Chhattisgarh Civil Commercial 2009 Chap3
Chhattisgarh Civil Commercial 2009 Chap3
Highlights
Internal control is an integral component of an organization’s
management processes, which are established in order to provide
reasonable assurance that its operations are carried out effectively and
efficiently, financial reports and operational data are reliable and the
applicable laws and regulations are complied with so as to achieve
organizational objectives. The Government of India has prescribed
comprehensive instructions for maintenance of internal control in
Government departments through Rule 64 of the General Financial Rules
2005. A review of internal controls in the Water Resources Department
has revealed the following:
Due to deficiencies in expenditure control, there was excess expenditure of
Rs 7.78 crore over the allotments issued by the Engineer-in-Chief.
(Paragraph 3.5.3)
Due to non-compliance with State Treasury Rules, lapsed deposits worth
Rs 24.90 lakh were not credited to Government account.
(Paragraph 3.6)
Due to deficiencies in assessing requirements while framing estimates,
there was excess expenditure of Rs 1.91 crore.
(Paragraph 3.7.7)
Due to deficiencies in enforcing terms of agreement, additional security
deposit and royalty were not deducted resulting in undue aid to
contractors.
(Paragraph 3.7.9 and 3.7.10)
There was non-compliance with provisions relating to quality control tests
in works amounting to Rs 1.43 crore.
(Paragraph 3.8.2)
3.1 Introduction
Internal controls in an organisation are meant to give reasonable assurance that
its operations are carried out according to the prescribed rules and regulations
and in an economical, efficient and effective manner.
The Water Resources Department (WRD) is responsible for managing the
water resources of the State, primarily through the creation and maintenance
of major, medium and minor irrigation projects. The department has six major
projects, 32 medium projects and 2,242 minor projects in Chhattisgarh. Of
Audit Report (Civil and Commercial) for the year ended 31 March 2009
these, five major, seven medium and 471 minor projects have been completed
and the remaining are under progress. The department has also identified
(June 2005) 595 locations for construction of anicuts1 across various rivers for
the purpose of ground water recharging and assistance in agriculture. As of
March 2009, 61 anicuts worth Rs 74.89 crore have been constructed and the
work of another 153 anicuts worth Rs 387 crore is under progress.
The department maintains the headworks2 and also undertakes major
maintenance of canals. The minor and routine repairs of canals are done by
Water Users Associations3.
1
Barriers across a river to enable storage of water for dry season.
2
Works undertaken at the site of storage of water such as reservoirs, dams, anicuts
etc.
3
Associations of farmers, responsible for equitable distribution of water and
collection of water rates.
4
CEs, Minimata Bango Project, Bilaspur and Mahanadi Reservoir Project, Raipur.
5
SE’s, Indravati Project Circle, Jagdalpur and Minimata Dam Circle, Kharsia.
6
Minimata Bango (MMB), Canal Division No 4, Dabhara, Tribal Development Pilot
Project (TDPP), Jagdalpur, Water Resources Division, Kanker, Minimata Bango,
Canal Division No. 5, Kharsia, Water Resources Division, Kondagaon and Minimata
Bango, Canal Division No. 6, Sakti.
7
Senior Geohydrologist, Ground Water Survey Division No. 9, Bilaspur.
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Chapter-III Internal Control
offices. The objectives and scope of the review were explained to the
Secretary during the entry conference. The exit conference for the review was
held on 26 August 2009 with the Secretary, during which all the findings were
discussed.
Audit Findings
8
23 (WRD), 41 (Tribal Area Sub-Plan i.e. TSP), 45 (Minor Irrigation Works), 57
(Externally Aided Projects pertaining to WRD), 64 (Special Component Plan for
Scheduled Castes) and 75 (NABARD Aided Project pertaining to WRD).
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Audit Report (Civil and Commercial) for the year ended 31 March 2009
any explanation as to why the surrenders were not foreseen prior to the
prescribed date. Thus, timely surrenders were not made as envisaged in the
Manual which limited the scope of the Government to provide the surrendered
funds to other departments. During the exit conference, the Government
agreed to issue directions for recording justifications for surrenders made after
15 March for the concerned financial year.
3.5.3 Excess expenditure over allotment
After the budgetary provisions are approved through the Appropriation Bill,
the E-in-C allots funds, head-wise, to the CEs, who in turn allot them to the
divisions. The expenditure is to be monitored regularly to ensure that there is
no excess over the allotments.
