16th JRM

FINANCIAL MANAGEMENT

Progress of Expenditure

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2009-10 2010-11 2011-12

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275382532421307

77 84

45705

3724231958

70 86

61775

4251937837

61 89

Rs. in crore

Distribution of Expenditure – 2011-12

` in crore

340118925

215812111

1242Total 37837

8.99

50.02

5.70

32.01

3.28

Access & Retention QualityGender & EquitySchool InfrastructureManagement

Category wise Allocation and ExpenditureRs. in Crore

 

2007-08 2008-09 2009-10 2010-11 2011-12Outlay Expdr. Outlay Expdr. Outlay Expdr. Outlay Expdr. Outlay Expdr.

Access & Retention 2079 1390 2874 2085 2622 1993 5425 3089 5610 3401Quality 9322 7092 10861 9331 14693 12405 21401 17013 30423 18925Gender & Equity 1659 925 2083 1316 1645 1055 2412 1588 4057 2158School Infrastructure 7666 5885 8075 5995 7736 5175 15369 9488 20358 12111Management 778 492 716 618 843 679 1098 780 1328 1242Total 21504 15785 24609 19344 27538 21307 45705 31958 61775 37837

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ManagementSchool InfrastructureGender & EquityQualityAccess & Retention

Improved Trend in Quarterly Expenditure Improvement in expenditure trend after the introduction of monthly

expenditure plan.%

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2007-08 2008-09 2009-10 2010-11 2011-120%

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60%

80%

100%

9% 9% 11% 15% 15%

21%27% 24%

26% 29%

23%25% 29% 22%

28%

47%39% 36% 38%

28%

Qtr 4Qtr 3Qtr 2Qtr1

Analysis of Financial Performance

% Achievement (Against Outlay)

No. of State2007-08 2008-09 2009-10 2010-11 2011-12

More than 80% 14 17 18 7 12Less than 80% and more than 60%

12 12 14 22 14

Less than 60% 9 6 3 6 9

% Achievement (Against Funds)

No. of State2007-08 2008-09 2009-10 2010-11 2011-12

More than 80% 18 20 24 25 30Less than 80% and more than 60%

14 11 11 8 4

Less than 60% 3 4 0 2 1

Allocation of Outlay – 2012-13

` in crore7333

345013621

229381567

Total 69959

10.48

49.32

5.18

32.79

2.24

Access & Retention QualityGender & EquitySchool InfrastructureManagement

Targeting Funds for the outlay of Rs. 69959 Crore in 2012-13

` in crore

GOI-BE 13th Finance Commission

Award

State Share Unspent Balances

Supplementary demand for

grant

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25555

4881

14055

4652

20816

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Status on State Share

20 States have released excess State share of Rs. 2554 cr. as on 31st March 2012.

State (Rs. in Crore) State (Rs. in Crore)

Andaman & Nicobar Islands

4.61 Assam 59.56

Chandigarh 8.13 Chhattisgarh 36.78

Dadra & Nagar Haveli 7.27 Daman & Diu 3.14

Goa 5.54 Gujarat 216.13

Haryana 133.72 Jammu & Kashmir 476.44

Jharkhand 47.00 Karnataka 179.48

Kerala 158.66 Lakshadweep 3.96

Madhya Pradesh 533.34 Maharashtra 10.30

Manipur 3.21 Nagaland 1.21

Puducherry 2.41 Rajasthan 663.19

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Status on State Share

Marginal Shortfall in 14 States amounting to Rs. 962.58 Cr.

State (Rs. in Crore) State (Rs. in Crore)

Andhra Pradesh 13.66 Arunachal Pradesh 48.68

Bihar 531.04 Delhi 8.87

Himachal Pradesh 14.84 Meghalaya 2.11

Mizoram 5.10 Punjab 235.27

Sikkim 2.58 Tamil Nadu 5.43

Tripura 8.82 Uttar Pradesh 65.28

Uttarakhand 4.31 West Bengal 16.63

Rs. 0.02 lakh is the shortfall in Orissa.

