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Presentation on Review of Financial Management and Post Review of Procurement in Manipur

Annexure ‘E’. Presentation on Review of Financial Management and Post Review of Procurement in Manipur. By: N.P. Chauhan Consultant- Financial Management T.S.G. - S.S.A.

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Presentation on Review of Financial Management and Post Review of Procurement in Manipur

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  1. Annexure ‘E’ Presentation on Review of Financial Management and Post Review of Procurement in Manipur By: N.P. Chauhan Consultant- Financial Management T.S.G. - S.S.A.

  2. I visited Manipur from 11th October, 2009 to 16th October, 2009 for Review of Financial Management and Post Review of Procurement.Visit to SPO, 2 DPOs (ZEOs), 4 BRCs/CRCs, 4 Primary Schools

  3. Review of Financial Management State Project Office Cash Book • The Cash book is being maintained in Double Entry System. The SPO maintains following bank accounts: • Cash book is closed daily and cash balance is struck and attested by SPD It is seen from above that the credit balances of cash book and bank statements do not tally as on 31-03-2009 and 05-10-2009. Therefore, there is a need for monthly reconciliation of cash book and bank statement on regular basis

  4. Maintenance of Current Bank Account instead of Savings Bank Account • It is a matter of serious concern that the State Project Office, Manipur has been maintaining a Current Bank A/c. instead of Saving Bank A/c. which is a violation of basic guidelines issued by MHRD. SPD, Manipur is being advised to close this current account and transfer the balance of Rs. 118498377 to savings bank account as there is a loss of interest on the amount lying idle in current account. • There are over writings and corrections in the Cash Book which should be attested by the Head of Office/DDO under his/her dated initials as per para 77.11 of FM&P Manual. These guidelines are not being followed.

  5. Ledger- The Ledger is not being maintained which is essential for classification of different heads of accounts. • Journal - The Journal is not being maintained which is necessary for recording adjustment entries. • Register for Temporary Advances – This is being maintained. • Register of Money Orders/Bank Draft Received – This is not being maintained as this may not be required. • Register of Remittances made into bank – This is not being maintained. • Register of MO, PO and Bank drafts despatched- This is not being maintained. • Bank Passbook/Bank Statement – Bank Statements are being received from UBI periodically. • Bill Register – This is being maintained.

  6. Establishment Register – This is not being maintained. • Stock Register – This is being maintained. • Capital Goods of consumable articles, non consumable articles and Register of works – This is being maintained. • Fixed Assets Register – This is being maintained. • Register of Investments – This is not being maintained as this is not required. • Register for settlement of Audit Objections (Annexure XXII) – This is not being maintained. • Consolidated Register indicating progressive expenditure (Para 55 of FM&P Manual) – This is not being maintained.

  7. Classification Accounts of the Project – Register is not maintained. However, Costing Code heads are followed for booking of expenditure under various heads like free text books, teacher training, BRC, CRC etc. • Dispatch Register – This is being maintained. • Monthly accounts of Receipts/Payments – This is not being maintained. • File Register – This is not being maintained. • Temporary Advances Register for Staff, Customers/supplier/VEC and TA/DA Advance – This is being maintained. • The SPO to take an urgent action for opening of all the above mentioned registers.

  8. Status of Bank Reconciliation As per para 82 of FM&P Manual bank reconciliation is to be done on monthly basis. However, bank reconciliation is not being done at all The SPO is required to tally entries shown in the passbook/bank statement with the entries in the cash book on monthly basis as per para 82.4 of FM&P Manual. The discrepancies are to be rectified and differences are to be explained in the Bank Reconciliation Statement as explained in para 82.5 of FM&P Manual

  9. Financial Irregularities BEO, Wangoi under District Imphal (West), withdrew an amount of Rs. 14.50 Lakhs for civil works and retained the amount with him for two years which was detected by Statutory Auditors As per guidelines, the funds should be transferred to the VECs through crossed cheques only. It is not understood as to how the BEO had withdrawn a heavy amount of Rs.14.50 Lakhs on account of Civil Works and the funds were retained by him without transferring the same to the VECs. The SPD has been requested to investigate the case and submit a report on the subject at the earliest possible.

