GOVERNMENT OF ANDHRA PRADESH 

STATE AUDIT DEPARTMENT 

   

VOLUME – II                               CONSOLIDATED AUDIT AND REVIEW 

REPORT ON THE ACCOUNTS OF            MUNICIPALITIES,                          

AGRICULTURAL MARKET COMMITTEES, ZILLA GRANDHALAYA SAMSTHAS        

FOR THE YEAR 2002‐03

DIRECTOR OF STATE AUDIT A.P., HYDERABAD.

FOREWORD

The CONSOLIDATED AUDIT AND REVIEW REPORT for the year 2002-03 complied in Two Volumes.

The Volume – I: PANCHAYAT RAJ INSTITUTIONS.

The Volume – II: MUNICIPALITIES, AGRICULTURAL MARKET COMMITTEES, and ZILLA GRANDHALAYA SAMSTHAS.

Both the Volumes are designed independently and comprehensively. Volume – I contains Part – A and Part – B. Part – A deals with introduction to the Panchayat Raj Institutions and A Few Selected Audit Objections. The Audit Objections are categorised into 19 Standardised Categories. Part – B deals with Accounting Statements which are prepared with reference to the Audited Accounts.

Volume – II is compiled on section basis and contains three sections.

Section – I: MUNICIPALITIES.

Section – II: AGRICULTURAL MARKET COMMITTEES.

Section – III: ZILLA GRANDHALAYA SAMSTHAS.

Each one of these three sections consists of Part – A and Part – B. Part – A of each section deals with introduction of the institution and A few Selected Audit Objections which are categorized into 19 standardised categories. Part – B of each section deals with accounting statements which are prepared with reference to the Audited Accounts.

        

GOVERNMENT OF ANDHRA PRADESH 

STATE AUDIT DEPARTMENT 

   

Section ‐ I 

CONSOLIDATED AUDIT AND REVIEW REPORT 

 ON THE ACCOUNTS OF MUNICIPALITIES                 

FOR THE YEAR 2002‐03

DIRECTOR OF STATE AUDIT A.P., HYDERABAD.

CONTENTS

PART – A

Sl. No. DESCRIPTION

PAGE No.

I Preface vii

II Overview ix

1 Introduction 1

3 Status of Audit 2

4 A few Selected Audit Objections – Category wise 4 to 50

i

PART-B

STATEMENT No.

DESCRIPTION OF STATEMENTS FOR THE YEAR 2002-03 OF MUNICIPALITIES

PAGE No.

1 1. Status of Audit of Municipalities 51

2. Status of Audit of Municipalities (District wise) 52

2 Receipts and Expenditure of Municipalities. 53

1. Receipts and Expenditure of Municipalities (District wise) 54

2. Receipts and Expenditure of Municipalities under General Account. 55

3. Receipts and Expenditure of Municipalities under Lighting Account. 56

4. Receipts and Expenditure of Municipalities under Education Account. 57

5. Receipts and Expenditure of Municipalities under Water Supply and Drainage Account. 58

6. Receipts and Expenditure of Municipalities under Town Planning Account. 59

7. Receipts and Expenditure of Municipalities under Deposits Account. 60

8. Receipts and Expenditure of Municipalities under Advances Account. 61

9. Receipts and Expenditure of Municipalities under Pension Fund Account. 62

10. Receipts and Expenditure of Municipalities under Provident Fund Account. 63

3 Government Grants sanctioned to Municipalities and Expenditure incurred. 64

1. Receipts and Expenditure under Teaching Grant Sanctioned to Municipalities. 65

2. Receipts and Expenditure under Nehru Rojgar Yojana Grant Sanctioned to Municipalities. 66

3. Receipts and Expenditure under Environment

Improvement Scheme Grant Sanctioned to Municipalities.

67

ii

4. Receipts and Expenditure under Integrated

Development of Small and Medium Towns Grant Sanctioned to Municipalities.

68

5. Receipts and Expenditure under Women

Development and Child Welfare Grant Sanctioned to Municipalities.

69

6. Receipts and Expenditure under Slum

Improvement Scheme Grant Sanctioned to Municipalities.

70

7. Receipts and Expenditure under Drought and Flood Relief Grant Sanctioned to Municipalities. 71

8. Receipts and Expenditure under Low Cost

Sanitation Scheme Grant Sanctioned to Municipalities.

72

9. Receipts and Expenditure under Master Plan Grant Sanctioned to Municipalities. 73

10. Receipts and Expenditure under Urban Poverty Alleviation Grant Sanctioned to Municipalities. 74

11. Receipts and Expenditure under Janmabhoomi Grant Sanctioned to Municipalities. 75

12. Receipts and Expenditure under Assembly /

Parliament Constituency Development Fund Grant Sanctioned to Municipalities.

