© COMPTROLLER AND AUDITOR GENERAL OF INDIA www.cag.gov.in www.agkar.cag.gov.in TABLE OF CONTENTS Paragraph Page Number Number Preface vii CHAPTER-I : INTRODUCTION About this report 1.1 1 Auditee profile 1.2 1 Authority for Audit 1.3 2 Organisational structure of the Office of the 1.4 3 Principal Accountant General (G&SSA), Karnataka, Bengaluru Planning and conduct of Audit 1.5 3 Significant audit observations 1.6 3 Performance audits of programmes/activities/ 1.6.1 4 Departments Information Systems audit 1.6.2 6 Compliance audit 1.6.3 6 Lack of responsiveness of Government to Audit 1.7 9 Inspection reports outstanding 1.7.1 9 Response of Departments to the draft 1.7.2 10 paragraphs Follow-up action on Audit Reports 1.7.3 10 Paragraphs to be discussed by the Public 1.7.4 10 Accounts Committee CHAPTER-II : PERFORMANCE AUDIT DEPARTMENT OF HOUSING Role of Karnataka Slum Development Board 2.1 13 in improvement and clearance of slums in the State DEPARTMENT OF URBAN DEVELOPMENT Water Supply Management by the Bangalore 2.2 30 Water Supply and Sewerage Board with special emphasis on Cauvery Water Supply Scheme, Stage IV, Phase II and Greater Bangalore Water Supply Project CHAPTER-III : INFORMATION SYSTEMS AUDIT DEPARTMENT OF HOME Police IT-2000 3.1 59 i Report No.10 of the year 2014 Paragraph Page Number Number CHAPTER-IV : COMPLIANCE AUDIT DEPARTMENT OF EDUCATION (PRIMARY & SECONDARY) Functioning of Public Libraries in Karnataka 4.1 79 DEPARTMENT OF MINORITY WELFARE Property Management by the Karnataka State 4.2 91 Board of Auqaf DEPARTMENT OF COLLEGIATE EDUCATION Irregular retention of tuition and laboratory fees 4.3 110 DEPARTMENT OF HOME Avoidable payment of interest 4.4 111 Locking up of Government funds 4.5 112 DEPARTMENT OF HIGHER EDUCATION Violation of codal provisions resulted in 4.6 113 escalation of cost and stoppage of work DEPARTMENT OF HOUSING Irregular investment in equity based funds 4.7 115 DEPARTMENT OF HORTICULTURE Continued release of funds for a project which 4.8 117 was not taken up DEPARTMENT OF KANNADA & CULTURE Delay in completion of a project 4.9 118 DEPARTMENT OF MEDICAL EDUCATION Unproductive investment 4.10 120 DEPARTMENT OF PRIMARY AND SECONDARY EDUCATION Delay in implementation of the project resulted 4.11 121 in locking up of Government funds and cost overrun DEPARTMENT OF REVENUE Sub-division of Government land for which 4.12 123 records did not exist DEPARTMENT OF URBAN DEVELOPMENT Excess payment of salary to Junior Engineers of 4.13 124 Urban Local Bodies ii Table of contents Paragraph Page Number Number Avoidable excess payment to contractors 4.14 125 Delay in finalising tender procedure leading to 4.15 126 avoidable extra expenditure Loss of revenue due to poor estate management 4.16 127 Excess payment of salary to Officers of 4.17 129 Bangalore Development Authority Compensation to persons who did not establish 4.18 130 title to acquired land Unproductive investment in commercial 4.19 131 Complex Non-revision of water rates for commercial/ 4.20 132 industrial connections DEPARTMENT OF REVENUE & DEPARTMENT OF URBAN DEVELOPMENT Irregular allotment of land to Indian Institute 4.21 134 for Human Settlements iii Report No.10 of the year 2014 List of Appendices Appendix Page Details Number Number Year-wise breakup of Inspection Reports and 1.1 141 Paragraphs outstanding in respect of Revenue Department Details of Departmental Notes pending as of 1.2 142 31.10.2014 (Excluding General and Statistical Paragraphs) Paragraphs (excluding General and Statistical) yet to 1.3 143 be discussed by PAC as of 31 October 2014 Extent of improvements made to 31 slums inspected 2.1 144 Statement showing list of selected works for 2.2 145 performance review under GBWASP and CWSS Stage IV Phase II Statement showing avoidable expenditure due to 2.3 147 adoption of manual means rate for earth excavation instead of mechanical means Statement showing boosting of estimates due to 2.4 148 non-adoption of Board SR rates Statement showing excess earth excavation against 2.5 149 IS 4127 standards Statement showing avoidable expenditure due to 2.6 150 excess provision of earth excavation against IS 4127 standards Statement showing avoidable expenditure incurred 2.7 152 due to providing of higher diameter of the pipe line due to non-adoption of C value as recommended by the CPHEEO Manual. Statement showing excess payment to the contractor 2.8 153 due to adoption of incorrect indices under W4C contract for supply of steel plates Statement showing package-wise avoidable 2.9 156 expenditure on account of adoption of incorrect indices towards price adjustment Excess payment towards earth excavation suggested 2.10 157 by mismatch among excavation, pipe volume and backfilling Statement showing excess payment made towards 