  10. Position of Flow of FundsThe Status of flow of funds is given below: Status of Receipt of funds from GOI and State Govt. of Manipur

  11. Status of Release of funds from SIS to DistrictsIt is noticed that there is a delay in release of funds from SPO to Districts/Sub Districts. As per para 89.3 of FM&P Manual SIS is required to release funds to the districts within fifteen days of its receipts from the GOI. There is a need for prompt release of funds from SPO to Districts/Sub Districts and VECs for smooth implementation of SSA. The feasibility of electronic transfer of funds is to be explored by discussing this issue with your banker i.e. United Bank of India, Paona Bazar branch, Imphal (West) and MHRD may be kept informed about further developments on the subject.

  12. Status of Statutory Audit by CA firmStatutory Auditors have been appointed for conducting audit of the year 2008-09 who were supposed to commence Audit from 19-10-2009 and the same is to be completed by 30-11-2009. It was intimated by Finance Controller that Annual Report alongwith Audited accounts will be submitted to MHRD by 15-12-2009. Status of C&AG Audit The Finance Controller has informed that Accountant General, Manipur had conducted Audit for 2006-07. However, the file was not traceable.

  13. Status of Internal Audit Internal Audit is being conducted through Chartered Accountant firm as there is no in house arrangement for Internal Audit for SSA in the State. It was intimated by Finance Controller that Internal Audit for the financial year 2007-08 has been completed. The Finance Controller has been advised to take up Internal Audit for the financial year 2009-10 on top priority. There is no need for a Internal Audit for the year 2008-09.

  14. Status of StaffingStaffing Structure of Finance & Accounts Staff The Status of staffing structure at SPO level is as under:

  15. The Status of staffing structure at DPO level is as under:

  16. Status of Orientation, Training for Accounts and Internal Audit-Personnel As per para 84 of FM&P Manual orientation training on planning, budgeting, accounting, procurement, internal audit etc. of SSA should be imparted to all account and audit staff at periodical interval so as to equip them with sufficient knowledge of the area of their work for smooth and efficient functioning of the tasks assigned to them. However, such training is not being arranged in Manipur.Delay of 1-2 ytears in Receipt of Utilization Certificates from DPOs Imphal (East) , Chandel and Bishnupur.

  17. Register showing Position of Outstanding Advances paid to suppliers/contractors – This is not being maintained. • Register showing Position of Outstanding Advances paid to employees – This is being maintained. • Visit to District Project Offices – • Action Taken Report on concurrent financial review report of IPAI Initial comments have been received from the SPD. However, further comments on some observations of IPAI’s review report are pending. • Status of Annual Reports and Audited Accounts The Annual Report and audited account of year 2006-07 have been submitted and Annual Report and audited accounts of year 2007-08 are under preparation. It was intimated by FC that efforts will be made for submission of Annual Reports for 2009-10 by 15.12.2009. Statutory Audit was to be commenced on 19-10-2009 and it will be completed by 30-11-2009 in 9 Districts.

  18. Status of Training of Finance and Accounts Personnel It is noticed that training has not being conducted for finance and accounts personnel . As per para 99.6 of FM&P Manual, initial and orientation training on financial management covering planning, budgeting, accounting ,procurement and internal audit etc. should be imparted to all finance & accounts personnel . DPO, District Imphal (West) The DPO is headed by Zonal Education officer Maintenance of Current Bank Account instead of SB A/c. The ZEO maintains a current bank account number 8402 in United Bank of India, Paona Bazaar, Imphal. There is an urgent need to close the current bank account and to open a savings bank account by transferring balance from the existing current bank account to the savings bank account.