76

4 Audit Objections raised in Municipalities for the year 2002-03. 77-78

5 No. of Audit Objections raised (category wise) and Amount involved in respect of Municipalities. 79

5 (1). Variation in Account figures. 80

5 (2). Excess utilization of Grants / Funds. 81

5 (3). Diversion of Grants / Funds. 82

5 (4). Non-utilization of Grants before the lapsable date. 83

5 (5). Mis-utilisation of Grants / Funds. 84

5 (6). Non-collection of dues. 85

5 (7). Advances pending adjustment. 86

5 (8). Violation of Rules. 87

iii

5 (9). No. of Audit Objections on Non-remittance of

deductions / recoveries from work bills / pay bills / contingent bills etc.,

88

5 (9) (1) Non-remittance of Income Tax not. 89

5 (9) (2) Non-remittance of Sales Tax. 90

5 (9) (3) Non-remittance of Seigniorage fee. 91

5 (9) (4) Non-remittance of G.I.S. 92

5 (9) (5) Non-remittance of A.P.G.L.I. 93

5 (9) (6) Non-remittance of G.P.F. 94

5 (9) (7) Non-remittance of Employees Welfare Fund. 95

5 (9) (8) Other recoveries such as Marriage Advance / H.B.A. etc., not remitted or partly remitted. 96

5 (9) (9) Income tax not deducted. 97

5 (9) (10) Sales tax not deducted. 98

5 (9) (11) Seigniorage Fee not deducted. 99

5 (9) (12) G.I.S. not deducted. 100

5 (9) (13) Employees Welfare Fund not deducted. 101

5 (9) (14) Other recoveries such as Marriage Advance / H.B.A. etc., not deducted. 102

5 (9) (15) Library cess collected but not remitted to Zilla Grandhalaya Samasthas. 103

5 (10). Non-production of records. 104 5 (11). Misappropriations. 105 5 (12). Excess Payments. 106 5 (13). Wasteful Expenditure. 107

5 (14). Instances of cases of unaccounted cash / stores. 108

5 (15). Pendency of Utilisation Certificates. 109 5 (16). Others. 110

5 (17). Demand Drafts / Cheques / Bankers Cheques etc., received but not realized within time. 111

6 No. of outstanding Audit objections as on 31-03-2004 in Municipalites. 112

7 No. of Utilisation Certificates due to be submitted in Municipalities. 113

iv

PREFACE

The State Audit Act, 1989 passed by the Legislature of Andhra Pradesh has empowered the Director of State Audit (earlier known as the Director, Local Fund Audit) to conduct the audit of accounts of Urban Local Bodies namely Municipalities, Municipal Corporations which he was doing earlier also as per Government orders.

The Director, State Audit conducts post audit of the above institutions in the subsequent financial year.

Audit reports containing various audit objections are issued to the Executive Authorities of the concerned Local bodies for follow up action i.e., rectification of defects pointed out in the audit reports and to submit a consolidated reply to the audit report after approval by the General Body of the authority concerned.

During the year 2003-04 the Director of State Audit had conducted the audit of the accounts of a total No. of 266 audit years.

The total amount audited:

Receipts : Rs. 558.25 Crores

Expenditure : Rs. 593.82 Crores

Under Section 11 of State Audit Act, 1989, the Director, State Audit is required to submit annually a Consolidated Audit and Review Report on the accounts of the Local Bodies to the Government and such report shall be laid on the table of the Legislative Assembly.

In accordance with the provisions of the Act, the Consolidated Audit and Review Report of Municipalities whose accounts for the year 2002-03 and also the arrears were audited by the Director of State Audit during the year 2003-04 is submitted.

vii

OVER VIEW

The Director, State Audit conducts “Post audit” of the accounts of Municipalities in the subsequent financial year. The various defects noticed are pointed out in the relevant audit reports, institution wise.

The Director, State Audit conducts the audit of the Municipalities through the District Audit Offices headed by the District Audit Officer. The District Audit Office is known as Circle Office and the District Audit Officer is the district administrative head of the Department. The District Audit Officer has got separate audit office for conducting audit of Zilla Parishad, Mandal Parishads, Gram Panchayats, Municipalities etc., in the district. These offices are headed by an Assistant Audit Officer who is provided with assistance of 5 to 6 Senior Auditors depending upon the number of institutions under his jurisdiction. The office of Assistant Audit Officer is known as Unit Office. There are six Regional Offices in the State in each of the six zones headed by Regional Deputy Director.

The audit reports of Municipalities are approved by the District Audit Officer.

The audit of the accounts of Municipalities is in arrears mainly due to non-finalisation of Annual Accounts due to improper / non-maintenance of various subsidiary Registers prescribed.

During the year under report, the Director could audit some of the arrears also apart from current audits as shown below:

Current Audit Arrear Audit Total 77 189 266

AUDITED AMOUNTS: The total Receipts and Expenditure of all the local authorities put together for

the year 2002-03 were Rs. 558.25 Crores and Rs. 593.82 Crores respectively.

