OFFICE OF CHIEF CONTROLLER OF ACCOUNTS
MINISTRY OF SURFACE TRANSPORT
GOVERNMENT OF INDIA
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OFFICE OF CHIEF CONTROLLER OF ACCOUNTS MINISTRY OF SURFACE TRANSPORT GOVERNMENT OF INDIA ABOUT OFFICE ABOUT US CONTACT US OTHER LINKS
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CONTENTS S.No Nomenclature Page Number
Part – II Important observations of Internal Audit of CCA, MOST
Para 1 to 7 Para 8 to 11 Para 12 to 16 Para 17 Para 18 to 22 Special Paras 53 IV. Statement showing position of outstanding Paras. 59 V. Statement showing outstanding temporary advances 60 of DLL Chennai. VI. Statement showing outstanding temporary advances of 61 Minor Ports Survey Organistion.
List of important paras/observations
2. Outstanding Advance of Rs.6,56,979/- 3. Heavy amount lying in the personal deposit account 4. Non recovery of I. Tax of Rs.1,85,640/-
7 Outstanding survey charges amounting to Rs.1,24,33,779/-
10. Payment Of Commission For Procuring The D.D. From Banks 11. Non- Recovery Of Dormitory Charges
12. Construction of 4 units-type-II Quarters at Hutbay 13. Delay in completion of work by the contractor entitling levy of compensations under clause 2 of the agreement. 14. In-ordinate delay in remittance of Govt. receipt 15. Delay in settlement of C.S.W.D. claims
D. Minor Ports Survey Organisation 17. Outstanding Advance of Rs.8,25,136/-
18. Expenditure incurred beyond delegated powers by various units.
F. National Highway Divisions
Special Paras S. Construction of drainage to avoid recurring expenditure-Suggestion of IAP
Intorduction
The Internal Audit Wing of this office conducts audit of the offices under the administrative control of the Ministry of Surface Transport in accordance with the provisions of Civil Accounts Manual. The duties of the Internal Audit are to ensure that initial records are maintained properly, uniform procedure is adopted in the matter of payments and accounting and corrective measures are adopted wherever necessary in order to bring the improvement in accounting. Summarily, the main duty of the internal audit wing is to examine if the Ministry and its subordinates offices are functioning in accordance with the relevant Govt. Rules and exchequer are under safe control. Out of 65 units ( excluding bank audit ) which were due for audit during 1999-2000, 53 units could be audited due to paucity of time, manpower and weather constraint ( for Andaman & Lakshadweep Islands ). As regards bank audit 4 banks have been audited during 1999-2000. In addition to above the Ministry of Surface Transport has also been entrusted the work of construction and maintenance of National Highways to the PWD NH Division of state/UT Governments on agency basis. There are 317 divisions(Approximately, as this number keeps changing) all over India under the Accounting Jurisdiction of Seven Regional Pay & Accounts Offices and Pay & Accounts Office (NH) Head Quarters of Ministry of Surface Transport. The Regional Pay & Accounts Offices and Pay & Accounts Office (NH) are functioning under the administrative control of Chief Controller of Accounts, Ministry of Surface Transport. The audit of state PWD Divisions is conducted by the RPAOs in respect of NH Accounts. The object of Internal Audit is to ensure that high standard of Public financial morality and sound financial administration and devotion to the financial interest of the Government is maintained in the Divisions entrusted with NH work. The periodicity of Internal Audit in general is based on the size of establishment/ scheme/project being audited, budget allotment etc.
II ORGANISTAIONS AUDITED Organisations audited during the year may be classified under following categories:
III TARGETS AND ACHIEVEMENTS DURING 1999-2000 Total 317 Public Works Units dealing with National Highway works in the States/UTs, 65 units pertaining to various wings of the Ministry (other than NH) and 17 bank branches fall under the purview of Internal Audit. Ideally these units are to be audited every year, but due to the reasons explained below all the units could not be audited during 1999-2000. 82 Public Works Divisions for National Highway work have been inspected and a total of 745 paras are raised during this year. There were 5970 outstanding at the beginning of this year. Out of 5970 paras, 556 have been settled. 65 units pertaining to other wings of the Ministry (other than NH) have been audited during 1999-2000. 418 out of 1442 old Internal Audit paras of other wings of MOST (other than NH Divisions) have been settled during the year of report. Internal Audit of the bank branches has been undertaken recently and during this year 4 bank branches have been audited. Special audit of Sub-marine pipeline project under Mumbai Port Trust was also conducted during the year under review.
IV Arrears, if any and steps taken to clear the same As a result of concerted and rigorous efforts of audit parties, who have been specifically advised to attend to old outstanding paras 418 old paras out of 1442 old paras have been settled along with raising a substantial number of new paras i.e.404 during 1999-2000.
As regards the audit of NH divisions of state PWD, RPAOs are asked to inspect one or two units every month as per directions of CCA, MOST. Yet time bound work viz. reimbursement of monthly claims, timely submission of accounts and other work allotted by CCA are the main responsibilities of RPAOs, hence Internal Audit is difficult to extend further. The other reason for arrears at RPAOs level is due to shortage of staff and availability of funds under Travel Expenses. There is only one JAO/AAO posted in each RPAO who has been assigned with the duties of supervising the pre-check of vouchers received with the reimbursement claims of AGs as well as of DDOs, compilation of monthly accounts, monthly/quarterly reports and returns sent to CCA office alongwith the additional work of conducting audit of different units scattered all over in the assigned states. The shortage of staff directly effects the quantity and quality of Audit. Inspite of above hindrances, efforts are being made to bring down the arrears. It is needless to mention that RPAOs should be strengthened by providing more staff for effective control over the expenditure on NH Works incurred by the state PWD.
