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Technical Support Group, EdCIL , New Delhi

Technical Support Group, EdCIL , New Delhi. FINANCIAL MANAGEMENT. Steps towards Responsive Accounting under SSA. Presentation for 31 st Quarterly Review Meeting of Finance Controllers. By : U.K. Verma, Consultant(FM). RESPONSIVE ACCOUNTING UNDER SSA.

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Technical Support Group, EdCIL , New Delhi

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  1. Technical Support Group, EdCIL, New Delhi FINANCIAL MANAGEMENT Steps towards Responsive Accounting under SSA Presentation for 31st Quarterly Review Meeting of Finance Controllers By : U.K. Verma, Consultant(FM)

  2. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Accounting System Government Accounting Vs Accounting under SSA GOVERNMENT ACCOUNTING RULES, 1990 Rule – 19 The accounts of Government are based, in the main, on the Single Entry System Rule – 22 With the exception of such book adjustments as may be authorized by these rules or by any general or special orders issued by the Central Government on the advice of the Comptroller and Auditor General of India, the transactions in Government accounts shall represent the actual cash receipts and disbursements during a financial year as distinguished from amounts due to or by Government during the same period. FINANCIAL MANAGEMENT & PROCCUREMENT MANUAL - SSA Para - 51 Complete accounts in respect of the monetary transactions of the State Implementation Society in the Headquarters Office as well as in the Subordinate Offices shall be maintained in the same manner as required in a State Government Office. However, the “Double Entry Method based on Mercantile System”of accounting shall be followed under SSA.

  3. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Issues – Auditor’s Feed Back • Uniform Accounting System not followed in all states. Some states still follow Cash basis of Accounting instead of Accrual basis as prescribed in FMP Manual; • Closing balance of unspent grant from last year not brought forward in the Income & Expenditure Account by some states whereas being taken in other cases; • Statutory Provisions under the Income Tax Act, 1961, EPF (MP) Act,1952, VAT etc. are not properly complied with. • Exp. in respect of previous year and even year before previous year have been taken in the Income & Exp. A/c • Separate set of books of accounts in respect of SSA, NPEGEL & KGBV are not maintained. • Realization against sale of old fixed assets are fully credited to the Income & Expenditure A/c without giving effect to the Fixed Assets Schedules

  4. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Issues – Auditor’s Feed Back • No Schedule /details of Cash & Bank Balance, Outstanding advances / liabilities forming part of Balance Sheet or Activity wise expenditure under any component has been annexed with annual accounts • The Balance Sheet shows no fixed assets as on the date by some of the SIS ; • Receipt of unspent balance from sub-district level / SMCs / VECs or amount not related with SSA funds have been credited in the Income & Expenditure Account under Miscellaneous / Other Receipts • Figures shown in the Utilization Certificate / Consolidated Annual Financial Statements / FMRs , Receipt & Payment Account are not in agreement with each other. • Expenditure for the year under different head(s) exceeds the budgetary provisions of the year; • Operation of multiple Bank Accounts under SSA / NPEGEL & KGBV

  5. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Issues – Auditor’s Feed Back • Books of Accounts are kept opened even after 9-12 months after close of the financial year which should be closed on or before 30th June every year after making necessary adjustments and incorporating the same in the books. • Bank Reconciliation Statement not prepared properly and un-presented Cheques appearing in the Bank reconciliation statements not considered to be properly treated either for transferring in state cheques or expenditures to be written back in the books of accounts. Interest / Bank Charges appearing in the BRS not accounted for • Outstanding Advances not reconciled, confirmed and poor progresses in adjustments ; • Procedural lapses in procurement procedures like Non publication of tenders in required manner, Non – evaluation of responsiveness of the technical and financial bids, awarding the works without prior approval of the Purchase Committee and settlements of claim without quality certifications;

  6. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi General Issues – Diagnosed • Accounting Principles : Most of the SIS’s Audit Reports reveals non-adherence of Accounting principles and inconsistencies & un-uniformity in Accounting System at State, district and sub-district level ; • Maintenance of Books of Accounts : Non-Maintenance or improper maintenance of books of accounts; • Bank Accounts & Bank Reconciliation : Operation of multiple bank accounts , non-preparation of Bank Reconciliation Statements ; unidentified debits and/or credits appearing in BRS, non-incorporation of due adjustment entries; • Outstanding Advances : Non-availability of age wise / name wise details of outstanding advances; Charging advances as expenditure in accounts, unconfirmed outstanding balances and long pendency of adjustment of advances; • Statutory Provisions : Non-deduction of TDS, non-deposit of TDS deducted in time, non-issuance of TDS Certificates and non-filing of Returns and incorrect accounting of TDS

