Updated version of a presentation that was scheduled to have been made on Feb 27, 2015 but was deliberately sabotaged by India's CAG in tandem with the Congress Govt. of Assam so that critical oversight failures would never come to light. Documents the methodical siphoning of govt. funds to unknown individuals and groups in a sensitive border state in NE India. There are innumerable questions about the facilitative roles, both as acts of commission and omission, played by government and statutory oversight agencies that await answers.
2. The Metamorphosis of the Citizen
“There is not a crime, there is not a dodge, there is not a trick, there is not a
swindle, there is not a vice which does not live by secrecy.” ― Joseph Pulitzer
3.
4. 87% of those registered in employment exchanges are
educated and their numbers have grown by 7.54% in 2012
In 2012-13 there was a 54% shortfall of rural dwelling units
under IAY
Credit : Deposit ratio declined by 0.5% over 2011-12
compared to 78.1% average for India
70% roads are in rural areas
Tele-density of 46.5/mille against national average of
73.34/mille
Primary school drop out rate 11.7% against national
average of 6.56%
5. Maternal Mortality Ratio is 328/100000 against national average of 178
Infant Mortality Rate highest at 55 against national average of 42
14% urban population
Assam 26th literate State in India with 14th largest population
Death rate 55/mille against 42/mille
Nearly 2 lakh people live in urban slums
SC/ST population of approx. 66%
18th largest 0-6 year child population
31.98% BPL population (Tendulkar)
Services contribute 51% of GSDP and industry 24%
Per capita income in 2013-14 est. Rs. 24553 against national average of
Rs. 39961, i.e. 39% lower
6. Human Services
• Medical & Public
Health
• Education
• Nutrition
• Water Supply &
Sanitation
• I-T enabled
services for remote
areas
Infrastructure
• Power
• Alternative sources
of energy
• Roads & Bridges
• Irrigation &
Waterways
• Water Resources
• Communication
Economic
• Agriculture
• Manufacturing
• Financial Services
• Employment
• Skill Development
Assam’s Sector Priorities
7. Inflation rate in India is expected to decrease to 4.37% in Jan. 2015 from 5% in
Dec. 2014. In 2016, the inflation rate is expected to decrease to 0.32%. In the long-
term, the inflation rate in India is projected to trend around 0.03, 0.48 and 0.66 %
in 2020, 2030 and 2050 respectively
Source: http://www.tradingeconomics.com/india/inflation-cpi/forecast
The Inflation Factor: 2012 and Onward
8. The Legal & Institutional
Accountability Framework
9. The Sanctioning Authorities
Sanctioning Authority
HoD/CCO
Dept.
Central Impl. Agency
Donors
Finance
Sanctioning Authority
DC’s Sectt.
Dist. Edu. Officer
Donor
School Principal
FA
Subject to delegation of powers prescribed by GoA
Illustrative
Example
only
10. The Difference of Accounting Structure between GoI and GoA
GOI
JS/AS & FA
Pr/CCA
Treasury PAO
Accounts CGA
Fin Adv. &
Budget Mgt
Internal Audit
GoA
Fin Dept.
Pr. Secy
(Finance)
DTA
63 treasuries/sub-
treasuries
Internal Audit
DLFA
Fin Adv.& Budget Mgt
Pr/AG (A&E)
Accounts & Treasury
Inspection
Treasuries
11. Financial Management Framework in a State
Legislature
CS/GoA
DCs ACs LBs
PAG (A&E) FD/GoA
Treasuries
DTA/LB
CCOs
SCOs
CM
CoM
Chief Accountability Authority (CAA)
Financial Adviser
Treasury Manager
Internal Auditor
Pr. Accounts Officer
12. Our Institutional Framework
Art.149&151ofConstitution
S. 10 , 11, 12 & 18 of CAG’s (DPC) Act, 1971
State Gubernatorial Entrustment for entitlements
State Financial Manual, Treasury & Other Rules
GFR, 2005
R&P Rules, 1983
Other GOI Rules/Entrustment
GOI Directives
13. The Treasury – PAG (A&E) Relationship
PAG (A&E)
TO
ATR
AFR
TO
ATR
AFR
TO
ATR
AFR
Sr. DAG
Accounts
ATR
AFR
TO cannot authorize payments
without PAG (A&E)’s prior
approval beyond ATR 15 (b)
Even urgent payments (relief)
may be made after informing
PAG’s (CTR 17)
TO may refuse payments outside
(CTR 15 (2) & TR 15 (a))
Only PAG (A&E) may permit non-
CTR 15 (1) drawing within his
jurisdiction (CTR 14 & TR 32 (a))
14. Documents GoA submits to the Legislature Annually
Finance Accounts
Receipts
Disbursements
Financial Results from revenue &
capital accounts
Public Debt
Public Account
Appropriation Accounts
Voted Expenditure
Charged Expenditure
15. Extract of CAG’s Certificate on F&A Accounts - I
The Finance Accounts have been prepared under my supervision in
accordance with the requirements of the Comptroller and Auditor
General’s (Duties, Powers and Conditions of Service) Act, 1971 and
have been compiled from the vouchers, challans and initial and
subsidiary accounts rendered by the treasuries, offices, and
departments responsible for the keeping of such accounts
functioning under the control of the Government of Assam and the
statements received from the Reserve Bank of India. Statements
(No. 9 and part of 14), part of explanatory notes to Statement
(No.11), part of maturity profile to annexure to Statement (No.15)
and Appendices (VII and X) in this compilation have been prepared
directly from the information received from the Government of
Assam/Corporations/Companies/Societies who are responsible to
ensure the correctness of such information.
16. Extract of CAG’s Certificate on F&A Accounts - II
The treasuries, offices, and/or departments functioning
under the control of the Government of Assam are
primarily responsible for preparation and correctness of
the initial and subsidiary accounts as well as ensuring the
regularity of transactions in accordance with the
applicable laws, standards, rules and regulations relating
to such accounts and transactions. I am responsible for
preparation and submission of Annual Accounts to the
State Legislature. My responsibility for the preparation of
accounts is discharged through the office of the Principal
Accountant General (A&E).