V General Conditions of maintenance of Internal Accounts Records
Although there is improvement in the general condition of maintenance of internal accounts records, there is still a lot of scope for betterment. Distinct improvement noticed as a result of internal audit is mentioned below :-
From the review of different audit reports it is transpired that there is little improvement in maintenance of records of accounts in NH Divisions. However, observation conveyed through the reports reveals that omission involving heavy financial implications is increasing rapidly. It is also pointed out that some Division did not produce the relevant records so as to avoid adverse comments from audit. It is also noticed that some Divisions are not maintaining the records or maintaining the records improperly. It was also pointed out earlier in the previous Annual Review. The same practice is continuing. For better result, it is suggested that the staff of NH Division of state PWD may suitably be instructed/trained for proper maintenance of Accounts records and observance of relevant rules and regulations as provided in General Financial Rules, Delegation of Financial powers, Central Treasury Rules and Receipts and Payment rules. This will save a considerable time, efforts and amount of Government. It is pertinent to mention that none of the PWD divisions furnish compliance report to audit. Matter was taken up with Director General-Road, CEs of state PWDs and PWD secretaries of respective state Government but things have not improved. It is high time to find out some remedy to this problem of non-observance of instructions by state PWDs.
VI Details of Schematic review and audit of Public Sector Undertakings
VII Whether any merged DDO system is working under the Ministry and The scheme of the merged DDO was introduced in this Ministry since April 1986 only in respect of two DDOs of Secretariat. There is a need felt to review the administrative and reporting channel of DDOs. Further improvement is required in the fields like maintenance of GPF records, contingent expenditure record, budget monitoring, use of appropriate forms for drawal of money etc.
VIII Suggestions, if any, made by Internal Audit leading to economy in expenditure or Recovery of over payment. While conducting audit of various units, suggestions were made in the form of audit paras regarding economy in expenditure or recovery of over payment . A detailed coverage is made in respect of important paras in Part-II of this report.
PART – II
SERIOUS IRREGULARITIES OVER PAYMENTS NON-MAINTENANCE OF RECORDS/ACCOUNTS AND OTHER IMPORTANT SHORTCOMINGS OBSERVED IN INTERNAL TEST CHECK DURING THE YEAR 1999-2000.
DIRECTOR GENERAL ( SHIPPING ) Para 1 - Outstanding Survey Fees for Rs. 1,00,319/- The Surveyor-in-charge, Cochin carries out the following functions:-
Under the provision of Merchant Shipping(Sailing Vessels) Act, 1977, the surveyor-in-charge should collect the various kind of fee from the owner of the ship, a certificate to this effect should issue to the owner of sailing vessels after conducting survey. It was observed that an amount of Rs 1,00,319/- on accounts of various kind of survey fee was outstanding against the owner of sailing vessels. The amount needs to be realised from the concerned parties at the earliest. [Para 3 of F.No. IA/SFT/6(35)/98-99]
Para 2 - Outstanding Advance of Rs.6,56,979/- The unit is paying temporary advances to the concerned officer/staff to meet the day to day works expenditure. Several items totaling Rs.6,56,979 pertaining to the period 1982 to 1999 are still lying outstanding for want of adjustment bills from the staff of DLL Port Blair. This may be got cleared at the earliest under intimation to audit. [Para 1 of F.No. IA/SFT/4(5)/98-99]
Para 3 - Heavy amount lying in the personal deposit account Personal deposit account is an arrangement intended to facilitate the office to credit receipts into and effect withdrawals directly from the account subject to an over all check being exercised by the Bank in which the account is authorised to be opened to ensure ( with the help of personal ledger account to be maintained by the Bank for the purpose) no over withdrawal . The account has to be maintained properly and utilised for the purpose for which the account is opened. The office of Shipping Master, Mumbai is maintaining the personal ledger account namely PLA-I and PLA-II. In case of Account No. PLA-I, it has been found that the credits are being received from the agencies of the concerned ships on account of undisbursed Pay & Allowances of crew employees. In case of absconding crew members, the agency deposits undisbursed Pay & Allowance to the office of Shipping Master, Mumbai, who in turn remits such money to the families of such crew members. The audit party has found a credit balance of Rs.37,24,988/- as on 31.3.99, whereas there was no details of persons to whom this money to be charged. The credits are piling up year by year, in this account. In spite of this fact having been pointed out by audit party, nothing has been done to make out a list of the claimants or the address of their families where amount are to be sent. The same office i.e. Shipping Master, Mumbai is maintaining another personal ledger account – PLA-II for crediting money received as advance from Shipping agencies on the request of employees working under them for sending the same to their families. The audit party found a credit balance of Rs.47,18,263.90 as on 31.3.99. This amount should have been sent to the families of those crew members whom their employer agencies had sent. The office of Shipping could not even produce a list of crew members to whom the money belonged. [Para 6 & 7 of F.No. IA/SFT/6(16)/98-99]