Lack of
control
It was observed that in respect of three grants, there was excess expenditure
resulted in over allotments, amounting to Rs 7.78 crore, as shown in Appendix-3.3. The
excess excesses indicated shortcomings in the monitoring and control of expenditure.
expenditure During the exit conference, the Government took serious note of such cases
of Rs 7.78 and decided to review all the cases and to call for explanation from the
crore over
allotment
concerned officials.
3.5.4 Non-receipt of security deposit for custody of cash
Rule 282 of the Chhattisgarh Financial Code provides that every cashier,
storekeeper and other subordinate, who is entrusted with the custody of cash,
stores or other valuables, is required to deposit security except in exceptional
cases as specified by Government.
Scrutiny of records in the test-checked units revealed that out of the 51
officials handling cash/stores, none had made any security deposits except for
two officials, one under SE, Electrical and Mechanical Circle, Raipur (SE,
E/M Circle, Raipur) and one under SE, Indravati Project Circle, Jagdalpur as
detailed in Appendix-3.4.
During the exit conference, the Government directed that security deposits
should be recovered from all the cashiers as per the rule.
9
WRD Kanker, MMB Dn. No. 5 Kharsia and TDPP, Division, Jagdalpur.
10
WRD Kondagaon and MMB Dn. No.6 Sakti.
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Chapter-III Internal Control
Rs 13.57 lakh were shown under the deposit head. In the absence of the said
registers, the exact amount of lapsed deposits could not be ascertained. MMB,
Dn. No.4 Dabhara did not have any case of lapsed deposits while EE, WRD,
Kondagaon stated (April 2009) that the register would be furnished after
updating but could not furnish it to Audit. During the exit conference, the
Government agreed to review all lapsed deposits in the divisions so that the
amounts could be credited to revenue.
Accounting activities
3.7.1 Amounts outstanding in suspense accounts
As per para 13.2.1 and 22.4.10 of the CPWA Code, the divisions were
required to maintain Cash Settlement Suspense Accounts (CSSA) and
Material Purchase Settlement Suspense Accounts (MPSSA) with item-wise
details. The operation of these suspense heads were dispensed w.e.f. 1983 and
1984 respectively but old outstanding balances were required to be reconciled
and cleared.
The balances under MPSSA represented amounts which were payable for
materials procured on credit from other divisions. The balances under CSSA
represented amounts receivable from other divisions for materials supplied on
credit. These heads were operated to ensure inter-divisional adjustments and
served as a control against loss/pilferage of stock.
Three11 of the test-checked divisions had old balances of Rs 52.85 lakh under
Long MPSSA and Rs 25.70 lakh under CSSA. It was observed that the divisions did
pending
not have any item-wise break-up of these balances which were outstanding for
balances
under periods from 1969-70 to 1999-2000. In the absence of the item-wise break-
suspense ups, it would be difficult to clear these balances and the problem would get
heads not further compounded with the passage of time. During the exit conference, the
cleared Government agreed that such old outstanding balances which were pending in
many divisions should be settled once and for all.
3.7.2 Miscellaneous Public Works Advances
According to Para 13.4.1 of the CPWA Code, (i) sale on credit (ii) expenditure
incurred on deposit works in excess of deposits received (iii) losses,
retrenchments, errors, etc. and (iv) other items are recorded under the head
‘Miscellaneous Public Works Advance’ (MPWA).
Huge
outstanding The items under this head are cleared either by cash recovery or by transfer to
balances some other head of account. A sum of Rs 7.58 crore was outstanding under
under MPWA in the test-checked divisions from March 1954 as shown at
MPWA
11
MPSSA: WRD, Kanker and MMB Dn. No. 6 Sakti; CSSA: TDPP, Jagdalpur and
WRD Kanker. Other four test-checked divisions did not have any outstanding
balances.
69
Audit Report (Civil and Commercial) for the year ended 31 March 2009
12
MMB, Dn.No. 4 Dabhara, MMB, Dn.No.5, Kharsia, WRD Kondagaon and MMB Dn.
No.6 Sakti.
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Chapter-III Internal Control
13
The Seventh test-checked division i.e. Ground Water Survey Division No. 9, Bilaspur
did not have any WUAs.
14
MMB, Dn. No. 4 Dabhara and WRD, Kondagaon.
15
TDPP, Jagdalpur.
16
WRD, Kanker and MMB, Dn. No.6 Sakti.
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Audit Report (Civil and Commercial) for the year ended 31 March 2009
one contractor at a time and the concerned contractor is eligible for further
piece work only after completion of the earlier piece work allotted to them.