17. The Basis of Your Financial Responsibility
CTR 28(2) & SO 213 (b) under TR 32 (a)
A Government officer supplied with funds for
expenditure shall be responsible for such funds
until an account of them has been rendered to
the satisfaction of the Accountant-General
concerned. He shall also be responsible for
seeing that payments are made to persons
entitled to receive them.
18. Art. 204
(3) Subject to the provisions of articles
205 and 206, no money shall be
withdrawn from the Consolidated Fund of
the State except under appropriation
made by law passed in accordance with
the provisions of this article
19. Art. 284
All moneys received by or deposited with—
(a) any officer employed in connection with the
affairs of the Union or of a State in his capacity
as such, other than revenues or public moneys
raised or received by the Government of India
or the Government of the State, as the case
may be………
21. Fixing Responsibility for Losses, Defalcation & Fraud
GFR 33
Any loss or shortage of public moneys,
departmental revenue or receipts, stamps, opium,
stores or other property held by, or on behalf of,
Government irrespective of the cause of loss and
manner of detection, shall be immediately
reported by the subordinate authority concerned
to the next higher authority as well as to the
Statutory Audit Officer and to the concerned
Principal Accounts Officer, even when such loss has
been made good by the party responsible for it
22. Responsibility for Losses, Defalcation & Fraud
GFR 37
An officer shall be held personally responsible for
any loss sustained by the Government through
fraud or negligence on his part.
He will also be held personally responsible for any loss arising
from fraud or negligence of any other officer to the extent to
which it may be shown that he contributed to the loss by his
own action or negligence.
The departmental proceedings for assessment of responsibility for
the loss shall be conducted according to the instructions contained in
Appendix 1 and those issued by the Ministry of Personnel from time
to time (to be circulated to all attendees)
25. What do these Sections of IPC Mean?
Sec Offence Punishment
200 Using as true any such
declaration known to be false
Imprisonment up to 10 years
or fine or both
409 Criminal Breach of trust by
public servant, banker, merchant
or agent
Imprisonment for life or
imprisonment for 10 years
and fine
468 Forgery for the purpose of
cheating
Imprisonment for 7 years or
fine
471 Using as genuine a forged
document which is known to be
forged
415 Cheating and dishonestly
inducing delivery of property
26. Privilege of the Assam State Assembly
Extracted from http://assamassembly.gov.in/rop_ch_20.html on Feb 23, 2015
Rule Power
170 Except where the breach of privilege is committed in the actual view of the House or of a
committee, the House shall at some proper stage of the proceedings before the sentence
is passed give an opportunity to the persons charge to be heard in explanation or
exculpation of the offence complained against him/her
Provided that if the matter has been referred to the Privileges Committee and the person
charged has been heard before the Committee it will not be necessary for the House to
give him/her that opportunity unless the House directs otherwise.
171 The Speaker may summon the party charged by notice or warrant to appear before the
House or the Committee of Privileges at any stage of the proceedings.
172 The House, like the House of Commons in the United Kingdom, has power under Article
194 of the Constitution to inflict amongst others the following punishment:— admonition,
reprimand, imprisonment, for such terms as may be decided by the House but it shall not
extend beyond the prorogation or dissolution of the House whichever is earlier, and
suspension or expulsion of a member for a period not exceeding 30 days or till prorogation
or dissolution of the House whichever is earlier.
29. The Pitfalls of Delayed Accounting
Future
resource
planning
Uncertain
current cash
mgt.
Ineffective
internal
monitoring
Incomplete
external
project
evaluation
Incomplete
Accounts
Unapproved use
of funds
Defalcation
H
O
D
&
C
A
A
A
G
E
N
C
I
E
S
Impedes Quality of Governance
30. Delayed Receipt of Treasury Accounts: 2014-15
Apr May Jun Jul Aug Sep Oct
Excluded 2 3 4 9 12 7 7
Delayed 51 48 35 51 54 60 59
0
10
20
30
40
50
60
70
No.ofUnits
In DaysUnits in Days
31. Delayed Receipt of Forest Accounts: 2014-15
Apr May Jun Jul Aug Sep Oct
Excluded 33 43 29 45 75 32 41
Delayed 85 71 86 81 52 68 71
0
10
20
30
40
50
60
70
80
90
100
No.ofUnits
Units in Days
32. Delayed Receipt of Works Accounts – 2014-15
Apr May Jun Jul Aug Sep Oct
Excluded 13 168 67 63 42 40 49
Delayed 280 270 273 286 277 310 292
0
50
100
150
200
250
300
350
No.ofUnits Units in Days
33. Delayed Receipt of Autonomous Council Deposit Accounts – 2014-15
Apr May Jun Jul Aug Sep Oct
Delayed 40 46 41 47 47 42 44
36
38
40
42
44
46
48
50
No.ofUnits
What accounts for such delays every month? What actions have you taken to
minimize delays? Please remember that appointment of a subordinate officer to
assist you in these functions does not absolve you of your responsibility.
