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39 TH REVIEW MEETING OF THE STATE FINANCE CONTROLLERS

39 TH REVIEW MEETING OF THE STATE FINANCE CONTROLLERS. IPAI REVIEW-KEY OBSERVATIONS—PROCUREMENT ISSUES 28 TH -29 TH OCTOBER 2013. BACKGROUND. SSA COVERS WIDE GAMUT OF ACTIVITES IN ALL THE STATES AND UNION TERRRITORIES

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39 TH REVIEW MEETING OF THE STATE FINANCE CONTROLLERS

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  1. 39TH REVIEW MEETING OF THE STATE FINANCE CONTROLLERS IPAI REVIEW-KEY OBSERVATIONS—PROCUREMENT ISSUES 28TH-29TH OCTOBER 2013

  2. BACKGROUND • SSA COVERS WIDE GAMUT OF ACTIVITES IN ALL THE STATES AND UNION TERRRITORIES • FOR UNIFORMITY AMONG THE IMPLEMENTING AGENCIES FINANCIAL MANAGEMENT SYSTEMS AND PROCUREMENT PROCEDURES HAVE BEEN LAID DOWN IN THE FMP MANUAL FOR PROPER IMPLEMENTATION AND MANAGEMENT OF THE PROGRAMME • SINCE SSA IS A CENTRALLY SPONSORED PROGRAMME,THE IMPLEMENTING AGENCIES AT ALL LEVELS ARE REQUIRED TO KEEP PROPER ACCOUNTS OF THE FUNDS RECEIVED BY THEM AND THE EXPENDITURE INCURRED FROM THESE FUNDS

  3. BACKGROUND • TOENSURE EFFECTIVENESS ,EFFICIENCY OF OPERATIONS, • RELIABILITY OF FINANCIAL AND OPERATIONAL REPORTING ,COMPLIANCE WITH THE PROVISIONS OF THE IMPLEMENTATION FRAMEWORK, • ESSENTIALITY OF MONITORING OF BOTH PROGRAMME IMPLEMENTATION AND OUTCOME INDICATORS ON A REGULAR BASIS ESSENTIAL. • SUPERVISION AND MONITORING AT THE COMMUNITY LEVEL,STATE LEVEL AND NATIONAL LEVELHAS BEEN LAID DOWN • INTERNAL CONTROL &INTERNAL AUDIT,EXTERNAL AUDIT, • CONCURRENT FINANCIAL REVIEW AND MONITORING BY GOI

  4. CONCURRENT FINANCIAL REVIEW AND MONITORING BY GOI • INSTITUTE OF PUBLIC AUDITORS OF INDIA(IPAI) HAVE CARRIED OUT THE FINANCIAL REVIEW OF ALL THE STATES AND UNION TERRITORIES THRICE • PHASE I COVERED THE PERIOD FROM2001-2002 TO 2004-05 • PHASE II COVERED THE PERIOD FROM2006-2007 TO 2008-09(STUDY CONDUCTE D FROM OCT08-MAR10 IN THREE SPELLS) • PHASEIII COVERED THE PERIODFROM2008-09TO2009-11(STUDY CONDUCTE D FROMSEP10-MAR 12 IN THREE SPELLS)

  5. IPAI-Purpose • To analyze the Strengths and weakness in the implementation of the Scheme • To suggest remedial measures to avoid repetition • To Check the internal controls and procedural lapses in the various activities under the scheme. • To address areas of concerns emanating from the financial reviews • Procurement is an important component of SSA programme. It covers text books, teaching learning equipments, furniture, school equipments, material required for teachers training, office equipments, computer and accessories, civil works, hiring of experts for specific tasks etc. • Procurement procedure prescribed in para 111 of MFM&P for all the procurements under SSA scheme (including NPEGEL and KGBV) is mandatory for SIS the various procedures to be generally observed in procurements, like specific budget provision, assessment of requirement, open tender system, floating of NIT in All India and local newspapers, constitution of Technical and Commercial bids Evaluation Committees obtaining their recommendations in selecting the bidders, issuing the supply orders, execution of contract/agreement etc

