Examination on Accounts and Audit Functions

 Examination on Accounts and Audit Functions

-Dr. Lalit Kumar Setia

The examinations of Accounts Officers, on Financial and Compliance Audit, Methods and Procedure of Auditing including auditing in Information Technology (IT) environment are very easy to attempt after going through the material available on my webpages. The Auditing standards are issued by Comptroller Auditor General in India, at the international level, these are issued by IFAC and INTOSAI.

The CPD test and syllabus focuses on the understanding of the Audit function. In Government, the Accounts Officer is Head of an office of Accounts responsible to ensure effective utilization of financial resources and compliance of rules in the department. The Audit officer is the head of an office of Audit. The Audit Officer and Accounts Officer, both are inter-related. An accounts officer performs functions as per financial rules while an audit officer checks and points out the irregularities while performing financial functions with recommendations to do the same work better.

To know the responsibilities of a Head of Accounts Office, the following article is a must-read.

https://drlalitsetia.blogspot.com/2021/08/responsibilities-of-head-of-accounting.html

From where do the funds/grants come in a Government office?

Article 267(1) of the constitution establishes Contingency Fund and an officer is designated as ‘Drawing Officer’ by the Central Government or Head of the Department; for drawing bills from this fund so that the financial functions may be discharged as per Government Accounting Rules 1990, Government Account (Receipt and Payment) Rules, 1983 and the orders or instructions issued latest in this regard.

How Haryana Treasuries are performing financial functions with the help of allotting Unique Code of Payee. Have a detailed reading of the following –

https://drlalitsetia.blogspot.com/2021/09/how-does-unique-code-of-payee-work.html

It is well known that an audit is an examination of accounting records which includes entries of financial transactions undertaken for performing the official duties by the officers of an office.

The PC-8 paper of Financial Rules and Principles of Government Accounts:

The Group II examinations for Subordinate Audit/Accounts Services (SAS) are particularly related to Financial Rules, Principles of Accounting in Government, Audit function, etc. The examination books are available on the web portal of CAG and the syllabus is also prescribed by the CAG, the sole authority entrusted with the responsibility of audit of accounts.

It is required to have a detailed understanding of Financial Procedures in Government, also explained in the following article –

https://managerialadministration.blogspot.com/2018/04/financial-procedures-in-government.html

Can an Executive Force Audit Officer modify audit findings?

This question is generally asked by the participants, Auditors in my class whether the Audit should be independent or not? It is interesting to clear that an Auditor General of State and Comptroller Auditor General in Central Government, is fully independent and there is no power in the hands of executive to direct the Audit Officers to modify or refrain from carrying out a fair audit, derive conclusions, and recommend to ensure proper utilization of the financial resources.

How the rules enforce the financial control and how the administration is held responsible if any irregularity stays for the long term –

https://managerialadministration.blogspot.com/2018/10/accounts-administration-and-prevention.html

Financial Audit

To verify whether the Government Accounts are properly prepared or not, whether the applicable laws and rules are compliance or not, whether there is a need to point out excess or shortfall in expenditure or not, and if there are any irregularities, what should be an action plan for sorting out the issues and timely completion and monitoring of the financial statements?

How to ensure effective financial administration –

https://managerialadministration.blogspot.com/2018/10/effective-financial-administration.html 

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved. 

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 8th October 2021 and last updated on 8th October 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

Money Matters in Government Office

Money Matters in Government Office

-Dr. Lalit Kumar

Utilizing Public Money in Government Office:

After joining a Government job, each employee is expected for adopting absolute integrity in official functions. Whatever task is assigned; it is assumed that proper account of utilizing money or financial resources be maintained by the employee. The Government Accounting Rules, 1990 guides to adopt the accounting systems for fair representation of the resources utilized in the office. Before joining the Government job, an employee may be using personal money or parents’ money and maybe extravagant in the making of expenses but while using public money or government money, it is expected that decisions are taken keeping in view various rules, instructions, and directions of Government. While in personal life, it was not mandatory to keep the account of money utilized on which expenses/assets and even there is no-one to put a finger against the person for misuse of the money, but in case of using money in Government, there are rules and instructions which can prove the irregularities on part of employees, there are RTI Activists seeking information of business affairs of Government offices to find out the irregularities of Officers / Officials, there are people who are waiting for any mistake by any employee so that they take benefit of it with making complaints.

