FINANCIAL MANAGEMENT

1

Meeting of Education Secretaries and State Project Directors

Of

Sarva Shiksha Abhiyan

31st July 2009

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Organization of the Organization of the presentationpresentation

► Systems for Financial Management Systems for Financial Management under SSAunder SSA FM structure and Fund Flow arrangementsFM structure and Fund Flow arrangements

► Status across different parametersStatus across different parameters► Action required for strengthening Action required for strengthening

financial management systemsfinancial management systems► Financial Status as on 31Financial Status as on 31stst March 2009 March 2009

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Manual on Financial Manual on Financial Management & ProcurementManagement & Procurement► Developed and implemented from 2004Developed and implemented from 2004

Substantial fund flow from 2002-03Substantial fund flow from 2002-03 To keep track of financial indicatorsTo keep track of financial indicators Standardizations/ CompilationsStandardizations/ Compilations To promote transparencyTo promote transparency Guidance for States/UTs specially non-DPEPGuidance for States/UTs specially non-DPEP

► Status: Adopted by all States/UTsStatus: Adopted by all States/UTs

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Manual on FM&P contd/-Manual on FM&P contd/-

Covers:Covers:► NormsNorms► Accounting Accounting ► ReportingReporting► AuditingAuditing► ProcurementProcurement

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Finance and Accounts Finance and Accounts StructureStructure

SIS (Finance & A/c Unit)

DPOs (Fin & A/c Unit)

BRC/CRC (BRCC/CRCC/Accountant)

VECs (Head Master/Sarpanch)

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Systems for Financial Systems for Financial MonitoringMonitoring

► GOI levelGOI level CAG AuditCAG Audit Quarterly Review Meetings of FCsQuarterly Review Meetings of FCs Concurrent Financial Reviews (IPAI) Concurrent Financial Reviews (IPAI) Field visitField visit JRMJRM Independent MIsIndependent MIs Special Audit as per needSpecial Audit as per need

► State levelState level Statutory AuditStatutory Audit Internal AuditInternal Audit State Accountant General auditState Accountant General audit Quarterly/ Monthly Review MeetingsQuarterly/ Monthly Review Meetings Field visitField visit

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State level Financial State level Financial MonitoringMonitoring

Statutory AuditStatutory Audit► Annual Annual

► Mandatory as per Societies registration ActMandatory as per Societies registration Act

► Coverage of all VECs/SDMCs receiving more than Coverage of all VECs/SDMCs receiving more than Rs. 1 lakh per year in a three year cycle. Rs. 1 lakh per year in a three year cycle.

► By C&AG / State AG empanelled list of CA firmsBy C&AG / State AG empanelled list of CA firms

► Report mandatory for GOI releases of next yearReport mandatory for GOI releases of next year

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Statutory Audit Statutory Audit cont…cont…► Status:Status:

Received from all except Chhattisgarh and J&K.Received from all except Chhattisgarh and J&K. Compliance awaited from some StatesCompliance awaited from some States

2003-042003-04 -- 2 States (J&K and Mizoram)2 States (J&K and Mizoram)2004-052004-05 -- 2 States (Jharkhand & Mizoram)2 States (Jharkhand & Mizoram)2005-062005-06 -- 11 States (Aru. Pr, AP, Bihar, 11 States (Aru. Pr, AP, Bihar,

Haryana, HP, Jharkhand, Chhattisgarh, J&K, Haryana, HP, Jharkhand, Chhattisgarh, J&K, Mizoram, Manipur and Nagaland)Mizoram, Manipur and Nagaland)

2006-072006-07 -- 18 States (Aru Pr, AP, Bihar, 18 States (Aru Pr, AP, Bihar, Chhattisgarh, Chandigarh, Jharkhand, Haryana, Chhattisgarh, Chandigarh, Jharkhand, Haryana, J&K, Karnataka, Kerala, MP, Manipur, Meghalaya,J&K, Karnataka, Kerala, MP, Manipur, Meghalaya,Nagaland, Puducherry, Sikkim, Tamil Nadu, Nagaland, Puducherry, Sikkim, Tamil Nadu, Tripura)Tripura)