  6. IPAI-Observations • IPAI OBSERVATIONS CAN BE CATEGORISED AS 1) General Observations • Includes compliance of Statutory Provisions relating to SIS, EC Meetings etc. 2) Specific Observations-Relates to Financial Management and Procurement issues a) Financial aspects includes/related to maintenance of records writing of books of accts and non-compliance of provisions of FMP Manual b) Procurement aspects has dealt with lapses in Procurement Procedures, Procurement process relating to both goods services and Civil Works and non-compliance of provisions of FMP Manual

  7. IPAI-Key Observations Irregular holding of GC/EC meetings, Not taken EC’s approval on the audited annual accounts before sending to MHRD. Delay in release of State Share, Non-availing of e-transfer facilities resulting in delay of receipt of funds. Treating advances as expenditure Excess expenditure Incurring inadmissible expenditure

  8. IPAI-Key Observations • Re-appropriation of funds without obtaining sanction of the competent authority; • Weak accounting system; • Non-maintenance of prescribed books of accounts like cash book, ledger, stock & asset register, advance register; • Not carried out annual physical verification of stocks/assets; • Non-submission/delay in submission of UCs; • Double entry system not followed;

  9. IPAI-Key Observations • Delay in supply of uniforms; • Aids and appliances not supplied to needy CWSN • Non-adherence of the prescribed procurement procedure; • Purchases without obtaining quotations • Cost effectiveness and accountability should be strictly followed. • States need to take immediate remedial action to avoid recurrence of such irregularities in future. • Issue suitable instructions to all functionaries for strict compliance of the SSA financial norms and the provisions of the FM&P Manual.

  10. IPAI -Observations • CIVIL WORKS • Delay in execution of works including spillover • Deficiencies in execution of works • Third Party Quality Assurance and Monitoring of Civil Works not done • Toilets and drinking water facility notproperly done

  11. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE Andhra Pradesh • Procurement of two tier beds for Kasturba Gandhi BalikaVidyalaya KGBV. • SSA programme suffered an avoidable loss of Rs.0.83 lakh (Rs.33.49- Rs.33.66 lakh • M/s Singhi Furnishing House in the earlier bid, quoted the lowest cost of Rs.32,66,250 for supply of 420 two tier beds but the quote could not be accepted because the firm did not meet the annual turnover limit of Rs.30,00,000 which in the later bid was reduced to Rs.20,00,000.

  12. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE ASSAM • Procurement of School Bags for EGS I to IV/NRBC/DUC/AIE/SSK • Procurement of two tier beds for Kasturba Gandhi BalikaVidyalaya (KGBV • M/s Fabricon Structural being the lowest bidder at Rs.33,49,403 vide order No. SSA/Estt/KGBV/Purchase/382/Pt-II/2006 dated 18 August 2008. Agreement was executed with the firm on 25 August 2008. • M/s Fabricon Structural in its earlier bid quoted Rs.42,55,052 for 420 two tier beds and in the second bid quoted Rs.33,49,403 which was a month later when the specifications and other terms and conditions of the tender were identical. Such a wide variation of almost Rs.10 lakh within a month quoted by the same firm appears unrealistic

  13. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE BIHAR • Text Books • Fire extinguishers • Teachers training • Aids and Appliances(Non-Utlisation) • Computer aided learning programme covering 9 districts

  14. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • CHHATISGARH • Payment of Central Excise Duty • Rajeev Gandhi Shiksha Mission is exempted from payment of central excise duty. However, SPO did not avail of this benefit on purchasing computers in January 2010. Even though central excise duty was paid to the firmapply No refund claimed of the excise duty paid on this purchase

  15. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • CHHATISGARH • Payment of Central Excise Duty • Rajeev Gandhi Shiksha Mission is exempted from payment of central excise duty. However, SPO did not avail of this benefit on purchasing computers in January 2010. Even though central excise duty was paid to the firmapply No refund claimed of the excise duty paid on this purchase

  16. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Chattisgarh • Uniform Kits lying unused in DPO Janjgir

  17. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE GUJARAT • Printing of Educational cards/Modules • the expenditure incurred for printing of such educational cards was classified under 'Teachers Training' for which separate grant was earmarked and the expenditure was incurred by diverting funds there from. • Printing of remedial work books • expenditure was debited to “Teachers Training” while it should have been debited under “Learning Enhancement Programme”.