Three17 test-checked divisions entered into 16 piece work agreements
Piece
amounting to Rs 43.14 lakh. Executive Engineer, WRD, Kondagaon awarded
works four piece works to the same contractor within the same month i.e. February
awarded 2009. EE, WRD, Kanker awarded (February 2009) five piece works to a
without single contractor within a span of four days and awarded (January and March
permission 2009) another four works to another two contractors within a span of one and
of SE
a half months. EE, TDPP, Jagdalpur awarded three piece works to a single
contractor on the same day. Allotment of multiple orders to the same
contractor without ensuring completion of the earlier works allotted to them,
was in contravention of the existing instructions. Details are given in
Appendix-3.7. Moreover, in these cases, while the administrative approval and
technical sanctions were obtained from the CE, the requisite prior approvals of
the SE before issue of the work orders were not available on record.
This matter was discussed during the exit conference and the department
agreed with the audit observation and stated that instructions would be
reiterated to all divisions for compliance.
17
TDPP, Jagdalpur ,WRD, Kanker and WRD, Kondagaon.
18
RD : ‘Reduced distance’ which is a unit for measuring distance in canals.
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Chapter-III Internal Control
It was observed that though CNS was projected in both the estimates as one of
the main components, it was not executed at all in either of the contracts
because the entire construction was through areas of non-expansive soil where
CNS layers were not required. It was evident that the projection and
assessment of the tenders and agreements on the basis of the price quoted for
CNS was incorrect. It can be seen from item nine of the table above that the
two contractors quoted very low rates for CNS work, which enabled them to
become L1 i.e. the lowest tenderers. If the EE had assessed the requirements
correctly and excluded CNS from the estimates, two other contractors who had
quoted lesser rates for other components would have become L1 and the
works would have been completed at a lower cost. Consequently, Government
incurred excess expenditure of Rs 1.91 crore on the two works as detailed in
Appendix-3.8.
During the exit conference, the Government decided that the non-execution of
CNS work against such a large estimated quantity was a serious issue and both
the tenders would be re-examined to ascertain whether there was any
manipulation in the estimates.
19
It is a certificate issued under Indian Standards Certification act regarding quality.
20
TDPP Jagdalpur ,WRD Kanker and WRD Kondagaon.
21
MMB Dn. No.4-Dabhara, MMB Dn. No.5 Kharsia and MMB Dn. No.6 Sakti.
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Audit Report (Civil and Commercial) for the year ended 31 March 2009
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Chapter-III Internal Control
Inventory Control
3.7.11 Non-maintenance of stock records
As per para 4.082 of the WD Manual, physical verification of stores is to be
conducted once in a year. Para 4.073 of the manual also envisages that as soon
as stores articles become unserviceable, a survey report should be prepared
and the stores disposed of after sanction from the competent authority. Para
4.083 of the Manual envisages that all articles of stock which are not likely to
be required during the following 12 months should be reported by the Sub-
Divisional Officer to the EE who, if necessary, would take the SE’s orders for
their disposal.
It was observed that in three23 out of seven test-checked divisions, the stock
position as per the monthly accounts was ‘nil’. The position of stock in the
remaining four divisions is given below:
Table-3.4: Division-wise position of stock
(Rupees in lakh)
Sl. Name of division Value of stock as per monthly
No. account
1. EE, WRD Kanker 60.74
2. EE, MMB Dn. No. 5 Kharsia 46.95
3. EE, MMB Dn. No. 6 Sakti 125.81
4. EE, TDPP Dn. Jagdalpur 3.92
Total 237.42
(Source: Information supplied by department and compiled by Audit)
Stock The total outstanding balance in case of four divisions was Rs 2.37 crore. It
records not was observed that EE, TDPP, Dn. Jagdalpur maintained full stock records, EE,
maintained MMB, Dn.No. 5 Kharsia had a list of stock items of only Rs 1.59 lakh and
for stores
there was no explanation for the balance stock of Rs 2.32 crore carried
valued at
Rs 2.32 forward in the monthly accounts.
crore EE, WRD, Kanker and EE, MMB Dn. No. 6, Sakti did not maintain any stock
register and there was no record regarding the large quantity of stock indicated
in the monthly accounts. Consequently, there was no way to ascertain how
much physical stock actually existed in these divisions against the amounts
shown.