2007-082007-08 -- 25 States (Assam, AP, Aru Pr, 25 States (Assam, AP, Aru Pr, Bihar, Chandigarh, Delhi, D&D, D&N Haveli , Goa, Bihar, Chandigarh, Delhi, D&D, D&N Haveli , Goa, Jharkhand, HP, Haryana, Karnataka, Kerala, Jharkhand, HP, Haryana, Karnataka, Kerala, Lakshadweep, MP, Maharashtra, Meghalaya, Lakshadweep, MP, Maharashtra, Meghalaya, Nagaland, Puducherry, Rajasthan, Sikkim, TN, Nagaland, Puducherry, Rajasthan, Sikkim, TN, Tripura & Uttrakhand)Tripura & Uttrakhand)

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► Action required:Action required: Statutory Audit reports to be submitted on time. Statutory Audit reports to be submitted on time.

Approval of EC/GC must be obtained before Approval of EC/GC must be obtained before forwarding to GOIforwarding to GOI

Non submission can lead to suspension of Non submission can lead to suspension of disbursals against SSA expenditures in defaulting disbursals against SSA expenditures in defaulting States eg CG and J and K.States eg CG and J and K.

Audit reports to be complete in all respectsAudit reports to be complete in all respects Ensure audit coverage of VECs >1 lakhEnsure audit coverage of VECs >1 lakh Submit quarterly audit compliance reports Submit quarterly audit compliance reports


Statutory Audit Statutory Audit cont…cont…

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Internal AuditInternal Audit

► Continuing and internal systemContinuing and internal system

► For mid course correctionFor mid course correction

► Option for methodology as per availabilityOption for methodology as per availability in-house auditors in-house auditors Chartered Accountant firm Chartered Accountant firm taking help from line Departments.taking help from line Departments.

► Status : Status :

Started in all States /UTsStarted in all States /UTs


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► Action taken :Action taken : issued instructions on 17issued instructions on 17thth September 2007, 1 September 2007, 1stst October October

2007, 182007, 18thth June 2008 and 27 June 2008 and 27thth May 2009 to strengthen May 2009 to strengthen the systemthe system

Status reviewed quarterlyStatus reviewed quarterly Good practices sharedGood practices shared

► Issues :Issues : Still needs strengthening in many States/UTsStill needs strengthening in many States/UTs Coverage in terms of units and durationCoverage in terms of units and duration


Internal Audit Internal Audit cont…cont…

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Internal Audit Internal Audit cont…cont…

Action required:Action required: Ensure optimal coverage through Ensure optimal coverage through

internal auditinternal audit Reports to be reviewed by SPDs as a Reports to be reviewed by SPDs as a

feedback on existing internal control feedback on existing internal control systems and for effective financial systems and for effective financial managementmanagement

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National level Financial National level Financial Monitoring Monitoring

Concurrent Financial reviewConcurrent Financial review

► Overall implementation review with focus on Overall implementation review with focus on finance and accountsfinance and accounts

► Hired the services of IPAI Hired the services of IPAI ► Status :Status :

11stst phase all States/UTs completed by 31 phase all States/UTs completed by 31stst March 2008. March 2008. 22ndnd phase – reports received for 12 States (Assam, Gujarat, phase – reports received for 12 States (Assam, Gujarat,

Haryana, HP, Karnataka, Maharashtra, Punjab, Rajasthan, Haryana, HP, Karnataka, Maharashtra, Punjab, Rajasthan, Tamil Nadu, UP, Uttarakhand and West Bengal)Tamil Nadu, UP, Uttarakhand and West Bengal)

Remaining States will be completed by 31Remaining States will be completed by 31stst March 2010. March 2010.

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National level Financial National level Financial MonitoringMonitoring

Concurrent Financial reviewConcurrent Financial review cont..cont..

