Sei sulla pagina 1di 55

PRESENTATION ON PRE-AUDIT OF PAYMENT AREAS OF CONCERN

DIRECTED BY: CGDA

PRODUCED BY : SAVITUR PRASAD

WHY AUDIT IS REQUIRED?


Whenever the advance of civilization brought about the necessity of one man being entrusted to some extent with the property of another, the advisability of some kind of check upon the fidelity of the former would become apparent.
Richard Brown, The History of Accounting and Accountants, 1905

WHAT IS AUDIT?
Audit is the independent objective assessment by the Governance on the assessment of Governments systems and practices, against criteria.

CAG ACT 1971


In pursuance of Section 23 of the Comptroller and Auditor Generals (Duties, Powers and Conditions of Service) Act, 1971, the CAG of India, has defined Audit means examination of accounts, transactions of records in performance of duties and exercise of powers of the CAG as prescribed in the Constitution of India and includes performance audit or any other type of audit determined by the CAG of India. When used as a noun, it refers to Audit Department as a whole or any part thereof as per context.
.continued

CONSTITUTIONAL PROVISION
Audit report of the Comptroller General of India means a report of the CAG of India under Article 151 of the Constitution of India.

As per the CAG Act 1971, the broad

objective of the audit are to ensure legality, regularity, economy, efficiency and effectiveness of financial management and public administration mainly through assessment as to:

1.

Whether the financial statements are properly prepared, are complete in all respects and are presented with adequate disclosures (financial audit);

2.

Whether the provisions of the Constitution, the applicable laws, rules and regulations made thereunder and various orders and instructions issued by competent authority are being complied with (compliance audit); and

3.

The extent to which an activity, programme or organization operates economically, efficiently and effectively (performance audit).

As per the CAG Act all audits undertaken by the CAG, or on his behalf, shall be as per the Constitution of India and the Act. These regulations, standing orders, guidelines and practice notes issued by the CAG shall guide the conduct of such audits.

WHAT IS PRE-AUDIT?

WHAT IS PRE-AUDIT?
Pre-audit is an upfront auditing procedure and the examination of documents supporting a transaction or series of transactions before these are paid for and recorded.
.Continued

WHAT IS PRE-AUDIT?
Pre-audit operates to:- determine that the proposed expenditure is in compliance with appropriation law and other specific statutory authority and regulations - assure that sufficient funds are available
.. continued

WHAT IS PRE-AUDIT?
- initially determine that the transaction is not illegal, irregular, extravagant, excessive, unconscionable or unnecessary - determine that the transaction is approved by proper authority and supported by authentic underlying evidences.

PROCEDURES PRESCRIPTION FOR PRE-AUDIT :

PROCEDURES PRESCRIPTION FOR PRE-AUDIT :


As per CAG Act, 1971, Audit of expenditure incurred from the Consolidated fund examines and verifies whether adequate, proper and sound systems and procedures are in place and are being complied with, both in letter and spirit.
Whether the Authority is competent to authorize the payment. continued

PROCEDURES PRESCRIPTION FOR PRE-AUDIT :


Compliance with the requirement of the applicable laws, rules, regulations, orders and instructions in actual disbursement; Evidence by way acknowledgement etc; of vouchers, payees

Accounting in the books of the Government ; and Monitoring, control and reporting as prescribed in Government rules.
. continued

PROCEDURES PRESCRIPTION FOR PRE-AUDIT :


As per CAG Act, Audit shall bring to light not only significant cases of irregularity and breach of rules, regulations and orders but also every matter which, in the judgement of audit officer, appears to involve significant unnecessary, excessive, extravagant or wasteful expenditure of public money and resources despite compliance with the rules, regulations and orders.

PROCEDURES PRESCRIPTION FOR PRE-AUDIT :


Copies all orders sanctioning expenditure issued by the Sanctioning Authority shall be endorsed to audit office as soon as these are issued. of

The orders shall cite reference to the authority by way of rules, regulations etc.

CONFUSION GALORE

CONFUSION GALORE - ISSUES


All revenue expenditure are incurred after concurrence by the IFAs. Audit of Sanction still a weak area. Absence of periodicity / validity of IFAs concurrence Period for placement of order not binding on executive.

PRE-AUDIT OF PAYMENTS AREAS OF CONCERN


Before making a payment the audit has to satisfy itself about the admissibility of the payment under reference. The rule 18 of Defence Audit Code allows the audit to call for any documents in relation the payment and ask the authorities necessary explanation as it may consider necessary.
..continued

PRE-AUDIT OF PAYMENTS AREAS OF CONCERN


However since the introduction of IFA system at command/unit level and Defence Purchase Manual the method of incurring expenditure and concurrence of sanction has undergone a change. Under IFA system the IFA is concurrently associated with purchase procedures from RFP onwards till issue of sanction and placing of Supply Order.
..continued

PRE-AUDIT OF PAYMENTS AREAS OF CONCERN


The DPM vide Para No. 7.8.4(b) has given the documents to be submitted for payment.
This suggest that if expenditure / sanction is concurred by IFA and documents as per above Para is submitted, the PCDA is bound to release the payment.