Para 4 - Non recovery of I. Tax of Rs.1,85,640/- As per provision contained in section 194- C of I. Tax Act, 1961 (43 of 1961) the Income Tax should be deducted @ 2% before making payment to contractor. During course of inspection of D.G. (Shipping) Mumbai, it was seen that payment amounting to Rs.92,82,000 were released to contractor, without deducting the income tax @ 2% . Rs.1,85,640 the recovery should have been effected before payments to contractor to avoid huge loss to Govt. revenue. The matter needs to be investigated further and remedial action may be taken by office of DG Shipping. [Para 1 of F.No. IA/SFT/6(26)/98-99]
Para 5 - Drawal of salary for more than the sanctioned strength In the office of D.G. Shipping Mumbai, the salaries of 4 Executive Officer have been drawn against the sanctioned strength of 3 executive officers. Also the salaries of 4 nautical officers have been drawn against the sanctioned strength of 2 nautical officer. It is advised that excess posts in both the cadres should either be got sanctioned by the competent authority or alternatively the person posted should be reverted. [Para 9 of F.No. IA/SFT/6(26)/98-99]
Para 6 - Payment released to Contractor without completion of work
Normally the payment to executing agency of the work awarded should be finally released on the completion of work as has been clearly stated in rule 137 of Receipt & Payments Rules. From the scrutiny of records, it has been revealed that a sum of Rs.17,87,400/- was released by D.G. ( Shipping ) Bombay to the contractor without completion of the job. Such instances does not entail misuse of Govt. money only, but also violate the laid down procedures. Such trend need to be arrested and D.G. ( Sh.), may give reason of non compliance of rule/provisions. [Para 2 of F.No. IA/SFT/6(26)/98-99]
Para 7 - Outstanding survey charges amounting to Rs.1,24,33,779/- The unit is rendering services of survey of Minor Ports and for that survey charges are claimed from the concerned Deptt. It was observed that a sum of Rs.1,24,33,779/- due from various parties on this account is still lying non-settled. The details of unit form whom the survey changes are due are as follows S.No. Name of the agency Amount outstanding --------------------------------------------------------------------------------------------- 1. I.W.A.I. W.C.C. 10, 19, 903, ] Brahamputra 35, 56, 300 ]
2. V.I.T. Lakshadweep 15, 60, 000 3. C.P.T. 1, 42, 880 4. W.H.P. – C.O.S. 20,89,686 5. K.P.T. 40,65,050 ----------------------------------------- 1,24,33,779 ----------------------------------------- Urgent action is required to get the outstanding survey charges settled. [Para 5 of F.No. IA/SFT/6(1)/98-99]
DIRECTOR GENERAL ( LHLS )
Para 8 - Delayed adjustment of temporary advance On scrutiny of records of DLL Chennai it was seen that temporary advances amounting to Rs.1,02,116/- as per Annexure-V consisting of capital and revenue advances pertaining to the period as old as February/March, 1996 have been either adjusted late or still eluding adjustment. This trend which is prevailing in the office need to be streamlined and temporary advances whether capital or revenue should be adjusted without further delay. [Para 4 of F.No. IA/SFT/4(12)/98-99]
Para 9 -Blocking Of Govt. Money Of Rs. 3.42 Lakhs A jeep for official use was purchased at a cost of Rs. 3,42,206/- lakhs in May, 1998 by DLL Jamnagar. The vehicle was got insured in 6/98. Since then the vehicle is lying in the garage and not being used at all. The vehicle has not been used for such a long period, the purchase of vehicle does not seem to be prudent and amounts to blocking of Govt. money to the tune of Rs.3,42,206/-. A due care need to be taken to avoid recurring of such lapses in future and vehicle needs to be sent to office/department which may use it productively. [Para 3 of F.No. IA/SFT/4(3)/98-99]
Para 10 - Payment of commission for procuring the D.D. from Banks It was observed that Director Light House & Light Ships Jamnagar had not been procuring DD’s from its accredited bank i.e. Syndicate Bank. During 1998-99 an amount of Rs.42,000/- was paid as commission charges to Syndicate Bank. As per instructions of R.B.I. the accredited bank has to procure DD’s free of cost for the DDOs. The said instructions may be followed strictly to avoid infructuous expenditure. [Para 7 of F.No. IA/SFT/4(3)/98-99]
Para 11 - Non- recovery of Dormitory Charges The Inspection party observed that Director, Training Center Calcutta have been imparting training to the technician’s and Light Keeper of various offices under the D.G. ( LHLS ) and no dormitory charges are being recovered from the trainees as they are being provided accommodation duly furnished with cots wedding and mosquito nets etc. The training center is required to change Rs.2.25 per day per trainee, During the past 5 years, position of trainee imparted by Training Center is as under :- Total amount computed on the basis of, above table comes to Rs.4500/- approx. which need to be adjusted immediately. [Para 2 of F.No. IA/SFT/4(10)/98-99]
CHIEF ENGR. & ADMINISTRATOR, PORT BLAIR Para 12 - Construction of 4 units-type-II Quarters at Hutbay During inspection of EE(C), Hutbay it was observed by the Inspection Party that the department had done numerous irregularities in a construction of above units namely viz. 1. M/s K. Parmeswaran who quoted an amount of Rs. 6,11,814/- i.e. 7.33% above the estimated cost of Rs.5,70,009 which was higher in comparison to other competitors. Apart from this there were other irregularities such as:
[Para 3 of F.No. IA/SFT/5(1)/97-98]
Para 13 - Delay in completion of work by the contractor entitling levy of compensations under clause 2 of the agreement.