AUDIT OBJECTIONS:

Various irregularities noticed in audit are broadly classified into 17 categories as detailed below:

1. Variation in Account Figures 2. Excess Utilisation of Grants 3. Diversion of Grants / Funds 4. Non-utilistion of Grants before lapsable date 5. Mis-utilisation of Grants / Funds 6. Non-collection of dues 7. Advances Pending Adjustment 8. Violation of Rules 9. Non-remittance of Deductions / Recoveries from vouchers / Pay Bills

/ Contingent Bills

10. Non-production of records

ix

11. Mis-appropriations 12. Excess payments 13. Wasteful Expenditure 14. Instances of cases of unaccounted cash / stores 15. Others 16. Demand Drafts / Cheques / Bankers Cheques etc., received but not

realized within time

A total number of 4096 audit objections involving an amount of Rs. 195.03 Crores were raised during the year. The category wise and institution wise number of audit objections raised during the year are shown in Statements from 5 to 5 (17) appended to the report.

On receipt of replies to the defects pointed out in the earlier reports supported by relevant records / documents, the audit objections were settled wherever the replies were satisfactory. The Assistant Audit Officer, District Audit officer and Regional Deputy Director are authorised to attend the settlement of audit objections.

The audit report contains the details about number of audit objections pending settlement at the close of the audit.

It could be observed that at the close of audit for the year 2002-03 (Conducted in 2003-04), the No. of audit objections pending settlement is 33620 involving an amount of Rs. 437.33 Crores.

The audit paras selected for inclusion in the Consolidated Audit and Review Report give a glimpse of financial administration in the Municipalities. For details Municipal Council wise, audit reports are to be referred.

x

1

CONSOLIDATED AUDIT AND REVIEW REPORT ON THE ACCOUNTS OF MUNICIPALITIES FOR THE YEAR 2002-03.

PART – A

INTRODUCTION

1.1 Under the State Audit Act, 1989 the Director is made incharge of the audit of the funds of local authorities and other authorities specified in the Schedule prescribed in the said Act.

1.2 The Department has got offices in all the districts, the District Audit Officer, State Audit being the head at the district level.

1.3 The Department conducts post audit of the Municipalities and Audit Reports consisting of defects noticed in audit are issued to the Commissioners of the Municipality concerned who has to take action for rectifying the defects pointed out in the Audit Report.

1.4 Under the State Audit Act, the Director is vested with the power of disallowing every item of the expenditure incurred contrary to the law and surcharge the same on the person incurring or authorizing the incurring of such expenditure and may charge against any person responsible therefor, the amount of any deficiency, loss or unprofitable out lay occasioned by the negligence or misconduct of that person or of any such sum which ought to have been accounted for but is not brought into account by that person and shall, in every such case, certify the amount due from such person.

SCOPE OF AUDIT

2.1 The State Audit Department being one of the limbs of the Government of Andhra Pradesh verifies the following aspects during the course of post audit of the Municipalities.

Whether the amounts collected like taxes, fees etc., by the Municipal Councils were properly accounted for with full details in the books of accounts of the Municipality concerned.

Whether adequate care is taken in periodical checking up of the funds with Treasury or Bank.

Whether expenditure incurred is provided for in the Budget of the Municipal Council and duly sanctioned by the competent authority under the relevant rules and executive instructions issued by the Government.

Whether funds are utilized only for the permitted purposes prescribed under the A.P. Municipalities Act 1965 Act / Rules.

Whether the procedure prescribed by Government in incurring the expenditure/payments made is properly followed and accounted for with due classification in the books of accounts of the Municipality.

Whether vouchers for the expenditure incurred were maintained.

Whether grants received from different sources were properly accounted for and utilized for the purposes for which they were meant.

2.2 The Department also conducts propriety audit of the expenditure incurred.

2

GRANTS RECEIVED DURING THE YEAR BY THE MUNICIPAL COUNCILS.

3.1 The Municipal Councils are provided grants by the State/Central Governments to implement the schemes entrusted to them and also for over all development of the area under their jurisdiction.

3.2 The receipts and charges are inclusive of the various grants received from Central and State Governments during the year 2002-03 by the Municipal Councils. The various Grants received by Municipal Councils are detailed in Statement No. 3.

STATUS OF AUDIT 4.1 266 years of Audit of Municipal Councils up to the year 2002-03 was

conducted in the year as mentioned below.

Current Audit Arrear Audit Total 77 189 266

4.2 The Department has conducted the audit of the receipts amounting to Rs. 55825.56 lakhs and expenditure of Rs. 59382.57 lakhs as detailed in the Statements No. 2 with Local Authority wise break up.

AUDIT OBJECTIONS 5.1 During the course of audit of these Municipalities for the year 2002-03 various

defects noticed were already pointed out in the relevant Audit Reports which were forwarded to the Chief Executive Authorities concerned for further action at their end as per the procedure laid down under the A.P. State Audit Act.

5.2 A total number of 4096 audit objections involving an amount of Rs. 19503.67 lakhs were raised in the audit of the Municipalities during the year under report.

5.3 A Consolidated Statement showing the number of objections raised, amount involved with institution-wise break-up is annexed vide Statement No. 5.