Why there is a need of reporting particulars of expenditure and incomes?

The Government Officers are recruited and selected very sincerely. It is also a well-known fact that everyone works very sincerely with absolute integrity. In such cases, why maintain accounts and report the same? When Senior Authorities have trust in the functions of Subordinate Officers then why maintain accounts and prepare the reports? All monetary transactions are recorded in Cash Book and even compiled at the level of Accountant General to check the irregularities. There are heads for booking of each expense, strict guidelines to categorize as per guidelines of Accounting Rules; so that it can be reported in the State Assembly or Parliament whenever public representatives ask for the information. How many payments are made for Salaries? How much is being spent on Education or Health or Legal Services or any other public service? How much amount is realized from income tax or GST or fines and penalties etc.? How much tax and non-tax revenue is being utilized by the Government?

Audit of money utilized in Government:

No doubt, the primary aim of the Government is public welfare and the public services are rendered without expectation of any profit out of the welfare activities. Since the money is collected from the public by the imposition of taxes, it is required to verify whether the money is utilized as per rules or not. Transparency and accountability in financial records is the duty of Head of Departments (HoDs) and for this purpose, generally the Finance Department issues instructions and guidelines including the economy in expenditure, budgetary control, timely submission of returns, and also compliance of each rule in office. For this purpose, it is expected to adopt well-organized accounting systems with provisions for checks to ensure financial control.

Where the money is utilized?

Whether it is personal life or official, the money can be utilized on two things either on consumption expenditure / procuring services or making of investments / procuring goods. In Government, the records are maintained with proper debit and credit; however, the style is to book the expenses or credit the revenues in prescribed heads. These booking of expenses and crediting of incomes finally form the monthly accounts then annual accounts for the decision making of the Administrators / Ministers. It does not matter whether the Single Entry System is used or Double Entry System, whether the accounts are manually maintained or on computers, whether the base of identifying transactions is cash basis or accrual basis. It matters whether there is transparency and fairness in maintaining the accounts or not. Wherever money is utilized, that should be audited by the Auditors and irregularities should be traced with proper action against the persons found guilty. 

Next Article - 

https://drlalitsetia.blogspot.com/2021/08/uniformity-in-accounts-of-government.html

Hindi Version:

सरकारी कार्यालय में धन का मामला

 -डॉ. ललित कुमार

 सरकारी कार्यालय में जनता के पैसे का उपयोग:

 सरकारी नौकरी में आने के बाद, प्रत्येक कर्मचारी से आधिकारिक कार्यों में पूर्ण सत्यनिष्ठा अपनाने की अपेक्षा की जाती है। जो भी कार्य सौंपा जाता है; यह माना जाता है कि कर्मचारी द्वारा, धन या वित्तीय संसाधनों के उपयोग का उचित लेखा-जोखा रखा जाए। सरकारी लेखा नियम, 1990 कार्यालय में उपयोग किए गए संसाधनों के उचित प्रतिनिधित्व के लिए लेखा प्रणाली को अपनाने के लिए मार्गदर्शन करते है। सरकारी नौकरी में आने से पहले, एक कर्मचारी व्यक्तिगत धन या माता-पिता के धन का उपयोग कर रहा होता है और शायद खर्चे फालतू भी हो, लेकिन  सरकारीधन का उपयोग करते समय, यह अपेक्षा की जाती है कि निर्णय विभिन्न नियमों, निर्देशों, और सरकार के निर्देशके अनुसार लिए जाएं।जबकि निजी जीवन में खर्च किए गए धन का लेखा जोखा रखना अनिवार्य नहीं होता। निजी जिंदगी में पैसे खर्च करो या निवेश, सदुपयोग करो या दुरुपयोग, व्यक्ति पर उंगली उठाने वाला कोई नहीं है, लेकिन सरकार में धन का उपयोग करने के मामले में, ऐसे नियम और निर्देश हैं जो कर्मचारियों की ओर से अनियमितताओं को साबित कर सकते हैं, अधिकारियों / अधिकारियों की अनियमितताओं का पता लगाने के लिए सरकारी कार्यालयों के व्यावसायिक मामलों की जानकारी लेने वाले आरटीआई कार्यकर्ता हैं ऐसे लोग हैं जो किसी भी कर्मचारी द्वारा किसी भी गलती की प्रतीक्षा कर रहे हैं इसलिए कि वे शिकायत करके इसका लाभ उठाएं।