Staff Position of Finance & Accounts S. No. Name of State Vacancies % of Vacancies    SPO DPO Block SPO DPO Block

1 Arunachal Pradesh 0 0 84 0 0 85

2 Assam 3 3 169 15 3 17

3 Bihar 3 81 322 33 53 604 Chandigarh UT 3 0 0 27 0 05 Chhatisgarh 8 41 25 80 76 176 D & N Haveli 1 0 0 50 0 07 Daman & DIU 0 1 1 0 33 508 Delhi 2 15 37 25 42 0

9 Gujarat 2 4 0 18 7 0

10 Haryana 5 5 180 22 12 6011 Himachal Pradesh 0 3 191 0 13 6312 Jammu & Kashmir 2 22 199 40 100 10013 Jharkhand 9 31 74 53 43 3014 Karnataka 1 2 341 11 3 2315 Kerala 0 5 6 0 9 4

Staff Position of Finance & Accounts S. No. Name of State Vacancies % of Vacancies

    SPO DPO Block SPO DPO Block

16 Lakshadeep 1 0 0 33 0 017 Madhya Pradesh 0 10 1968 0 20 8918 Maharashtra 0 14 2285 0 14 8619 Meghalaya 2 7 0 25 14 020 Mizoram 1 0 0 20 0 0

21 Orissa 0 6 942 0 6 100

22 Puducherry 5 6 7 38 38 11

23 Punjab 2 12 14 20 24 324 Rajasthan 0 16 69 0 24 2825 Tamil Nadu 3 26 496 50 17 5726 Tripura 1 8 27 10 29 2227 Uttar Pradesh 10 55 136 36 31 1528 Uttarakhand 3 19 27 25 49 22

29 West Bengal 1 18 75 9 22 11

  Total 68 410 7675 22 23 45

Staff Position of Finance & Accounts

Position improved in 17 States of A&N Islands, Andhra Pradesh, Arunachal Pradesh, Daman & Diu, Delhi, Himachal Pradesh, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Manipur, Orissa, Rajasthan, Uttar Pradesh, Uttarakhand and West Bengal

Sanctioned 20615 Accountants at block level in 2012-13. 45% vacancy position at block level and the States need some

more time to position them. Urged the States to take urgent steps to fill up the existing

vacancies. Progress is being reviewed regularly in the Quarterly Review

Meeting of State Finance Controllers.

Capacity Building of Finance & Accounts staff

5 days mandatory training for finance and accounts staff.

15 States provided adequate training.

Inadequate training provided by 14 States.

No training was provided in 6 States.

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Capacity Building of Finance & Accounts staff • Initiatives taken at National level.

During review meetings of State Finance Controllers provided capacity building on: - Moving towards quality in Financial Management with special

reference to Annual Grants under SSA. Preparation of Monthly Monitoring Report. Maintenance of online software to monitor progress of

procurement of contracts of above Rs. 10 lakh per contract. Preparation of Annual Procurement Plan . Procurement Procedure. Accounting of 13th Finance Commission Award . Responsive Accounting Procedure. Settlement of Advances. Tracking of funds at all levels. Clearance of pending audit observations.

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Capacity Building of Finance & Accounts staff Disseminated findings of the following: -

Recommendations of the 14th and 15th JRM. Post Review of procurement carried out by World Bank

Consultants. Key observations made by Statutory Auditors for 2009-10 and

2010-11 Key observations made by IPAI for the 3rd Phase of financial

review. Regional Capacity Building Workshops: -

With a view to develop a cadre of Master Trainers at State and District level, conducted 3 Regional Workshops at Western, Southern and Northern regions.

Four such Workshops are planned in the current year.

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Capacity Building of Finance & Accounts staff Preparation of Annual Training Plan: -

To provide intensive capacity building at all levels, States have been requested to prepare an annual training plan.