5.4 CATEGORISATION OF AUDIT OBJECTIONS The various audit objections are classified into 17 categories as detailed below.

Variation in Account Figures Excess Utilisation of Grants Diversion of Grants / Funds Non-utilistion of Grants before lapsable date Mis-utilisation of Grants / Funds Non-collection of dues Advances Pending Adjustment Violation of Rules Non-remittance of Deductions / Recoveries from vouchers / Pay Bills

/ Contingent Bills

3

Non Production of records Mis-appropriations Excess payments Wasteful Expenditure Instances of cases of unaccounted cash / stores Others Demand Drafts / Cheques / Bankers Cheques etc., received but not

realized within time

5.5 Consolidated Statements showing the various Audit Objections raised in the Audit Reports with amounts involved category-wise are annexed to the Report [Statements from 5 (1) to 5 (17)].

5.6 Several Audit Objections are pending settlement at the close of audit for the year. Statement showing Outstanding Audit Objections is Annexed vide Statement No. 6.

5.7 Gist of some of the selected audit objections pertaining to the year under report is enumerated below:

4

1. VARIATION IN ACCOUNT FIGURES 6.1 It was observed in audit that there were certain variations in account figures

like opening balance in a particular account not tallying with the closing balance of the previous year, closing balance in the cash book of the previous year not carried forward as opening balance for the current year, Treasury balance not tallying with the cash book balance and reasons for such differences have not been identified and explained in Reconciliation Statements etc.,. It was also noticed that Reconciliation Statements explaining the differences between the Treasury balance and the Cash book balance were not prepared periodically to check the correctness of accounts maintained. These defects were pointed out in audit reports.

6.2 A Consolidated Statement No. 5 (1) of Variation in account figures is appended to the Report from which it could be seen that Non-reconciliation of Rs. 32.31 lakhs was pointed out in 49 audit paras. A few of such cases are detailed below.

6.3 MUNICIPAL COUNCIL – MANGALAGIRI – GUNTUR DISTRICT. DIFFERENCE BETWEEN THE CLOSING BALANCES OF CASH BOOK AND SUB TREASURY PASS BOOK – Rs. 34,770/-

The Closing Balance as per Cash Book as on 31-03-2003 of Rs. 10,33,014/- was reduced by deducting Rs. 34,770/- as difference in Treasury Books. But no details were furnished for the above difference. The Treasury authorities may be addressed and difference got reconciled. (Para No. 1 of the Audit Report)

6.4 MUNICIPAL COUNCIL – BHONGIR – NALGONDA DISTRICT. CLOSING BALANCE NOT ADOPTED AS OPENING BALANCE IN BANK PASS BOOK – Rs. 5,423/-

It was noticed from the Bank Statement in respect of S.J.S.R.Y account No. 255353 at S.B.H., Bhongir, the Closing Balance as on 31-03-2002 was Rs. 5,423/-. But it was not taken as Opening Balance as on 01-04-2002 and shown as Nil. The transactions from 01-04-2002 to 05-04-2002 were not produced. Immediate action has to be taken to rectify the discrepancies. (Para No.1 of the Audit Report)

6.5 MUNICIPAL COUNCIL – KAVALI – NELLORE DISTRICT. (a) CLOSING BALANCES AS PER ANNUAL ACCOUNT, CASH BOOKS

AND PASS BOOKS – HUGE DIFFERENCE UNDER RECONCILIATION.

(i) The consolidated closing balance as per Annual Account of General Funds of Kavali Municipality as on 31-03-2003 of Rs. 33,63,279-57 was reconciled with the Closing Balance as per the Cash Book and Sub Treasury Pass Book. But the amount under reconciliation is very huge. The Closing Balances in the Cash Book and Sub Treasury Pass Book were Rs. 10,18,244-07 and Rs. 17,96,500-60 respectively. The amounts under reconciliation related to the years since 1993-94. But no action was taken by the Executive Authority to reverse the wrong entries, pass necessary correct entries to wipe off the amounts under reconciliation at his level and to address the Treasury authorities to pass necessary entries.

5

(ii) The Closing Balances as per Cash Books of Secondary Education Fund and Elementary Education Fund were not in agreement with the Closing Balances in the Sub Treasury Pass Books concerned as shown below.

Sl. No.

Name of the Fund

Closing Balance as per

Cash Book

Closing Balance as per Sub Treasury

Pass Book Difference

1. Secondary Education Fund

Rs. 82,635/- Rs. 1,18,459/- Rs. 35,824/-

2. Elementary Education Funds

Rs. 7,19,478/- Rs. 1,28,380 Rs. 5,91,098/-

Immediate action has to be taken to reconcile the difference and to pass the necessary entries.

(b) DIFFERENCE BETWEEN THE RECEIPTS AS PER ANNUAL ACCOUNT AND SUBSIDIARY REGISTERS. As verified from the Annual Account and Subsidiary Registers, there was

difference between the Annual Accounts and Subsidiary Registers in respect of the Heads as shown against each.

Sl. No.

Name of the receipt Head

Receipts as per Annual Account

Rs.

Receipts as per Subsidiary

Register Rs.

Difference Rs.

