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Session Title

Session Title. Audit of Municipal Fund, Special Fund, Grants. Session Overview. In this session we will discuss the Municipal Fund, Grants, Special Fund and Audit points thereon. Learning Objective. The necessary inputs will enable the participants to,

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Session Title

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  1. Session Title Audit of Municipal Fund, Special Fund, Grants

  2. Session Overview In this session we will discuss the Municipal Fund, Grants, Special Fund and Audit points thereon. Training Module on Audit of ULBs Session 3

  3. Learning Objective The necessary inputs will enable the participants to, • acquire basic concepts of municipal fund, • its maintenance, grants and special fund as well as • probable audit points thereon. Training Module on Audit of ULBs Session 3

  4. The Municipal Fund (in case of KMC)(This part is to be adopted as adopted as per State specific scenario) • Fund is held by the Corporation in trust or by the Board of Councillors in trust (in case of other Municipalities and Corporations); • Moneys realised or realisable and otherwise received by the Corporation / Municipality will be credited to this fund. Training Module on Audit of ULBs Session 3

  5. The Municipal Fund (in case of KMC) • Fund is maintained in the following six accounts: • the water supply, sewerage and drainage account, • the road development and maintenance account, • the bustee service account, Training Module on Audit of ULBs Session 3

  6. The Municipal Fund (in case of KMC) • the commercial project account, • the solid waste account, and • the general account related to all moneys received by or on behalf of the Corporation. Training Module on Audit of ULBs Session 3

  7. The Municipal Fund (in case of KMC) • moneys realised on the aforesaid accounts will be deposited with the State Bank of India or any scheduled bank approved by the State Government for credit to the respective heads of accounts viz.— • the Water-supply, Sewerage and Drainage Account; Training Module on Audit of ULBs Session 3

  8. The Municipal Fund (in case of KMC) • the Road Development and Maintenance Account; • the Bustee Services Account of the Municipal Fund; • the Commercial Projects Account of the Municipal Fund; • the General Account of the Municipal Fund. Training Module on Audit of ULBs Session 3

  9. Water-supply, Sewerage and Drainage Account • The Municipal Fund should be credited with— • an amount equal to 30% of the amount realised on account of the property tax other than the amount realised from bustees; Training Module on Audit of ULBs Session 3

  10. Water-supply, Sewerage and Drainage Account • the money realised by the Corporation under the provisions of the Act; • sum transferred each year by the Corporation from the General Account and the amount received from the State Government. Training Module on Audit of ULBs Session 3

  11. Water-supply, Sewerage and Drainage Account • amount given by the State Government to the Corporation for a specific purpose or given towards payment of salaries and allowances; Training Module on Audit of ULBs Session 3

  12. Water-supply, Sewerage and Drainage Account • the moneys credited to the Municipal Fund in the Water-supply, Sewerage and Drainage Account shall be applied for the purposes of water-supply, sewerage and drainage. Training Module on Audit of ULBs Session 3

  13. Road Development and Maintenance Account • This account is credited with— • such subvention as the State Government may give from time to time from the proceeds of the tax on motor vehicles; Training Module on Audit of ULBs Session 3

  14. Road Development and Maintenance Account • fees realised on account of parking of vehicles ; • an amount equal to 25% of the total grant made by the State Government to the Corporation under the provisions of taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972. Training Module on Audit of ULBs Session 3

  15. Road Development and Maintenance Account • money given by the State Government to the Corporation for a specific purpose or given towards payment of salaries and allowances; • the money credited to the Road Development and Maintenance Account shall be applied for the purposes of development and maintenance of roads. Training Module on Audit of ULBs Session 3

  16. Bustee Services Account • This account is credited with — • property tax realised from bustees; • such amount as may be transferred by the Corporation from the General Account; and • the amount received from the State Government; Training Module on Audit of ULBs Session 3

  17. Bustee Services Account • The State Government shall in each year give to the Corporation a sum • not less than double the amount transferred by the Corporation from the General Account for credit to the Bustee Services Account. Training Module on Audit of ULBs Session 3

  18. Custody of Municipal Fund (in case of municipalities and other corporations in West Bengal) • Sums received on account of the municipal fund shall be paid into a treasury. • When money cannot be immediately remitted to the treasury they shall be kept in a strong iron-safe. Training Module on Audit of ULBs Session 3

  19. Custody of Municipal Fund (in case of municipalities and other corporations in West Bengal) • At the end of the day the Finance Officer shall verify • the cash and/or cheques in hand with reference to all relevant receipt documents. Training Module on Audit of ULBs Session 3

  20. Custody of Municipal Fund • cash balance shall be recorded in a bound book in prescribed form by the Cashier. • the cash balance certificate, in the daily Cash Balance Register should be signed by the Cashier/finance Officer. Training Module on Audit of ULBs Session 3

  21. Custody of Municipal Fund • claims against the Municipality shall be discharged by cheques but amounts not exceeding Rs.500/- may be paid in cash from the permanent advance. Training Module on Audit of ULBs Session 3

  22. Custody of Municipal Fund • Chairman-in-Council / Mayor may invest moneys not required for immediate use, either in Government securities or in any other form of security which may be approved by the State Government. Training Module on Audit of ULBs Session 3

  23. Custody of Municipal Fund • Municipality may operate a separate bank account for implementation of any centrally sponsored scheme. • Such account shall remain operative for the scheme specified, and be closed as soon as the scheme is completed. Training Module on Audit of ULBs Session 3

  24. Application of Municipal Fund(in case of municipalities and other corporations) • All moneys credited to the Municipal Fund shall be applied for • payment of all sums, charges and costs necessary for carrying out the purposes of the Act. Training Module on Audit of ULBs Session 3