On this being pointed out, EE, WRD, Kanker replied (April 2009) that the
stock of Rs 60.74 lakh pertained to the period prior to 2000. The stock records
had been seized by the Economic Offences Wing in 1996-97 and it was not
possible to maintain any record thereafter. EE, MMB Dn. No. 5, Kharsia
replied (May 2009) that as the transactions were old, reconciliation would
require minute examination which would require time. EE, MMB Dn. No. 6,
Sakti replied (May 2009) that the verification of stock was being taken up with
the SDOs concerned.
23
Ground Water Survey Dn. No. 9 Bilaspur, MMB Dn. No.4 Dabhara and WRD,
Kondagaon.
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Audit Report (Civil and Commercial) for the year ended 31 March 2009
Administrative control
3.7.12 Deficiencies in manpower deployment
The deployment of EEs in the office of the E-in-C and CEs is detailed below:
Table-3.5 : Staff position in the cadre of EEs as on March 2009
Sl. Name of Office Sanctioned Working Excess
No. strength of strength
EE (Civil)
1.Engineer-in-Chief 5 10 5
2.CE, Mahanadi Godavari Basin, 5 7 2
Raipur
3. CE, Hasdeo Bango Basin, 7 9 2
Bilaspur
4. CE, Mahanadi Reservoir Project, 7 10 3
Raipur
5. CE, Minimata Bango Project, 6 8 2
Bilaspur
Total 30 44 14
(Source: Information supplied by E-in-C and compiled by Audit)
Fourteen While the table indicates that 14 EEs were posted in excess of the sanctioned
EEs posted strength in the offices of the E-in-C and CEs, it was observed that 15 Assistant
in excess of Engineers (AEs) were holding the higher charge of EEs in 1524 divisions. The
sanctioned department should reconsider equitable deployment of manpower in order to
strength in ensure that posts of higher responsibilities such as those of EEs are not
E-in-C and
CE offices
manned by AEs, especially when EEs are available and posted in excess in the
offices of the E-in-C and CEs.
Scrutiny of the sanctioned strength and deployment under CE, MRP, Raipur
revealed that the distribution of staff was not uniform as detailed in the table
below:
24
(i)WRD Dn. Baikunthpur (ii) WRD Kharang Dn. Bilaspur (iii) MMB Dn. No. 4
Dabhara (iv) Tandula Dn. Durg (v)WRD Dn. Janjgir (vi) WRD Dn. Jashpur (vii)
WRD Dn. Kanker (viii) WRD Dn. Kawardha (ix) WRD Dn. Kota (x) Maniyari WRD
Dn. Mungeli (xi) WRD Dn. Pendra road (xii) WM Dn. 1 Raipur (xiii) WM Dn. Rudri
(xiv) Dam Dn. No. 2 Rudri (xv) WRD, Dn. Surajpur.
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Chapter-III Internal Control
25
Mahanadi Circle, Raipur and MMB Dam Circle, Rudri.
26
MRP, Raipur.
27
Ground Water Survey Dn. 9 Bilaspur and WRD, Kondagaon.
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Audit Report (Civil and Commercial) for the year ended 31 March 2009
28
(i) Construction of structures under Kosorteda Project by TDPP Dn. Jagdalpur.
(ii) Construction of Dudhawa RBC and structures ch 270 to 390 by WRD, Kanker
(iii) Construction of Dudhawa RBC and structures ch 390 to 530 by WRD, Kanker.
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Chapter-III Internal Control
3.9 Conclusion
The review of the internal control mechanism in the Water Resources
Department revealed that there were persistent savings and instances of excess
expenditure over the allotments given by the Engineer-in-Chief. Amounts
were pending for settlement under suspense heads. There were instances of
non-reconciliation of cheques and remittances, deficiencies in preparation of
works abstract registers and execution of work without approval of the
competent authorities. There were deficiencies in maintenance of stock
records and deployment of manpower. The department did not have an
Internal Audit wing, in the absence of which the extent of compliance with the
existing rules, procedures and instructions could not be monitored on a regular
basis.
3.10 Recommendations
It is recommended that the Department should
• identify and review lapsed deposits and credit the same to revenue,
• clear outstanding suspense balances through a special drive,
• examine the feasibility of computerising the maintenance of divisional
accounts and related registers,
• issue guidelines to all divisions prescribing regular returns from Water
User Associations,
• introduce a standard clause in agreements to confirm that contractors
have procured cement and steel from approved suppliers,
• review the deployment of manpower,
• consider setting up an Internal Audit wing in the department
• maintain programme registers of inspections to ensure that inspections
take place as per the prescribed frequencies and
• take proactive steps to settle pending audit paragraphs to strengthen the
accountability mechanism.
79