► Action takenAction taken Observations are followed till settlementObservations are followed till settlement Follow up action of 12 States are completed Follow up action of 12 States are completed

(1(1stst Phase report) Phase report) Follow up in progress for 23 States/UTs. (1Follow up in progress for 23 States/UTs. (1stst

Phase report)Phase report) Follow up in progress for 12 States (2Follow up in progress for 12 States (2ndnd Phase Phase

report)report)

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Key observations from IPAI reports:Key observations from IPAI reports: Maintenance of books of accounts Maintenance of books of accounts

specially at sub district level.specially at sub district level. Release of advance and its settlementRelease of advance and its settlement Submission of UC/Expenditure Submission of UC/Expenditure

StatementStatement Bank reconciliationBank reconciliation ProcurementProcurement Diversion of fundsDiversion of funds

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Action required:Action required: IPAI reviews are sample reviews of two IPAI reviews are sample reviews of two

districts in a state. These can be taken as a districts in a state. These can be taken as a reflection of the general status of accounts reflection of the general status of accounts and financial management in other districts and financial management in other districts also, requiring close examination and also, requiring close examination and corrective action. Compliance/Comments on corrective action. Compliance/Comments on IPAI reviews should be sent to GOI and IPAI reviews should be sent to GOI and corrective measures must be taken, as corrective measures must be taken, as warranted.warranted.

17

National level Financial National level Financial MonitoringMonitoring

Performance Audit by CAGPerformance Audit by CAG 18.52 crore to be recouped to SSA accounts18.52 crore to be recouped to SSA accounts 1.99 crore pertain to other financial/procedural 1.99 crore pertain to other financial/procedural

iregularities(1.46 crores from Haryana)iregularities(1.46 crores from Haryana)

Quarterly Review MeetingsQuarterly Review Meetings 21 meetings held21 meetings held Status on various financial indicators reviewed Status on various financial indicators reviewed

e.g. exp, staff position, capacity building, e.g. exp, staff position, capacity building, external audit, internal audit, UC, bank external audit, internal audit, UC, bank reconciliation, shortfall in State releases, etc.reconciliation, shortfall in State releases, etc.

Ensure participation of F.C.s esp CG,Manipur,UP Ensure participation of F.C.s esp CG,Manipur,UP etcetc

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Manual AvailabilityManual Availability► Adopted by all States/UTsAdopted by all States/UTs

► Translated to Hindi by GOITranslated to Hindi by GOI

► Translated in local languages by StatesTranslated in local languages by States

► VEC manual developed and disseminatedVEC manual developed and disseminated

Financial Indicators

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Action required from States/UTsAction required from States/UTs

► Ensure FMP Manual availability at all SIS Ensure FMP Manual availability at all SIS and DPOsand DPOs

► Ensure VEC Manual availability at all Ensure VEC Manual availability at all VECs/PTAsVECs/PTAs

► FMP /VEC manuals to be updated, FMP /VEC manuals to be updated, incorporating amendments made so farincorporating amendments made so far

Financial Financial IndicatorsIndicators

Manual Manual cont…cont…

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Staffing of Accounts PersonnelStaffing of Accounts PersonnelStaff PositionStaff Position► Vacant posts at SPO in some states (14no.)Vacant posts at SPO in some states (14no.)

AP (4), Aru. Pr (1), Assam (4), Bihar (3), Haryana (6), AP (4), Aru. Pr (1), Assam (4), Bihar (3), Haryana (6), Karnataka (1), Maharashtra (1), Meghalaya (1), Puducherry Karnataka (1), Maharashtra (1), Meghalaya (1), Puducherry (1), Punjab (1), Rajasthan (2), Tripura (1), Uttarakhand (4) (1), Punjab (1), Rajasthan (2), Tripura (1), Uttarakhand (4) and WB (2).and WB (2).

► Vacant posts at DPOs in some states (14nos)Vacant posts at DPOs in some states (14nos) AP (2), Assam (21), Bihar (34), Gujarat (11), Haryana (16), AP (2), Assam (21), Bihar (34), Gujarat (11), Haryana (16),

MP (12), Maharashtra (163), Nagaland (3), Orissa (13), MP (12), Maharashtra (163), Nagaland (3), Orissa (13), Punjab (4), Rajasthan (34), TN (4), Uttarakhand (14) and WB Punjab (4), Rajasthan (34), TN (4), Uttarakhand (14) and WB (23).(23).

