Report of the Comptroller and Auditor General of India on Public Sector Undertakings
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Report of the Comptroller and Auditor General of India on Public Sector Undertakings for the year ended March 2014 Government of Karnataka Report No.9 of the year 2014 Table of contents Paragraph Particulars Page No. No. Preface v Overview vii-xiii Chapter I Overview of State Public Sector Undertakings Introduction 1.1-1.3 1-2 Accountability framework 1.4-1.8 2-3 Stake of Government of Karnataka 1.9-1.13 4-5 Budgetary support to PSUs 1.14-1.15 5-6 Guarantees for loan and guarantee commission 1.16 6 outstanding Absence of accurate figures of the investment in PSUs 1.17-1.18 6-7 Arrears in finalisation of accounts 1.19-1.22 7-8 Impact of non-finalisation of accounts 1.23-1.26 8 Performance of PSUs 1.27-1.35 8-11 Non-working PSUs 1.36-1.38 11-12 Comments on Accounts and Internal Audit 1.39-1.42 12-14 Finalisation of accounts by Statutory Corporations 1.43-1.45 15-16 Recoveries at the instance of Audit 1.46 16 Disinvestment, privatisation and restructuring of PSUs 1.47 16-17 Reforms in power sector 1.48-1.49 17-18 Chapter II Performance Audits relating to Government Companies Karnataka Power Corporation Limited 2.1 19 Performance Audit on ‘Construction and performance of Bellary Thermal Power Station’ Executive Summary 19-20 Introduction 2.1.1 21 Audit Objectives 2.1.2 21 Scope of Audit 2.1.3 21-22 Audit Methodology 2.1.4 22-23 Audit Criteria 2.1.5 23 Audit Findings 2.1.6 23 Planning 2.1.7-2.1.7.3 23-27 Project execution 2.1.8.1-2.1.10 27-31 Operational efficiency 2.1.11-2.1.11.8 31-36 i Audit Report –PSUs for the year ended 31 March 2014 Paragraph Particulars Page No. No. Financial Management 2.1.12-2.1.14 36-38 Environmental norms 2.1.15-2.1.15.4 38-40 Acknowledgement 40 Conclusions 40-41 Recommendations 41 Performance Audit on ‘Irrigation Projects in 2.2 42 Karnataka’ Executive summary 42-43 Introduction 2.2.1-2.2.2 44-45 Audit Objectives 2.2.3 45 Scope and Methodology of Audit 2.2.4 45-46 Audit Criteria 2.2.5 46 Audit Findings 2.2.6 46 Status of works 2.2.7 47 Achievement of objectives of the projects/works 2.2.8-2.2.9 47-50 Deficiencies in survey and design 2.2.10-2.2.13 50-52 Deficiencies in estimation 2.2.14 52-55 Deficiencies in tendering 2.2.15-2.2.20 55-57 Deficiencies in acquisition of land 2.2.21-2.2.24 57-59 Deficiencies in execution of works 2.2.25-2.2.30 60-64 Acknowledgement 64 Conclusions 64 Recommendations 64 Chapter III Compliance Audit Observations Government Companies Karnataka State Tourism Development Corporation Limited Implementation of Golden Chariot Project 3.1 65-76 Non utilisation of infrastructure created 3.2 76-77 Idling of assets due to ill-planning 3.3 77-78 Unfruitful expenditure 3.4 79 Inappropriate acquisitions and inaction on court 3.5 80-82 pronouncements Karnataka Power Transmission Corporation Limited Non-synchronisation of substation and associated 3.6 82-83 line works Lacuna in the system of procurement of cables and 3.7 83-85 usage of cables returned to stock Undue benefit to the contractor 3.8 85-86 Creation of excess infrastructure 3.9 87-88 ii Table of contents Paragraph Particulars Page No. No. Electricity Supply Companies Purchase of Power in the State 3.10 89-97 The Mysore Paper Mills Limited Idle investment and failure to comply with the 3.11 97-99 Charter on Environmental protection Karnataka Renewable Energy Development Limited Failure to comply with provisions of Service Tax 3.12 99-100 Act Karnataka Forest Development Corporation Limited Faulty tender evaluation 3.13 101-102 Karnataka Silk Industries Corporation Limited Extra expenditure 3.14 102-103 Hubli Electricity Supply Company Limited Avoidable payment of interest 3.15 103-104 Karnataka State Coir Development Corporation Limited Unfruitful investment 3.16 105-106 Statutory Corporations Karnataka State Road Transport Corporation Additional burden 3.17 107 Follow-up action on Audit Reports Explanatory notes outstanding 3.18 108 Response to Inspection Reports, Draft Paragraphs and 3.19 108-109 Reviews No. Annexure 1 Statement showing particulars of up- to-date paid-up capital, loans outstanding and manpower as on 1.10, 1.47 111-119 31 March 2014 in respect of Government Companies and Statutory Corporations. 2 Statement showing grants and subsidy received/receivable, guarantees received, waiver of dues, loans written off and loans converted into equity 1.14 120-122 during the year and guarantee commitment at the end of March 2014. 3 Statements showing the investments made by the State Government in PSUs whose accounts are in arrears at 1.22 123-124 the end of March 2014. 