A contract was awarded by Ex. Engg. Campbell Bay for Rs.3,24,651 for construction of 4 units of type ‘A’ Qrs. at Kamorata as per agreement No.36/96-97. The Rs.8,25,136/- pertaining to the period 1997-98 are still lying outstanding for want of adjustment. The stipulated date of completion of work was 24.11.96. As the contractor failed to abide by the time schedule, it was mandatory on the part of the Ex. Engr. To levy 10% of the estimated cost of contract which works out to Rs.32,465/- [Para 5 of F.No. IA/SFT/5(4)/97-98]
Para 14 - In-ordinate delay in remittance of Govt. receipt The rule 3 of G.F.R. stipulates that on money received by or on behalf of Govt. either as dues of Govt. or for deposit, remittance or otherwise should be brought into Govt. Account without delay as also envisaged in para 1.17.1 of Civil Accounts Manual. During inspection of 96-97 & 97-98 of E.E. ( Campbell Bay ), it was noticed that drafts/cheques were remitted to bank after a lapse of 15 days to 2 months. For example, three cheques bearing No. 590746 dated 24.4.96, 594165 dt.21.3.96 and 594168 dt.31.3.96 for Rs.1,45,402/-, Rs.1,37,126/- and Rs.1,00,000/- respectively, they were deposited into Govt. Account after 15 days or more than 15 days. This trend of blocking Govt. money needs to be checked immediately. [Para 4 of F.No. IA/SFT/5(4)/97-98]
Para 15 - Delay in settlement of C.S.W.D. claims As per codal provision each claim is required to be verified/adjusted, within 10 days of the receipt. During scrutiny of register ( claims ) received from the o/o the Ex. Engg.( CSWD), Port Blair, it was observed that the above provision was not adhered to by the Division resulting in 14 items amounting to Rs.70,15,864/- relating to the period 6/96 to 12/97 were lying outstanding for want of adjustment till April,99. Prompt action need to be initiated in the matter. [Para 7 of F.No. IA/SFT/5(11)/98-99]
Para 16 - Non adjustment of huge advances under M.P.W.A. A scrutiny of M.P.W.A. ( Miscellaneous Public Works Advances ) Register of Dy. Chief Engg. ( Dry Dock, Port Blair ) revealed that a sum of Rs.3,12,009 was outstanding under this head. Out of which an amount of Rs.1,60,456/- and Rs.1,23,058/- pertain to the period 1981-82 to 1997-98. Since the amount involved is substantial and mostly given to parties an advance payment of the material a very prompt & strict action require to be taken either to procure material or adjust the amount. [Para 4 of F.No. IA/SFT/5(8)/98-99]
MINOR PORTS SURVEY ORGANISATION Para 17 - Outstanding Advance of Rs.8,25,136/- The unit is paying temporary advances to the concerned officer/staff to meet the day to day works expenditure. It was observed from the record that an amount of Rs.8,25,136/- pertaining to the period 1997-98 as per Annexure-III are still lying outstanding for want of adjustment. [Para 2 of F.No. IA/SFT/6(1)/98-99]
GENERAL Para 18 - Expenditure incurred beyond delegated powers by various units As per delegation of financial power Rules, Head of office is empowered to incur expenditure upto Rs.4,000 per annum on purchase of Stationery items during a year and Head of the Department can incur expenditure of Rs. 40,000/- per annum. Contrary to said Financial Power Rules, the following units have incurred expenditure on purchase of stationery items more than the financial powers.
S.No. Name of the Unit Year Total Expenditure 1. DLL (Training), Calcutta 1998-99 5,802/- 2. DLL Cochin - do - 5,759/- 3. Shipping Master, Mumbai - do - 35,968/- 4. Shipping Master, Calcutta - do - 25,728/-
The irregular expenditure needs to be got regularised from the Head of the Department/- Finance Wing of the M/o Surface Transport.