► Information is not available from 12 States Information is not available from 12 States A&N, Chhattisgarh, D&D, Goa, HP, J&K, Kerala, A&N, Chhattisgarh, D&D, Goa, HP, J&K, Kerala,

Lakshadweep, Manipur, Mizoram, Sikkim and UP.Lakshadweep, Manipur, Mizoram, Sikkim and UP.


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Action required from States:Action required from States:► all vacant posts at SPO and district levels to be all vacant posts at SPO and district levels to be

filled by September, 2009. filled by September, 2009.

► 9 States have provided Accounts staff at sub 9 States have provided Accounts staff at sub district level; other states/UTs to examine this district level; other states/UTs to examine this approach for feasibility and adoptionapproach for feasibility and adoption


Staffing cont…

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Capacity building of accounts staffCapacity building of accounts staff

► 5 days mandatory training in a year5 days mandatory training in a year► suggested to hire the services of CA suggested to hire the services of CA

specially on double entry system of specially on double entry system of accountingaccounting

► support provided by GOI’s TSG support provided by GOI’s TSG

► Some lagging States/UTs (5 nos) : Haryana, Some lagging States/UTs (5 nos) : Haryana, Lakshadweep, Meghalaya, Nagaland and Lakshadweep, Meghalaya, Nagaland and PuducherryPuducherry


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Action required by States/UTsAction required by States/UTs

All States/UTs must provide training to All States/UTs must provide training to accounts staff on a regular basis, especially accounts staff on a regular basis, especially covering areas where amendments have covering areas where amendments have been made in the FMP manual .been made in the FMP manual .

Audit reports, concurrent review reports by Audit reports, concurrent review reports by IPAI must be discussed to point out the areas IPAI must be discussed to point out the areas for improvement and corrective action. for improvement and corrective action.

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Innovative initiatives taken Innovative initiatives taken up up E- transfer for speedy funds flowE- transfer for speedy funds flow

GOI’s funds remitted by electronic transfer. where GOI’s funds remitted by electronic transfer. where branches of accredited bank are not available branches of accredited bank are not available remittance of funds to other nationalized / remittance of funds to other nationalized / scheduled bank by RTGS.scheduled bank by RTGS.

In all states upto district level, except Meghalaya, In all states upto district level, except Meghalaya, Sikkim and Tripura Sikkim and Tripura

Upto sub district level 9 States 100% wherever Upto sub district level 9 States 100% wherever feasible. (AP, Aru.Pr, D&D, Goa, Gujarat, feasible. (AP, Aru.Pr, D&D, Goa, Gujarat, Jharkhand, Karnataka, Lakshadeep, Orissa, TN, UP, Jharkhand, Karnataka, Lakshadeep, Orissa, TN, UP, WB)WB)

Action requiredAction required States/UTs advised to adopt e transfer if feasible, States/UTs advised to adopt e transfer if feasible,

upto sub district levelsupto sub district levels

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Innovative initiatives cont…Innovative initiatives cont…

Web based MonitoringWeb based Monitoring Andhra Pradesh, Assam, Bihar, Chhattisgarh, Andhra Pradesh, Assam, Bihar, Chhattisgarh,

Delhi, Haryana, Jharkhand, Karnataka, Kerala, Delhi, Haryana, Jharkhand, Karnataka, Kerala, M.P., Maharashtra, Manipur, Puducherry, M.P., Maharashtra, Manipur, Puducherry, Punjab, Rajasthan and Tamil Nadu covering 264 Punjab, Rajasthan and Tamil Nadu covering 264 districts.districts.