Units in Days
37. The Pitfalls of not Reconciling Collection of Revenues
Assessment
of Demand
Revenue
Collection
Expenditure
Revenue
Deposited
Revenue
collected but
not deposited
Revenue
evaded
Anti-evasion
reconciliation
Fraud
Embezzlement
Collections
Accountability
38. Sector No. of
Items
Challans presented
by SAAs
Challans presented
by other than SAAs
Total
Tax Revenue 31969 23.87 155.40 179.27
Non Tax Revenue 5079 4.16 2.49 6.65
Social Service 3034 1.16 0.46 1.62
Economic Service 10498 19.44 66.18 85.62
Expenditure Heads
(Revenue Account) 129 2.16 0.18 2.34
Loans and Advances 180 2.08 0.11 2.19
Public Account 2513 3.19 0.25 3.44
Debt Deposit and
Remittances 6617 330.22 4.19 334.41
TOTAL 59579 386.28 229.26 615.54
Sector & Payer wise Distribution of Unrealized Revenue
(Rs. in Crore)
41. Revenue not
received in bank
scroll within 10 days
CTMIS transfers to
Lapsed Challans
Receipt Schedule
not Generated
PAG (A&E) does not
receive receipt
schedule
Lapsed challans not
reviewed by
Treasury
No DDO-TO-PAG
reconciliation
undertaken by State
agencies
The Challan’s Aberrant Trajectory
Since cash accounting only
recognizes receipts physically
received and not those accruing,
and the DDO-TO-PAG
reconciliation being dysfunctional,
there is no way in which PAG
(A&E) can detect such mass
evasion of revenue, other than by
treasury and DTA inspection, that
too once a year.
43. Unspent Balances Drawn in Cash
Royalties on Minerals & Forests
State Excise
CST/VAT
Police Fines/Fees
Agricultural Income Tax
Profession Tax
Lease Renewal Fees
Motor Vehicles
Misc. Receipts
Some Major Revenue Budget Heads Deprived
44. Rupees in Crore
2010-11 2011-12 2012-13
TOTAL 367.67 155.82 92.76 616.26
The Gross Impact in Just Three Years
Did the dept. carry out even random checks on
the Assessment Registers in their departmental
revenue collection units?
Is there any working monitoring system at all?
Were demand notices issued to assessees that did
not submit challans at all?
49. Why is an Advanced Contingent Bill Undesirable?
Sanction
Unverified
multiple
sub-
vouchers
Frequent
Drawings
Unverified
stores
entry/issue
Unverified
Recipients
2015
50. The Risks Involved - I
Contemporary technology makes
it easy to scan signatures, create
convincing bogus bills, even
rubber stamps and seals,
chemical-treat or hot-iron paper
to artificially age it, repeatedly
photocopy these to remove
physical cut and paste marks, 3-D
printing to create replicas of
stores and packages and much
more.
54. Some Samples of Sub-vouchers that CCOs Certify - III
BIMAL AUTO AGENCY
OPP ADABARI, BUS STAND ,TERMINUS ADABARI, A.T. ROAD GUWAHATI
Email:bimalauto@satyam.net.in, bimal.gwh.sal1@marutidealers.com
Phone 1: 09864088957/58/59
Phone 2: 9864088958
http://www.marutisuzuki.com/LocateDealer.aspx?InDealer=Service
55. Some Samples of Sub-vouchers that CCOs Certify - IV
BDO’s Own Bill
56. Some Samples that Merit Your Random Verification
The Comptroller and Auditor
General (CAG),…………...….in
1995,……………………pointed out
several discrepancies in cattle
transport. The animal husbandry
department had shown in its
record that it ferried the cattle
from district headquarters to
Panchayats on truck and gave
their registration numbers.
However on verification, the
registration numbers were found
to be of cars, auto rickshaws.
http://www.business-standard.com/article/politics/the-scam-that-changed-lalu-s-political-future-113100101033_1.html
60. Staggering Numbers of Unadjusted AC Bills
5246 Outstanding Bills
Rs. 1351.23 crore
Sep 30, 2014
61. Our Stand on GoA DCC Bills
We will accept GoA DCC Bills only if :
CCO certifies that there are no prev. DCC bills outstanding
DCC bills are submitted within the specified 30 days
All supporting original vouchers (including sub-vouchers)
are submitted with the DCC bill duly cancelled
Do not contain any photocopied, with unauthenticated
additions, overwritten, modified, and/or not canceled
sub-vouchers
Original sub-vouchers meet the minimum modicum of
regularity
63. The Pitfalls of not Certifying Utilization
Sanction
Implement
Reconcile
Certify
Next Inst.
Defalcation
Diversion/Parking
Unauthorized Use
Resource plg.
Savings
Reallocation
64. Receipts & G-I-A therein from Govt. of India (Rs. in Crore)
2011-12
2012-13
2013-14
Receipts from GoI G-I-A from GoI
16950.4
7666.87
19967.18
9365.92
20512.84
8938.32
65. Why are G-I-A Sanctions Faulty?
Sanction Links to previous sanction(s) unstated
Min. conditions not laid down per GFRs
No time limit prescribed for UCs, etc.