Para 19 -Excess payment due to wrong pay fixation i) During inspection of D.G. ( Sh.), Mumbai, it was observed that wrong fixation of Pay of Sh. K.P. Jason, U.D.C. during 1.1.88 to 18.9.91 an excess amount of Rs.20,775/- on accounts of Basic Pay was paid by D.G. ( Sh. ) Mumbai away from the allowance paid thereon. The amount is substantial & need to be recovered & adjusted in Govt. account immediately. ii) The inspection party on scrutiny of service book of Sh. R.M. Kalingam, Dy. Director and R.K. Varadaraj observed that W.E.F. 1.1.96 to 30.9.96, the pay of the officers was wrongly fixed thus making an extra payment amounting to Rs.1,66,291 to the above officials. Since the amount involved is substantial, same needs immediate action to recover. [Para 8 of F.No. IA/SFT/6(26)/98-99]
Para 20 - Incurring of Capital Expenditure without Budget Provision Under the provision of Rule 6 of GFR, the expenditure should not be incurred on the work without budget provision. During inspection of DG(Sh.), it was noticed that capital expenditure on the supply and installation of vertical blinds and false ceiling was incurred without allocation of fund. This work was not related with any sanction. As such, entire expenditure of Rs.12,47,400/- is irregular and should be got regularised from the Ministry of Finance. [Para 5 of F.No. IA/SFT/6(26)/98-99]
Para 21 - Excess Expenditure of Rs.1,77,803/- under office expenditure During the course of inspection of MMD, Chennai, it was observed that an excess expenditure to the tune of Rs.1,77,803/- has been incurred over and above the Budget allotment which was Rs.6,21,000/- and expenditure incurred Rs.7,98,803/- during the year 1998-99. The Deptt. did not initiate any action to get it regularised from the competent authority. Urgent steps need to be taken to get the excess amount regularise from the competent authority. [Para 11 of F.No. IA/SFT/6(34)/98-99]
Para 22 - Irregular/Unauthorised Expenditure During inspection, it was observed that paint purchased amounting to Rs. 27,594/- were purchased without the sanction of the competent authority. The Director who is not empowered to make such bulk purchases require to get the expenditure regularised by obtaining the ex-post-facto sanction of the Head of the Department. [Para 4 of F.No. IA/SFT/4(11)/98-99]
NATIONAL HIGHWAY DIVISIONS OF STATE PWDs Para 23(a)- Misuse/ Mis-appropriation of NH funds amounting to Rs. 331.44 lacs Expenditure should not be incurred on any new item of work without prior approval of the competent authority subject to availability of Funds as per Universal cardinal and principles of accounting and financial regulations. Any transaction done against the provisions of proper sanction would be categorised as misappropriation of Funds with the intention of merely utilising the unspent funds. It has been observed during the Inspection of NH Divisions that NH Divisions are incurring expenditure from NH Funds on civil works of states such as construction and maintenance of office Buildings, residential quarters, constructions of boundary walls, godowns, sheds & houses, electric switches etc or funds are transferred to Deposit/ MPWA and kept accumulated thereof. Such expenditure is being charged to NH works in contravention of Financial propriety. Audit has noticed such instances during inspection in 1999-2000 which amounts to Rs. 331.44 lacs. A gist of few paras are being given below:
3,31,44,540
It could not be immediately ascertained in audit whether the withdrawn funds were utilised on specific works/profects from which it was withdrawn. However it is seen that out of Rs. 3,00,00,000 kept in revenue deposit in 3/95, Rs. 2,45,00,000 were drawn in favour of 13(thirteen) Nos. of NH divisions and the Bank Draft for Rs. 245 lakhs were forwarded to the Deputy Secretary to the Govt. of Assam, PW(Budget) department vide Executive Engineer’s letter No. A-III/94-95/3723 dated 10.7.95. The balance amount was drawn and utilised by the division during 7.95 and 8.95. This indicates that funds provided in the budget for specific purposes were diverted for other use. An amount of Rs. 76,30,000 was transferred to the revenue deposit Head in 6.98 by debiting NH works, under MH-5054 and the amount was spent in 8.98 by adopting similar method. The Cheque for Rs 3.00 crores was issued in favour of Secretary PWD Assam. Out of Rs. 3.00 crores, an amount to the tune of Rs. 2.45 crores was distributed among 13 Divisions in the subsequent year for utilising the amount against NH works. Drawal of money by transfer to a deposit head to avoid/lapse budget provisions is prohibited under the financial rules. (Para-3 of report No.41) Para-23(b) Incorrect booking of various expenditure to NH Works amounting to Rs 23.75 lacs In 1984 Ministry of Surface Transport issued instructions vide their letter nos. NH/11/P/1684 dated 28.01.84 and No. RW/NH-III/8/81 dated 16.2.1984 that expenditure on salaries of supervisory staff, repair of Jeep car and POL, purchase of stationery, payment of telephone bills and other office contingencies etc. must not be charged to NH Works as the Ministry of Surface Transport is paying 9% Agency changes to state Government. During test check of records of the NH Divisions, it has been observed that an expenditure of Rs. 23.75 lacs has been incurred on such items which is contrary to the provisions and orders of the Ministry of Surface Transport. A few examples are given below: (Para 8 of report No. 13) (Para 4 of report No. 40) (Para 12 of report No. 59)
Para 24 Irregular/Excess purchases of Materials – loss to MOST (amounting to Rs. 38.94 lacs) In terms of Accounting procedure of PWD, it is desirable to retain the supply of materials to contractors in the hands of Government provided that a clause to this affect has been inserted in the terms and conditions of contract. Material issued to the contractor under such clause should be intended for the use and consumption on the specific work. Materials should not be issued to contractor in bulk in advance long before their actual requirements as to avoid inherent risk of pilferage and misuse. But during inspections of NH divisions it was noticed that materials were purchased without any provision or purchased in excess of actual requirement. Audit has pointed out such irregularities in 8 paras amounting to Rs 38.94 lacs. A few such instances are given below:
(Para 7 of report No. 29)
(Para 8 of report No. 61) (Para 1(C) of report No. 69)
Provisions do exist in the agreement for enforcement of timely completion of works. Job work is required to be completed within the stipulated period as per conditions of contract. In case work is not completed by the contractor within the stipulated period of time as provided in the contract, the executing authority has the right to impose penalty or rescind the contract at the risk and cost of the contractor. In the course of scrutiny of records of some NH Divisions by ITC, it has been revealed that the works were not completed within stipulated period specified in the contract and even no extension of time for completion of the work was granted to keep the contract alive. No penalty was levied for delay in execution of work by contractor. Hence Non-recovery of penalty, Non-levy of compensation for delay in completion of work by the contractor, non-recovery of excess expenditure from defaulting contractor for abandonment of work and its executions from other contractor at the risk and cost of initial contractors constitute un-authorised financial aid to contractors. During the course of Inspection, it has been noticed that monetory loss to the MOST amounts to Rs4408.19 lacs on this account during 1999-2000.