  18. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Gujarat • Purchase of mini dictionary • The amount spent was to be debited to LEP grant • The dictionary was to be purchased within the ceiling limit of Rs.20 and it has to contain minimum 8000 words and explain verbs, adjectives, synonyms etc., which will be useful to the child up to higher secondary level.

  19. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Haryana • Purchase of colour pencils • No action was taken to invite open tenders and make a state level purchase at economical prices in terms of Para 112.2.6 of the Manual on Financial Management and Procurement. • Infringement of conditions of contract by NIIT.

  20. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Himachal Pradesh • Electrification and cabling work in 28 Upper Primary schools to a contractor in June, 2010 at a total cost of Rs.1.62 lakh and was to be completed by July 2010 • Delay in execution of work deprived the children of training in computer.

  21. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Himachal Pradesh • Procurement of material without inspection and payment in anticipation of receipt of materials

  22. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Jammu & Kashmir • Purchase of Computers and Accessories. • 2008-09. • purchase of computers and accessories resulted in blocking of Rs. 5.69 crore in shape of Bank Draft for seven months resulting in loss of at least Rs. 11.19 lakh in interest. • Purchase Of UPS & White Board. • without inviting any bids from companies on rate contract of DGS&D, orders for purchases valuing over Rs.17.23 Lakh were placed directly with the company in gross violation of the prescribed procurement procedure.

  23. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Kerala • IRREGULAR EXPENDITURE ON ACTIVITIES NOT RELATED TO SSA - Payment of EPF. • Purchase of Laptops and LCDs for DIETs under Innovative Activities – CAL • Purchase and supply of computer tables/chairs to BRCs during 2008-09 by the District Project Officer, Kottayam • Short supply of Maths Kit - District Project Office,Kottayam • LOSS ON PURCHASE OF HEARING AIDS • Purchase and distribution of Personal Weighing Scale and Dairy mats to Anganvadies attached to Social Welfare Department during 2008-09 • Child Census

  24. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Madhya Pradesh. • Irregular expenditure of Rs 6.60 crore in the purchase of Dev Putra Magazine and loss of interest of Rs 1.00 crore • Purchase of Computers

  25. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • MAHARASHTRA • Computers, equipments, CDs, Operating System, Text Books and work books during the period 08-09 to 2010-11. • Text books / work books • Absence of Bulk Purchase benefits. • Procurement of Dot Matrix Printers

  26. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • ORISSA • In purchasing computers by placing huge funds of Rs. 5.92 Crore • Supply of 316 upper primary science kits (UPSK) and 316 upper primary mathematics kits (UPMK) during 2010-11 • Supply of 19,631 nos. of Hand Books for designing mathematics laboratories in schools.

  27. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • PANJAB • Improper maintenance of stock register • Non-consumable items/equipments issued to persons not related to SSA Punjab Society • Non maintenance of list/ register of Major contracts valuing Rs. 5 lakh and above • Avoidable Expenditure of Rs. 28.15 lakh1499 computers were purchased during June 2009 • Excess payment of Rs. 1,45,672/- in printing of text books

  28. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Rajasthan • Purchase of green boards -purchase of green boards at such a high cost • Printing of Work Books work books procured after the expiry of the year 2009-10 • Procurement of Science and Maths Kits • Delay in finalisation of tenders for printing work • Contract for Computer Aided Learning Programme (CALP) • Procurement of telecast film • Supply of bags to girl students

  29. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Tamil Nadu • PURCHASE OF COMPUTERS 2008-09 and PURCHASE OF COMPUTERS DURING 2009-10: • PROCUREMENT OF ABL CARDS AND WORK BOOKS – PAYMENT OF V.A.T

  30. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • Uttar Pradesh • PROCUREMENT OF TEXT BOOKS • PROCUREMENT OF COMPUTERS