Other standard UC conditions not mentioned
Balance carry over permission unstated
Whether closing balance deducted in next FY
Mode of drawing not stated
Vr. No. link to each drawing per UC absent
68. Our Stand on GoA UCs
We will accept GoA UCs only if :
They are linked to their respective vouchers (incl. sub-
vouchers)
Do not contain any photocopied, mutilated, overwritten,
etc. sub-vouchers
Original sub-vouchers meet the minimum modicum of
regularity
They are certified by the sanctioning authority
himself/herself as being correct and in full conformity with
the relevant GFRs
Are not against expenditure met from sources outside the
Consolidated Fund of Assam
70. The Pitfalls of Suspense Account Booking
AC Bill
Drawn
Vouchers
Not
Available
Suspense
Expenditure
Understated
Budget under
provisioned
Defalcation
Misrepresentative
accounting
Unlawful Use/
Diversion
Accountability &
Governance
Rs. 1349.27 crore
outstanding suspense up
to Sep, 2014
72. Monthly Trend of Total Receipts & Expenditure for 2012-13 up
to Feb, 2013 (Rs. In Crore)
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB
Tax Revenue
Non-tax Revenue
GIA & Contributions
Total Receipts
Total Expenditure
Total Revenue Expenditure
Total Capital Plan Expenditure
Total Plan-Revenue
Expenditure
74. Monthly Trend of Fiscal & Revenue Surplus for 2012-13
up to Feb, 2013
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Revenue 824.71 2298.33 2225.93 3323.43 4046.81 4357.4 4474.85 5153.61 5578.34 5066.65 5302.23
Fiscal 822.62 2262.25 2101.63 3101.78 3751.33 3599.23 3535.08 4128.8 4210.88 3566.73 3592.23
0
1000
2000
3000
4000
5000
6000
Rs.InCrore
75. The Assam FRBM Act, 2005 Does NOT Promote Accountability
Over provisioning in budget in
infrastructure & human service
departments
FRBM Act, 2005 limits fiscal
deficit to 3% per annum
Savings of up to Rs. 10,000
crore per annum – 23-37% of
gross expenditure –almost
equal to annual State Plan
budget
Notional budget deficit within
FRBM Act limits
Lump sum transfers to Revenue Deposit -
depts. refund savings in previous FY to current
FY and issue payments without legislative
approval/sanction
Most non-works payments, including for
suppliers, transferred to unauthorized current
and/or savings accounts
Qualifies Assam for larger
Central grants by XII & XIII FCs’
Awards
No accountability
Large funds transferred to societies registered
by State, e.g. AIFA
Large funds transferred to NGOs/Societies
without credentials/status of work known to
PAG (A&E)
77. Assam Infrastructure Financing Authority - II
Established as a registered society sponsored by GoA
Not a statutory authority or corporation with its own State
Act
Cannot be audited by IA&AD, being a registered society
Large amounts directly transferred from Govt. Account
No MAAs, UC, TDS on interest income and/or interest credit
received by us
Annual Reports (including audited accounts) not available in
public domain
79. Chronic Unspent Balances in Some Major Budget Heads
Funds available = Rs. 16563.28 crore
Unspent balance = Rs. 11594.30 crore @
70% avg. surrender p.a.
e.g. Rs. 1047 crore = 4027 JNURM non-
AC buses @ Rs. 26 lakh/bus (avg. sav.
70% p.a.)?
e.g. Rs. 2116 crore = Scholarships for
1.76 lakh school kids @ Rs. 12000/kid
(avg. sav. of 70% p.a.)?
e.g. Rs. 5190 crore = >2500 km. new
roads (avg. sav. of 72% p.a.)?
Rs. 1500 crore WB flood control project?
80. The Star Marchers
Dept. %age
Minority Development 100
Mines, Minerals & Power 62
Information & Technology 69
Municipal Administration 62
Dev. Of Border Areas 72
SAD 85
S&T and Environment 74
Revenue 64
Health 29
Fisheries 48
Forest 37
P&RD 43
PWD 40
If anyone were to seek
clarification, under RTI or
otherwise, from you on the
utilization of these funds,
would you be able to quantify
specific reasons with any
degree of certainty? Please
remember you are also the
HoD /CCO.
81. Allocation Expenditure
1710.00 1628.21
1770.00 1422.17
1797.00 1456.34
2175.00 1794.68
3007.09 2232.53
3853.84 2757.97
3895.00 2669.28
5040.77 4014.85
6000.00 5023.09
7799.68 6860.32
9000.00 6350.41
10500.00 7245.75
56,548.38 43,455.60
Allocation & Expenditure of Plan Funds
2001-02 to 2012-13 (Rs. in Crore)
http://planassam.info/contents_sub.php?username=&status=&q=4&link_name=4&link_caption=6&ID=88 extracted on Feb 12, 2015
Some Questions for SAAs & CCOs
Was utilization properly certified?
Were vouchers linked with UC?
Was carry over sanction obtained from donor?
Was the expenditure randomly checked for anomalies?
Were sub-vouchers randomly checked?
Were stores randomly checked for quality and quantity?
Were accounts rendered timely?
Was reconciliation of receipts & expenditure done by your
depts.?
Does the impact of your dept.'s expenditure broadly
correspond with the Economic Survey?
83. The Paradox of Rising Receipts and Uncertified Application
Deficit 3%<
XII & XIII FC
Incentives
Low Interest
liability
Increasing
Plan grants
(incl. CSS)
Unauthorized
transfers
outside Govt.
Account
F&A Accounts
shows figures
of expdn. only
84. Drawing from State’s Treasuries in March 2004-05 to 2013-14
(Rs. in Crore)
4247.95
1972.11
3375.51
3691.19 4625.27
9756.44
5951.38
9397.53
9067.16
10080
0
2000
4000
6000
8000
10000
12000
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Rs.inCrore
Total = Rs.62,164.54 crore
85. The Brawn Drain in Mar 2014
Approx. 30% of GoA’s expenditure is in March whereas the
average of the other months is barely 6%.
%age drawn No. of GoA depts.
0-39 39
40-50 9
51-80 10
80-100 3
TOTAL 61
Total Drawn (Rs. in Crore) 10080
Total Expenditure for FY (Rs. in
Crore)
35179.60
86. Modus Operandi
Executing
Department
Dr. & Disb. Officer
Treasury Officer
Finance Dept
Bank detaches Pay-in slip and/or
credits/issues CA/TDR/CDR/BC
Current A/c/TDR/CDR
Supplier payments
CA/TDR/CDR
endorsement on Bill
Other payments
F & A A/c = Spent BUT Actually = Transferred/Deferred/No expdn
CA Opened
87. Source Fiscal Dept Amount
(Rs. In Crore)
CAG Report 2010-11 2010-11 Elementary Education 267.09
CAG Report 2011-12 2006-12 Fisheries 40.96
AG’s Inspection Reports
(in current bank
accounts)
2010-12 Director, Madarsa Education 110.05
2010-12 Inspector of Schools Diphu 12.83
2010-12 Director, Secondary Education 23.65
(TDRs)
2011-13 Director, Library Services 3.03 + 1.68 (intt.)
2006-13 Supdt, ITI, Dhemaji 2.18 + 0.72 (intt.)