Some important paras involving financial implications are noted below :-
(Para 1(1) of report No. 2) As per terms of agreement in the records of CW Division-I Ludhiana, the work was to be completed within 42 months i.e., upto 27.2.90 but the work was in progress upto 3/99. As per agreement clause liquidated damages at 10% of the estimated cost was to be imposed upon the contractor as penalty which works to Rs. 131.39 lacs. No penalty has been levied against the contractor. As such the contractor has been favoured. (Para 1(F) of report No. 52) (Para 6 of report 52) (Para 3 of report No. 60) (Para 1(b) of report No. 77)
Para 26 Excess/Improper Mobilization Advance amounting to Rs 474 lacs. In terms of rules laid down in CPWD manual Vol-II Mobilization advance, subject to a maximum limit of 10% of estimated cost, are sanctioned to the contractors as advance on the security of Machinery and plants brought to site for specialised and capital intensive works costing not less than Rs. Two Crores which is further subjected to 80 % of the cost of machineries and plants to brought to the site. During the course of inspection of NH Divisions, it has been noticed that set norms for sanction of such advance are not being followed strictly while issuing sanctions for grant of Mobilization Advance. Audit has observed that instances are there where Mobilization Advance was given in excess of the admissible limits and interest thereon is not being charged as no clause for levy of interest has found to be incorporated in the contract. A few cases of recovery of Mobilization Advance is still pending although the work has finally been completed. It has also been noticed that interest on Mobilization advance though recovered but taken as state receipt by NH Divisions. The balance amount of mobilization advance should have been adjusted from the final Running Account of the contractor. The Divisions have not discharged their duties properly.
Some of important cases are given below:
(Para 4 of report 35) (Para 5 of report no. 35) (Para 3 of report No. 72)
In terms of codal provisions laid down in the systems of Public Works Accounts, no amount should be debited to "MPWA" for want of sanctions or appropriations . But during inspection of NH Divisions it has been observed that instead of effecting recovery, dues have been debited to MPWA. Audit has reported that a sum of Rs. 112 lacs against 6 paras is outstanding under MPWA. Divisional authorities did not initiate any tangible action to liquidate the outstanding balance under MPWA. Some illustrations are given below:
(Para 4 of Report No. 18) (Para 5 (Part III) of report No. 31) (Para 10 of report No. 61)
Para 28 Non-receipt of Materials against advance payment of Rs. 708.69 lacs. As per procedure in vogue, advance payments are made to oil companies and to Railway authorities for procurement of road materials like Bitumen and for construction of Rail over Bridge respectively. During inspection of various NH Divisions it has been observed that supplies are either not received or short supplies received from the concerned parties against such advances as a result, balance amount of advance remains un-recovered/un-adjusted for years together. Example is given below:
(Para 7 of report 19)
As per common prudence substantiated with rules, no material should be purchased for/booked to the work unless it is required in near future. Superfluous booking and its subsequent withdrawal either to stock or by transfer to other work tantamounts to breach of financial propriety. It has been revealed from review of Inspection Reports of different NH Divisions that materials worth Rs 108.50 lacs were booked to NH Works at the fag end of the financial year. A few instances are given below : 30.1 Scrutiny of Transfer Entry Order book of NH Division Sambalpur revealed that the expenditure of Rs. 24 lacs on works were incurred initially by the Division by Diverting fund from other woks and subsequently adjusted when funds were received for those works as detailed below :-
(Para 1 of report No. 8)
(Para 1 of report No. 53) (Para 13 of report No. 59.)
