REPORT OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA FOR THE YEAR ENDED 31 MARCH 2011 (Report No. 2) GOVERNMENT OF GOA TABLE OF CONTENTS Reference to Paragraph Page Preface v CHAPTER – I INTRODUCTION About this report 1.1 1 Significant audit observations 1.1.1 1 Lack of responsiveness of Government to Audit 1.2 6 CHAPTER – II PERFORMANCE AUDIT FOREST DEPARTMENT Protection, Conservation and Development of Forests in Goa 2.1 7 CORPORATION OF THE CITY OF PANAJI Performance Audit on the assessment, collection and accountal 2.2 36 of revenue and utilization of State Government developmental grants by the Corporation of the City of Panaji CHAPTER – III AUDIT OF TRANSACTIONS Idle investment 3.1 59 HEALTH DEPARTMENT Non-utilisation of a district hospital – Infructuous expenditure 3.1.1 59 Undue favour to contractor 3.2 61 WATER RESOURCES DEPARTMENT Irregular release of bank guarantee and hypothecated 3.2.1 61 machinery to the contractor, resulting in non-adjustment of mobilisation/machinery advances Avoidable expenditure 3.3 63 WATER RESOURCES DEPARTMENT Avoidable payment of interest 3.3.1 63 PUBLIC HEALTH DEPARTMENT Avoidable expenditure 3.3.2 64 Regularity issue 3.4 65 FOREST DEPARTMENT Loss of interest due to non-recovery of net present value of 3.4.1 65 forest land HEALTH DEPARTMENT Irregular procurement of equipment 3.4.2 66 FINANCE DEPARTMENT Non-recovery of Labour Welfare Cess 3.4.3 68 General paragraphs 3.5 69 Lack of response to audit findings 3.5.1 69 Follow-up on Audit Reports 3.5.2 70 Audit Report for the year ended 31 March 2011 CHAPTER – IV DISTRICT BASED AUDIT District-centric Audit of North Goa District 4.1 71 CHAPTER – V REVENUE RECEIPTS Trend of revenue receipts 5.1 111 FINANCE DEPARTMENT Utilisation of declaration forms in inter-state trade and 5.2 123 commerce Irregular allowance of Input Tax Credit 5.3 132 REVENUE DEPARTMENT Short levy of stamp duty and registration fees 5.4 133 CHAPTER – VI GOVERNMENT COMMERCIAL AND TRADING ACTIVITIES Overview of State Public Sector Undertakings 6.1 135 Infrastructure development for the IT Park at Dona Paula – 6.2 147 Irregular payment of compensation to contractor and avoidable expenditure on Project Management Consultancy Loss due to short lifting of allocated quantity of coal 6.3 149 Idle investment on Utility service centre building 6.4 150 Corporate Governance in State Government Companies 6.5 151 Loss of revenue due to non-levying of compounding charges in 6.6 155 electricity theft cases Loss of revenue due to non-collection of electricity duty on sale 6.7 156 of power Extra expenditure in the purchase of single phase electronic 6.8 157 meters Loss due to non-recovery of cost of strengthening of supply line 6.9 158 ii Table of contents Appendix APPENDICES Page No. 2.1 Statement showing Targets and achievements under various 161 schemes for the period 2006-11 2.2 Statement showing the status of 21 test-checked cases pending 163 with Forest Settlement Officer 2.3 Deficiencies in the cash book 166 2.4 (a) Statement showing budgeted and actual receipt of GIA from 167 the Government of Goa (b) Statement showing unspent balance of grants-in-aid and UCs pending 2.5 Statement showing discrepancies between collection as per 168 Classified summary of receipts and collection as per Demand & Collection Registers 3.1 List of machinery and equipment installed in New Hospital 169 3.2 Statement showing year-wise position of inspection reports and 170 paragraphs pending settlement 3.3 Statement showing number of paragraphs/reviews in respect of 172 which Government explanatory memoranda had not been received for vetting 4.1 Statement showing functions and responsibilities of Zilla 173 Panchayats and Village Panchayats 4.2 Statement showing functions devolved to Zilla Panchayats and 178 Village Panchayats 4.3 Statement showing year-wise requirement and utilisation of 179 foodgrains in primary and upper primary schools 4.4 Statement showing the works sanctioned by DRDA 180 4.5 Statement showing component wise expenditure under the SGSY 181 scheme 4.6 Statement showing beneficiaries selected by VPs 182 4.7 Statement showing the position of Municipal Waste Processing 183 and Disposal Facilities 5.1 Statement showing concessional rates allowed through invalid 184 declarations in form C 5.2 Statement showing exemptions allowed through invalid F forms 188 5.3 Statement showing results of cross verifications of 'C' & 'F' forms 190 6.1 Statement showing particulars of up to date paid-up capital, loans 194 outstanding and Manpower as on 31 March 2011 in respect of Government Companies and Statutory Corporations 6.2 Summarised financial results of Government Companies and 197 Statutory Corporations for the latest year for which accounts were finalized 6.3 Statement showing