Draft Guidelines for Performance Audit On

DRAFT GUIDELINES FOR

PERFORMANCE AUDIT ON

REVENUE COLLECTION AND DELIVERY OF CITIZEN SERVICES BY ERODE CITY MUNICIPAL CORPORATION

Office of the Principal Accountant General (General and Social Sector Audit) Tamil Nadu and Puducherry Chennai-18.

INDEX

Sl. No. Content Page No.

1 Introduction 3

2 Organisational framework 3

3 Financial performance 3

4 Services rendered by the Corporation 4

5 Implementation of schemes 4

6 Scope of audit and audit coverage 5

7 Audit objectives 6

8 Audit criteria 6

9 Sample selection 6

10 Issue analysis 7

11 Study design matrix 7

12 Time schedule 7

13 Procedural issues 7

14 Annexure

[2]

Audit Implementation Guidelines

1. Introduction

Erode City is the head quarters of Erode District, which was bifurcated from the composite Coimbatore District during the year 1979. This town was constituted as a Municipality in the year 1871 and was elevated to Special Grade during the year 1980 and upgraded as Corporation from 01 January 2008. The new Council was formed with elected members in October 2011. Total area of the Corporation is 109.52 Sq.km. The Corporation has been divided into four zones covering 60 electoral wards and 15 sanitary divisions. As per 2011 census, population of the Corporation was 4.98 lakh.

2. Organisational framework

Principal Secretary to the Government, Municipal Administration and Water Supply Department is the overall head at the Government level. The Commissioner of Municipal Administration is the head of the Department who is responsible for monitoring the functions of the Municipal Corporations. The Corporation is headed by a Commissioner who is the executive head for implementing all functions of the Corporation in accordance with the resolutions passed by the corporation council. The Mayor is the ex-officio member and Chairperson of the Council and assisted by the Deputy Mayor who is also an elected representative. Zonal Officers of four zones, under the control of Commissioner of the Corporation, execute the functions of the Corporation as per the powers delegated to them.

3. Financial performance

The major sources of revenue for the Corporation are tax and non tax receipts. While the tax receipts include property tax and profession tax, the non tax receipts account for recovery of rent, fees, fines and other charges. The Corporation also receives  State and Central Finance Commission grants to meet expenditure towards salary of their staff and to provide basic amenities in the Corporation area,

[3]

 Assigned revenue by state government from the Entertainment tax and surcharge on stamp duty collected by the state  Other grants for implementation of various schemes

The details of receipts and expenditure of the Corporation, as per the budget proposals for the years 2010-15, are given below:

(Rupees in lakh) Budget estimates Revised estimates Actuals Year Receipts Expenditure Receipts Expenditure Receipts Expenditure 2010-11 11853.31 14057.21 4972.80 7261.01 5404.28 4106.17 2011-12 11469.43 14781.14 14046.59 14611.73 5835.02 5157.09 2012-13 17159.13 18179.33 14039.09 13119.04 14098.42* 10502.11* 2013-14 16094.75 17249.32 16170.83 16882.43 Not finalised 2014-15 23046.59 23119.09 Not finalised * Unaudited figures

4. Services rendered by the Corporation

The Twelfth Schedule to the 74th Constitutional Amendment had devolved 18 functions to the Urban Local Bodies. Out of 18 functions, the Government of Tamil Nadu has devolved 17 functions to the Urban Local Bodies so far. The services rendered by the Corporation to the citizen under the devolved functions include provision of water supply, streetlights, and other basic amenities to the public such as roads, drainage, public health, promotion of education in the corporation area. The Corporation provides on-line services under e-governance in payment of dues, issue of various certificates and redressal of grievances.

5. Implementation of schemes

The Corporation receives grants from Government for implementation of various schemes under the devolved functions. Besides the Corporation can evolve schemes for implementation and provide funds under their budget. Major schemes implemented by the Corporation with the financial assistance from Central/State Governments are Solid Waste Management, Water Supply Improvement Scheme, Under Ground Sewage Scheme and Integrated Urban Development Mission. The

[4] major works executed by the Corporation from their own budget are construction of storm water drains, improvements to roads and provision of basic amenities.