1. D & O Trades 3,06,834/- 3,67,629/- 61,095/-2. Building License fees 2,81,856/- 2,02,610/- 79,246/-3. Advertisement Tax 84,540/- 80,500/- 4,040/-4. Encroachment fees 1,22,695/- 1,10,600/- 12,095/-5. Development Charges 4,08,393/- 1,50,000/- 2,58,393/-

Action has to be taken to reconcile the differences. (Para No. 1 of the Audit Report)

6.6 MUNICIPAL COUNCIL – MARKAPUR – PRAKASAM DISTRICT.

DIFFERENCE BETWEEN THE CLOSING BALANCES OF CASH BOOK AND PASS BOOK – RECONCILIATION STATEMENT NOT PREPARED – Rs. 21,44,597/-

The Closing Balance as per Cash Book as on 31-03-2003 was Rs. 31,26,272-61 whereas the Closing Balance as per Treasury Pass Book was Rs. 9,81,625-61. Thus there is a huge difference of Rs. 21,44,597/- But reconciliation statement was not prepared and produced. Immediate action has to be taken in this regard. (Para No. 3 of the Audit Report of General Funds)

6.7 MUNICIPAL COUNCIL – TANDOOR – RANGA REDDY DISTRICT.

AMOUNTS CREDITED TO MUNICIPAL FUNDS – DETAILS NOT FURNISHED – Rs. 15,44,703/-

An aggregate amount of Rs. 15,44,703/- was credited to the funds of Tandoor Municipal Council remitted in the following challans. But details for the amounts were not furnished to classify the amounts under relevant heads in the accounts.

6

Sl. No. Challan No. & Date of adjustment Amount in Rs.

1. 213 / 03-04-2002 7,200/-2. 1336 / 30-07-2002 506/-3. 960 / 23-07-2002 1,998/-4. 26 / 26 / 15-04-2002 3,32,574/-5. 27 / 27 / 15-04-2002 1,68,879/-6. 37 / 37 / 23-12-2002 1,27,500/-7. 9 / 9 / 01-02-2003 1,93,095/-8. 10 / 10 / 01-02-2003 4,12,808/-9. 3265 / 15-02-2003 3,00,143/- Total: 15,44,703/-

(Para No. 5 of the Audit Report)

7

2. EXCESS UTILISATION OF GRANTS 7.1 The Municipalities are in receipt of Grants-in-Aid from the Government for

certain specified purposes to be spent within a prescribed time. They furnish utilization certificates for the grants utilized.

7.2 During the course of audit, several instances have come to the notice of audit that certain municipalities incurred expenditure in excess of the Grant-in-Aid received. The fact of incurring of such excess expenditure further implies that such expenditure was met from the unspent balances of some other grants. Necessary steps are called for to curb this sort of financial indiscipline at the earliest. The excess expenditure incurred, wherever possible, should be got reimbursed from the grant sanctioning authorities explaining the circumstances under which excess expenditure over and above the grant sanctioned became inevitable.

7.3 All such cases of excess expenditure over and above the Grant-in-aid received are detailed in Statement No. 5 (2) to the Report from which it could be seen that a total amount of Rs. 112.00 lakhs was spent in excess of the grants received which was pointed out in the relevant audit reports in 46 paras.

7.4 A few of such irregularities pointed out in the relevant audit reports are detailed below.

7.5 MUNICIPAL COUNCIL – KAVALI – NELLORE DISTRICT.

EXPENDITURE INCURRED IN EXCESS OF THE GRANTS RECEIVED – NEEDS REIMBURSEMENT. It was noticed in audit of the accounts of Kavali Municipality that expenditure was incurred in excess of the grants received in respect of following grants. The excess expenditure has to be got reimbursed to the funds of the institutions concerned from the grant releasing authorities duly explaining the reasons for such excess expenditure otherwise there will be shortage of funds for completion of the other schemes and development activities which were already taken up.

Sl. No

Name of the Grant

Grant Received

Rs.

Expenditure Incurred

Rs.

Excess expenditure

incurred Rs.

Para No. of Audit

Report 1 SJSRY (A/c 409) 5,841/- 8,900/- 3,059/- 2 (2) 2 SJSRY (A/c No.

406) 3,90,388/- 3,98,000/- 7,612/- -do-

3 SJSRY (A/c No. 405)

3,759/- 1,16,000/- 1,12,241/- -do-

4 VWEP 17,616/- 4,57,495/- 4,39,879/- -do- 5 NSDP 14,02,796/- 14,46,210/- 43,414/- -do- Total: 18,20,400/- 24,26,605/- 6,06,205/-

8

3. DIVERSION OF GRANTS / FUNDS 8.1 Municipalities are empowered to levy and collect different taxes like Property

Tax, Advertisement Tax, Vacant Land Tax etc., and collect water charges for supply of water to the house holds and industrial/commercial units. The Municipalities are authorized to collect Building License fees for permitting to construct new buildings in the municipal area. They are also authorized to collect D&O Trades License Fees for permitting the traders to carry on business in the Municipal area. Certain Municipalities also raise some income from their properties by leasing them out. All the monies received by the municipalities form part of their general funds and they can be utilized for the purposes prescribed under the Act / Rules. Rule 39 of the Rules framed relating to Taxation and Finance in Schedule I i under Section 130 of the Andhra Pradesh Municipalities Act, 1965 prescribed the purposes to which the Municipal Fund might be applied. According to the said rule, these include all objects expressly declared obligatory or discretionary by law or rules and in general everything necessary for or conducive to the safety, health, education and convenience of inhabitants or to the amenities of the municipality and incidental to the administration and the fund should be applicable thereto within the municipality. However the expenditure outside the Municipality is to be specially sanctioned by Government.

