Challenges in AG (A&E) officesSushil Kumar

AG (A&E) HP

Out Line

Introduction

Mandate of CAG of India

External Challenges

Internal Challenges

Introduction

Offices of AG(A&E) come into being as part of restructuring of cadres of Indian Audit and Accounts Department.

The objective being to develop organizational pattern suited to needs of audit and maintenance of accounts of the state government.

Mandate of CAG of India

Constitutional and Statutory

Article 149 facilitated enactment of statute to define the duties and powers of CAG

Article 150 provided that the accounts of states and union shall be kept in such form as President may on advice of CAG prescribe.

Article 279 states that CAG shall ascertain and certify the net proceeds of taxes and duties to be distributed to between state and union.

Provisions of DPC Act 1971

Section 10 of the Act states that CAG shall be responsible be responsible for compiling the accounts of Union and States from initial and subsidiary Accounts.

Section 11 of the Act mandates that CAG of India to prepare and submit annual accounts of receipt and disbursements of Union and States/ UTs as well as Annual Appropriation Accounts

Section 12 mandates the CAG to provide information and to render assistance in preparation of annual financial statements of the Government from the accounts which are maintained by him.,

Mandate for entitlement functions are neither constitutional nor statutory but purely conventional.

Entitlement functions in states

CAG carries out:

Pension Authorization in 18 States

GPF authorization in 19 States

GE function in 9 states

Management of Divisional Accountant Cadre in 19 states.

External Challenges

Challenges pertaining to mandate

debate on segregation of accounting and auditing functions dates back to 1924

Indian Audit and Accounts Order 1936 provided for separation of accounts and audit

Section 11 empowers the President / Governor to relieve the CAG of India of his accounting responsibilities

The UTs of Goa, Pondicherry and Delhi have accounting functions since these became fill fledged states

Its impact:

Union accounting functions separated in 1976

Computerization of Treasuries

Introduction of treasury computerization has posed the threat of redundancies

The dependency on accounts compiled by AG(A&E) for budgetary control has diminished

The information is easily available to State government

The IFMS is comprehensive system

IFMS

Some of the module of IFMS

Interface of treasury system with other internal systems of state and other stake holders like AG office, RBI, Agency Banks, for implementing single source of truth for all transactions.

On-line budget module for preparation, operationalization and monitoring of budget

Accounts module for generation of compiled accounts

Pension Pay Roll and pension management module

Fund flow management module

Electronic settlement of receipt and payment

Online treasury inspection and audit module

How to Proceed

Increase relevancy of office by:

Speedy functioning

Correctness in accounts

Professionalize to adopt new concepts

General more relevant and timely information for decision making

Compilers to validators

Better auditing

Customer satisfaction

Our customers:

State government

State Government employees

Recent drivers:

Emergence of IT

RTI Act

Public Service Guarantee Acts

General awareness

Accounting Reforms

GASAB ( Government Accounting Standards Advisory Board)

Advise on accounting standards for transition from rule based accounting to standard based accounting

Two series of standards:

IGAS (Indian Government Accounting Standard) for cash based accounting

IFRS (Indian Government Financial Reporting Standards) for accrual accounting

Till now three standards have been notified:

Disclosure of Guarantees

Accounting of Grants-in-aid

Accounting of Loans

Accounting Reforms

Migration to accrual based accounting

MoF constituted Apex Committee in 2007 to oversee the implementation of Cash to Accrual accounts

GASAB has prepared three Key Documents: Operational Framework of Accrual basis of Accounting, Roadmap and transition path for Accrual Accounting; and Operational Guidelines for accrual based financial reporting in government.

The transition is to carried out in five phases spread over ten to twelve years

Challenges in capacity building in human recourse as well as technology modification

Accounting Reforms

Modification in Finance Accounts

The format of Finance Account went material alteration in year 2009-10

At present the number of Statements and Appendices in Finance Accounts is 19 and 14 respectively.

Challenges

Bulkiness is not necessarily a desirable quality of Accounts

FA are beyond the average capability of average citizen to understand the accounts.

Accounts at Glance lacks legal backing

Annual Accounts data are collected from various sources

Accounting Reforms

Appropriation Accounts;

Need to make more compact

Norms of savings and excesses need revision

Accounting Reforms

Revision of List of Major and Minor Heads:

List of Major and Minor Heads has been substantially revised three times in 1962, 1974 and 1987 after first list was published in 1938.

The Government of India appointed a committee in 2009 under the chairmanship of Shri CR Sundaramurti to review the prevailing classification system.

The committee recommended a new classification based on seven segments: administrative, function, programme cum scheme, recipient, target, economic and geographical.

New scheme of classification requires adoption of 49 digits

Internal Challenges

Human Recourse Challenges

Staffing pattern in A&E office is a relic of pre-computerization period

Shortages in DEO cadre

No deputation allowance

No uniform standard for output.

Therefore output based standards for personnel dealing with verification of vouchers, scrutiny of accounts, verification of entitlement claims and their authorization is urgently needed both form a result based performance basement and effective cadre management in A&E offices.

Human Recourse Challenges

All India recruitment but required to function locally

IT knowledge a must

Hygienic Challenges

The AG (A&E) offices are repositories of vouchers, accounts, cheques, accounts, pension records and GPF records.

The estimated number of vouchers reaching A&E office is staggering 4.2 crore.

This has led to the problem of not only cleanliness but also cost of maintenance.

Hygienic Challenges

Non-revision of norms of preservation

The norms of preservation of records have not been revised in the context of amendment to Indian Evidence Act 1872 and Information Technology Act 2000.

Section 65(B) of Indian Evidence Act states that any information contained in an electronic record printed on a paper, stored and recorded or copied in optical or magnetic media produced by computer shall admissible in any proceedings.

Section 7 of Information Technology Act states that retention of information in electronic format satisfies requirement of retention of documents information as per any law.

Hygienic Challenges

Retention period needs review

Digitization of records.

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