Para 31 Faulty financial and contractual Accounting worth Rs. 788.58 lacs. It is mandatory for the contractor to execute the work as per the specification and the conditions of contract detailed in the schedule of work which forms a part of the contract. Audit has observed that there is deviation from the specifications but the works are accepted by the divisional officers without accounting for the deviation. Payment on hand receipts, splitting up of Jobs, wrong booking of Expenditure incurred on repairs of central Machines, rejection of lowest tender on enhancement of tender value without approval of Ministry of Surface transport. Non-recovery of levied compensation are some of the reasons for faulty financial and contractual accounting resulting in financial loss to Ministry of Surface Transport. A few instances are noted as under :
(Para 1 of report No. 16) Accepted tender of Shri Gunjal Rs 54.58 lacs
Para 32 Escalation charges amounting to Rs. 1980.51 lacs Clause 10CC of the agreement of the contract provides for compensation in case of statutory increase in prices of materials, POL or labour component to be paid to the contractor have to be incorporated before hand. There escalation charges become due to the contractor subject to certain conditions. The date of completion of work within the stipulated period is the main criteria for consideration of escalation charges. The cost of work on which escalation charges are payable, shall be taken into account after deducting the cost of Extra items work executed departmentally and the cost of material issued departmentally. It should be reckoned as 85% of the cost of work after deduction of above mentioned elements. During the test check it is observed that above conditions are not being adhered to strictly resulting in higher payment of Escalation to the contractors. In a few sample cased this is to the tune of Rs. 1980.51 lacs, during 1999-2000 which is a direct financial loss to the Central Govt. (Ministry of Surface Transport). A few examples in support of above observation are given below :
32.1 Scrutiny of records of NH Division Tonk(Rajasthan) revealed that the work "Re-alignment and improvement to geometrics( Bonthly By Pass) from KM 134/150 to 140/650 of Jaipur-Tonk Road of NH-12" (Job No. 012/RJ/90/108 was awarded to M/S Bhawan va Path Nirman (Bohra) & Company with stipulated date of completion of 5.12.1993. Actual date of completion of work was 30.6.95 with delay of 572 days. The final extension was granted by Addl. Secy., Govt. of Rajasthan with imposing the compensation @ 1% amounting to Rs. 25184/-. As the contractor was penalised by imposing compensation he is not entitled to receive the price excalation. The excess price excalation of Rs. 17,97,874/- was paid to the contractor out of which Rs. 9,59,526 has been recovered & balance of Rs. 8,38,348/- is still outstanding against the contractor which may be recovered form the contractor immediately.
(Para-1 of report No. 45) i) Variation of Price (Labour) 8,46,09,577.93 ii) Variation of Price (General) 5,91,26,398.88 iii)Variation of Price (HSD/POL) 3,60,11,691.80 17,97,47,668.61 It has also been observed that no documentary evidence has been found attached with the bill to prove the price escalation and their payment to the firm. (Para 1(C) of report No. 77) Govt. of India, Ministry of Surface Transport incurs expenditure on National Highway on items pertaining to Original works, other schemes and maintenance & repairs of National Highway. As such all receipts realized relating to NH work (such as sale of tenders, road cutting charges, value of empties, forfeited amount of lapsed deposits, rent from hotels, hire charges of Machinery, road side advertisements etc should be either taken as central Govt. revenue under MH-1054-other receipts or should be taken as reduction of cost of the work under 5054-capital outlay on NH . During test check of records of NH Division it is observed that a huge amount of revenues realised from the above mentioned sources have either been credited to state Govt. under "MH 0059" or kept under "8443-civil Deposits". The amount was subsequently transferred to other state works at intermittent intervals. Audit has pointed out that a total amount of Rs. 246.28 lacs involving 56 paras has been shown as mis-classified during the year 1999-2000. A few illustrations are given below:
(Para 7 of report No. 30) 2,40,000 was remitted to PAO(NH) New Delhi. As per instruction of Ministry of Surface Transport Auction money after deduction of 5% for auctions commission will be remitted to PAO(NH) New Delhi. As such a sum of Rs. 5,18,730 out of Rs. 5,46,032/- should have been remitted (instead of Rs. 2,40,000/-) to PAO(NH) New Delhi. Thus short remittance of Rs. 2,78,730 has been made to PAO(NH) New Delhi. This matter has also been brought to the notice of D.G.(Road), Ministry of Surface Transport. (Para 1 of report No. 47) (Para 4 of report 55) (Para 1 of report No. 56)
Para 34 : Non-remittance of Toll collection receipts of Rs. 722.40 lacs. As per notification dated 1992 of the Ministry of Surface Transport regarding fee for use of Permanent Bridges, the Divisional officer shall remit entire toll fee collection to the PAO(NH), Head Quarter through Demand Draft to enable him to credit the amount so received in relevant receipts head in his books. Thereafter the Ministry of Surface Transport sanctions/reimburses collection charges of such receipts to state concerned. But contrary to the provisions of the above mentioned procedure, the NH Divisions are not remitting the toll collection in time. In some cases the toll fee collected by the Division is not at all remitted to PAO(NH) Ministry of Surface Transport and misclassified as receipts under 8443 civil Deposits which is subsequently transferred to state Head under 0059 state receipts. As a result of internal check of the accounts of the NH Divisions it is observed that an amount of Rs. 722.40 lacs on account of toll fee collected has either been misclassified to state receipts or Deposits. This amount has not found place in the books of PAO(NH) New Delhi. A few instances are detailed below:
(Para 2 of report No. 11)
(Para. 9 of report No. 20)
(Para 1 of report No. 32)
(Para 1 of report No. 33)