2010-12 Director of Employment & Craftsmen
Training
26.21
(Banker’s cheque)
2010-11 Director, Madarsa Education 13.13
2008 Director, Higher Education 10.98
2010-12 Director, Secondary Education 3.53
2010-11 Director, Elementary Education 18.16 + 23.92
2011-12 Director, Welfare of SC &ST 18.90
2012-13 Director, Cultural Affairs 27.18
How did these Transfers Occur? - I
88. Dept Account No. Closing Balance as
on 31/03/2012
(In Rupees)
Director Social Welfare 30075704870 358,03,00,000
Director of Archaeology 30097994494 25,63,79,764
Director of Cultural Affairs 10823632066 49,30,14,946
Director of Tourism 30089016232 45,81,68,891
Director of Health Services 10821406301 112,26,03,721
(04/04/2012)
Secretariat Accounts 10821406640 63,62,58,413
Assam Police HQ 10823631936 25,30,31,035
TOTAL 679,97,56,770
How did these Transfers Occur? - II
89. Samples of What We Have So Far Found - I
Director, Social Welfare (DSW) drew Rs. 355.95 crore spread over
151 transactions from 5th-30th Mar, 2012 and had Rs. 358.03 crore
closing balance as on 31st Mar, 2012
Items for which such moneys were transferred included funds for
Anganwadis, ICDS medicines and kits, purchase of school bags, child
weighing scales and utensils (ICDS receipts from GOI in 2011-12 = Rs.
687.46 crore)
Amounts drawn by the DDO from the treasury without details of
beneficiaries, location-wise quantities of supply, and details of work
done by contractors
Even vendor payments for items such as for purchase of school
bags, utensils, Anganwadi materials, medicines and kits under ICDS
have been transferred to the above current account and vendors not
paid from the government account
90. Samples of What We Have So Far Found - II
Dy. Director, Elementary Education drew and transferred a total amount of Rs.
336.03 crore spread over 26 transactions from 3rd-31st Mar, 2012, to an unknown
current account
Amounts included state’s share of Sarva Shiksha Abhiyan and Mid-day meal
component
Dy. Director, Secondary Education, drew a total of Rs. 80.29 crore spread over
13 transactions from 25-31 Mar, 2012, and the treasury transferred these
amounts to SBI current account no. 30726979917
Transactions related to the setting up of model schools (Rs. 4.46 crore),
promotion of sports (Rs. 6.65 crore), building grants for 50 secondary schools (Rs.
2.50 crore), contractual teacher salaries (Rs. 5.38 crore), publication of school
magazine (Rs. 13.30 crore) and central share for information and communication
technology in schools, etc.
All amounts drawn without details of beneficiaries, locations and quantities of
supply, cash/cheque receipts, and names of contractors with details of work done
by them (such as for construction of kitchen stores)
91. Samples of What We Have So Far Found - III
No names of contractual teachers for each school of 2320 such schools
Mid-day meal expenditure by school and target schoolchildren beneficiary
populations (Rs. 100.55 crore, excluding remuneration for cooks)
Remuneration to mid-day meal cooks (Rs. 45.06 crore) by location & name
Promotion of youth festivals (Rs. 6.65 crore) by location & event
Promotion of sports (Rs. 6.65 crore) by venue and dates of holding them
Printing and distribution of school magazines (Rs. 13.30 crore) by each school
Purchase of text books (Rs. 56.10 crore) by beneficiary students
Vendor payments for items such for supply of food grains to schools transferred to
current account and vendors not paid from the government account for:
Mid-day meals (Rs. 21.67 crore), Free text books (Rs. 56.10 crore), AMTRON (Rs. 19.42
crore)
Grants-in-aid not drawn by implementing agencies from
treasury but drawn and retained by depts. themselves
92. Sample Amounts Transferred in Mar 2012
Dept Amt. transferred in
March 2012
(In Rupees)
Savings/Current A/c
no.
Director, WPT&BC 65,90,00,000 10821404188
Dy. Director (Elementary Education) 336,03,00,000 30770481976
Dy. Director (Secondary Education) 183,88,00,000 DCR+30726979917
Dy. Director (Accounts), Commerce & Industry 45,14,00,000 N/A
Director, Tourism 5,15,00,000 30089016232
Director, Sericulture 4,79,00,000 N/A
Dy. Director (Accounts), Industry & Commerce 42,67,00,000 N/A
Director, Dte. Of Archaeology 10,00,00,000 30097994494
Director of Cultural Affairs 5,00,00,000 30089016232
Director, WT&EGT 6,00,00,000 N/A
TOTAL 402,13,30,000 -
93. Sample of Closing Cash Balances
Dept Account No. Closing Balance
as on 31/03/2012
(In Rupees)
Director Social Welfare 30075704870 358,03,00,000
Director of Archaeology 30097994494 25,63,79,764
Director of Cultural Affairs 10823632066 49,30,14,946
Director of Tourism 30089016232 45,81,68,891
Director of Health Services 10821406301 112,26,03,721
(04/04/2012)
Secretariat Accounts 10821406640 63,62,58,413
Assam Police HQ 10823631936 25,30,31,035
TOTAL 679,97,56,770
94. Samples of AG (Audit) Assam’s findings
Source Fiscal Dept Amount
(Rs. In Crore)
CAG Report 2010-11 2010-11 Elementary Education 267.09
CAG Report 2011-12 2006-12 Fisheries 40.96
AG’s Inspection Reports (in
current bank accounts)
2010-12 Director, Madarsa Education 110.05
2010-12 Inspector of Schools Diphu 12.83
2010-12 Director, Secondary Education 23.65
(TDRs)
2011-13 Director, Library Services 3.03 + 1.68 (intt.)
2006-13 Supdt, ITI, Dhemaji 2.18 + 0.72 (intt.)