8.2 As per the orders issued by Government in G.O. Ms. No. 1886, Municipal Administration dated 22-11-1965; the Municipal Councils should not divert the following earmarked funds even temporarily for other purposes without the previous sanction of Government.

1. Water and Drainage Tax Fund 2. Deposits including provident funds 3. Lighting Tax Fund 4. Loan Funds 5. Special Government grants 6. Elementary Education Fund 7. Capital receipts from sale of capital assets and 8. Endowments.

8.3 But it was observed in audit that diversion of funds / grants was frequently made in most of the Municipalities without the sanction of the Government. A few of such diversions reported in the Audit Reports are cited hereunder.

A Statement of such cases noticed is appended to the Report Statement No. 5 (3). 8.4 MUNICIPAL COUNCIL – WANAPARTHY – MAHABOOBNAGAR

DISTRICT.

DIVERSION OF U.S.E.P. FUNDS TO ROAD GRANT FUNDS – Rs. 1,00,000/- An amount of Rs. 1,00,000/- was diverted from Urban Self Employment

Programme to Road Grant without the sanction of the Government. (Para No. 20 of the Audit Report)

9

8.5 MUNICIPAL COUNCIL – SRIKALAHASTI – CHITTOOR DISTRICT.

DIVERSION FROM ONE FUND TO ANOTHER FUND – Rs. 5,68,806/- An aggregate amount of Rs. 5,68,806/- as shown below was diverted from one

fund to another without sanction of the Government.

Sl. No.

Vr. Nos. & Date

Scheme / Grant from which diverted

Scheme / Grant to which diverted

Amount Rs.

1. 208 G.F. Old age pensions 5,000/-2. 227 G.F. Old age pensions 25,900/-3. 01 / 06-2002 Drought Relief Grant G.F. (Elec. charges) 1,23,155/-4. 26 / 09-2002 Sec. Education G.F. (Pension) 19,970/-5. 51 / 01-2003 -do- G.F. (interest) 78,781/-6. 526 / 10-

2002 Water supply G.F. purchase of water

supply machinery 71,000/-

7. 319 / 08-2002

Drought Relief Grant G.F. purchase of water supply material

2,00,000/-

Total: 5,68,806/-(Para No.3 of the Audit Report)

8.6 MUNICIPAL COUNCIL – PALASA – SRIKAKULAM DISTRICT.

DIVERSION OF SCHOOL BUILDING GRANT FOR REPAIRS TO OFFICE BUILDING – Rs. 4,39,998/-

An amount of Rs. 4,39,998/- was diverted from School Building Grant to meet the expenditure on repairs to office building of the council without the approval of the Government (Para No.12 of the Audit Report)

8.7 MUNICIPAL COUNCIL – ADONI – KURNOOL DISTRICT.

DIVERSION OF FUNDS OF D.F.I.D. / GRANTS TO GENERAL FUNDS – Rs. 25,00,000/-

An amount of Rs. 25,00,000/- was diverted from D.F.I.D Grants to General Funds without sanction of the Government. (Para No.15 of the Audit Report)

8.8 MUNICIPAL COUNCIL – KAVALI – NELLORE DISTRICT.

DIVERSION OF MUNICIPAL COUNCIL GENERAL FUNDS TO JANMABHOOMI PROGRAMME – Rs. 1,10,843/-

An amount of Rs. 1,10,843/- was diverted to Janma Bhoomi Programme from General funds without the permission of the Government which is irregular. (Para No.3 (i) of the Audit Report)

10

4. NON-UTILISATION OF GRANTS BEFORE LAPSABLE DATE 9.1 Government release special grants to the Local bodies for implementing

specific schemes. These grants are to be utilised for the purposes for which they are meant for following the guidelines issued / norms prescribed and such utilisation should be within the date prescribed, otherwise, the grants will lapse to government, unless the lapsable date of any particular grant is extended by government or grant releasing authority.

9.2 It is noticed in audit that in spite of allowing reasonable time for utilising the grant, certain municipalities did not utilise the grants released within the lapsable date and thereby huge amounts were left unutilised. The grant sanctioning authorities were also not approached for extending the utilisation period. Thus the schemes for which the grants released were not implemented effectively and totally. The unspent balances were also not refunded to the grant releasing authorities.