  19. Cash Book Cash book is written up to 31-03-2008 and there is an urgent need to complete the cash book from 01-04-2008 onwards the cash book shows a credit balance of Rs. 1725854 as on 31-03-2008 where as the bank statement shows a credit balance of Rs. 992694 as on 31-03-2008 which does not tally with the balance as shown in the Cash Book. Bank Statement for the period from 04-01-2009 to 04-05-2009 is only available.. The bank statement shows a credit balance of Rs. 2951745 as on 04-05-2009. Necessary action to be taken by the DPO for completion of Cash Book and its reconciliation with the bank statement on top priority.

  20. Advance Register – This is not being maintained. • Cheque Issue Register – This is being maintained • Ledger – This is not complete and it is not maintained from 01-04-2008 onwards. • Visit to Lamgjing Primary School – Primary Section was a part of upper primary school Langjing Primary School which has been separated as an independent primary school from February 2009 (Academic Session). It was intimated by the Headmistress that a new saving bank account has been opened with United Bank of India on 09-10-2009. She was unable to show any other registers during the visit. It was also intimated that all schools in 4 valley districts out of 9 are closed for the last 1 month due to threat of some organizations.

  21. Visit to Ngashi Rastralipi Primary School - The School is maintaining a saving bank account no. 9735 in Manipur Rural Bank from 27-08-2009. There is a balance of Rs. 1000 in the same bank account. • Bank Passbook/Bank Statement – The Headmistress could neither show passbook nor bank statement. • Stock Register – This register is not being maintained. • Cash Book – This was not presented during my visit.

  22. Visit to BRC (URC) – Khoyathong Saving Bank Account 129909 is being maintained in United Bank of India, Paona bazaar, Imphal. Cash Book – Cash Book has been maintained upto 31-03-2008. The Cash Book shows a closing balance of Rs. 2420 whereas the bank statement shows a balance of Rs. 2505 as on 08-01-2009. which does not tally with the balance shown in the Cash Book. The Cash book not up to date and this is also not signed by the Head of Office. The Cash book is also not written on daily basis as required under para 77.8 of FM&P Manual. It was intimated by BRC that Cash Book has not been written for the year 2008-09 and 2009-10 as funds were not received.

  23. Visit to BRC – Haorang Sabol 16 CRCs work under rural and one CRP is posted for each CRC. No records are maintained by CRCs. A current bank account no. 8550 is maintained for rural main and the holder of the account is Block Education Officer Imphal (West) -1 under Zonal Education officer-1. The current bank account is to be closed and a savings bank account is to be opened with immediate effect. The Cash Book entries have not been signed by Head of Office on daily basis. • Stock Register- This is not being maintained. • Assets Register - This is not being maintained. • Cheque Issue Register – This was not presented during my visit.

  24. District Project Office (ZEO) Churachandpur • Cash Book – Cash Book is written upto 10-02-2009. The Cash Book shows a Credit Balance of Rs. 12354732 as on 10-02-2009. The Bank Statement dated 06-06-2009 shows a balance of Rs. 13250535.45 as on 10-02-2009 which does not tally with the balance shown in the cash book. The Bank Statement for the period from 08-06-2009 to 27-08-2009 shows a credit balance of Rs. 7438936.65 as on 24-08-2009. • Stock Register - The stock register is maintained upto 04-04-2005. which needs updation. • Cheque Issue Register – This register is maintained upto 27-12-2008 It was intimated by Zonal Education Officer that new cheque book register is maintained by Deputy Commissioner’s Office in continuation of the cheque issue register maintained by ZEO.

  25. BMC Churachandpur • Cash Book – Cash Book is written upto 20-03-2009 and it shows a balance of Rs. 3621.50 as on 20-03-2009. The Bank Statement dated 28-04-2009 also shows a balance of Rs. 3621.50 which tallies with the closing balance of cash book. The BMC maintains a SB A/c No.0255010123794 in United Bank of India, Churachandpur. It was intimated by BMC that funds have not been received after 20-03-2009 so, no transaction have been recorded in the cash book. • Cheque issue register – The Register is maintained upto 16-03-2007. • Stock Register - Stock Register is maintained upto 29-09-2005. There is an urgent need for updation for the stock register.