In order to project a clear and accurate picture of the Govt. account, it is the first and foremost duty of each Department to exhibit every charge of expenditure against the proper head of Account. During test check of NH Divisions, it is observed that a large number of items of Expenditure either pertaining to Minor works such as maintenance & repairs have been classified against the original works and vice versa. In certain cases the expenditure on maintenance & repairs of state machinery has been debited to NH (MOST) which is irregular and highly objectionable. Such diversions are difficult to be found out by PAO during the pre-check of reimbursement of claims. Hence, it is desired that PWD divisions and state AG work in a more responsible manner and avoid such irregular practices. A few instances of such misclassifications are noted below:
MONTH Exp. in lacs 12/97 1.86 4/98 1.07 5/98 2.13 6/98 1.45 10/98 0.81 7.32 (Para 4(b) of report No. 11) (Para 1(c) of report No. 12)
(Para 6 of report No. 32)
Para 36 Non – adjustment/Misclassification of hire charges of Rs. 1320.04 lacs In order to facilitate the execution of works, the Ministry of Surface Transport lends Machines and HOT Mix Plant to intending contractors on hire charges basis. Accordingly, hire charges should be collected from the hirer from the hour on which the plant/Machinery are handed over at the work site till it is returned. Divisions are required to submit a schedule of recovery of hire charges of Central Machines with the monthly account/claims for re-imbursement of expenditure on NH. The hire charges so depicted in the monthly account are credited as Revenue Receipts under 1054 of the Central Govt. by the concerned RPAO. Test check reveals that these instructions are not being followed by some divisions. This has resulted in a loss of revenue Receipts of Rs. 1320.04 lacs. A few instances are quoted below:
Above amount has been credited to state head of Account by A.G., U.P. as the same was not shown in re-imbursement claims received from A.G.,U.P. To credit the above amount to central head of Account a revised T.E. may be drawn in light of AG’s endorsement No. Book(Works)-I/A/C/98-99/40-41 dated 6.1.99 (Para1 of report No. 22)
Thus a huge amount of Rs. 1,40,69,072.64 (1,43,16,626.18-2,47,553.54) is still with the division and needs to be credited to MH 1054(R & B)-800 Other Receipts of Ministry of Surface Transport. (Para 1 of report No. 46) (Para 2(a) of report No. 56)
The work of construction and maintenance of National Highway are entrusted to the PWD(NH) Divisions of State Govt. The expenditure incurred on this account by State Governments is subsequently charged to Ministry of Surface Transport through RPAOs(NH). As such the initial accounting records are invariably required to be maintained by PWD Divisions so as to watch and monitor the accounts of expenditure incurred and receipts realised from time to time. Test check of the records of Divisions revealed that in many cases basic accounting records are either not being maintained or being maintained improperly. There are several instances reported by the RPAOs where certain accounting records were not produced to Audit. Non/Improper maintenance of initial records like cash Book, subsidiary cash book, contractor ledger, Register of M.Bs works Register, Receipt Book, liability Register, stock Register, T & P Register, T E Books, Road Material Accounts, Register of interest Bearing Securities, Register of Deposits, Register of Purchase, MPWA Register, log Book, tender sale Register, Tender opening Register, Agreement, Priced store ledger, Hindrance Register, Monthly account in some cases, Register of Mobilization Advances and Register of Land Acquisition Advance etc. has been pointed out by the IAP in respect of almost all the Divisions inspected during the year 1999-2000.
Non-Production of records is a very serious lapse and proper appropriation of Ministry of Surface Transport funds cannot be ascertained and authenticated. For this reason the Audit is unable to work out the loss caused to Ministry of Surface Transport in certain cases because of non availability of the proper registers/records. A few examples of such irregularities are quoted below:-
(Para 10 & 11 of report No. 40)
(Para 10,11 & 12 of report No. 48)
(Para 1,2,3 & 4 of report No. 70)
Para 38 Misappropriation of funds/Materials On scrutiny of records of NH Division Cuttack it is found that Shri P.C. Samantarey JE NH Section Panikaili did not hand over the 2.100 MT Steel to his successor at the time of relinquishing his charges of the section on 20.1.93. The materials were kept under the custody of Shri Samantarey since 30.9.1985. It was confirmed by sub-divisional officer NH sub-Division PaniKaili vide his letter No- 407 dated 24.10.98 that the whereabouts of the steel could not be found. The cost of the steel had not been worked out. If the material has not been returned by Shri Samantarey, the cost of the same has to be worked out and action taken as per rule 16 of General financial Rules. (Para 6 of report No. 61)
SPECIAL PARAS During the checking of records of CW Division Ferozepur it has been pointed out by IAP that some inferior type of material has been used on Zira-Talwandi-Faridkot Road KM/185-05 to 223-75. The affected portion of the corridor on the above National Highway has also been inspected by Director Quality Control Cell and raised the following observations.
(Para 2 of report No. 40)
SPECIAL PARAS Para 40 whereabouts of 276 Govt. Machineries are not known. From the records of Mechanical Division Muzaffarpur it has been noticed by IAP that whereabouts of 276 central Machines could not be located. These machines were declared Beyond Economical Repair and auction thereof was sanctioned by competent authority in the year 1986. In this connection Chief Engineer(NH) Mechanical Patna vide his letter no. 1828 dated 20.10.1994 has also enquired into from all Executive Engineers of Bihar to locate the missing condemned machines so that action could be taken on auction sanctioned in 1986. But to no avail so far. This is a very serious lapse on the part of State P.W. Divisions. As such some suitable action has to be taken by the Ministry to get the depreciated value of these machines and amount to be recovered from the State Government. (Para 2(2) of Report No. 47)
Para 41 Construction of drainage to avoid recurring expenditure-Suggestion of IAP
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