22 States prepared annual training plan for 2012-13. 13 States of Andhra Pradesh, Chhattisgarh, Dadar & Nagar Haveli,

Daman & Diu, Goa, Himachal Pradesh, Jammu & Kashmir, Lakshadweep, Manipur, Nagaland, Tamil Nadu, Uttar Pradesh and West Bengal are yet to prepare the plan.

Urged the States to provide adequate training at all levels and implement measures to assess its effectiveness and relevance.

Progress is being reviewed regularly in the Quarterly Review Meeting of State Finance Controllers.

AccountingBank Reconciliation Statement Prepared monthly up to district level in all States except some

districts of Manipur and Meghalaya. Introduced at BRC level in most of the States, except

Arunachal Pradesh, Bihar, Delhi, Kerala, Manipur, Meghalaya, Rajasthan, Sikkim and Uttar Pradesh.

Monitored regularly in the Quarterly Review Meetings of State Finance Controllers.

Fund Flow Release of GOI funds to all States by e-transfer/RTGS Except Sikkim, all States releases funds by

e-transfer/RTGS/Bank transfers from States to districts and districts to sub-district level units based on facilities available.

Accounting Software Installed in 30 States

upto District level except in Madhya Pradesh (2 districts only covered)

BRC level covered in 6 States of Gujarat, Jharkhand, Maharashtra, Punjab, Tamil Nadu and West Bengal

Not installed in 5 States. Parallel system of

accounting is continuing in all States and the Manual cash book, is the basis of audit.

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Statutory Audit Report

• Audit Reports of all the 35 States/UTs for the year 2010-11 are on the SSA website.

• Comparative Statement of the receipt of Audit Report:-Period 2009-10 2010-11

By November 8 States 11 States

Delay of 1 month 7 States 10 States

Delay of 2 months 9 States 6 States

Delay of 3 months 2 States 6 States

Delay of 4 months 2 States 0

Delay of 5 months 4 States 1 State

Delay of 6 months 2 States 1 State

Delay of 7 months 1 State 0

Statutory Audit (cont’d.)

• Audit Report of 2011-12 is due on 1st November 2012.• Alert Memo for timely submission issued to all States on 11th

June 2012.• Held a video conference on 10th July 2012 to take stock of the

position. Accounts for 2011-12 closed by all States. Auditors appointed by all States except Goa, Gujarat and Uttarakhand

(will be appointed shortly) Audit is in process. All States have committed to submit the report by due date.

• Progress is being monitored in the Quarterly Review Meeting of State Finance Controllers.

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Status of Internal Audit

10 States on concurrent basis

15 States in progress 10 States not carried

out

Internal Audit

• In view of the significant increase in the quantum of outlays, the States have been requested to strengthen the internal audit system as under: Prepare an Annual Internal Audit Plan to focus on:

review of priority operations, internal controls and risk management in the high expenditure and priority areas like teacher’s salary, civil works, procurement, unadjusted advances, BRC/CRC expenditure etc.

Conduct the internal audit on concurrent basis. Revise the staffing level as necessary to meet these

objectives.• The progress is being monitored in the Quarterly Review

Meeting of State Finance Controllers.

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Concurrent Financial Reviews & Procurement Plan

IPAI has completed 1st, 2nd and 3rd phase of concurrent financial review in all States; reports shared with all States for follow up action:

Settlement of review Para:1st phase : completed for 16 States; in progress for 19 States.2nd phase: completed for 1 State; in progress for 34 States.3rd phase: In progress for all States.

The IPAI’s contract for the 4th Phase of review has now been extended for 2012-14.

Concurrent Financial Reviews & Procurement Plan

State Procurement Plan 2012-13:

Requested the States to upload on States’ web-sites.

Intimation received from 5 States of Andhra Pradesh, Madhya Pradesh, Maharashtra, Tripura and Rajasthan.

On line software to monitor progress of procurement;

Software hoisted in a dedicated website called www.rte-ssaprocurement.com.

Login id and password shared with States and Districts.

Operational Manual developed and disseminated.