2.11 158 hard rock excavation by mechanical means instead of excavation by blasting under W1 raw water transmission mains iv Table of contents Appendix Page Details Number Number Loss to the Board due to use of Fe415 instead of 2.12 159 Fe500 steel Irregular payments 4.1 160 Excess payment due to non-ascertaining of market 4.2 162 rate Extra payment due to non-supply of items 4.3 163 District-wise number of Waqf institutions 4.4 165 Details of encroachment of Auqaf 4.5 166 Statement showing the outstanding CWC loans 4.6 167 Mis-utilisation of loans released in three instances 4.7 168 Arbitrary fixation of rent 4.8 170 Progress of the “Kalagrama” project 4.9 171 Procedure for rebuilding the missing file 4.10 172 Documents to be furnished by the grantees 4.11 173 Details of compensation paid by Bangalore 4.12 174 Development Authority v PREFACE This Report of the Comptroller and Auditor General of India for the year ended 31 March 2014 has been prepared for submission to the Governor of Karnataka under Article 151 of the Constitution. The report contains significant results of the performance audit and compliance audit of the Departments and Autonomous Bodies of Departments of the Government of Karnataka under the General and Social Services including Departments of Education, Home, Horticulture, Housing, Kannada & Culture, Medical Education, Minority Welfare, Revenue and Urban Development. 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. Instances relating to period subsequent to 2013-14 have also been included, wherever found necessary. The audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. vii CHAPTER-I INTRODUCTION 1.1 About this Report This Report of the Comptroller and Auditor General of India (C&AG) relates to matters arising from performance audit of selected programmes and activities and compliance audit of Government Departments and Autonomous Bodies. Compliance audit refers to examination of the transactions relating to expenditure of the audited entities to ascertain whether the provisions of the Constitution of India, applicable laws, rules, regulations and various orders and instructions issued by competent authorities are being complied with. On the other hand, performance audit, besides conducting a compliance audit, also examines whether the objectives of the programme/activity/Department are achieved economically and efficiently. The primary purpose of the Report is to bring to the notice of the State Legislature, important results of audit. Auditing Standards require that the materiality level for reporting should be commensurate with the nature, volume and magnitude of transactions. The audit findings are expected to enable the Executive to take corrective actions as also to frame policies and directives that will lead to improved financial management of the organisations, thus, contributing to better governance. This chapter, in addition to explaining the planning and extent of audit, provides a synopsis of the significant deficiencies and achievements in implementation of selected schemes, significant audit observations made during the compliance audit and follow-up on previous Audit Reports. Chapter-II of this report contains findings arising out of performance audit of selected programmes/activities/Departments. Chapter-III contains findings arising out of information systems audit in selected Government audit and Autonomous Bodies. Chapter-IV contains observations arising out of compliance audit in Government Departments and Autonomous Bodies. 1.2 Auditee Profile The Principal Accountant General (General & Social Sector Audit), Karnataka, Bengaluru conducts audit of the expenditure under the General and Social Services incurred by 66 Departments in the State and 11 Autonomous Bodies. The Departments are headed by Additional Chief Secretaries/Principal Secretaries/Secretaries, who are assisted by Directors/ Commissioners and subordinate officers working under them. 1 Report No.10 of the year 2014 The summary of fiscal transactions during the year 2012-13 and 2013-14 is given in Table-1 below. Table-1: Summary of fiscal transactions (` in crore) Receipts Disbursements 2012-13 2013-14 2012-13 2013-14 Section-A: Revenue Total Non-Plan Plan Total Revenue receipts 78,176.22 89,542.53 Revenue 76,293.26 62,219.74 26,969.83 89,189.57 expenditure Tax revenue 53,753.56 62,603.53** General Services 20,180.85 24,794.03 160.38 24,954.41 Non-tax revenue 3,966.10 4,031.90 Social Services 30,419.80 17,813.32 14,808.57 32,621.89 Share of union taxes/ 12,647.14 13,808.28 Economic Services 21,674.19 16,742.34 9,850.49 26,592.83 duties Grants-in-aid and 7,809.42 9,098.82 Grants-in-aid and 4,018.42 2,870.05 2,150.39 5,020.44 contributions from GOI contributions Section – B: Capital and others: Misc.