FINANCIAL MANAGEMENT IN NEERANCHAL PROJECTVIGYAN BHAWAN,DT 11.01.14

Department of Land Resources, MoRD

CONTENTS Introduction Objectives Financing Plan Funding Pattern Component wise cost Break-up IUFR Budget & Fund Flow system Accounting Procedures Audit Internal Control System Books of Accounts & Records Staffing & Capacity Building Implementation of CPSMS

INTRODUCTION

Neeranchal National Watershed project is assisted by World Bank(IDA) and implemented by Department of Land Resources, Ministry of Rural Development, Government of India.

Project Duration -6 years starting from 2014-15.

Expected effective date- June 2014 Project will be implemetned in 8 selected

states i.e, Andhra Pradesh, Odisha, Jharkhand,Chhatisgarh, Madhya Pradesh, Maharastra, Gujrat & Rajasthan.

OBJECTIVES

Strengthen fiscal and financial management at all levels.

Ensure uniformity in accounting across all locations of the Project

To provide timely and reliable financial information to different stake holders.

To ensure the project funds are utilized for the purpose for which it was intended for.

FINANCING PLAN

SOURCE FUND (US$m) FUND(INR cr)

World Bank(IDA) 178.50 (50%) 1071.00

Government of India(DoLR) & State Government

178.50(50%) 1071.00

TOTAL 357.00 2142.00

FUNDING PATTERN

World bank will not provide any advance towards project expenditure.

Eligible Expenditures of project are to be reimbursed on quarterly basis based on the IUFR.

WHAT IS ELIGIBLE EXPENDITURE?

Eligible expenditures are those expenditures for which Government and WB have agreed upon in the legal documents and are mentioned in the Cost table and these are spent as per the Project Implementation Plan(PIP)

COMPONENT WISE COST BREAK-UP

Heads US($)m INR(Cr) % Central Institutional and Capacity Building

11.3 67.80 3.16

National Innovation support 32.0 192.00 8.96

IWMP implementation support in States

301.9 1811.40 84.57

Project Management & Coordination 11.8 70.80 3.31

Total 357.0 2142.00 100

INTERIM UNAUDITED FINANCIAL REPORT(IUFR)

IUFR is a very important financial reporting format in which each state has to report their financial progress.

The report has to be submitted within 30 days of the completion of quarter to DoLR ,Project implementation Unit(PIU).

The IUFR format for states are :

BUDGET & FUND FLOW SYSTEM

Approved % of the total approved work plan(AWP) of the project for any financial year will be budgeted in the budget line of DoLR , MoRD.

Similarly approved % of the total AWP will be budgeted in the state budgets of 8 states as a separate budget line for Neeranchal Project.

The Fund flow pattern of the project will be like:

ACCOUNTING PROCEDURE AT SLNA

The following general principles for accounting will be applicable for all SLNAs:

Cash Basis Double entry Method Accounts may be maintained preferably in Tally. Only Actual expenditure will be reported in IUFR.

No advance will be shown as expenditure

CONTD. Separate Bank accounts are to be opened for

Neeranchal Project at state & district level.(preferably in same bank).

Delegation of Financial Powers and Financial Rules will be as per the SLNA administrative/financial rules.

SLNA,WCDC,(WDT,WC if required) will be treated as different accounting centers and separate accounting records are to be maintained.

CONTD.

All funds released by the state to the district and block level units will be treated as inter unit transfers until expenditures are incurred at these levels.

Interest earned from the project fund will be treated as grant and will be spent for the purpose of Project purposes.

No depreciation on Assets.

AUDIT

External Audit : Annually Auditor Selection: Practicing CA firms

empanelled by C&AG as per the WB procurement procedure.

Audit ToR & Report: As per the ToR & format agreed with the WB.

Audit Report to be submitted by 15th September for each F.Y by SLNA.

INTERNAL AUDIT

Half yearly. Auditor Selection: Practising CA firms

empanelled by C&AG as per the WB procurement procedure.

Audit ToR : As per the ToR agreed with the WB.

Audit Report to be submitted to management & PIU, DoLR.

INTERNAL CONTROL SYSTEM Preparation of BRS on Monthly Basis Preparation of Monthly Receipts & Payments

Statements Submission of Requisition Form for

seeking funds Monthly reconciliation of payments with

expenditures Monthly Review of Financial Progress

against Annual Budget Monthly Analysis of Advances Monthly analysis of Statutory payments Numbering of assets and physical

verification

BOOKS OF ACCOUNTS & RECORDS Cash Book General Ledger Journal Book Cheque Issue Register Fixed Asset Register Audit objections register Advance Register/Ledger Budget Control Register Payment Vouchers(Cash & Bank) Receipt Vouchers(Cash & Bank) Journal Vouchers File opening register Dak (Letters Issue/receipt) Registers

STAFFING & CAPACITY BUILDING

Dedicated FM cell with staff of requisite qualifications and experience will be created at SLNA and WCDC level to strengthen the FM arrangement of on going IWMP.

Adequate hand hold training & capacity building will be imparted to the FM staffs.

IMPLEMENTATION OF CPSMS

CPSMS can be implemented instantly at 8 Neeranchal states as chart of accounts is prepared. Hence registration and expenditure filing is possible in these states for neeranchal transactions

For IWMP states: Only Registration at present.