 व्यय और आय के विवरण की रिपोर्टिंग की आवश्यकता क्यों है?

 सरकारी अधिकारियों की भर्ती की जाती है और उन्हें बहुत ईमानदारी से चुना जाता है। यह भी एक सर्वविदित तथ्य है कि हर कोई पूरी ईमानदारी के साथ काम करता है।

जब सभी ईमानदार हैं तो हर मामलों में, खातों का रखरखाव और उसकी रिपोर्ट क्यों करें? जब वरिष्ठ अधिकारियों को अधीनस्थ अधिकारियों के कार्यों पर भरोसा है तो लेखों

का रखरखाव और रिपोर्ट क्यों तैयार करें? सभी मौद्रिक लेनदेन को कैश बुक में दर्ज किया जाता है और यहां तक ​​कि अनियमितताओं की जांच के लिए महालेखाकार के स्तर पर लेखों को संकलित किया जाता है। प्रत्येक व्यय की बुकिंग के लिए उपयुक्त हेड हैं, लेखांकन नियमों के दिशानिर्देशों के अनुसार वर्गीकृत करने के लिए सख्त दिशानिर्देश हैं; ताकि जब भी जन प्रतिनिधि सूचना मांगे तो राज्य विधानसभा या संसद में इसकी सूचना दी जा सके। वेतन के लिए कितने भुगतान किए जाते हैं? शिक्षा या स्वास्थ्य या कानूनी सेवाओं या किसी अन्य सार्वजनिक सेवा पर कितना खर्च किया जा रहा है? आयकर या जीएसटी या जुर्माना और दंड आदि से कितनी राशि की वसूली होती है? सरकार द्वारा कितने कर और गैर-कर राजस्व का उपयोग किया जा रहा है? सबका विवरण तैयार किया जा सकता है।

 सरकार में उपयोग किए गए धन की लेखापरीक्षा:

 निस्संदेह, सरकार का प्राथमिक उद्देश्य लोक कल्याण है और लोक सेवाओं को कल्याणकारी गतिविधियों से बिना किसी लाभ की अपेक्षा के प्रदान किया जाता है। चूंकि जनता पर कर लगाकर धन एकत्र किया जाता है, इसलिए यह सत्यापित करना आवश्यक है कि धन का उपयोग नियमों के अनुसार किया गया है या नहीं। वित्तीय अभिलेखों में पारदर्शिता और जवाबदेही विभागाध्यक्षों (एचओडी) का कर्तव्य है और इस उद्देश्य के लिए, आम तौर पर वित्त विभाग व्यय, बजटीय नियंत्रण, समय पर रिटर्न जमा करने, और प्रत्येक नियम के अनुपालन में मितव्ययिता सहित निर्देश और दिशानिर्देश जारी करता है। 

प्रत्येक कार्यालय से इस उद्देश्य के लिए, वित्तीय नियंत्रण सुनिश्चित करने के लिए उचित प्रावधानों के साथ सुव्यवस्थित लेखा प्रणाली को अपनाने की उम्मीद है।

 पैसे का उपयोग कहाँ किया जाता है?