Equity, Loans, Grants and Subsidy 200 received/receivable, guarantees received, waiver of dues, loans written off and loans converted in to equity during the year and guarantee commitment at the end of March 2011 iii Audit Report for the year ended 31 March 2011 6.4 Statement showing investments made by State Government in 203 PSUs whose accounts were in arrears as on 30 September 2011 6.5 Statement showing financial position of Statutory Corporations 205 6.6 Statement showing working results of Statutory Corporation 206 6.7 Summarised financial results of departmentally managed 207 commercial undertakings as per their latest proforma accounts iv PREFACE 1. This Report has been prepared for submission to the Governor of Goa under Article 151 of the Constitution. 2. Chapter I of this Report provides a synopsis of the significant deficiencies and achievements in the implementation of selected schemes, important audit observations made during the audit of transactions and follow-up on previous Audit Reports. Chapter II contains findings of the performance audit of the Forest Department and the Corporation of the city of Panaji. Chapter III deals with the findings of transaction audits in the Public Health, Water Resources, Forest and Finance departments. Chapter IV brings out the results of a district-centric Audit of the North Goa district. 3. The observations arising out of audit of revenue receipts of the State in the various tax departments are included in Chapter V of this Report. 4. The observations arising out of audit of commercial and trading activities of the Government are included in Chapter VI of this Report. 5. The cases mentioned in the Report are among those which came to notice in the course of test audit of accounts during the year 2010-11 as well as those which had come to notice in earlier years but could not be dealt with in previous Reports. Matters relating to the period subsequent to 2010-11 have also been included, wherever necessary. v 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, companies, corporations and autonomous bodies. The primary purpose of the Report is to bring to the notice of the State Legislature, important results of audit. The findings of audit 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. The audit has been conducted in accordance with the Auditing Standards prescribed for the Indian Audit and Accounts Department. The Auditing Standards require that the materiality level for reporting should be commensurate with the nature, volume and magnitude of transactions. The specific audit methodology adopted for audit of programmes and schemes has been mentioned in the reviews. The audit conclusions have been drawn and the recommendations made taking into consideration the views of the Government, wherever received. 1.1.1 Significant audit observations A summary of the significant audit observations is given below: Protection, Conservation and Development of forests in Goa 1.1.1.1 Poor enforcement of the Goa, Daman and Diu Preservation of Trees Act, 1984 The Goa, Daman and Diu Preservation of Trees Act, 1984 provided that every person granted permission under the Act was bound to plant such number and kind of tree/trees in the area from which the tree/trees was/were felled or disposed of under such permission as may be directed by the Tree Officer. Audit observed that as against 2.03 lakh trees to be replanted in lieu of 0.59 lakh trees permitted to be cut during the period 2005-11 in North and South Divisions, only 0.09 lakh trees were replanted. Thus the provisions of the Act pertaining to replanting of trees were poorly enforced. (Paragraph 2.1.10.1) Audit Report for the year ended 31 March 2011 1.1.1.2 Shortfall in Compensatory Afforestation The Forest Conservation Act, 1980 stipulated that wherever non-forest land was not available or the area of the non-forest land was less than the forest area being diverted, compensatory afforestation (CA) was to be carried out in degraded forests in twice the area being diverted or in an area equal to the difference between the forest land being diverted and the available non-forest land, as the case may be. Scrutiny in audit revealed that as against CA of 1,440.97 hectares to be done since 1983, only 509.59 hectares (35 per cent) had been brought under afforestation in the North division. Similar shortfall in CA also occurred in the South division (18 per cent). (Paragraph 2.1.10.2(d)) 1.1.1.3 Performance Audit on the assessment, collection and accountal of revenue and utilisation of State Government developmental grants by the Corporation of the City of Panaji The new shopping complex built at a cost of ` 15.33 crore by the Corporation of the City of Panaji was encroached by vendors without any formal agreements and allotment.