E-procurementE-procurement Started in GujaratStarted in Gujarat

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Computerisation of Accounts:Computerisation of Accounts: Introduced in at least 17 StatesIntroduced in at least 17 States

► Gujarat, Karnataka, Kerala, MP, Maharashtra Gujarat, Karnataka, Kerala, MP, Maharashtra Rajasthan and UPRajasthan and UP

► Assam, Bihar, Delhi, Haryana, Jharkhand, Nagaland, Assam, Bihar, Delhi, Haryana, Jharkhand, Nagaland, Orissa, Punjab, TN, and Uttrakahnd Tally softwareOrissa, Punjab, TN, and Uttrakahnd Tally software

Web Portal by NICWeb Portal by NIC Financial report at district and State levelFinancial report at district and State levelAction required:Action required: States/UTs to upload the information , States/UTs to upload the information ,

regularlyregularly

Innovative initiatives cont…Innovative initiatives cont…

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ProcurementProcurement► Decentralized procurement advocatedDecentralized procurement advocated

► Detailed procedure provided in the Detailed procedure provided in the manualmanual

► Procurement audit check list prepared Procurement audit check list prepared and disseminated and disseminated

► Revised Financial ceilings communicatedRevised Financial ceilings communicated

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Procurement cont.Procurement cont.

Status of procurementsStatus of procurements Not as per requirements of FMP Manual in Not as per requirements of FMP Manual in

some States.some States. 2009-10 procurement plans not available for 2009-10 procurement plans not available for

all States.all States. Possible excessive procurement of Possible excessive procurement of

unrequired items.unrequired items. Need to select NGOs/Consultant Need to select NGOs/Consultant

organizations on the basis of feasible TORs organizations on the basis of feasible TORs and monitoring actual quality of deliveryand monitoring actual quality of delivery

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Procurement Procurement cont.cont.

Action Required:Action Required:► Procurement plans to be uploaded on State SSA websiteProcurement plans to be uploaded on State SSA website► All procurements to be done as per FMP ManualAll procurements to be done as per FMP Manual► Post review of procurement being carried out by the DPs in Post review of procurement being carried out by the DPs in

8 states for FY 2007-08 (TN, Punjab, CG, Kerala, Bihar, WB, 8 states for FY 2007-08 (TN, Punjab, CG, Kerala, Bihar, WB, Gujarat and Orissa)-Gujarat and Orissa)-MUST SUBMIT LIST OF MUST SUBMIT LIST OF PROCUREMENT CONTRACTS IN THE FINANCE PROCUREMENT CONTRACTS IN THE FINANCE CONTROLLERS MEETING ON 10CONTROLLERS MEETING ON 10THTH AND 11 AND 11THTH AUGUST AUGUST 20092009

► Statutory Audits to ensure coverage of procurements ; Statutory Audits to ensure coverage of procurements ; procurement audit check list to be available with all procurement audit check list to be available with all auditors.auditors.

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Provision of Funds – XIth Provision of Funds – XIth PlanPlan

► Provided Rs. 71,000 crore for GOI Share. Provided Rs. 71,000 crore for GOI Share. ► Releases by GoIReleases by GoI

Rs. 11374 Cr in 2007-08,Rs. 11374 Cr in 2007-08,Rs. 12717 Cr in 2008-09Rs. 12717 Cr in 2008-09Rs. 3924 Cr in 2009-10 (up to 30Rs. 3924 Cr in 2009-10 (up to 30thth June 2009) June 2009)

► States providing corresponding provision as per States providing corresponding provision as per sharing patternsharing pattern

► For 8 NE States 90:10 during the entire XIth Plan For 8 NE States 90:10 during the entire XIth Plan period.period.

YearYear Sharing Pattern Sharing Pattern (GoI:State)(GoI:State)

2007-08 to 2008-2007-08 to 2008-0909

65:3565:35

2009-102009-10 60:4060:402010-112010-11 55:4555:452011-122011-12 50:5050:50

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FINANCIAL PROGRESS

12853

15785

2302

19701

23679

10002

6598

1306172

3057

19344

21364

1117

20868

24268

14290

11034

8570

3659

17023

11478

4943

7873

5390

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

22000

24000

26000

28000

30000R

s. in

Cro

re

Expenditure 172 1306 3057 6598 10002 12853 15785 19344AWP&B 1117 3659 8570 11034 14290 20868 21364 24268Fund available 539 2302 4943 7873 11478 17023 19701 23679

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

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Financial Progress cont…

► 2008-09 – Total Reported expenditure Rs. 19343.92 Cr against outlay of Rs.24608.74 crore (78.61%)