 चाहे वह निजी जीवन हो या आधिकारिक, धन का उपयोग दो चीजों पर किया जा सकता है या तो उपभोग व्यय / सेवाओं की खरीद या निवेश / सामान की खरीद पर किया जा सकता है। सरकार में, अभिलेखों को उचित डेबिट और क्रेडिट के साथ रखा जाता है; हालाँकि, शैली खर्चों को बुक करने या राजस्व को निर्धारित शीर्षों में जमा करने की है। व्यय की ये बुकिंग और आय जमा करने से अंतत: प्रशासकों / मंत्रियों के निर्णय लेने के लिए मासिक खाते और फिर वार्षिक खाते बनते हैं। इससे कोई फर्क नहीं पड़ता कि सिंगल एंट्री सिस्टम का उपयोग किया जाता है या डबल एंट्री सिस्टम, चाहे खातों को मैन्युअल रूप से या कंप्यूटर पर बनाए रखा जाता हो, चाहे लेनदेन की पहचान का आधार नकद आधार या प्रोद्भवन आधार हो। यह मायने रखता है कि खातों को बनाए रखने में पारदर्शिता और निष्पक्षता है या नहीं। जहां कहीं भी धन का उपयोग किया जाता है, उसका लेखा परीक्षकों द्वारा ऑडिट किया जाना चाहिए और दोषी पाए जाने वाले व्यक्तियों के खिलाफ उचित कार्रवाई के साथ अनियमितताओं का पता लगाया जाना चाहिए।.

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved.

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. The article was published on 26th August, 2021 and last updated on 4^th September, 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

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Arrears of Dearness Allowance

 Arrears of Dearness Allowance to Government Employees

Dr. Lalit Kumar Setia

What are Arrears?

Whenever a person delivers services, he becomes entitled for remuneration for the services. In case of employees working in an organization, the remuneration in form of salaries paid after the end of a period (usually a month). The amount accrued from the date on which the first missed payment was due.

When Arrears are paid to Government Employees:

The employees get a salary hike or Dearness Allowance hike from the months which have been passed, but the amount is not received. Such amount is computed and paid as arrears to the Government employees. For example, the Dearness Allowance raised from 17% to 28% from 1^st July 2021 and paid in the month of August with the salaries of July, then there will be no arrears.

But the increase in Dearness Allowance from 17% to 28%, was due from a long period of Covid-19 pandemic. 4% increase was pending from January to June 2020 and 3% was pending from July to December 2020. Further, 4% was pending from Jan to June 2021. It means 4%+4%+3% = 11% was pending to be provided to the Government employees due to compensate them as increase in Dearness Allowance in response to rise in the inflation.

Arrears for Dearness Allowance from 17% to 28% from July 2021:

In India, the Central Government and most of the State Governments have decided to freeze the Dearness Allowance (DA) of Government employees due to financial hardship in result of Covid-19 pandemic in India and the States. The Government of Haryana had already decided to not provide arrears of DA due from July 2020 to January 2021 (https://www.livemint.com/news/india/haryana-govt-freezes-dearness-allowance-at-current-rate-till-july-2021-11594105517856.html).

The Government had decided to restore the rate of Dearness Allowance prospectively and revised rate be effective from July 2021 with the remarks that no arrears for the period from Jan 2020 to June 2021 be provided. The letter of Finance Department, Government of Haryana dated 6^th July 2020 stated that additional instalment of Dearness Allowance payable to Haryana Government Employees due from 1^st Jan 2020 shall not be paid.

The letter is available at http://www.finhry.gov.in/FileUploads/Upload_7826f176-33d2-4a20-8514-2c7f82a19035_.PDF

Whether Government may decide to give Dearness Allowance Arrears or not?

