Report of the Comptroller and Auditor General of India on Public Sector Undertakings For the year ended 31 March 2015 Government of Jharkhand Report No. 2 of the year 2016 Table of Contents Particulars Reference to Paragraph(s) Page(s) Preface v Overview vii – xii Chapter – I Functioning of State Public Sector Undertakings Introduction 1.1 1 Accountability framework 1.2 – 1.4 1-2 Stake of Government of Jharkhand 1.5 2 Investment in State PSUs 1.6 - 1.7 3-4 Special support and returns during the year 1.8 4-5 Reconciliation with Finance Accounts 1.9 5-6 Arrears in finalisation of accounts 1.10 - 1.11 6-7 Placement of Separate Audit Reports 1.12 7 Impact of non-finalisation of account 1.13 7 Performance of PSUs as per their latest finalised 1.14-1.17 7-9 accounts Accounts Comments 1.18 - 1.19 9-10 Response of the Government to Audit 1.20 10 Follow up action on Audit Reports 1.21 - 1.23 10 –12 Coverage of this Report 1.24 12 Chapter – II Performance Audit of Government Company Working of the Jharkhand Tourism Development 2.1 13 Corporation Limited Executive Summary - 13 – 14 Introduction 2.1.1 15 Organisational Setup 2.1.2 15 Audit Objectives 2.1.3 15-16 Audit Criteria 2.1.4 16 Audit Scope and Methodology 2.1.5 16 Financial Management 2.1.6 16-17 Utilisation of funds 2.1.6.1 17-18 Non recovery of outstanding dues 2.1.6.2 18 Loss due to non collection of service tax from 2.1.6.3 18-19 customers/lessees Loss due to non-availing of flexi deposit facility in 2.1.6.4 19 current account Tourism Policy and Planning 2.1.7 19-20 Self managed hotels and tourist complexes 2.1.8 20 Tourist inflow 2.1.8.1 20 Audit Report on Public Sector Undertakings for the year ended 31 March 2015 Low occupancy of Hotels 2.1.8.2 20-21 Lack of policy for tariff fixation 2.1.8.3 21 Operations through Public Private Partnerships (PPP) 2.1.9 21-23 Leased out assets 2.1.10 24-26 Infrastructural development activities 2.1.11 27-30 Transport services 2.1.12 30-31 Internal control and monitoring mechanism 2.1.13 32 Conclusion and Recommendations 32-33 IT Audit on “Systems for Collection of Baseline 2.2 34 Data and Applications for Energy Accounting in Jharkhand Bijli Vitran Nigam Limited under the R-APDRP” Executive Summary 2.2 34-35 Introduction 2.2.1 35-36 Audit Objectives 2.2.2 36 Audit Criteria 2.2.3 36-37 Organisation Set-up 2.2.4 37 Audit Scope and Methodology 2.2.5 37-38 Financial Performance 2.2.6 38 Planning and implementation of IT infrastructure 2.2.7 38 Non-fulfilment of objectives due to tardy execution of 2.2.7.1 38-39 the project Delayed appointment of IT Implementing Agency 2.2.7.2 39-40 Incomplete Asset Mapping and Consumer Indexing 2.2.7.3 40 Deficiencies in setting-up of Data Centre and Disaster 2.2.7.4 40-41 Recovery Centre Deficiency in preparation of DPRs 2.2.7.5 42 Inadequate manpower 2.2.7.6 42 Insufficient Capacity Building 2.2.7.7 42-43 Observations on Application Software 2.2.8 43-44 Inadequate input and validation controls 2.2.8.1 44 Inadequate controls for Data Security 2.2.8.2 44-45 Un-metered consumers in R-APDRP project area 2.2.8.3 45 DC and DRC established in the same seismic zone 2.2.8.4 46 Conclusion and Recommendations 46-47 Chapter – III Transaction Audit Observations 3 49 Jharkhand Hill Area Lift Irrigation Corporation Limited Loss due to of non-claiming refund of tax deducted at 3.1 49-50 source Jharkhand Urja Utpadan Nigam Limited and Tenughat Vidyut Nigam Limited Irregular expenditure 3.2 50-51 ii Table of Contents Jharkhand Bijli Vitran Nigam Limited Avoidable expenditure 3.3 52-53 Loss of revenue due to non-conversion of consumers’ 3.4 53-54 category Loss of revenue due to incorrect application of 3.5 54-55 multiplying factor Annexures Sl. No. Particulars Reference to Paragraph(s) Page(s) 1.1 Statement showing investments made by State 1.11 57 Government in PSUs whose accounts are in arrears 1.2 Summarised financial position and working 1.14 58-60 results of Government companies and Statutory Corporations as per their latest finalised financial statements/ accounts 2.1.1 Details of