Ach>90%Ach>90% 9 StatesPunjab (98%), Karnataka (94%), Kerala (94%), TN (94%), Aru Pr. (93%), Tripura (93%), Chhattisgarh (91%), Rajs (91%), and Maharashtra (86%),

90%<Ach >80%90%<Ach >80% 8 States Assam (89%), U.P (88%), Puducherry (87%), H.P (85%), M.P (83%),Uttarakhand (81%), A &N (80%) and Orissa (80%)

80% <Ach> 70%80% <Ach> 70% 6 States Sikkim (79%, Mizoram (78%) Goa (76%), Jharkhand (73%) WB (72%) and Haryana (70%)

Ach< 70%Ach< 70% 12 States Gujarat (68%),Lakshadweep (66%), Meghalaya (65%), Delhi (64%), Bihar (62%) AP (60%), Nagaland (56%), Chandigarh (56%), D&N (56%), J &K (54%), D&D (47%) and Manipur (20%)

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State Share2007-082007-08 2008-092008-09 2009-102009-10

Sharing Sharing PatternPattern

65:35 (90:10 65:35 (90:10 for NE States)for NE States)

65:35(90:10 65:35(90:10 for NE States)for NE States)

60:40 (90:10 60:40 (90:10 for NE States)for NE States)

AWP&B (Rs. AWP&B (Rs. in Crs)in Crs)

2150421504 2460924609 2706227062

► Even with increase in sharing pattern 21 States/UTs released excess State share. Excess release of Rs. 874 Cr as on 31st March 2009.

► Adhoc/1st installment by GOI released in May/June.

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State Share cont.. State Share cont..

► No backlog of previous year No backlog of previous year ► Backlog of State Share as on 31Backlog of State Share as on 31stst March 2009 : March 2009 :

(Rs. in lakh)(Rs. in lakh)

A&N IslandA&N Island 38.1838.18 Arunachal PradeshArunachal Pradesh 715.29715.29A.P.A.P. 26103.126103.1

55J&KJ&K 7712.387712.38

ChhattisgarhChhattisgarh 356.29356.29 Meghalaya Meghalaya 992.75992.75MaharashtraMaharashtra 434.65434.65 OrissaOrissa 498.29498.29MizoramMizoram 961.21961.21 PunjabPunjab 4277.044277.04PuducherryPuducherry 80.6780.67 SikkimSikkim 104.80104.80RajasthanRajasthan 5431.175431.17 UttarakhandUttarakhand 807.64807.64TripuraTripura 23.4223.42

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Refund of unspent balancesRefund of unspent balances In pre-project activities of SSA. Refunds In pre-project activities of SSA. Refunds due from :due from :

Assam, Bihar, Jammu & Kashmir, MP, Assam, Bihar, Jammu & Kashmir, MP, Manipur, Meghalaya, Mizoram Manipur, Meghalaya, Mizoram

In DPEP. Refunds due from:In DPEP. Refunds due from: Bihar, CG, Jharkhand, HP, MP, Orissa, Bihar, CG, Jharkhand, HP, MP, Orissa, UP, RajasthanUP, Rajasthan

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Diversion of funds and other Diversion of funds and other irregularitiesirregularities

Details from concurrent financial Details from concurrent financial reviews, CAG and statutory reviews, CAG and statutory audits, State reports are audits, State reports are provided in annexure 1 to 10provided in annexure 1 to 10

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Diversion of funds and other irregularities Diversion of funds and other irregularities cont..cont..

Action required:Action required: Diverted funds to be recouped to SSA accountsDiverted funds to be recouped to SSA accounts MHRD to make required adjustments against State MHRD to make required adjustments against State

shareshare In cases of fraud/embezzlement etc, action against In cases of fraud/embezzlement etc, action against

officials should be initiated and speedily officials should be initiated and speedily concluded; recoveries should be effected and concluded; recoveries should be effected and credited to SSA accounts credited to SSA accounts

Comments on IPAI reports (Phase-II) indicating Comments on IPAI reports (Phase-II) indicating such instances should be speedily furnished to GOI such instances should be speedily furnished to GOI

FM systems to be strengthened overall FM systems to be strengthened overall

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