2010-12 Director of Employment &
Craftsmen Training
26.21
(Banker’s cheque)
2010-11 Director, Madarsa Education 13.13
2008 Director, Higher Education 10.98
2010-12 Director, Secondary Education 3.53
2010-11 Director, Elementary Education 18.16 + 23.92
2011-12 Director, Welfare of SC &ST 18.90
2012-13 Director, Cultural Affairs 27.18
95. Probable Statewide Magnitude of Funds in Current
Accounts/TDRs/CDRs (Rs. In Crore)
10000
1 10000
2 20000
3 30000
4 40000
5 50000
Total no. of salary-
paying DDOs
No. of Accounts per DDO
@ avg. Rs. One crore
balance per account
96. Impossible to Segregate by Object, Source, etc.
CAs
Plan
GOI
State
Non-Plan
GOI
State
Capital
GOI
State
Revenue
GOI
State
Vintage cocktail, availability of records, discontinued schemes,
dispersal of moneys in diverse current accounts spread over
several million transactions, etc.
97. CA and other Unlawful Transfers PAG (A&E), Assam Detected
Up to 2011-12
Rs. 2626.99 crore
In 2012-13
Rs. 1239.26 crore
Total: Rs. 3866.25 crore
Limited to Dispur & New Guwahati
Treasuries only for Mar. 2012 & 2013 >
Rs. one crore
Budget Heads: Mar, 2013
2225
2202
2210
2216
2403
2070
2401
2052
2236
2235
3451
2415
2435
Utilization Certificates?
100. Note 4(viii) of Finance Accounts of GoA for 2012-13
………….Although the Government of Assam vide letter No.
BB.58/92/Pt.II/335 dated 18 May 2013 directed closure of
all bank accounts w.e.f 1 October 2013, there is no
assurance that this has actually been done. Further, since
such unauthorized current bank balances represent
cumulative amounts that were previously shown as
having been expended in the Finance and Appropriation
Accounts from 2005-06 and up to date, the actual
expenditure of the Government of Assam are to
this extent overstated for the entire period from
2005-06 to 2011-12.
101. Note 4(xi) of Finance Accounts of GoA for 2012-13
Unspent balances in the books of implementing agencies
The State Government provides funds to State/District Level
Autonomous Bodies and Authorities, Societies, Non
Governmental Organizations etc. for implementation of
Centrally Sponsored Schemes (State share) and State Schemes.
Since the funds are generally not being spent fully by the
implementing agencies in the same financial year, there remain
unspent balances in the bank account of these implementing
agencies. The aggregate amount of the unspent balances in the
accounts of the implementing agencies kept outside
Government Accounts (in bank accounts) is not readily
ascertainable. The Government expenditure as reflected in the
Accounts to that extent is, therefore, not final.
113. The 8443-Civil Deposit Modus Operandi
Unspent Balance
Revenue Deposit - 8443
Refunded in Current FY &
cheques issued without valid
sanction and appropriation
Transferred to DDOs’ Current
Account by DD/BC/e-advice
Loss of RBI Interest
Not captured
in F&A
Accounts
Not reported
to Legislature
No Ext.
Oversight
114. A Sample of Transfer to 8443-Civil Deposit
Utilization Certificates?
115. Magnitude of Transfers to 8443-Civil Deposits
8443-Civil Deposits are public moneys held in trust by the
Government. No moneys from the Consolidated Fund of
Assam may be parked herein.
Year Amount Transferred by GoA
(Rs. In Crore)
2008-09 655.61
2009-10 127.80
2010-11 0.25
2011-12 666.07
2012-13 381.73
2013-14 95.13
116. Magnitude of Transfers to 8443-Civil Deposits
Rs. 201.41 crore deposited in Dispur Treasury from
24/02/2010 – 31/03/2010 and in July 2010, by
DDOs under 8443-Civil Deposit lying without being
declared lapsed under CTR 635 and not written
back to govt. account up to Jan 31, 2015 for fresh
appropriation and utilization
Payments of Rs. 95 lakh made by four treasuries in
May 2013 against funds transferred to 8443-Civil
Deposit as far back as Nov., 2004 (paid in Oct.,
2012, i.e. 9 years later)
118. Banking Secrecy Laws – Your Protective Shield?
RBI Master Circular no. Leg. BC. 22/09.07.006/2013-13 of Jul
1, 2013, specifically prohibits banks from disclosing any
customer details, save in specific circumstances, e.g.
national security, ML, etc.
S. 44 of the State Bank of India Act, 1955, contains similar
provisions
S. 3 of the Public Financial Institutions (Obligation as to
Fidelity and Secrecy) Act, 1983, provides similar restrictions
for PSBs
IA&AD cannot audit such amounts since these fall outside
the purview of S. 10(1)(a) of the CAG’s (DPC) Act, 1971
The above applies to all banking instruments, indefinitely
119. Banks Preserve These Records Indefinitely
S. 17 & 18 of Prevention of Corruption Act, 1988 empower
scrutiny of bank accounts without a warrant
120. Lateral Movement of Current Account Balances
Post-
closure
Pre-
closure
Rs. 296.52 crore
unexplained by 86 GoA
DDOs after purported
closure of current bank
accounts – no CA
certified by bank and FD
closed to us up to date.
There are over 10000
DDOs in Assam who did
not reply to us.
121. Legislation, GoI & RBI Directives - A Must Read for You
http://rbidocs.rbi.org.in/rdocs/notification/PDFs/45M
L010712FL.pdf
http://rbi.org.in/scripts/BS_ViewMasCirculardetails.as
px?id=7361#an4
http://fiuindia.gov.in/faq-maintainrecords.htm
http://fiuindia.gov.in/notifications rule3maintain.htm
122. • FDRs
• Banker’s cheques
• CDRs
• Cash
I
• Parallel unlawful
recipient bank
accounts outside of
govt. account
II
• 8443 – Civil DepositsIII
No Financial Wizardry, this!