  31. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • UTTARAKHAND • NON MAINTENANCE OF CONTRACT REGISTERS FOR GOODS AND SERVICES PROCURED • PURCHASE OF COMPUTERS AGAINST CAL • CONSIDERATION OF BIDS NOT FULFILLING ELIGIBILITY CRITERIA • Tender for empanelment of printers , • Tender for Procurement of Stationery • AWARD OF CONTRACT TO HIGHEST BIDDER ON GROUNDS OF BETTER SPECIFICATION NOT PREVIOUSLY DEFINED

  32. PROCUREMENT ISSUES –Highlighted by IPAI-STATEWISE • WEST BENGAL • COMPUTER AIDED LEARNING. • PURCHASE OF COMPUTERS AND TRAINING OF TEACHERS UNDER CAL IN NADIA DISTRICT • IRREGULAR AWARD OF PRINTING WORK • PROCUREMENT OF FREE TEXT BOOKS • PURCHASE OF AIDS AND APPLIANCES FOR CWSN • IRREGULAR SUPPLY OF BI-CYCLES TO CLUSTER COORDINATORS OF NPEGEL PROGRAMMED LEARNING.

  33. PROCUREMENT RISKS,CONSEQUENCES,ACTION • Identifying the need and planning the purchase

  34. PROCUREMENT RISKS,CONSEQUENCES,ACTION Developing the specification

  35. PROCUREMENT RISKS,CONSEQUENCES,ACTION Selecting the purchasing method

  36. PROCUREMENT RISKS,CONSEQUENCES,ACTION Purchasing documentation

  37. IPAI –ITS AFTERMATH • OUT COME OF IPAI • EC MEETINGS ARE BEING HELD AND STATUTORY PROVISIONS RELATING TO SIS ARE ALSO BEING COMPLIED WITH • PROCUREMENT PLAN IS BEING PREPARED IN CONSONANCE WITH AWPB • IMPROVEMENT IN FUNDS FLOW DUE TO IMPROVED SYSTEMS AND BETTER BANKING ARRANGEMENTS WITH ELECTRONIC MODE OF TRANSFER OF MONEY FROM SPD TO DISTRICTS • STILL NEED TO ALSO FACILITATE QUICK AND CHEAPER TRANFER OF FUNDS TO VEC/SCHOOLS. • NUMBER OF LEVELS/TRANCHES THRU WHICHFUNDS ARE FLOWING HAS IMPROVED MAINLY IN CASE OF CENTRE TOSTATE(SPD) AND FROM SPD TO DISTRICTS,BUT STILL SOMES STATES HAVE TO STREAMLINE THE SAME. • TRENDS IN EXPENDITURE HAS INDICATED THAT CAPACITY TO UTILISE FUNDS HAVE GONE UP • CPSMS Registration has improved • Web portal usages has shown improvement.

  38. IPAI –ITS AFTERMATH • AREAS OF CONCERN • Delay in release of State Share • Diversion of funds • Advances Settlement • Clearance of Audit observations • Procurement procedures not being followed • Monitoring at lower level inadequate • Training not result oriented • Community participation needs to be strengthened. • Non-Use of CAD • Miantainance and Non-Production of Records

  39. OUT COME OF IPAI, FINANCIAL REVIEW AND MONITORING IMPROVEMENT IN FUNDS FLOW DUE TO IMPROVED SYSTEMS AND BETTER BANKING ARRANGEMENTS WITH ELECTRONIC MODE OF TRANSFER OF MONEY FROM SPD TO DISTRICTS STILL NEED TO ALSO FACILITATE QUICK AND CHEAPER TRANFER OF FUNDS TO VEC/SCHOOLS. NUMBER OF LEVELS/TRANCHES THRU WHICHFUNDS ARE FLOWING HAS IMPROVED MAINLY IN CASE OF CENTRETOSTATE(SPD) AND FROM SPD TO DISTRICTS,BUT STILL SOMES STATES HAVE TO STREAMLINE THE SAME. TRENDS IN EXPENDITURE HAS INDICATED THAT CAPACITY TO UTILISE FUNDS HAVE GONE UP PROCUREMENT PLAN PREPRATION WEB PORTAL UPLOADING

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