Para 3.8.22 — MSO (Audit)
Original Rule Text
3.8.22 Apart from the adequacy of resources, the examination of documents in the executing agencies as well as in the administrative department concerned should cover the following aspects:
(i) Budgetary assumptions and their reliability.
(ii) Release of funds without assessing requirements based on utilisation of earlier releases or in excess of requirements resulting in retention of unspent balances.
(iii) Timely release of the budgeted funds to the executing agencies is of vital importance. Instances of belated release of funds leading to their not being utilised and resulting in an adverse impact on the implementation of the project/scheme, as well as of unnecessary releases even when the pace of implementation is slow and progress inadequate should be specifically commented upon.
(iv) Arrangements for receipt and scrutiny of periodical reports on utilisation of funds.
(v) Inter-State/Inter-district comparisons with reference to their target population.
(vi) Irregular treatment of advances and deposits as expenditure and consequential false reporting of financial achievements.
(vii) Funds retained in excess of requirements by the State Government, District Rural Development Agency (DRDA), etc. should be aggregated and accountability established in the State and Central Governments for excessive release of funds and/or poor performance.
(viii) Investment of surplus funds and unspent balances, interest earned/forgone, and utilization of interest, etc.
(ix) Quality of maintenance of basic records, such as cash books, ledgers, bank accounts and the integrity and reliability of financial reports.
(x) Extent to which the maintenance of accounts facilitates audit and inspection trails distinctly in respect of each scheme executed or administered by the same agencies without the accounts of different schemes being mixed up so as to create confusion.
(xi) Extent to which the State Government adhered to the approved financing arrangements by the timely release of its pro rata contributions with reference to the budget provisions and actual releases.
What This Means
The financial management examination in a performance review should cover eleven key aspects: reliability of budget assumptions, whether funds are released based on actual utilization of earlier releases, timeliness of fund releases and their impact on implementation, arrangements for monitoring fund utilization reports, inter-state/district comparisons, irregular treatment of advances as expenditure (false reporting), aggregation of excess fund retention and accountability, investment and utilization of surplus funds and interest earned, quality of basic records (cash books, ledgers, bank accounts), separation of accounts of different schemes, and whether state government released its share on time.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Budget assumptions must be examined for reliability
- 2Funds should not be released without checking utilization of prior releases
- 3Belated or excessive fund releases adversely affecting implementation must be flagged
- 4Treating advances and deposits as expenditure constitutes false reporting
- 5Inter-state and inter-district comparisons reveal disparities in implementation
- 6Basic record quality (cash books, ledgers) affects financial reliability
Practical Example
While reviewing a centrally-sponsored rural roads scheme, the audit team finds that the state government released Rs 120 crores to district agencies when only Rs 30 crores of the previous release had been spent. The agencies deposited Rs 80 crores in fixed deposits, earning Rs 4.5 crores in interest that was never reported or utilized for the scheme. Meanwhile, the districts reported advances to contractors as 'expenditure,' inflating their utilization figures to justify further releases. The audit team flags all three issues — excessive releases, interest mismanagement, and false financial reporting.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is 'false reporting of financial achievements'?▼
Why examine the timeliness of fund releases?▼
Should interest earned on scheme funds be tracked?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.