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• Audit of Pay and Allowances :

• In BSNL and MTNL, the expenditure on pay and allowances to staff constitutes about 45 per cent of total revenue expenditure. Significant item of expenditure which can be audited in a comparatively very less time and more accurately.

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• If we conduct thorough substantive audit of one month and thereafter by making it as a base month, we can compare all the other 11 months pay and allowances which should be comparable to the base month. Any major variation in the other months over the base month may be examined with reference to the probable reasons.

• Analytical Review technique

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• Probable reasons for variations in the expenditure:

– - Revision of pay scales.

• - New recruitments.

• - Large number of retirements.

• - Payment of arrears.

• - Mass transfers (incoming and outgoing) through LPCs

– If the population size is 50- 20.

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• House Rent Allowance:

• 1. Obtain a list of total Government accommodations available under that unit

• 2. What are the applicable rates in the official’s place of duty and whether drawn correctly as applicable.

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• 3. Cross check that the employee who is paid HRA has not been occupying Govt. accommodation. [IP unit case]. (A list of occupants of staff quarters may be obtained) as shown below. The total number of employees who are in quarters should tally with the total number of employees for whom HRA is not drawn. The number of employees for whom Standard Licence Fee is recovered should also tally with the number of employees for whom HRA is not paid as well as the number of quarters occupied.

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• Transport Allowance :• - Collect the list of vehicles owned/hired

and allocation thereof and cross check with the pay bill – whether the concerned officers are drawing the transport allowance. If yes, justification for the same.

• - Collect the list of quarters allotted to the staff to ensure that they are not staying within 1 km of the office premise in which case transport allowance is not to be

drawn.

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• - If the employee is absent on account of training, leave or other purpose for more than 30 days in a calendar month, ensure that transport allowance is not paid for the calendar month in which he was absent completely.

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• Expenditure on rented buildings:• Preliminary work:• 1. Obtain the total list of buildings owned/hired

and occupation chart thereof.

• Officers to be approached: DE/SDE (Bldg) or OP.

• Records available: (i) Rent Register

• (ii) Register of lease deeds

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• Scrutinise the General Ledger to examine whether monthly payments of rent are consistent and comparable.

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• If there is variation in any month, the probable reasons for it could be

• - New buildings taken on rent or lease

• - Additional space hired• - Upward/downward revision of rent.• - Any buildings vacated.• - Surrender of partial accommodation• Payment of arrears on account of revision of rent • Prepare a statement of difference under each item of reason

as listed above.

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• New buildings hired: Examine the following points:

• (A) Hiring of accommodation:

• (i) Justification for requirement: Who has initiated the requirement. Whether requirement arose due to

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• installation of new exchange

• (b) expansion of exchange

• (c) change in technology

• (d) restructuring of the unit

• (e) Posting additional staffWhether any other existing building (own/hired)

would have met the additional requirement.• Whether hiring was due to delay in construction of own building

– if so, examine the reasons for delay in construction

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• (ii) Sanction of NIT from competent authority available.

• (iii) Publication in newspaper

• (iv) Sale of tender forms

• (v) Receipt of tenders, minutes of opening of bids .

• (vi) Comparative statement of tenders

• vii) Minutes of meetings of Rent Assessment Committee/Rent Finalisation Committee and the consideration applied by the committees to ensure that the tenders were processed impartially and the interest of BSNL/MTNL is taken care of.

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• (ii) If rent is exclusive of municipal taxes which are to be paid separately, ascertain whether the levies and rates applicable have been properly accounted for. (case study)

– DAP on payment of building repair cess for a building by MTNL which was not accounted for while hiring the building and fixing rent/municipal taxes Krishna Vihar building Appendix II.

• (iii) Whether signed lease deed exists for hiring the building.

• (iv) Study the agreement to judge that no clause is included in the agreement which is detrimental to the interests of BSNL/MTNL.

• (v) Whether measurement of plinth area/carpet area taken and certified by Civil wing before taking possession.

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• (A) Payment of rent and taxes:

– - Whether any advance deposit made and if so verify whether relevant clause is available in the agreement and proper receipt obtained from the lessor.

• - Whether proper receipts for payment of rent obtained from the lessor and kept on record for all months.

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• Existing buildings:• (A) Revision of rent:

• Scrutinise the agreement for due date, rate and other conditions of rent revision.

• Examine the minutes of the meeting of Fair Rent Assessment Committee to check whether the above aspects have been taken into account by the committee.

• Whether all the terms and conditions agreed are reasonable on the propriety test

– Propriety Test: The public money should be spent as if this is our own money, i.e. with all reasonable prudence which a common may think of while spending his money.

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• Whether prevailing market rates of rent in the area or downward trend in rent rates taken into account while allowing revision of rent.

• Whether sanction of the competent authority was obtained for revision or rent.

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• Vacation of building: Examine the schedule date of vacation and

actual date of vacation to check whether the building was continued to be kept hired unduly

Verify that no unwarranted payments made to landlord while vacating building.

Furniture/fixtures and other removable items provided in the building are shifted and taken over correctly.

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What are the expenses for shifting – e.g. transportation of office equipment, machinery, files, etc. Examine the agreement for handling and transportation and actual payments made.

Assess whether decision to vacate the building and occupy another rented building was justified by comparing the overall expenditure/ other reasons and consequential losses.

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• Expenditure on cable maintenance• Cable maintenance is required to maintain uninterrupted

service to the consumer. The need for cable maintenance arises mainly due to water logging in monsoon, cable damaged by other utility agencies, breaking of joints, rat cuts, etc. this is one of the major item of maintenance activity for which DE (External) is assigned the responsibility.

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• Fast repair of cable fault is the yardstick for performance measurement with both the point of view, i.e. quick restoration of service and minimising loss of revenue for the period of interruption.

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• Cable faults may be divided into two parts:

• 1. Local – to be maintained by the DE (External).

• 2. Long distance route – A separate unit under the DEM (Maintenance) looks after the cable.

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• Preliminary work:

• Obtain the map for the area where the total cables laid is available – that is cables laid in duct and cables laid directly (with yearwise data). Collect MIS Reports on Fault Repair Service – Duration of faults, Clearance of faults within specified periods.

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• Obtain the monthwise details of payments/booking from the General Ledger and analyse the trend, ie.e whether heavy expenditure is incurred during monsoon season or any other month.

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• Detailed examination:• - Cross check whether the fault

really occurred on the route

• Check Fault Register/Complaints Register and the phone numbers falling in that route to check whether they were really down on that period and complaints

had been registered. This will help in finding out false bills

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• - Check whether reinstatement charges were paid to municipal authorities which will again show whether the claims were genuine.

• - Study the NIT for cable fault rectification and its terms and conditions and cross check with the bills to ensure that they are in agreement with the tender conditions/contract.

• - Check whether the contractor attended the faults within the time period prescribed in the agreement.

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• - Check the stores issued and ensure that quantity consumed is reasonable.

• - Check whether proper records are maintained for the materials issued like cable bits, jointing kits, lead, etc. Ensure that unutilized stores is duly returned and recorded.

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• - Check that the stores issued for the purpose of maintenance is booked correctly under revenue expenditure.

• - Check whether the cable fault has occurred on recently laid cable which could be due to negligence/poor workmanship of cable laying contractor. The cost of such maintenance should be recovered from the contractor concerned.