  26. Release of funds for SSA to Deputy Commissioner of District. • It was intimated by ZEO, Churachandpur now funds are being released to Deputy Commissioner of the district and DPO’s proposals for expenditure are processed by Deputy Commissioner as per Chief Secretary, Manipur wireless message No. DC(CCP)/DDC/2001`1: Dt. 10-07-07 . According to new arrangement Zonal Education Officer is to be involved in implementation of SSA but not in actual operation of account and sanction of funds including signing of cheques. • The ZEO Churachandpur has informed that the accounts are being maintained by the office of Deputy Commissioner’s after issue of above mentioned directive of the Chief Secretary, Manipur from July 2007 onwards. • The Zonal Education officer, Churachandpur could not show the books of accounts and other related documents which are maintained by the office of the Deputy Commisioner, Churachandpur.

  27. Visit to BRC, Samulamlau Block, Churachandpur • Cash Book - This is written upto 11-03-2008. which shows a balance of Rs. 2749 as on 11-03-2009. The correspondence bank statement for this was not presented/Shown. It was intimated by BRC that the cash book prepared upto 31-03-2009 was under submission to Internal Auditor. The Cash Book is to be updated from 01-04-2009 onwards. • The cash book is also not maintained as per double entry system. • Stock Register – It was intimated by BRC that the register is under submission to internal auditor • Asset Register – It was intimated by BRC that the register is under submission to internal auditor

  28. Visit to Primary School Vungzugen • Cash Book – The Cash Book is written upto 10-12-2008 and it shows a balance of Rs. 7500. The Head Mistress of the School has informed that funds were not received after 10-12-2008. So, no entries have been made in the cash book. • Cheque Issue Register – This is not being maintained. • Register for School Maintenance grant – This is maintained upto 10-12-2008.

  29. Visit to Primary School, Rengkai The Cash book is written upto 04-12-2008 and it shows a closing balance of Rs. 453 as on 04-12-2008. The bank passbook (Savings bank account No. 16998) is incomplete as there are no entres after 30-06-07. It shows a balance of Rs. 537 as n 30.06.2007. It was informed by headmaster that funds were not received 10-12-2008. Therefore cash book was not maintained. Stock Register – This is being maintained. CRC Churachandpur Savings Bank Account – It was intimated by ZEO that no separate bank account is maintained by cluster resource person and there are five primary school under this CRC. CRC Vimgzagin There are no records maintained in this CRC.

  30. Post Review of Procurement The contracts for Rs. 48.50 on account of School Mapping & Micro Planning and Household Survey were selected for post review The objective of School Mapping & Micro Planning and Household Survey was to bring to all children to school or alternate schools, bridging gender gap and to focus on quality. • Notification for Invitation of offers published in local dailies only A Notification No. 3/12/08-SSA(SMA) dated 20-09-2008 was published by the State SSA Mission Authority, Manipur in two Newspapers viz., the Sangai Express (English) and Poknapham ( Local daily). Notification not published in one National Daily.

  31. High level committee for selection of NGOs A Committee consisting of Chief Secretary, Manipur, Principal Secretary (Planning), Principal Secretary (Finance) and Commissioner (Education-S) was constituted by Chairman, Executive Committee of SSA for selection of NGOs for conducting Survey for School Mapping & Micro Planning and Household vide State Project Director No.3/12/08-SSA(SMA) dated 04-10-2008.

  32. Terms of Reference A suggested TOR for selection of NGOs was prepared internally Sl No. Area to be considered Suggested marks 1 Financial Soundness 15 2 Area of Operation 20 3 Availability of Manpower 20 4 Experience of similar projects 15 5 Interview with the selection committee 30 Total 100

  33. Responses received from 54 NGOs With reference to the advertisement, 54 responses were received from the NGOs out of which 10 NGOs were shortlisted on the basis of above mentioned criteria. Selection of 3 NGOs by Selection Committee after Interview 1. Green Foundation, Kwakeithel for household survey in the four valley districts. 2. Oriental Rural Development Organisation, Tamei, Tamenglong for household survey in five hill districts. 3. Nirvana Foundation, Imphal for School Mapping.

