Financial Processes – 2 nd Common Review Mission 25 th Nov. 2008

1. Financial Processes – 2nd Common Review Mission 25th Nov. 2008 National Rural Health Mission Ministry of Health & Family Welfare Government of India New Delhi

2. Initiatives in the area of Financial Management

3. Delegation of Administrative & Financial Powers Intended outcome: • Increased absorption capacities in the public health delivery system. Trigger: • Due to concentration of these powers at higher levels, decision making process has been protracted leading to delays in execution of work and concomitant lower utilization of funds.

4. Unification of Financial and Accounting processes under NRHM Intended outcome: • To synergise the manpower and other related resources scattered earlier under different societies under NRHM. • To provide the Mission with unified financial and accounting processes for fund flow and reporting back of utilization. Trigger: • NRHM fund flow scattered and as a result reporting of utilization also disjointed. • At any given time financial position of NRHM not available at a single point either at District, State or Centre. • Financial and accounting manpower artificially segregated under different NRHM components.

5. Concurrent Audit of DHS Intended outcome: • Enhanced quality and timeliness of book keeping. • Faster adjustment of advances leading to higher utilization levels. • Enhanced level of internal controls in the system. Trigger: • Various reviews by FMG and independent agencies pointed out dismal quality of book keeping at District and State levels. • Many instances of advances being reported as expenditure.

6. Appointment of Director (Fin. & Acc.) in SHS Intended outcome: • To provide the professionals in the SPMUs and DPMUs with a distinct leadership. • To put in place a credible system of internal control in the system. Trigger: • Spiralling allocations to State Health Societies under NRHM. • Quality concerns with regard to accounting and financial management.

7. E-Banking Intended outcome: • To send funds electronically to the lowest possible level. • To have an on-line financial management information (FMIS) system in place. Trigger: • Fund transfers taking a long time. • Reporting of utilization taking undue time through multifarious levels.

8. Financial Management:Proposed Checklist

9. Delegation of Powers • Does the adequate delegation of powers exist under SHS and DHS? (Ministry on 1st May 2007 had forwarded a detailed Framework for Delegation of Administrative and Financial Powers to all States).

10. Unification under NRHM • What is the status of implementation of the Guidelines on financial, accounting, auditing, fund flow and banking arrangements under NRHM which was issued by the Ministry on 14th December 2006? •  Who are the joint signatories at the SHS and DHS level? •  Unification of Vertical/Disease Control programmes: • Whether the NDCPs have been integrated? • Extent of integration at State, District and Sub-district levels may be indicated.

11. Fund Flow: • Mode of Fund Transfer: • State to Districts: How are the funds being transferred from the State to the districts? Whether electronically or through DD/Cheques? • Districts to Blocks/CHC/SHC: What is the mode of fund transfer: whether electronic or manual? •  Lag in Fund Transfer: What is the time lag for the transfer of funds to the districts from the date of receipt of funds at the State level to the time of transfer to Districts? • Number & name of districts, which have been, excluded in the FMR sent for the March’ 2006 and June’ 2006. What are the problematic districts and steps taken to solve the problem?

12. Fund Flow: Only For Kerala team: • Are all the Districts on e-banking platform? • How the e-banking has helped in financial management? • What is the acceptance level of e-banking in the Districts? • What is the status of funds being sent to CHCs/PHCs/Sub-Health Centres? Are these funds going electronically or manually?

13. RCH-I Accounts: • What is the RCH-I Unspent available at the State and District level? • Problems being faced for the complete settlement of RCH- I account? • Time span for closing RCH-I may also be indicated.

14. Type of Financing: • Are the districts being given the flexible funds under RCH – II programme? Or the fund transfer to the districts is still activity specific? • May please indicate the quantum of funds devolved to the districts as the flexible funds. Is it specific?

15. JSY: • Problems faced in payment under JSY programme. • Whether adequate JSY funds are available at all levels? • Whether the JSY funds distributed till the ANM level or only till PHC level?

