Annexure-T

1. Annexure-T Recommendations of the 11th JRM on Financial Management & Procurement24th Review Meeting of State FCs- Delhi(3rd - 4th.02.2010)

2. 11th JRM recommendations on FM&P • Held from January 15-29, 2010. • Undertaken field review in 10 States of Assam, Bihar, Chhattisgarh, HP, Kerala, MP, Rajasthan, Tamil Nadu, Tripura and West Bengal. • Main recommendations made on Financial Management & Procurement are given in two parts. • (i) State level. • (ii) National level.

3. 11th JRM recommendations on FM&PState Level • Assam • A concrete response from SMD and its districts partners to the State commissioned study on utilization of annual grants. • Provide guidelines early distinguishing grants for Building/Procurement, for Operations and for Maintenance. • Ensure clarity through guidelines on what can and what can’t be spent under the Maintenance Grant. • This would ensure, for example that maintenance grants are not utilized for day to day operation, and that buildings and infrastructure do not fall into disrepair.

4. 11th JRM recommendations on FM&PState Level • Bihar • Staffing • Sanction Postsat least as per SSA indicative norms. • Speed up hiring of staff. • Remove obstacles in hiring further staff. • Analyse reason for high level of advances.

5. 11th JRM recommendations on FM&PState Level • Bihar • Salaries • Audit actual payment of salaries. • Report to MHRD on the present audit arrangements and ensure proper audit coverage. • KGBV finances • Review the process of withdrawal from Banks. • All withdrawals be signed jointly by a person independent of the NGO.

6. 11th JRM recommendations on FM&PState Level • Bihar • KGBV finances (cont’d..) • Strengthen internal control. • Consider given limited financial freedom to the Warden, e.g. handling of petty cash. • BSP to appoint statutory auditors to ensure quality, independence else statutory auditors may audit each KGBV as they cover each DPO. • Prohibit cash payments above of Rs. 5,000 other than by an account payee cheque.

7. 11th JRM recommendations on FM&PState Level • Bihar • KGBV finances (cont’d..) • Extend Scope of Internal Auditors to cover KGBVs. • Take corrective action against KGBVs not following SSA financial management guidelines. • Audit Process • Create specific team to prepare full fledged position of accounts at each districts and update bank reconciliations.

8. 11th JRM recommendations on FM&PState Level • Bihar • Audit Process (cont’d..) • Cover VECs as per MHRD guidelines. • Increase the coverage (man days of internal auditors) • Revise the TORs to include coverage of VECs which may necessitate revision of audit fee.

9. 11th JRM recommendations on FM&PState Level • Bihar • Other Matters • Make efforts to ensure e-transfer of funds (core banking facility) as many of sub-district level units. • Make Tally accounting software operational in all the districts at the earliest. • Retain printed reports from the software. • Furnish action taken reports on IPAI review reports.

10. 11th JRM recommendations on FM&PState Level • Chhattisgarh • Staffing and capacity building is an urgent priority. • Identify low spending components and determine strategies to spend the unspent balances effectively. • Carefully plan training of staff at State, district, block and JBVS scheduled for February, 2010 to build the capacity and increase the understanding, use and importance of the FM&P Manual.

11. 11th JRM recommendations on FM&PState Level • Chhattisgarh • Hire the services of 3-4 empanelled CA firms to provide internal audit on a periodic and rolling basis at the State, district, block and cluster level.

12. 11th JRM recommendations on FM&PState Level • Rajasthan • Need for re-circulating FM&P Manual to all SSA sub-district level units to ensure awareness and compliance. • Need for training in FMP for key functionaries, both at the district and sub-district level including HM and SDMC members. • Schools need to display details of funds received and utilized under SSA. • Consider online procurement to ensure transparency.

13. 11th JRM recommendations on FM&PState Level • Rajasthan • Fill up all vacant positions of accounts staff as quickly as possible for appropriate financial monitoring and accounting. • Further strengthen internal audit mechanism for effective coverage in terms of the volume of investments at divers level. • Develop a mechanism to release State share within 30 days of receipt of GOI share.

14. 11th JRM recommendations on FM&PState Level • Tamil Nadu • Explore options for contracting CA firms for conduct of internal audits with focus on transaction audit. • Phase out redundancy in maintenance of accounts at the district level i.e. on Tally and manual book keeping. • Implementation of a regimen for annual physical verification of assets.

15. 11th JRM recommendations on FM&PState Level • Tripura • Lack of understanding of the asset register format at BRC and school level. • Needs simplified understanding of the asset register at lower levels. • Some of the banks at village level do not have computerization which makes difficult in timely updation of reports and reconciliation at the block and State level. • Faces problems on recruitment of professional talent in financial management.

16. 11th JRM recommendations on FM&PState Level • Tripura • Needs significant capacity building in financial planning and management. • West Bengal • Take all efforts to expedite the process the utilizing allocated funds, specially in LEP out of school children, NPEGEL and other interventions. • HP, Kerala and MP • No recommendations.

17. 11th JRM recommendations on FM&PNational Level • Overall • More intensive engagement with certain States like Bihar, UP, MP, West Bengal and Chhattisgarh for improvement of accounting system. • Bihar and Chhattisgarh need to be attended to on priority. • These are large spending States need significant capacity strengthening across almost all aspects of FM&P.

18. 11th JRM recommendations on FM&PNational Level • Overall • Resolution on an urgent basis of the severe shortage of staffing at State and District levels. • This needs to be resolved soon, to ensure use of funds for the purpose to which intended and to improve the quality of expenditure to achieve the SSA goals. • Obtain commitments from States on this and the time of PAB approval. • Closely follow up with all States on the continued implementation of the FM Action Plan.

19. 11th JRM recommendations on FM&PNational Level • Funds Flow • Continue efforts to achieve 100% electronic transfer of funds to sub-district level. • MHRD to monitor compliance at quarterly meetings of FCs. • MHRD to monitor compliance of the use of systems for tracking unspent balances at district and sub-districts levels. • Accounts • Adopt computerized accounting software by all States at SPO and DPO levels.

20. 11th JRM recommendations on FM&PNational Level • Audit and Internal Controls • Obtain clear certification from the external auditors on the following: • (a) All entities other than VECs (such as BRC/CRC/KGBV) have been covered. • (b) VECs have been covered as per FM&P requirements. • (c) Treatment of advances and recording of expenditure. • (d) If salaries are paid directly by the SSA society, then these have been audited.

21. 11th JRM recommendations on FM&PNational Level • Audit and Internal Controls • SIS should ensure that audit report in respect of external implementing agencies using SSA funds are obtained and follow up action, where necessary is initiated. • Strengthen internal audit particularly in States which rely on in house team. • Obtain commitments from States on this at the time of PAB approval.

22. 11th JRM recommendations on FM&PNational Level • Disclosure • MHRD to monitor compliances on disclosure of information through display board during regular reviews. • Procurement • Follow the recommendations made in the procurement post review reports on • (i) Revision of the Manual to provide greater clarity over use of prescribed SSA processes and procedures,

23. 11th JRM recommendations on FM&PNational Level Procurement (ii) Develop a procurement MIS package. (iii) Provide capacity building of staff involved in procurement function (iv) Greater involvement in procurement decisions made at community level. (v) Take action on the recommendations agreed in Annex-XX. (vi) MHRD to encourage use of online tendering of goods and services by States.

24. Thank You