R
I
S
K
I
S
Y
O
U
R
S
www.cgg.gov.in/.../Handbook%20on%20Financial%20accountability.pdf
123. Short-term Investment In GOI - Treasury Bills
2009-10 2010-11 2011-12 2012-13 2013-14
Opening Balance 8861.5 8177.89 6747.83 6022.05 6266.41
Interest 481.99 407.61 464.52 483.26 400.17
Closing Balance 8177.89 6747.83 6022.05 6266.41 3611.98
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Rs.InCrore
While there are large budget surrenders every year large investments are made in short-term
investments in Govt. of India Treasury Bills. The State is not short of funds even if Central Plan
grants were temporarily reduced for financial stringency of GoI.
125. Violations by Treasury Officers
i. Arts. 204, 284(a) – Constitution of India
ii. ATR 4 & SO 2(16)
iii.ATR 5 & Note below SO 8
iv.ATR 7(1)
v. ATR 9(1)
vi.ATR 10 & SO 37
vii.ATR 15(a) & SO 47
viii.ATR 15(b) & SO 48
ix. ATR 16 & SO 50, Note 3(3) under SO 53 & 56(d)
x. ATR 17
xi. ATR 24
xii.ATR 25
xiii.ATR 27
TOs acted beyond their legal
authorization while authorizing
transfers outside govt. account
and caused loss of interest &
probably principal too
126. Our Recent Instructions to DCs & Treasury Officers
a. All payments shall be made directly and only to beneficiaries as per govt. sanction
only and not be assigned to any DDO whatever, except for contingent expenditure
AC bills.
b. DDO bill endorsements for transfer to DDO-held bank accounts outside of govt.
account and/or by DDOs for payment in their own favor for investing unspent
balances in FDR/TDRs, banker’s cheques, demand draft, pay order and any other
banking instrument shall be declined;
c. Decline all endorsements on bills preferred by DDOs for transferring funds from the
Consolidated & Contingency Funds of Assam to 8443-Civil Deposits;
d. TOs shall not authorize payments for subsequent AC bills without obtaining proof of
submission of DCC bill to PAG (A&E) for previously released AC Bill amounts;
e. Shall not transfer govt. funds to bodies/agencies created as a new instrument or
existing bodies/agencies of service & funded by Govt. of Assam without their
notified rules, w/o PAG (A&E)’s prior approval;
f. Ensure immediate entry of relevant data received in bank receipt scrolls and closely
monitor Lapsed Challans on CTMIS.
127. Some Basic Recommended Reading of the Rules
Constitution of India available at http://indiacode.nic.in/coiweb/welcome.html
General Financial Rules, 2005 available at
http://finmin.nic.in/the_ministry/dept_expenditure/gfrs/GFR2005.pdf
Receipt & Payment Rules, 1983 available at
http://www.cga.nic.in/writereaddata/receipts.pdf
Assam Delegation of Financial Powers Rules, 1960 available at
http://artassam.nic.in/Finance%20deptt/The%20Assam%20Delegation%20of%20Fina
ncial%20Powers%20Rules,%201960.pdf
Ministry of Finance Budget Manual (2010) available at
http://finmin.nic.in/the_ministry/dept_eco_affairs/budget/Budget_Manual.pdf
The Assam Fiscal Responsibility and Budget Management Act, 2005, available at
http://www.assampolice.gov.in/ppt/assam_frbm.pdf
The Assam Economic Survey, 2013-14 available at
http://www.planassam.info/economic_survey_assam_13-
14/Economic_Survey_%202013-14.pdf
Right to Information Act, 2005 available at http://righttoinformation.gov.in/rtiact.asp
GoA P&RD Dept. data available at http://planassam.info/
128. Some Useful Data Web Links
Open Data available at https://data.gov.in/catalogs
MoSPI data available at http://164.100.34.62:8080/dwh/
NIC Data Links available at http://www.nic.in/publication
Indian Public Finance Statistics available at
http://finmin.nic.in/reports/ipfstat.asp
National Summary data available at
http://finmin.nic.in/stats_data/nsdp_sdds/index.html
Monthly Economic Report of MoF available at
http://finmin.nic.in/stats_data/monthly_economic_report/index.asp
Key Data on Rural Development from IDFC India Rural Development
Report available at http://rural.nic.in/netrural/rural/sites/IDFC.aspx
Vendor/manufacturer web sites, e.g. for medical equipment
http://www.narang.com/products.php &
http://www.kaycoindia.com/sitemap.html#productare
129. Rating Personnel on Accountability
Defense Services perhaps have a part
of their APAR/ACR devoted to
settlement or otherwise of audit and
accounting objections
Should GoA devise similar measures
for all its personnel?
Should some of the cases in this
presentation be investigated?
130. Reconstructing the Chain of Unlawful Transfers
Sanction
Drawing
Treasury
Bank
Unauthorized Transfer
outside Govt. Account
No Accountability &
Ext. Oversight
Interest
Taxes
(I-T, VAT, S-T)
UCs
Subsequent
Instalments
131. The Responsibility Matrix
Sanctioning
Authority
Financial
Concurrence
Executing
HoD &
Agencies
Vendors &
Contractors
Departmental
DDOs
Treasury
Officers
Banks
For now a time is come to mock at form.
Harry the Fifth is crowned. Up, vanity,
Down, royal state, all you sage counsillors, hence,
And to the English court assemble now,
From every region, apes of idleness.
Now, neighbor confines, purge you of your scum.
Have you a ruffian that will swear, drink, dance,
Revel the night, rob, murder, and commit
The oldest sins the newest kind of ways?
Be happy, he will trouble you no more.
England shall double gild his treble guilt.
England shall give him office, honor, might,
For the fifth Harry from curbed license plucks
The muzzle of restraint, and the wild dog
Shall flesh his tooth on every innocent.
O my poor kingdom, sick with civil blows!
When that my care could not withhold thy riots,
What wilt thou do when riot is thy care?
O, thou wilt be a wilderness again,
Peopled with wolves, thy old inhabitants.