6. Scope of audit and audit coverage

The performance audit would focus on the following services.

Provision of water supply, maintenance of roads and pavements, street lights, public health and sanitation, solid waste management, provision of sewerage facilities, Parks and Play fields, amenities provided in schools owned by the Corporation, maintenance of burial/cremation grounds, regulation of buildings, e-governance for issue of birth and death certificates, approval for buildings, issue of trade licences, tax and non tax payment and grievance redressal besides planning, budgetary controls and tax administration for effective delivery of citizen services.

The performance audit would commence with an entry conference with the Principal Secretary of Municipal Administration and Water Supply Department at Government level to discuss the audit objectives. The entry conference would also provide an opportunity to include specific areas of concern expressed by the Government in the audit objectives.

The field visit would include examination of records at the  Head office of the Corporation, four zonal offices to study the performance of the Corporation;  Head of the Department and Secretariat to study their monitoring role;  Government Departments such as Registration Department, Health Department, Statistics Department, Education Department and Town and Country Planning Department and Pollution Control Board for cross examination of details obtained from the Corporation. Performance Audit would also include field inspection of various assets of the Corporation for ascertaining its utility and gathering evidence from the beneficiaries on the extent of provision of amenities / services by the Corporation in schools and hospitals through survey questionnaire. An exit conference would be held, on completion of the performance audit, with the Principal Secretary to the Government, Municipal Administration and Water Supply Department to discuss

[5] the outcome of the audit. The performance audit would cover a period of five years from 2010-11 to 2014-15.

7. Audit objectives

The Audit objectives as follows:  To assess whether planning is aimed at effective delivery of citizen services  To assess whether revenue generation is adequate to support the delivery of services and revenue collection mechanism is efficient  To assess whether citizen services are rendered efficiently and effectively  To assess whether the existing mechanism for Monitoring and Evaluation is effective

8. Audit criteria

The audit findings would be benchmarked against the following criteria:

 Erode City Municipal Corporation Act, 2008 and Coimbatore City Municipal Corporation Act;  Town and Country Planning Act and Building Rules;  Tamil Nadu Tender Transparency Act, 1998;  Municipal Solid Waste (Management & Handling) Rules, 2000;  Ministry of Road, Transport and Highways specifications;  Central Public Health & Environmental Engineering Organisation (CPHEEO) Manual;  Municipal Manual, Municipal Accounting Manual, IT Manual and Engineering Manual; and  Council resolutions.  Scheme guidelines for various schemes executed with the assistance of state / central government;  Government orders, executive instructions and circulars issued from time to time;

9. Sample selection

The Corporation is a single entity with four zones. Test check of records in all the four zones is covered. No sampling is required.

Audit will cover all the major schemes under each function of the Corporation. In certain scheme where number of works are taken up, 25 per cent of the total works

[6] executed during the years 2010-15 with estimated cost above Rs 10 lakh will be taken up for detailed study. The selection of works will be on random sampling method using IDEA software.

10. Issue analysis

An issue analysis for the performance audit is given in Annexure 1. Each question is derived from the audit objective or audit sub-objective which they support. The overall conclusion against each audit objective supported by the conclusion on the sub objectives would be based on the result of audit tests.

11. Study design matrix

The five major themes are split into number of study questions and sub-questions. All the study questions are linked with appropriate audit criteria, the requirement of evidence, the source / method of gathering the evidence and analysis of evidence to arrive at a conclusion, in the detailed study design matrix given in Annexure 2.

12. Time Schedule

The following time schedule is proposed for the Performance Audit.

Sl. Schedule Date No. 1. Beginning of field visit First week of January 2015 2. Mid-term review by Prl.AG Second week of March 2015 3. Mid-term review by Headquarters Second week of July 2015 4. Issue of factual note by party Second week of August 2015

13. Procedural issues

All the procedural issues prescribed such as conduct of Entry and Exit Conference, documentation, collection of suitable evidence, adhering to the style guide in drafting of performance audit report, submission of assurance memo, etc. would be strictly adhered to as per the Performance Audit Guidelines issued by the headquarters.

[7]