As per the decision, the Government has decided that the arrears of Dearness Allowance shall not be paid. It happened due to financial hardship which come from the pandemic of Covid-19. In case, Government decides to give arrears, there will be huge cash outflow from the treasuries of Government.

Fall in GST collections due to Covid-19 Pandemic:

It is well known that the major source of revenue collection of Government in India and States, is now Goods and Services Tax (GST). In the month of June 2021, the collections of GST is Rs. 92,849 Crores. http://gstcouncil.gov.in/sites/default/files/gst-statistics/GST-Revenue-Collection-June-2021.pdf

The collection in GST was decreased as the Government provided relief measures in form of waiver or reduction in the interest on delayed return filing for 15 days for the return filing month June 2021 for the taxpayers with the aggregate turnover up to Rs. 5 Crore in the wake of covid pandemic second wave.

In May 2021, the GST collection was Rs. 1,02,709 Crores. In May 2021, the taxpayers had been given various relief measures in the wake of covid pandemic second wave.

In April 2021, despite of second wave of Covid-19 pandemic, the Indian businesses have paid the GST and filed the GST returns on time and the GST Collection was Rs. 1,41,384 Crores.

In March 2021, the GST Collection was Rs. 1,23,902 Crores. However, during this month the Central Government has settled the amount of IGST in the ratio of Fifty Fifty with the States and UTs.

In February 2021, the GST collection was Rs. 1,13,143 Crores. In this month also, the Central Government settled the amount of IGST with the States / UTs in ratio of Fifty Fifty.

In Jan 2021, the GST collection was Rs. 1,19,847 Crores. Keeping in view the collections from Jan 2021 to June 2021; the Government decided to settle the complications from fall in the collection of GST and reduce the revenue expenditure.

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Irregularities in Tendering

 Irregularities in Tendering

Role of Central Vigilance Commission

The managerial administration deals with the issues relating to the proper procurement of goods and services. The public sector organizations have strong governance mechanisms to deal with issues of corruption. Before the year 2000, every file of public sector organizations was considered a confidential secret document and at that time, it was very difficult to detect financial irregularities. 

The committee on the prevention of corruption recommended to set up Central Vigilance Commission (CVC) in 1964 and in 2003, the bill was passed in Parliament and ‘the Central Vigilance Commission Act’ is enacted. The CVC inquires and investigates cases of corruption. As per financial rules of the Government, the procurement of goods is required to be justified on three parameters directly related to prudent use of public money i.e. (i) Economy, (ii) Efficiency, (iii) Effectiveness. These three parameters are known as 3 Es for the authorities to look into, before taking the decision to use the public money.

Why use Tender in procurement?

The first and most important cause of using the tender system for procurement is ‘ensuring transparency and efficiency in procurement’. A tender provides equal and fair treatment to vendors and service providers. It promotes competition and the chances of getting goods at the lowest prices increased. The tender process is very difficult to be cracked by corrupt people. The tender in itself is designed particularly to ensure no room for corruption. There are a lot of guidelines issued by the Central Vigilance Commission to carry out procurement-related activities properly.  

Importance of tendering in public procurement 

Tendering is an important process in public procurement because it ensures transparency, competition, fairness, and value for money. Here are some reasons why tendering is important in public procurement:

Transparency: The tendering process is transparent, which means that it allows all interested parties to compete for public contracts fairly. This can help prevent corruption, favoritism, and other unethical practices that can occur when contracts are awarded without competition.

Competition: Tendering encourages competition among suppliers, which can lead to better prices, higher quality goods or services, and more innovative solutions. When suppliers compete, they are motivated to offer the best value for money, which benefits both the government and the public.

Fairness: The tendering process ensures that all suppliers have an equal opportunity to compete for public contracts. This helps to prevent discrimination and ensures that the contract is awarded to the most qualified supplier.

Value for money: Tendering helps to ensure that the government gets the best value for money. By inviting competitive bids, the government can compare prices, quality, and other factors to ensure that the contract is awarded to the supplier that offers the best value.

