Para 3.8.24 — MSO (Audit)
Original Rule Text
3.8.24 A relationship between physical and financial performance should be established and commented upon for the State as a whole as well as for the sample districts. The unit cost of implementing the scheme should be arrived at and analysed in absolute terms. For instance, if the unit rate of expenditure per beneficiary is fixed at around Rs 10,000, a budget provision of Rs 20 crores in one year or a five-year period can be expected to cover 20,000 beneficiaries. If, in this example, the actual expenditure is only Rs 15 crores and 25,000 beneficiaries are stated to have been covered, one of the following three conclusions is possible:
(i) the estimation was incorrect;
(ii) the benefit flowing was insufficient and less than what was intended; or
(iii) the reporting of the input or output itself was erroneous.
On the other hand, if in the same example, only 5,000 of the target population are stated to have benefited from the scheme, it could be concluded that the lower achievement is suggestive of leakage, mismanagement, etc. In the macro analysis and correlation of
financial and physical performance, only the financial input actually utilised for the scheme should be used.
- Misuse of Funds
What This Means
A performance review must establish and analyze the relationship between financial expenditure and physical achievements, both state-wide and for sampled districts. By calculating the unit cost (expenditure per beneficiary), audit can assess whether the actual cost-benefit ratio matches the projections made at the sanctioning stage. If expenditure is lower than budgeted but more beneficiaries are covered, either estimates were wrong, benefits were insufficient, or reporting was erroneous. If expenditure is high but coverage is low, it suggests leakage or mismanagement. Only actual expenditure used for the scheme should be used in this analysis.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Relationship between physical and financial performance must be established
- 2Unit cost analysis (cost per beneficiary) is a key evaluation tool
- 3Analysis should cover both state-wide and sample-district levels
- 4Three possible conclusions when numbers don't match: wrong estimates, insufficient benefits, or erroneous reporting
- 5Low coverage with high expenditure suggests leakage or mismanagement
- 6Only actual scheme expenditure (not overhead) should be used in the analysis
Practical Example
A state poverty alleviation scheme budgeted Rs 25 crores to cover 25,000 families at Rs 10,000 per family. Actual expenditure was Rs 18 crores but the department claims 30,000 families benefited. The audit team calculates the actual unit cost as Rs 6,000 per family — 40% below the intended Rs 10,000. They conclude that either the benefit per family was diluted (each family received less assistance than intended), or the beneficiary count was inflated. Field verification in sample districts reveals both: some families received only Rs 5,000 and ghost beneficiaries were listed.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why use unit cost analysis?▼
Why should only actual scheme expenditure be used?▼
How does this analysis differ from financial audit?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.