The question here is whether a sanction concurred by IFA can be objected in audit by PCDA
..continued

PRE-AUDIT OF PAYMENTS AREAS OF CONCERN


The contractual obligations are statutory. The question here is whether Audit can reject a bill of payment which has created liability for the Government through sanction order issued by an Authority, who is not competent to do so.
Whether any mechanism exist to redress the grievance of third party, who is put to financial loss, though no irregularity can be ascribed to him.

AREAS OF CONCERN-CONTD
Broadly, payments can be categorised as under: - Payment related to personal claims. - Payment related to stores etc. - Payment related to imprest accounts. Further, payments can be from revenue head or capital head

AREAS OF CONCERN-CONTD
Some Case References INMARAST Bills. Communication system provided to ships, submarines during sailing. INMARAST leased line facility provided by TATA TELE Services for 77 terminals for 24 X 7 usage on global beam 64 E.

AREAS OF CONCERN-CONTD
Facility provided for IN Ships for communication between command headquarters and ships on sailing through satellite. The rate charged by the service provider is on higher side compared with normal landline and mobiles ( Pulse rate for each second is Rs.5.10)

AREAS OF CONCERN-CONTD
It is observed from the bills that majority of calls (90%) are on account of private calls to mobiles, residential phones etc.

It is also observed that calls are also being made to foreign countries to private numbers. The monthly expenditure for some of the months is as under: .

AREAS OF CONCERN-CONTD
Mar 2012 ---------Apr 2012 ---------May 2012 ---------June 2012 ----------July 2012 ---------Aug. 2012 ---------Sep. 2012 ----------Oct. 2012 ----------Nov 2012 ----------Dec. 2012 ----------Total ----------Rs. 36.67 cr. Rs. 22.20 cr. Rs. 32.60 cr. Rs. 34.32 cr. Rs. 28.84 cr. Rs. 17.16 cr. Rs. 16.59 cr. Rs. 11.56 cr. Rs. 9.57 cr. Rs. 11.02 cr. Rs. 220 cr.

AREAS OF CONCERN-CONTD
Payment of Overtime to industrial employees The practice of paying unlimited overtime to industrial employees of Naval Dockyard and other establishment has been successfully stopped by insisting on observance of allowance in accordance with Factories Act, 1948. Matter was raised up to Secretary (Ministry of Defense) but the stand taken by PCDA, Navy was accepted ultimately, resulting in saving of crores of Rupees.

AREAS OF CONCERN-CONTD
Payment of Overtime to industrial employees The anomalous situation of wrongly interpreting the rule for years has been corrected but it is a matter of concern that such wrong practices continue in total violation of laid down provisions despite the Draft Para raised by Test Audit Authorities. Open violation of rules and regulations shall not be allowed under any pretext. Either the rule be modified or practice should not be allowed to continue.

AREAS OF CONCERN-CONTD
Payment recommended for PSU like HSL/GRSE where case of extension for delivery period pending with MoD Repair and Refit bills received from PSUs for payment and recommended by units without valid delivery period extension for the contract concluded by the Ministry creates confusing situation where payments are insisted though case for approval of extension pending with Ministries for months/years.

AREAS OF CONCERN-CONTD
Various critical components including main engine of interceptor boat differ from the Maker name mentioned in the Contract. 4 Boats since have been supplied. Whether to agree for release of further payment as and then next 4 boats are delivered in another few months time.

AREAS OF CONCERN-CONTD
Main Engine of Interceptor Boat Contract for construction of 36 Interceptor Boats at a cost of Rs.976.95 crores was concluded between Govt. of India (Ministry of Defence) and M/s Larsen & Toubro Ltd., Mumbai. The build specifications were laid down for important and critical equipments and the Makers name and Module number are specified in Appendix III of the Contract.

AREAS OF CONCERN-CONTD
Procurement of 4 KA 31 Helicopter Engine for 22.61 crores Views of the participants are solicited on course of action to be adopted for 4 Helicopter Engines for KA 31 have been received by Navy. The copy of the Government of Sanction dated 25th of March 2011 is in next slide.

CONTD
Sanction appears to be in order. Yet the payment has not been released so far. Reason: Procurement has been through High seas Sales. Under which Clause of DPM, the payment can be released. CBI has asked for the papers and details.

DHARTI DREDGING

AREAS OF CONCERN-CONTD
Innumerable examples of irregularities of nature brought out above. Another case, in which sovriegn function of carrying out inspection test of submarine has been outsourced to private vendor by submarine overseas team (SOT) in prestigious P-75 Project (Scorpion Submarine).

AREAS OF CONCERN-CONTD
Outsourced vendor is also supplier of stores item to MDL, who is constructing the submarine. Conflict of Interest.

Case Concurred by IFA.


Whether payment can be released ?

NON LINKED FOREIGN STORES

RESTRAINT AND AFFLUENCE

WAY FORWARD
Defense Audit Tribunal - To cater to the matters involving litigation pertaining to payments of all types which are objected in Audit. Whistleblower programmes on the lines of Practice Followed in the Department of Defence (US)

DESPITE TURBULENCE, PCDA (NAVY) ENSURES DISCIPLINED PAYMENT

Potrebbero piacerti anche