Key Recommendations

• Inform the states, as they start their AWPB preparation process, the likely budget available from MHRD. This indicative amount should be based on available evidence from budget discussions, rather than the desirable amount based on State’s needs.

• With increasing scale of the Program, MHRD may consider a Financial Management Improvement Plan specifically targeting the weaker states, which in case of SSA are also the large spending states.

• The expertise of the State Finance & Accounts Service officers could be most effectively utilized to man the Finance and Accounts wings for professional management.

• MHRD should follow up with States to ensure that all procurement plans are hosted on the respective websites by mid-August 2012. MHRD should brief the 17th JRM on the action taken on the recommendations and observations made in the IPAI reports. MHRD should follow up on these and take appropriate action.

Other Recommendations

Budget Analysis• MHRD may consider the way in which it makes approvals during the

PAB process. The Mission suggests the following for MHRD’s consideration: Inform the states, as they start their AWPB preparation process,

the likely budget available from MHRD. This indicative amount should be based on available evidence from

budget discussions, rather than the desirable amount based on State’s needs.

Give each State an indicative Central allocation, so that they can plan their AWPBs appropriately and such that the sum of these indicative State allocations adds up to the total indicative Central share.

These State allocations could be based on the needs of different states, as measured for example by the Education Development Index.

Other Recommendations In this way, States’ AWPBs would contain their priority items, the costs of

which they can be reasonably sure of spending from the allocated SSA funds. States would also be able to prepare their own budgets accordingly.

States could of course plan for more activities than can be financed from the indicative allocation, creating first order and second order priorities. Should additional Central funds become available, and States have fully funded their first order priorities, then these second order priorities could be considered.

MHRD would need to decide whether at that point to hold a supplemental PAB, again allocating Central resources in line with objective needs of States.

Financial Management Improvement Plan

With increasing scale of the Program, MHRD may consider a Financial Management Improvement Plan specifically targeting the weaker states, which in case of SSA are also the large spending states.

MHRD should monitor the FM improvement plans for the large spending states on a regular basis and provide update on the status to JRM.

States must continue to focus on quality of audit reports and have a time bound plan for compliance with audit observations of previous years.

Other RecommendationsFinance and Accounts Staffing• Three main challenges for the program for FM staffing are:

(a) urgent attention to maintain acceptable level of staffing in large states at district and sub-district level; and

(b) time-bound plan to fill vacancies at sub-district level in all states, as weak financial management at sub-district level continues to be highlighted in audit and review missions; and

(c) sanctioning posts as per norms at district level in all states. The expertise of the State Finance & Accounts Service officers could

be most effectively utilized to man the Finance and Accounts wings for professional management.

Accounting Software• States should have time bound target to discontinue manual records at

state and district level and closely monitor implementation of computerized accounting.

Other RecommendationsProcurementOn-line Software to Monitor Progress of Procurement• MHRD should monitor the website closely to ensure that States are

uploading information on the database otherwise the purpose will be defeated.

• It is also suggested that the Operational Manual be uploaded on to the SSA website to provide easy access to States and Districts.

Procurement Plan• The Mission recommends that MHRD should follow up with States to

ensure that all procurement plans are hosted on the respective websites by mid-August 2012.

• Though MHRD has been making all out efforts to ensure that PAB minutes are issued in a timely manner, there has been significant delay this year.

• Delay in issuing the PAB minutes impede procurement activities and program implementation.

• The Mission urges the MHRD to press further in order to ensure that PAB minutes are issued by 25th April in the following years, as mentioned in the Budget Calendar.

Other Recommendations

Compliance of IPAI Review Reports• The Mission recommends that MHRD should brief the next JRM on the

action taken on the recommendations and observations made in the IPAI reports.

• MHRD should follow up on these and take appropriate action wherever non-compliance is noted.

• The Mission also reiterates the recommendation made in the 15th JRM whereby it was suggested that MHRD include specific checklists for review of procurement as part of the ToR for internal and external audit and that the Tor should prescribe a percentage of purchase related transactions that will need to be reviewed by the auditors.

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