Accountability: The tendering process is accountable, which means that the government can be held responsible for its decisions. If a supplier is awarded a contract that is not in the public interest, the government can be held accountable for its decision.

In summary, tendering is an important process in public procurement because it promotes transparency, competition, fairness, value for money, and accountability. By using a tendering process, the government can ensure that public contracts are awarded to the most qualified and cost-effective supplier.

Lalit Kumar

e-Procurement 

e-Procurement is the process of conducting procurement activities electronically, typically through the use of internet-based technologies. It involves the use of digital platforms and tools to streamline and automate the procurement process, from the initial sourcing of suppliers through to the final payment of goods or services.

e-Procurement offers a number of benefits over traditional procurement methods. Some of these benefits include:

Increased efficiency: e-Procurement can streamline and automate many of the processes involved in procurement, such as supplier identification, request for proposal (RFP) issuance, and purchase order creation. This can save time and reduce administrative overheads, allowing procurement professionals to focus on more value-added activities.

Cost savings: By automating and streamlining procurement processes, e-Procurement can help reduce procurement costs. It can also help to drive down prices by increasing competition among suppliers.

Improved accuracy: e-Procurement can help reduce errors in the procurement process, such as manual data entry errors or miscommunications. By automating many of the procurement processes, e-Procurement can help ensure that data is accurate and up-to-date.

Better supplier management: e-Procurement can help procurement professionals to manage supplier relationships more effectively, by providing real-time visibility into supplier performance, and automating the process of supplier selection and evaluation.

Increased transparency: e-Procurement can help increase transparency in the procurement process, by providing real-time visibility into the status of procurement activities, including RFP issuance, supplier selection, and contract award.

e-Procurement can be used in a range of procurement activities, including sourcing, bidding, negotiation, contract management, and payment processing. Some common e-Procurement tools include e-sourcing platforms, e-tendering systems, e-auction platforms, and e-invoicing systems. These tools can be used by both private and public sector organizations to streamline and automate their procurement processes.

Precautions before proceeding to award Tender:

The tender process is required to be followed strictly in order and a single mistake can lead to financial irregularities. There are a lot of tenders in which the competent authorities face litigation from the suppliers’ side and sometimes auditors point out the irregularities. Before proceeding to award a tender, the procurement authorities should reflect the following upon file with a justification pointing out the true and fair position of the authorities:

(i)  Specifications in terms of quality and quantity should be justified.

(ii) Procurement of excess quantity of goods should always be avoided.

(iii) The tender procedure should be notified to the committee constituted to supervise and implement the tender system. The procedure should be fair and transparent, in other words, full-proof in awarding the tender to a good vendor.

(iv) Procurement of goods should only be done as per the actual requirements of the office.

(v) Provision should be made to keep proper records of procurement stages so that the procurement cannot be challenged as faulty.

Delhi Transport Bus Corporation Procurement:

Delhi Transport Corporation procured one thousand low-floor buses. Further, an Annual Maintenance Contract (AMC) was also done in the procurement of the buses. The basic principle for fair procurement is to create competition among the bidders so that the vendor or service provider with the least price can be provided the work order. The BJP demanded a CBI probe in this matter on the basis that tendering process is completed with monopoly pricing instead of competitive pricing. It is a must to use proper procedure and in the process of procurement of low floor buses and AMC, there were procedural lapses. Even if there is no scam in a particular case, it is a must to adopt a fair procedure.

Income Tax Department Raids Dainik Bhaskar

The concern is relating to tax evasion and the department of Income Tax raids usually. This time it is upon Newspaper Agencies such as Dainik Bhaskar.

In next article, it is studied how procurement is done in Government. 

https://drlalitsetia.blogspot.com/2019/04/procurement-of-goods-in-government.html 

https://drlalitsetia.blogspot.com/2021/07/use-of-position-and-government-resources.html

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