmentfromtimetotime. TheELApreparesReportontheaccountsofPRIsunitwiseandsendssuch reporttotheMukhia,thePramukh,theAdhyaksha,asthecasemaybe,of theGramPanchayat,thePanchayatSamitiortheZillaParishadandacopy thereoftotheStateGovernment. ThisReportoftheELAfortheyearended31March2010isconsolidationof major audit findings arising out of audit of accounts of Panchayati Raj InstitutionsintheStateofBihar. The audit findings in the Report are those which came to notice in the courseofauditofaccountsofPanchayatRajInstitutionsconductedduring 2009Ͳ2010aswellasthosewhichhadcometonoticeintheearlieryearsbut couldnotbedealtwithinpreviousReports iv OVERVIEW TheReportcontainsfourchapters.ThefirstchapterbringsoutstatusofPRIsinthe StateofBihar.ThesecondchaptercontainsobservationonFinancialManagement andReporting.ThirdchapterdiscussesaboutInternalControlMechanisminPRIs. Chapterfourcontainsobservationofauditonexecutionofschemes.Asynopsisof thefindingscontainedintheAnnualReportispresentedinthisoverview. 1.IntroductionofPRIsintheStateofBihar ¾ Inresponsetoobjectionsraisedbyaudit`1.09croreand`0.41crorewas recovered at the instance of audit during the year 2008Ͳ09 and 2009Ͳ10 respectively. (ParagraphͲ1.10) 2.FinancialManagementandReporting ¾ TheZilaParishadssustainedalossof`7.73croreduetononͲrealisationof settlementamount,stampfee,rentofshops&govt.offices. (ParagraphͲ2.2.1,2.2.2,2.2.3,2.2.4&2.2.5) ¾ Advancesof`104.18crorelyingunadjusted/unrecovered. (ParagraphͲ2.5) ¾ ThePRIswerefollowingthePanchayatSamitiandZilaParishad(Budgetand Accounts)Rules,1964.TheBudgetandAccountsformatsprescribedbythe C&AGofIndiawerenotoperationalised. (ParagraphͲ2.7) ¾ NoneofthePRIscoveredinthisreportdidprepareAnnualAccounts. (ParagraphͲ2.7) ¾ NoneofthePanchayatSamitisandGramPanchayatshadpreparedBudget estimates. (ParagraphͲ2.7) ¾ The PRIs were not maintain/maintaining improperly the basic record/register as prescribed by the rules, viz. Govt. Grant Register, Loan Register, Loan Appropriation Register, Advance Ledger, Deposit Ledger, RegisterofOutstandingAdvance,Registerofworks,AssetRegisteretc. (ParagraphͲ2.8) v 3.InternalControlMechanism ¾ Due to lack of Monitoring and Supervision over works 18705 works remainedincompleteinvolvingadvanceof`201.93crore. (ParagraphͲ3.4.1) ¾ Inalargeno.ofprojectsundertakenbythePRIsadvancesof`2.10crore were made to the executing agents but neither the projects were started northeadvanceswererecovered. (ParagraphͲ3.4.2) ¾ ThePRIsdidnottakefollowupactionontheAuditReportsissuedtothem duetowhichirregularitiespointedoutinauditreportsremainedunchecked. Upto2008Ͳ09,65061parasinrespectof4165ARsinvolvingmoneyvalueof `371.16croreremainedoutstandingforcompliance. (ParagraphͲ3.7) 4.ExecutionofSchemes ¾ Thegrantof`14.00croremeantforexecutionofworksforthebenefitof SC/STcommunitywasdivertedtowardstheexecutionofgeneralschemes. (ParagraphͲ4.1.1) ¾ Engagementoflabourswithsamenameforthesameperiodwereshownin thesameschemeaswellasinmorethanonescheme. (ParagraphͲ4.3.1) ¾ Intestchecked40PRIs`2.58crorewasspentduring2006Ͳ07to2008Ͳ09on the execution of works such as repairs/renovation of ZP/Block office by violatingTFCguidelines. (ParagraphͲ4.4.6) vi CHAPTERͲI INTRODUCTIONTOPRIsINTHESTATEOFBIHAR 1.1 Background rd The 73 Constitutional Amendment gave constitutional status to Panchayat Raj Institutions(PRIs)andestablishedasystemofuniformstructure,regularelections, and regular flow of funds through Finance Commission etc. As a follow up, the States are required to entrust these bodies with such powers, functions and responsibilitiessoastoenablethemtofunctionasinstitutionsofselfͲgovernment. In particular, the PRIs are required to prepare plans and implement schemes for economic development and social justice including those enumerated in the EleventhScheduleoftheConstitution. rd Afterthe73 amendment,theGovernmentofBiharenactedtheBiharPanchayat RajAct(BPRA),1993,subsequentlyreplacedbyBiharPanchayatRajAct,2006anda three tier system of Panchayat Raj (Zila Parishad, Panchayat Samiti and Gram st Panchayat)cameintoexistenceafter1 generalelectionheldinApril/May2001.As of March 2010 there were 38 Z.P.s, 531 P.Ss and 8463 G.Ps in the state. The PanchayatRajDepartmentcoͲordinatesfunctioningofPRIs. 1.2 StateProfile ThestateofBiharwithanareaof94,163sq.kmaccountsforabout3%ofthetotal geographicalareaofthecountry.Ithasapopulationof8.29crore(approx.)which accounts for 8% of the population of the country. The adverse landͲman ratio is reflected in the high density of population, which is 881 per sq.km. The decadal growthofpopulationfor1991Ͳ2001is28.43%whichisthehighestinthecountry. Literacyrateinthestateis47.53%andislowestinthecountry.Aspercensus2001 shareofRuralpopulationis89%ofstatepopulation(approximately).Theeconomy of the state is characterized by high incidence of poverty, low literacy rate, unemploymentandlowpercapitaincome.Thehumandevelopmentindicatorsare also very poor. The comparative demographic and developmental picture of the StateisgiveninTable:1.1. 1 TableͲ1.1:ImportantStatisticsoftheState Sl. Particulars Unit State Ranking All India No. figure among figure states 1 ShareinCountry’sPopulation percent 8.07 3 2 ShareofRuralPopulation percent 89.5 2 2 3 TotalArea km 94,163 12 32,87,240 2 4 PopulationDensity perkm 881 2 313 5 Literacyrate(2001) percent 47 28 64.8 6 Sexratio per 919 20 933 1000 7 Population below poverty line percent 41.4 28 27.5 (FY05) 8 HumanDevelopmentIndex(2001) 0.367 28 AcomparisonofpopulationperLocalBodyofBiharwithallIndiafigureandwith StateofKerala,whichisnumberoneinDevolutionIndex,isprovidedinTable1.2 (CensusͲ2001): TableͲ1.2 Sl. Type of Number Average Total Average Number Average No. PRIs of PRIs population number of populationper of PRIs population (Bihar) per PRI PRIs (non PRI (non SCS (Kerala) per PRI (Bihar) SCS states statesofIndia) (Kerala) ofIndia) 1 Zila 38 19,55,703 493 14,20,254 14 19,03,357 Parishads 2 Panchayat 531 1,39,956 5728 1,22,239 152 1,75,309 Samitis 3 Gram 8463 8,781 228679 3,062 999 26,674 Panchayats Total 9032 234900 1165 2 1.3
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