  34. The Ten Shortlisted NGOs were intereviewed by the High Level Selection Committee A meeting of the high level selection committee for NGOs was held on 12-01-2009 vide Commissioner (Education-S), notice number 3/12/08-SSA(SMA) dated 05-01-2009. Direction issued to SPD for negotiation of prices instead of inviting financial and technical bids in two envelopes. The Selection Committee directed the SPD,SSA, SMA to negotiate and fix the rate with the NGOs involved in the implementation of the work keeping the overall amount within the estimated figure of Rs. 50 Lakhs. Accordingly the SPD, SSA negotiated the rate with the NGOs keeping the overall amount within the estimated figure of Rs. 50 Lakhs. Time Frame – The School Mapping exercise was to be completed within March 2009. Total Budget – The rate of survey will be Rs. 800 per Village/Town/City ( for both hill or plain area ) subject to a maximum ceiling of Rs. 21,50,000 Deduction of 1% for delay of every week or part thereof

  35. Observations on the post review of procurement contract – 1. Lack of procurement plan - which is an essential requirement as per para 108 of FM&P Manual. The procurement plan covering civil works, equipment, goods, vehicles and consultancy services is to be prepared on firm basis for the first year of the programme and on a tentative basis for the subsequent years as per para 108 (b) of FM&P Manual. The procurement plan is to be prepared every year for proper monitoring . As per para 108 (d) of FM&P Manual, procurement schedule is to be sent to the EE Bureau, GOI. 2. Lack of Cost Estimates - for the above mentioned contracts were not prepared as required in para 118.5 of FM&P Manual. 3. Non-publication of advertisement in National Daily - The advertisement for invitation of expression of interest was published only in two local newspapers published from Imphal. .As per para 118.6 of FM&P Manual, advertisement (seeking Expression of Interest)shall be published in regional and national newspapers having wide circulation.

  36. 4. Financial Bid and Technical Bid not Invited - Proposals were not sought in two envelope system i.e. Technical proposal in one envelope and Financial proposal in another envelope which is a violation of guideline contained in para 118.8 of FM&P Manual 5. Evaluation procedure not followed - Technical and Financial evaluation is required to be done by two separate evaluation committees. However, in this case the High Level Selection Committee directed only SPD, SSA to negotiate contract price without inviting financial bids which is a violation of para 118.9 of FM&P Manual. 6. Appraisal procedure for proposals not followed - As per para 120.5, the proposals for engagement of NGOs should initially be desk appraised by an evaluation committee formed for this purpose and if found suitable, be field appraised before selection. However, in this case the process has not been followed. 7. Negotiation of Rates without Inviting Financial Bid is not proper - The selection committee consisting of Chief Secretary, Principal Secretary (Planning), Principal Secretary (Finance) and Commissioner (Education-S) directed the SPD to negotiate and fix the rate with the NGOs keeping the overall budgetary allocation of Rs. 50 Lakhs without assessing the reasonableness of rates which is not proper.

  37. Guidelines for Negotiation with L-1 Bidder not followed - As per direction of the Selection Committee, SPD was asked to make negotiation of contract price with the NGOs without inviting financial and technical bids which is in contravention of guidelines contained in para 110.28 of FM&P Manual according to which negotiation should ordinarily be discouraged and negotiation may be undertaken only with lowest evaluated responsive bidder (L-1). 9. Records for Negotiation of Price not maintained - As per para 110.29 of FM&P Manual detailed reasons and results of negotiations of price shall be recorded in the proceedings. However, in this case the reasonableness of the contract price and details of negotiation of price with the NGOs are not available in the file.

  38. THANK YOU

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