9.3 A few of such cases pointed out in the Audit Reports of the local bodies are detailed hereunder.

A Statement of such cases noticed is appended to the Report Statement No. 5 (4). 9.4 MUNICIPAL COUNCIL – KAVALI – NELLORE DISTRICT.

GRANTS – GRANTS ADJUSTED TO MUNICIPALITY ACCOUNT FOR VARIOUS PURPOSES – NOT FULLY UTILISED – UNSPENT BALANCES NOT REFUNDED TO STATE FUNDS – Rs. 13,74,089/-

During the year under audit the following grants were released and adjusted under various heads to the municipal funds. The grants adjusted, expenditure incurred during the year and unspent balances are as noted against each.

Sl. No. Nature of Grant

Amount adjusted Rs.

Expenditure incurred

Rs.

Unspent balance

Rs. 1. Secondary Education 33,89,163/- 33,45,167/- 43,996/-2. Janma Bhoomi 10,26,550/- 7,77,819/- 2,48,731/-3. U.S.E.P. A/c 16,866/- - Nil - 16,866/-4. Water Transpiration 8,03,240/- 7,45,410/- 57,830/-5. E. Sevakendram 10,06,666/- - 10,06,666/-

The unspent balance would need to be refunded to state funds under intimation to audit. (Para No. 4 (1) of the Audit Report)

11

5. MIS-UTILISATION OF GRANTS / FUNDS 10.1 Many cases of Mis-utilisation of funds/grants were noticed in audit, a few of

them are mentioned below. 10.2 A total number of 28 such cases involving an amount of Rs. 42.45 lakhs were

pointed out in audit. 10.3 A Statement of such cases noticed is appended to the Report Statement No. 5

(5) 10.4 MUNICIPAL COUNCIL – RAMAGUNDAM – KARIMNAGAR

DISTRICT. EXPENDITURE ON COST OF CELL PHONES, RENTAL AND SERVICE CHARGES – SANCTION OF GOVERNMENT NOT OBTAINED – Rs. 1,86,045/- An expenditure of Rs. 1,86,045/- was incurred on cost of Cell Phones, Rental and Service Charges, during the year under report as detailed below. But sanction orders of Government for purchase of the Cell Phones and their maintenance charges obtained, if any, were not produced to audit. In the absence of the same the expenditure incurred is inadmissible and held under objection.

Sl. No. Vr. No. & Date Amount Spent 1. 06/01-04-2002 Rs. 13,046/-2. 218/10-06-2002 Rs. 14,592/-3. 329/04-07-2002 Rs. 15,711/-4. 602/10-08-2002 Rs. 3,237/-5. 760/12-10-2002 Rs. 6,628/-6. 779 / Rs. 4,101/-7. 877/16-11-2002 Rs. 3,605/-8. 879/16-11-2002 Rs. 500/-9. 880/16-11-2002 Rs. 500/-10. 882/16-11-2002 Rs. 6,428/-11. 938/16-11-2002 Rs. 1,172/-12. 1044/30-012003 Rs. 4,967/-13. 1084/03-02-2003 Rs. 18,150/-14. 1121/15-02-2003 Rs. 10,715/-15. 1122/15-02-2003 Rs. 5,194/-16. 1125/15-02-2003 Rs. 12,995/-17. 1139/19-02-2003 Rs. 30,000/-18. 1241/15-05-2003 Rs. 13,173/-19. 1245/14-05-2003 Rs. 21,331/-

Total: Rs. 1,86,045/-

10.5 MUNICIPAL COUNCIL –YELLANDU – KHAMMAM DISTRICT.

TELEPHONE CHARGES – PAYMENT OF TELEPHONE CHARGES – TELEPHONE NOT BELONGING TO THE MUNICIPAL COUNCIL – IRREGULAR – NEEDS RECOVERY – Rs. 10,764/-

As verified from the following vouchers, a total amount of Rs. 10,794/- was drawn and paid towards Telephone charges in respect of Telephone No. 54120 which

12

belongs to one Y. Kotaiah, J.K. Colony, Yellandu who is an outsider, other than the Municipality.

Vr. No.& Date Details AmountRs. 87 / 22-05-2002 Telephone charges for the months of 3 & 4 / 2002 1,376/-217 / 28-08-2002 Telephone charges for the months of 5 & 6 / 2002 2,247/-316 / 10-10-2002 Telephone charges for the months of 7 & 8 / 2002 2,706/-413 / 26-11-2002 Telephone charges for the months of 9 & 10 / 2002 2,249/-529 / 07-03-2003 Telephone charges for the months of 11 & 12 /

2002 2,216/-

Total: 10,794/-

The payment for the phone not belonging to the Municipal Council is highly objectionable and misuse of drawing powers and needs stern action against the concerned. The Telephone Bills were also not made available to audit for verification. (Para No. 12 of the Audit Report)

13

6. NON-COLLECTION OF DUES NON-COLLECTION / SHORT COLLECTION OF TAXES AND NON-TAXES – AND ALLOWED TO BECOME BARRED BY LIMITATION OF TIME – INCLUDING CASES OF MANAGEMENT RESULTING IN SHORT REALISATION. 11.1 On verification of Revenue collections in Municipalities, huge amounts have

been noticed pending realization for long periods and allowed to become barred by limitation of time. No appropriate action seemed to have been initiated by the executive authorities before the dues become barred by limitation of time, in spite of various statutory provisions for their recovery such as through distraint, prosecution or filing of suits. Dependence of Municipalities on Government grants get lowered if timely and appropriate action is taken by the executive authorities for collection of these outstanding dues. In most of Municipal Councils the details of year wise outstanding dues were not prepared and produced to audit. Hence, it could not be ascertained in audit as to the amount of dues that had become time barred during the year barred by limitation within the meaning of Section 365 (1) of A.P. Municipalities Act 1965.