  7. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi General Issues – Diagnosed • Creation of Liabilities & Timely settlement : creation of un-confirmed and un-ascertained liabilities in accounts; • Procurement procedures : Procedural lapses in the procurements; • Internal Control Mechanism & internal Audit : In-adequate and lack of effective internal control mechanism; internal audit system not in commensurate with size of funds , non-existence of concurrent internal audit system, non-compliance of internal audit reports in timely manner before finalization of annual accounts;

  8. Technical Support Group, EdCIL, New Delhi RESPONSIVE ACCOUNTING UNDER SSA Strategies & Remedial Action Remedial Strategies FM Assessment Tools Special Drive for Advance Adjustment Intensive Training & Capacity Building Format designed for reporting of actual status of Accounts to MHRD on key issues. Status to be scrutinized for issue & need based remedial supportive action by MHRD / TSG Central Team of MHRD Officials & TSG consultants constituted to visit SISs having bulk outstanding advances to review and sensitize Civil Work and Accounts functionaries of state / district level offices Intensive 2-days Accounts Training by MHRD Official & TSG Consultants to State and District Level Accounts Personnel on key issues with a view to develop some Mater Trainer for imparting further training at district / sub-district level Team Visited Bihar & Jharkhand – Reported adj.– Jharkhand 550 Cr. & Bihar – 2400 Cr. (approx) Two Regional Trainings at Maharastra (110 Persons )& Kerala (73 persons) SISs yet to submit the Status Report

  9. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi FM Status Assessment Tool • FM Status Assessment Tool : In the prescribed format each SIS has to submit it existing status on following parameters : • General Profile; • Accounting System; • Books of Accounts; • Status of Bank Accounts; • Status of Bank Reconciliation Statements; • Internal Audit System; • External Audit; • Outstanding Advances; • Staff Strength and Capacity Building; and • Status of Annual Reports Format for Assessment Tool firstly shared with State Finance Controllers in 30th Quarterly Review Meeting and after incorporating the suggestions received, sent to States vide AS (SE) letter dated 2nd September 2011 . States yet to respond on it.

  10. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Settlement of Pending Advance • Strategies • Two visits of Central Team comprising Mr. Arun Sharma, and Mr. Sushil Kumar from MHRD and TSG Consultants from Civil Works and Financial Management unit ; • Meeting with SIS and DPO’s Civil Works & Accounts functionaries; • Pending Advance disbursed up to 2009-10 targeted ; • Provisions made for adjustment of advance to the extent actually utilised for the Works under progress with full transparency • Time bond target fixed for adjustment ; • Continuous monitoring of the progresses and feed back from MHRD; • Outcomes • in Bihar Reported Adjustment of Rs. 2000 Crores in first stage and further Rs. 400 cr. – Total approximately 2,400 Crore against the total outstanding balance of Rs. 3800 Cr. Approx. • In Jharkhand – reported adjustment Rs. 550 Crore against total outstanding balance of Rs. 950 Crore; • Major portion of reported adjustments relates to Civil Works

  11. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Training & Capacity Building Intensive Training for Capacity Building TSG in Role of “Trainer” Five 2-days Regional Trainings planned on Financial Management for the purpose of capacity building of Accounts Personnel of SPO/DPOsin view to develop some of them as “Master Trainer” who could not only tackle the chronic financial management issues but also to impart further training to district and sub-district level accounts personnel. Western Region Southern Region Eastern Region N. E. Region Northern Region Pune (Maharstra) Trichoor (Kerala) Patna (Bihar) Guwahati (Assam) Pachkula (Haryana) Gujrat , Rajasthan, Madhya Pradesh, Maharastra, Goa, Dam. & Diu , D & N. Hav., Lakshadweep Kerala, Andhra Pradesh, Tamil Tadu, Puducherry, Karnataka, A&N Islsland, Bihar, Jharkhand, Chhattisgarh, West Bengal , Orissa Assam, Tripura, Nagaland, Meghalaya, Manipur, Arunachal Pradesh , Sikkim Haryana, Punjab, Chandigarh, Delhi, Himachal Pradesh J & K, Uttarakhand, Uttar Pradesh