Henry IV, Part-II, l. 248-268
Unlawful
Unconstitutional
Unaccountable
132. The Comptroller and Auditor General (CAG), in its report in
1995, pointed out how in a state government's
farm……50,000 kg of mustard oil (then worth Rs. 15 lakh)
was purchased in a single year just to shine the horns of
the buffalos……………Between 1993-94 and 1995-96, the
state government paid Rs. 253 crore for purchase of cattle
feed while the real value of the feed was just Rs. 10
crore………..the CBI, later, found that the bills were forged
and not even a single gram of cattle feed was purchased
from this amount. At the same time, state government
was found to have paid Rs. 172 crore on fictitious purchase
of maize based cattle feed in……….districts.
Historic Fallout of Unauthorized Drawings
134. Remember that in all organizations, private and
government, sanction, billing, payment and audit are
separate functions – any overlap on your part is at your
risk
Treasury Office/PAO is the only paying authority - no
executive officer may legally exercise this power
without violating the principle of separation of powers
8443-Civil Deposits are barred by the Constitution from
receiving govt.’s own funds – diversion is thus illegal
and at your risk
Do not divert funds into CDRs, FD or any other banking
instrument outside the govt. account and/or cash –
remember that you render yourself liable for
administrative action should these be detected or
misused at any stage even after you have demitted your
charge
1
135. Inspect your treasuries every month thoroughly
and file your reports diligently
Carry out random checks on revenue assessment
documents to see whether demand notices have
been issued and whether the collections officer
has reconciled his accounts with the treasury and
PAG (A&E)
Check with your CCOs if they have submitted their
accounts per schedule
Update yourself on reconciliation of revenues and
expenditure
Nominate a responsible officer to surprise verify
the cash, cheques, etc. that your DDO is holding
every month and report to you
2
136. Encourage your SAAs to open credit
accounts with POL bunks, automobile
dealers, stationery suppliers,
restaurants/hotels, florists, etc. and pay
monthly bills only via treasury e-mode –
remember cash is easily leaked and
overspent
Insist on your SAAs to render DCC bills
within 30 days of drawing – carry out
random checks on a few sub-vouchers and
keep yourself safe
3
137. Remember every Rupee saved is welcome, but every Rupee surrendered
militates against the State (from GoI) in every subsequent year
Therefore your projects need to be planned at least 1-2 years in advance
Early planning advances your position in the queue for resources, both State and
central, and helps FD to balance their cash reserves and evenly space out cash
drawings/borrowings
4
138. Order random checks on stores
receipts and issues
Randomly verify whether stores have
been received by implementing
agencies
Use the vast troves on the Internet for
background information on proposals
that you receive for your approval
On your official tours to implementing
agencies, insist on a detailed
presentation with financials vis-à-vis
W-I-P
File a detailed tour note to your
immediate superior and the PAA –
after all they too have a right to know
plus you are safe
5
139. Incorporate GFR conditions in sanctions
Link UCs to their vouchers
Visit your works site accounts offices regularly
Part of fiscal resources, particularly from GoI
may have been sourced from market borrowings
and needs to be repaid
GoI’s rising revenue deficit owing to interest
payments is a loss of resources for your State too
Savings/surrenders are difficult for us to justify
to successive Finance Commissions/MoF
Multilateral/bilateral assistance often carry large
commitment charges till you start using such
funds - you need to utilize such funds within the
stipulated period and maintain detailed accounts
6
140. 7
Meet your DDOs fortnightly and review
their work stats – their performance will
inform you about the pace of project
work in your respective dept. – DDO is a
junior functionary but a critical one for
you
Build centralized e-databases of
beneficiaries, projects, etc. with online
update access
Create an e-payment gateway to credit
beneficiary accounts directly
Inform CAA & FD within a week in case you
detect any major financial irregularity
Never draw public funds in anticipation of
an event that may or may not occur on or
before Mar 31
141. Administering Employee Entitlements
Pensions
We do not receive advance
pensioner profiles from depts.
Pension cases are received even after
25-30 years
Even where returned we receive
cases back with delays of 7 years and
more
Service records in mangled condition
Unauthenticated modifications in
applications & service books
Unregularized periods of service
Unlawful replacement of
names/misspelt/different names in
pension applications
Causes us to be dragged into
litigation for no fault of ours
Provident Fund
Incorrect employee name
Incorrect/incomplete A/c no.
Incomplete DDO details
Unavailable month of credit
Missing accounting classification in
transfer cases
Incomplete recovery schedule
Minus balances owing to excessive
temporary advs.
Gazetted Entitlement
Transfer/deputation order
Appointment order
Irregular service verification
Non-regularization of ad
hoc/previous service
Foreign Service details not sent
Joining Report not received
8
142. Tell us every month which employees are
expected to retire in the next 180 days
Fix responsibility upon COs to ensure that
service records are properly verified, PF
deductions properly shown in recovery
schedules, broken service regularized, pay
fixed/refixed, etc. at least 3 months before
DoR
Initiate action against defaulting SCOs for all
delays greater than a month after DoR of
employee
Carry out random checks on the list of
employees sent to us so as to minimize
fraudulent claims
Ensure that nominations are updated
Consult the appropriate links on our web site
@ http://agasm.cag.gov.in/
E-mail us at agaeassam@cag.gov.in for all
clarifications
You too will be a pensioner
in the not too distant
future!
9
145. In saying . . . the proper end of government
is the greatest happiness of all, or, in case of
competition and to the extent of the
competition, the greatest happiness of the
greatest number, it seems to me that I have
made a declaration of peace and good will
to all men.
Jeremy Bentham
Leading Principles of a Constitutional Code, 1823
Source: Burns, JH - Happiness and Utility: Jeremy Bentham’s Equation. Utilitas Vol. 17, No. 1, March
2005, Cambridge University Press, extracted on Feb 8, 2015 from www.utilitarianism.com/jeremy-
bentham/greatest-happiness.pdf
The Utilitarian View of Government
146. Devised & Presented
For the Govt. of Assam
By
Pr. Accountant General (A&E)
Assam
Feb 27, 2015