self managed hotels/tourist 2.1.1 61 complexes and leased out properties 2.1.2 Statement showing properties handed over to 2.1.1 62 the Company by the Department for operation and maintenance 2.1.3 Organisational Structure of JTDC 2.1.2 63 2.1.4 Statement showing financial position and 2.1.6 64 working results 2.1.5 Details of tourist inflow in the State alongwith 2.1.8 65 details of tourist who availed accommodation facility of the Company during the year 2010-11 to 2014-15 2.1.6 Statement showing properties leased through 2.1.9.1 66-68 PPP mode 2.2.1 Organisational chart for implementation of 2.2.4 69 R-APDRP 2.2.2 List of project towns selected for R-APDRP 2.2.6 70 2.2.3 List of 17 modules of R-APDRP Application 2.2.8 71 software 2.2.4 Some examples of Non-Communicating 2.2.8.1 72 Meters 3.1 Detail of loss of the company due to violation 3.4 73 of the tariff orders 3.2 Statement showing lower billing to the 3.5 74 customers due to difference in MF iii Audit Report on Public Sector Undertakings for the year ended 31 March 2015 iv Preface This Report deals with the results of audit of Government companies of Jharkhand for the year ended 31 March 2015. 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 and Sections 139 and 143 of the Companies Act, 2013. The Accounts certified by the Statutory Auditors (Chartered Accountants) appointed by the CAG under the Companies Act are subject to supplementary audit by 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 State Legislature of Jharkhand under the provisions of Section 19-A of the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971. The instances mentioned in this Report are those, which came to notice in the course of test audit during the year 2014-15 as well as those which came to notice in earlier years, but could not be reported in the previous Audit Reports; matters relating to the period subsequent to 2014-15 have also been included, wherever necessary. The Audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. Overview 1. Functioning of State Public Sector Undertakings Audit of Government companies is governed by Section 139 and 143 of the Companies Act, 2013. As on 31 March 2015, the State of Jharkhand had 18 Government Companies (all working). The accounts of Government companies are audited by Statutory Auditors appointed by the Comptroller and Auditor General of India (CAG). These accounts are also subject to supplementary audit conducted by CAG. Audit of Jharkhand State Electricity Board (JSEB), an erstwhile statutory corporation, for which CAG was the sole auditor was governed by the Electricity Act, 2003. JSEB had been re-organised (January 2014) in to four power sector Government companies. However, JSEB had finalised its accounts for the year 2013-14 (upto 05.01.2014) during 2014-15. The working PSUs employed 7023 employees as on 31 March 2015. The PSUs (including JSEB) registered a turnover of ` 3205.87 crore as per their latest finalised accounts as of September 2015. (Paragraphs 1.1 and 1.3) Investment in PSUs As on 31 March 2015, the investment (Capital and Long term loans) in 18 PSUs was ` 1784.33 crore. It decreased by 65.65 per cent from ` 5195.28 crore in 2010-11 due to the reason that assets and liabilities of erstwhile JSEB had not been transferred to its successor companies as per Jharkhand State Electricity Reform Transfer Scheme, 2013 and they formed part of residuary assets and liabilities to be retained by the State Government. Out of total investment in PSUs, 11.32 per cent was towards Capital and 88.68 per cent was towards Long-term loans. Power sector accounted for 94.35 per cent of the total investment in 2014-15. The Government contributed ` 2903.79 crore towards equity, loans and grants/ subsidies during 2014-15. (Paragraphs 1.6, 1.7 and 1.8) Arrears in Accounts Eighteen PSUs had arrears of 57 accounts as of September 2015. The extent of arrears was one to nine years. The PSUs need to set targets for the work relating to preparation of accounts with special focus on clearance of arrears.