16. Untied Fund, Annual Maintenance Grants & Corpus Grant to RKS Fund Utilization: • Have all the sub-centres accounts been opened? • Problems faced in the operation of untied funds & Annual Maintenance Grant Fund at Sub-Health Centres/PHC/CHC? • Whether these funds have reached: • Whether these funds are being utilized? Are they being used mainly for meeting office expenses ( elect., water, phone bills, etc.)? • Whether these funds are subjected to community scrutiny?

17. Audit Report: • Expected date for the submission of the Audit Report, in case it has not been submitted yet? • Has the auditor gone to the districts or districts accounts were called at the State headquarters? • Any issues regarding the audit arrangements?

18. Concurrent Audit: • Is it operational in all districts? If not number and name of the districts may be indicated? • Whether the auditor for Concurrent monthly audit appointed at the District level or at the State level? • What is the quantum of monthly fee payment to the concurrent auditor? • Whether the payment is made at the district or state level? • Whether State receives a summary report at the State level. • Whether a summary of important points flagged by Monthly concurrent auditor is submitted to Mission Director or Direoct (Health).

19. Monitoring: • What is the frequency of interaction of Districts Accounts Managers with the State Finance/Accounts Manager? • What is the frequency of interaction of District Accounts Mangers with the Accountants (or person maintaining the accounts) at the CHC/PHC/ and ANM at Sub-Health Centres?

20. SPMU and DPMU: • Staff position of all contractual employees in SPMU and DPMU i.e. Sanctioned and in place? • Quantum of payments to SFM, SAM, SPM, DPM, DAM. • Whether the payments are timely? • What are annual increments?

21. Status of Block Management unit (in EAG and NE States): • Block Health Managers in position and vacancy. • Block Accountant in position and vacancy. • What are the reasons for vacancy and the action plan of State to fill up the vacancy. • Have the Block Accountants been assigned clear job responsibility? Have they started performing?

22. Capacity Building of F&A Staff • Does the State has a training calendar from all District Accounts Manager for training the accounts in Blocks, PHCs and SHCs? • MOHFW has requested States to rope in institutions of repute to provide constant skill upgradation to F&A staff. Has the State put this system in place?

23. Interest Fund: • Does State and Districts monitor interest amount? • What are the items on which interest funds are spent? • Please indicate the quantum of interest (shown six-monthly in bank statements) earned on SHS accounts. • Please indicate the quantum of interest (shown six-monthly in bank statements) earned on DHS accounts of District visited.

24. Bank Accounts: • How many bank accounts do SHS have? • How many bank account (of (a) above) are redundant and have not been operated for a long time?

25. Rogi Kalyan Samities • See the trend of earnings of RKS • See the trend of State Government budgetary support to the health system at Distt. And below. • Is RKS being used only to facilitate opening of bank account? • Is RKS involved in management of the hospital? • Is the involvement of Revenue Deptt. in RKS fund operation a boon or a bottleneck.

26. Financial Reporting: • Are monthly FMRs being submitted by the districts to the State on a regular basis (by 10th of the following month)? • Whether Statement of Fund Position (showing Cash, Bank & Advances) being prepared by the State and Districts? • What is the source data for preparing FMR at State and Districts (it should be as per Cash book & Ledgers)? • Is physical progress being captured at the time of reporting financial progress or it is being worked out on pro-rata basis? • Are the funds being spent mainly on SOFT items.

27. Internal Control • Is there any system of reconciliation of advances? • Does State & Districts prepare age-wise analysis of advances? • Has the State Govt. or SHS issued any order for closing the advances within a fixed period of time? • What is oldest advance pending in the State & Districts? • Does SHS & DHS carry out bank reconciliation on a periodic basis (fortnightly or monthly)? • Are the Cash books closed daily?

28. State share contribution • State Share of 15% Share for NRHM: Please bring details of 15% State share contribution for NRHM during 2007-08 and 2008-09. • This amount was required to be credited into the bank account of the State Health Society. • State has to increase health budgetary outlay by 10% per year – at least. Is this happening?