  25. Application of Municipal Fund(in case of municipalities and other corporations) • Sums payable out of the Municipal Fund under any other law in force for the time being. • No payment of any sum shall be made out of Municipal Fund unless • such expenditure is sanctioned by the competent authority and, • covered by a current budget grant. Training Module on Audit of ULBs Session 3

  26. Payments not to be made out of Municipal Fund unless covered by a budget grant (Kolkata Corporation) • Nopayment shall be made unless such expenditure is covered by a current budget grant except in the following cases: • refund of taxes • repayment of moneys to contractors held in deposit Training Module on Audit of ULBs Session 3

  27. Payments not to be made out of Municipal Fund unless covered by a budget grant (Kolkata Corporation) • temporary payments for works urgently required by the State Government in the public interest; • sums payable as compensation; Training Module on Audit of ULBs Session 3

  28. Procedure of payment when money not covered by a budget grant • the Municipal Commissioner shall forthwith communicate the circumstances of such payment to the Mayor-in-Council; Training Module on Audit of ULBs Session 3

  29. Procedure of payment when money not covered by a budget grant • the Mayor-in-Council recommend to the Corporation • to take necessary action as may appear to be feasible and expedient for covering the amount of such payment. Training Module on Audit of ULBs Session 3

  30. Expenditure on physical assets outside Kolkata • This may be made if a resolution to that effect is carried by not less than one–half of the total number of members of the Corporation. Training Module on Audit of ULBs Session 3

  31. Power to incur expenditure beyond the limits of a Municipality • The Board of Councillors may, with the approval of the State Government, authorise • expenditure to be incurred beyond the limits of municipal area for creation of physical assets in that area. Training Module on Audit of ULBs Session 3

  32. Power to incur expenditure(for municipalities and other corporations in West Bengal) • if the estimated cost of the work or purchase is Rs.5000/- but does not exceed Rs.5,00,000/- • no expenditure shall be made without the approval of the Board of Councillors Training Module on Audit of ULBs Session 3

  33. Power to incur expenditure(for municipalities and other corporations in West Bengal) • provided that • where the estimated cost of the work/purchase exceeds Rs.5,00,000/-, • approval of the State Government shall be obtained. Training Module on Audit of ULBs Session 3

  34. Investment of surplus money(for Kolkata Corporation) • may be transferred by the Corporation either in whole or in part to any other account of the Municipal Fund Training Module on Audit of ULBs Session 3

  35. Investment of surplus money(for Kolkata Corporation) • provided that • money shall not be transferred permanently from any of the accounts to any other account without the previous approval of the State Government Training Module on Audit of ULBs Session 3

  36. Investment of surplus money(for Kolkata Corporation) • and money standing at the credit of the Commercial Projects Account shall not be transferred to the General Account. Training Module on Audit of ULBs Session 3

  37. Investment of surplus money(for Kolkata Corporation) • May be invested in • public securities or • small savings schemes approved by the State Government or • deposited at interest with such scheduled bank. Training Module on Audit of ULBs Session 3

  38. Investment of surplus money(for Kolkata Corporation) • Profit or loss, if any, arising from the above investment shall be credited or debited to the account to which such profit or loss relates. Training Module on Audit of ULBs Session 3

  39. Financial assistance from theState Government(for municipalities and other corporations) • The State Government may, give grants or financial assistance to a Municipality with or without direction as to the manner in which the sum shall be applied. Training Module on Audit of ULBs Session 3

  40. Financial assistance from theState Government(for municipalities and other corporations) • The State Government may also lay down a pattern for distribution of such grants or assistance. Training Module on Audit of ULBs Session 3

  41. Financial assistance from theState Government(for municipalities and other corporations) • The State Government may give grants for implementation in full or in part of any scheme included in the Annual Development Plan. Training Module on Audit of ULBs Session 3

  42. Grants Introduction • The municipalities and municipal corporations receive grants from the State and/or Central Government(s). Training Module on Audit of ULBs Session 3

  43. Grants • Such grants could be either for: • general purposes; • carrying out specific projects/schemes; Training Module on Audit of ULBs Session 3

  44. Nature of grants Capital Grants utilised for capital expenditure i.e. creation of a fixed asset. The benefits of such expenditure are of an enduring nature and spread over an extended period of time. Revenue Grants utilised for meeting recurring expenditure, the benefits of which expire within the accounting year in which it is incurred. These are usually in the nature of a subsidy • Grants for a non-specific purpose is termed as General Grants and for a specific purpose is termed as Specific Grants. Training Module on Audit of ULBs Session 3

  45. General Grants • The municipalities/corporations receive certain grants from the State Government • to facilitate meeting certain expenditure Training Module on Audit of ULBs Session 3

  46. General Grants • Such Grants are: • Motor Vehicles Tax Grant • Stamp Duty Grant • District Court Grant Training Module on Audit of ULBs Session 3

  47. Specific Grants • The municipalities/corporations also receive grants for meeting specific expenditures. • Specific Grants may either be received in advance or as a reimbursement of the expenditure. Training Module on Audit of ULBs Session 3

  48. Types of Specific Grants • Revenue Grants • for meeting expenditure incurred during the ordinary course of activities like • Dearness Allowance Expenditure Reimbursement Grant, • Grant for Chemicals used for Water Supply Works, etc. Training Module on Audit of ULBs Session 3

  49. Types of Specific Grants • Revenue Grants for operating specific projects/schemes: • Census Grant, • Pulse Polio Grant, • Family Welfare Grant etc. Training Module on Audit of ULBs Session 3

  50. Types of Specific Grants • Backward Classes Development Grant, • Integrated Urban Areas Development/Integrated Development of Small and Medium Towns Grant, Training Module on Audit of ULBs Session 3

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