4 Summarised financial results of Government Companies and Statutory Corporations for the latest 1.28 125-129 year for which accounts were finalised. 5 Statement showing financial position of Statutory Corporations. 1.28 130-135 iii Audit Report –PSUs for the year ended 31 March 2014 Paragraph Particulars Page No. No. No. Annexure 6 Statement showing working results of Statutory 1.28 136-141 Corporations. 7 Statement showing major comments made by the Statutory Auditors on possible improvements in the 1.42 142-143 internal audit/ internal control systems. 8 Statement showing the details of deficiencies in the various works test checked by Audit in respect of 2.2.10, 2.2.25 144-150 performance audit on Irrigation projects in Karnataka. 9 Details of purchase of electricity from various other 3.10.5 151 sources for the last five years ended March 2013 10 Statement showing the department-wise outstanding 3.19 152 Inspection Reports (IRs). Glossary 153 iv This report deals with the results of audit of Government companies and Statutory corporations for the year ended March 2014. The accounts of Government Companies (including companies deemed to be government companies as per the provisions of the Companies Act) are audited by the Comptroller and Auditor General of India (CAG) under the provisions of Section 619 of the Companies Act 1956. The accounts certified by the Statutory Auditors (Chartered Accountants) appointed by the CAG under the Companies Act are subject to supplementary audit by the officers of the CAG and the CAG gives his comments or supplements the reports of the Statutory Auditors. In addition, these companies are also subject to test audit by the CAG. Reports in relation to the accounts of a Government Company or Corporation are submitted to the Government by the CAG for laying before the State Legislature of Karnataka under the provisions of Section 19-A of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971. In respect of Karnataka State Road Transport Corporation, Bangalore Metropolitan Transport Corporation, North Western Karnataka Road Transport Corporation and North Eastern Karnataka Road Transport Corporation, which are Statutory Corporations, the CAG is the sole auditor. As per the State Financial Corporations (Amendment) Act, 2000, the CAG has the right to conduct the audit of accounts of Karnataka State Financial Corporation in addition to the audit conducted by the Chartered Accountants, appointed by the Corporation out of the panels of Auditors approved by the Reserve Bank of India. In respect of Karnataka State Warehousing Corporation, the CAG has the right to conduct the audit of their accounts in addition to the audit conducted by the Chartered Accountants, appointed by the State Government in consultation with the CAG. In respect of Karnataka Electricity Regulatory Commission, the CAG is the sole auditor. The Audit Reports on the annual accounts of all these corporations are forwarded separately to the State Government. The instances mentioned in this report are those, which came to notice in the course of test audit for the period 2013-14 as well as those which came to notice in earlier years, but could not be reported in the previous Audit Reports. The matters relating to the period subsequent to 2013-14 have also been included wherever felt necessary. The audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. v This report deals with the results of audit of Government companies and Statutory corporations for the year ended March 2014. The accounts of Government Companies (including companies deemed to be government companies as per the provisions of the Companies Act) are audited by the Comptroller and Auditor General of India (CAG) under the provisions of Section 619 of the Companies Act 1956. The accounts certified by the Statutory Auditors (Chartered Accountants) appointed by the CAG under the Companies Act are subject to supplementary audit by the officers of the CAG and the CAG gives his comments or supplements the reports of the Statutory Auditors. In addition, these companies are also subject to test audit by the CAG. Reports in relation to the accounts of a Government Company or Corporation are submitted to the Government by the CAG for laying before the State Legislature of Karnataka under the provisions of Section 19-A of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971. In respect of Karnataka State Road Transport Corporation, Bangalore Metropolitan Transport Corporation, North Western Karnataka Road Transport Corporation and North Eastern Karnataka Road Transport Corporation, which are Statutory Corporations, the CAG is the sole auditor.