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LB 2013-14 ENGLISH.Pdf ANNUAL TECHNICAL INSPECTION REPORT ON LOCAL BODIES In terms of the Technical Guidance and Support of the Comptroller and Auditor General of India FOR THE YEAR ENDED 31 MARCH 2014 GOVERNMENT OF MADHYA PRADESH Table of Contents Paragraph Page no. no. Preface - v Overview - vii to ix PART – I: URBAN LOCAL BODIES CHAPTER – 1: AN OVERVIEW OF FINANCES AND ACCOUNTING PROCEDURES OF URBAN LOCAL BODIES (ULBs) Introduction 1.1 1 Administrative set up of ULBs 1.2 1 Implementation of Audit Plan 1.3 2 Accounting arrangement 1.4 2 Audit arrangement 1.5 3 Sources of revenue 1.6 4 Budgetary allocation and expenditure 1.7 4 Transfer of Funds, Functions and Functionaries to ULBs 1.8 5 Status of outstanding Inspection Report Paragraphs 1.9 5 Non-preparation of bank reconciliation statement 1.10 5 Non-realisation of tax/non-tax revenue 1.11 6 Non-adjustment of temporary advances 1.12 6 Release and utilisation of Thirteenth Finance Commission 1.13 7 Grants to Urban Local Bodies Conclusions 1.14 9 CHAPTER – 2: AUDIT PARAGRAPHS Service Level Benchmarking for performance management 2.1 11 of Urban Services Unfruitful expenditure on water filtration plant 2.2 26 Wasteful expenditure due to execution of work in forest land 2.3 27 PART – II: PANCHAYAT RAJ INSTITUTIONS CHAPTER – 3: AN OVERVIEW OF FINANCES AND ACCOUNTING PROCEDURES OF PANCHAYAT RAJ INSTITUTIONS (PRIs) Introduction 3.1 29 Administrative set up of PRIs 3.2 30 Annual Technical Inspection Report on Local Bodies for the year ended 31 March 2014 Paragraph Page no. no. Role and responsibilities of three tiers of PRI 3.3 30 Implementation of Audit Plan 3.4 31 Accounting arrangement 3.5 31 Audit arrangement 3.6 32 Sources of revenue 3.7 33 Receipts and expenditure of PRIs 3.8 33 Transfer of Funds, Functions and Functionaries in PRIs 3.9 34 Non-preparation of bank reconciliation statement 3.10 34 Status of outstanding Inspection Report Paragraphs 3.11 34 Non-adjustment of temporary advances 3.12 34 Release and utilisation of Thirteenth Finance Commission 3.13 35 Grants to PRIs Conclusions 3.14 39 CHAPTER – 4: AUDIT PARAGRAPHS Receipts of Panchayats 4.1 41 Loss of interest due to keeping scheme funds out of bank 4.2 48 account Diversion of MGNREGS funds 4.3 50 ii Table of contents APPENDICES - ULBs Page no. Appendix – 1.1 List of ULBs audited 53 Appendix - 1.2 Devolution of Functions by State Government to 55 Urban Local Bodies Appendix – 1.3 Non-preparation of bank reconciliation statement 56 Appendix - 1.4A Statement showing non-collection of tax revenue 58 Appendix - 1.4B Statement showing details of non-collection of rent 60 and premium Appendix - 1.5 Statement showing details of non-tax revenue (water 61 charges) not realised Appendix - 1.6 Details of unadjusted temporary advances 63 APPENDICES - PRIs Page no. Appendix - 3.1 Non-preparation of bank reconciliation Statements in 64 PRIs Appendix - 3.2 Details of unadjusted temporary advances 69 Appendix - 3.3 Delays in release of ThFC grant to PRIs 71 Appendix - 3.4 Disproportionate distribution of GPG among ZPs and 73 JPs Appendix - 4.1 List of Gram Panchayats test-checked in audit 75 Appendix - 4.2 List of Gram Panchayats which imposed Property Tax 77 Appendix - 4.3 List of Gram Panchayats which did not impose any tax 79 Appendix - 4.4 List of Gram Panchayats which did not produce the 80 records for complying the procedure for imposing taxes Appendix - 4.5 Name of Gram Panchayats which imposed and collected 81 water charges Appendix - 4.6 List of Gram Panchayats which received Incentive 82 Grant Appendix - 4.7 List of Gram Panchayats which did not collect the 84 entire tax imposed Appendix - 4.8 List of Gram Panchayats which did not maintain tax 85 demand and collection register Appendix - 4.9 Loss of interest due to keeping of Scheme funds in the 86 form of demand draft Appendix - 4.10 Details of diversion of MNREGS funds by GPs 88 iii P R E F A C E This Report of Comptroller and Auditor General of India has been prepared for submission to the Governor of Madhya Pradesh under Technical Guidance and Support over the audit of Urban Local Bodies and Panchayat Raj Institutions. The Report covering the period 2013-14 contains observations on Urban Local Bodies and Panchayat Raj Institutions. This Report consists of two Parts. Part - I deals with the observations on Urban Local Bodies and Part - II deals with the observations on Panchayat Raj Institutions. The cases mentioned in the Report are among those, which came to notice in the course of test audit of accounts for the period 2013-14 as well as those which had come to notice in earlier years, but could not be reported in previous Audit Reports. Matters relating to the period subsequent to 2013-14 have also been included, wherever necessary. Audit has been conducted in conformity with auditing standard issued by the Comptroller and Auditor General of India, based on the auditing standards of the International Organisation of Supreme Audit Institutions. OVERVIEW OVERVIEW This Report consists of two Parts. Part - I is on Urban Local Bodies (ULBs) and Part - II is on Panchayat Raj Institutions (PRIs). Each part contains two chapters; one is on ‘An overview on the Finances and Accounting Procedure’ and the other one is on ‘Audit paragraphs.’ A summary of the major findings are discussed below: PART – I : URBAN LOCAL BODIES CHAPTER – 1 : AN OVERVIEW OF FINANCES AND ACCOUNTING PROCEDURES IN URBAN LOCAL BODIES (ULBs) The ULBs did not adopt the accrual based accounting system, as envisaged in the Madhya Pradesh Municipal Accounting Manual. Comptroller and Auditor General of India provided Technical Guidance and Support for audit of the ULBs. (Paragraph 1.4) There were differences between the cash book balances and the bank balances of ULBs due to non-reconciliation, which is fraught with the risk of misuse of funds. (Paragraph 1.10) Tax revenue and non-tax revenue amounting to ` 845 crore imposed up to 2012-13 remained outstanding in 48 ULBs. (Paragraph 1.11) Utilisation Certificates of ThFC grants were submitted by the State Government to the Government of India based on funds released to the ULBs and not on the basis of actual utilisation. (Paragraph 1.13.1) The State Government did not receive the performance grants for the year 2012-13 and 2013-14, since the conditions for being eligible for the grants were not fulfilled. (Paragraph 1.13.2) CHAPTER - 2 : AUDIT PARAGRAPHS Long Paragraph Service Level Benchmarking for Performance Management of Urban Services: In order to increase accountability for service delivery by Urban Local Bodies (ULBs), Government of India launched the Service Level Benchmarks (SLBs) initiative covering water, sanitation, solid waste management and storm water drainage. The Thirteenth Finance Commission also linked the drawal of ‘Performance Grant’ by the State Government with the achievement of the targets set by the State Government for delivery of the urban services. (Paragraph 2.1.1) Availability of continuous and qualitative water supply services was not adequate in four ULBs since the targets fixed for water supply connections were lower than the benchmark of 100 per cent coverage prescribed by GoI. The achievement was much lower than the targets fixed; the lowest was at Annual Technical Inspection Report on Local Bodies for the year ended 31 March 2014 Indore (31 to 34 per cent). The per capita water supply was only 55 to 100 litres per day during 2013-14 against the benchmark of 135 litres per day. Against the benchmark of 100 per cent, the cost recovery of water supply services was 28 to 50 per cent in two Municipal Corporations and 2 to 14 per cent in two Municipal Councils. (Paragraphs 2.1.4.2, 2.1.4.7, 2.1.4.12 and 2.1.4.17) Except MC Indore, sewage services were not in existence in three other ULBs. Even in Indore cost of the services provided was not recovered. (Paragraphs 2.1.4.3, 2.1.4.8, 2.1.4.13 and 2.1.4.18) Collection of municipal solid waste (MSW) was 86 to 100 per cent of total generation of MSW in four ULBs. However, disposal of MSW was done only in Indore, where only seven per cent MSW collected was disposed at landfill sites. (Paragraphs 2.1.4.4, 2.1.4.9, 2.1.4.14 and 2.1.4.19) Government showed achievement of 70 to 90 per cent regarding coverage of Storm water drainage network, though the ULBs did not maintain the records of such incidences. (Paragraphs 2.1.4.5, 2.1.4.10, 2.1.4.15 and 2.1.4.20) Transaction audits Nagar Parishad, Rajgarh procured an ultra filtration plant in August 2009 for providing pure drinking water, which was not installed and made operational, even after spending ` 36.44 lakh because of non-laying of new distribution pipelines. (Paragraph 2.2) A work of housing project taken up by Gwalior Municipal Corporation in forest land had to be abandoned due to stoppage of work by Forest Department. As a result, expenditure of ` 25.55 lakh became wasteful. (Paragraph 2.3) PART – II: PANCHAYAT RAJ INSTITUTIONS CHAPTER – 3 : AN OVERVIEW OF FINANCES AND ACCOUNTS OF PANCHAYAT RAJ INSTITUTIONS (PRIs) There was short devaluation of grants to PRIs amounting to ` 147.98 crore. There were differences between the cash book balances and bank balances of PRIs due to non-reconciliation, which is fraught with the risk of misuse of funds.
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