  12. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Training & Capacity Building Intensive Training for Capacity Building • Salient Features of Regional Training • All District & State Level Accounts Officers of the hosting state to participate; • Other Participating states to nominate five Accounts personnel. 3 (three) of them shall invariably be from DPOs and 2 (two) from State project Office; • Keys issues identified from the States Audit Reports of preceding years; • After completion of all five Regional Trainings, the hosting states shall select at least 3 (three) persons and all other state shall nominate all three accounts personnel who have attended the training as the “Master Trainer “ • All such Persons identified shall be imparted 3-days intensive Training centrally at Delhi; and • After the second phase of training, such Master Trainers shall impart further Training at District / sub-district level Accounts training

  13. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Training & Capacity Building Intensive Training for Capacity Building • Key Issues selected for Training • Training : Needs & Importance; • FM Action Plan & Monthly Exp. Plan; • Book Keeping & Accounting under SSA-Accounting Cycle • Bank Reconciliation Statement; • Accounting of 13th FC Awards; • Implementation of CPSMS • Procurement Procedure; • Statutory Compliance - TDS under IT Act, 1961 • Settlement of Audit Para • Adjustment of Outstanding Advances

  14. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Training & Capacity Building Intensive Training for Capacity Building • Regional Training – Resource Book • Importance & Need of Training – Post Training Expectations; • Double Entry System of Accounting; • Book of Accounts under SSA – Cash Book, Ledger , Trial Balance, Receipt & Payment Account, Income & Expenditure Account & Balance Sheet. • Bank Accounts & Bank Reconciliation Statement • Statutory Provisions under Income Tax Act, 1961 • TDS Deductions, Deposit in Govt.’s Revenue Account, Filing of E- Quarterly Returns

  15. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Training & Capacity Building Intensive Training for Capacity Building 1st – Batch of Regional Training at Pune ( Maharastra) Date : 10th – 11th Oct’2011 Venue : Hotel VITS , Pune States Participated : Maharastra, Rajashthan, Madhya Pradesh, Daman & Diu, Dadar & Nagar Haveli Not Participated : Goa Lakshadweep Total no. of Participants : 101

  16. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Training & Capacity Building Intensive Training for Capacity Building 2nd – Batch of Regional Training at Trichoor ( Kerala) Date : 14th – 15th October ’2011 Venue : Joy Palace, Trichoor States Participated : Kerala, Karnataka, Puducherry, Tamil Nadu Not Participated : Andhra Pradesh A & N Island Total no. of Participants 73

  17. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Training Feed Back Intensive Training for Capacity Building Participants Feed Back After the Training feed back of the participants were taken in a prescribed format specially designed for Post Training Evaluation & Learning self assessment • Post Training Evaluation & Learning Self Assessment : • ( 0n the scale of 3 to 5 : 1=Low, 3=Medium, 5=High ) • About 45 % Participants, on the basis of self evaluation have gained their knowledge from Low to Medium; • About 30 % Participants gained knowledge level from medium to High • 25 % participants gained knowledge level from Low to High

  18. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Training Feed Back Intensive Training for Capacity Building Participants Feed Back After the Training feed back of the participants were taken in a prescribed format specially designed for Post Training Evaluation & Learning self assessment Will do differently in practice as a result of this Training 96 % participants would perform in better way after this training. Topics & Issues that were strength of the Training 67 % participants - Accounting , BRS, Procurement, Statutory Compliance were the strength of the training. Weaknesses of the Training 30 % participants - Communication in English, 40 % lack of Group discussions, 20 % inadequate time ; 10 % no weakness

  19. RESPONSIVE ACCOUNTING UNDER SSA Technical Support Group, EdCIL, New Delhi Training Feed Back Intensive Training for Capacity Building Participants Feed Back After the Training feed back of the participants were taken in a prescribed format specially designed for Post Training Evaluation & Learning self assessment How to improve this Training 40 % participants wants this training to be imparted in their States covering all DPOs Accounts Staff; Should be conducted every year Additional Topics should be included for Training Computerized Accounting , Service & Travelling Rules 7 % Preparation of AWP & B, Revised Financial Norms etc,

  20. FINANCIAL MANAGEMENT - SSA Technical Support Group, EdCIL, New Delhi Thank You ….

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