11.2 Sub-Section (1) of Section 374 of A.P. Municipalities Act, 1965 places the liability for loss on the officers of the Municipality if the loss is a direct consequence of their neglect. In most of the cases, the taxes and non-taxes became time barred without taking appropriate legal action before expiration of periods allowed for such recoveries. But no action seemed to have been taken against the officers concerned for such neglect in many of the Municipal Councils. A few cases of outstanding dues pointed out in the relevant Audit Reports are shown below.

11.3 Consolidated Statement showing details of Non-Collection of Dues is Annexed to the Report vide Statement No. 5 (6) from which it can be seen that 328 No. of Audit Objections involving an amount of Rs. 1974.71 lakhs were raised in the Audit Reports for the year.

11.4 OUTSTANDING DUES – Rs. 200.61 LAKHS. The various Taxes and Non-Taxes outstanding in various Municipalities were

pointed out in the Audit Reports concerned. A few of them are mentioned below. Rs. In Lakhs

Sl. No.

Name of the Municipal Council

& District

Amount of outstanding dues (both taxes and

non-taxes)

Details

Para No. of Audit

Report (1) (2) (3) (4) (5) 1. Nidadavolu,

West Godavari 0.77 Quarter rent 27

0.94 Water Charges 2 9.27 Property tax 3 0.13 Encroachment fee 5

2. Pedana, Krishna

0.11 Shop leases 6 3.65 Leases of Market 12 3. Tandur,

Ranga Reddy 0.27 Tax on Advertisement

7

14

(1) (2) (3) (4) (5) 4. Ramagundam,

Karimnagar 0.44 Market leases 15

5. Adilabad, Adilabad 0.74 Market leases 13 6. Bhainsa, Adilabad 0.2 Market leases 13 7. Srikalahasti,

Chittoor 1.4 Water tap

contribution 4

49.99 Property Tax, Water Charges & V.L. Taxes

2 (1) 8. Mangalagiri, Guntur

3.6 Leases of Town Market, Slaughter Houses etc.,

2 (2)

9. Tenali, Guntur 6.69 Leases of Markets, Fish Tank etc.,

22

6.18 Leases of Market, Slaughter Houses etc.,

17

3.72 Water Charges 21

10. Amudalavalasa, Srikakulam

58.2 Property Tax 11 11. Palasa, Srikakulam 9.29 Leases 15 12. Itchapuram,

Srikakulam 42.29 Property Tax 10

13. Tadipatri, Anantapur,

2.73 Encroachment fee / Tax on Advertisement

4.2 & 3

Total: 200.61

As per section 365 (2) of A.P. Municipalities Act, 1965 it is the duty of the Commissioner to place before the council a list of arrears amount due which are likely to become time barred at least one year before the limitation, stating the reasons in regard to recovery of such taxes. No such lists appeared to have been placed before the council in any of the Municipal Councils and no action was initiated for their realization to avoid their becoming barred by limitation of time.

11.5 MUNICIPAL COUNCIL – ANANTAPUR – ANANTAPUR DISTRICT.

Instructions were issued in G.O. Ms. No. 154/167/M. dated: 08-04-2002 for enhancement of property tax on the existing tax @ 75% on residential assessments and @ 100% on commercial complexes / non residential assessments in Municipalities. It was noticed from the Demand Registers of wards 7 to 12 that in many cases the property tax was revised and fixed less than the existing tax. The revision so made was without recording any reasons therefor contrary to the Government orders. A list of such cases was appended to para No. 7 of Audit Report detailing the assessment number, amount of tax to be raised and Revised Property Tax. The implementation of such revision of tax resulted in a total loss of Rs. 5,41,134/- to the Municipal Funds. Improper supervision over the process of fixation of tax demand appears to be the cause of such loss of funds to the Municipality. (Para No. 7 of the Audit Report on General Funds)

15

7. ADVANCES PENDING ADJUSTMENT 12.1 It was observed during the course of audit that temporary advances paid for

specific purposes were outstanding for a long time though they should have been got adjusted through detailed bills and vouchers as soon as possible as per Article 99 of A.P. Financial Code. Several objections were raised on such outstanding advances in the relevant audit reports pointing out failure of the Executive Authorities and Drawing Officers to take necessary action to get these advances adjusted.

12.2 It was also observed that huge amounts of personal advances are outstanding for a longtime due to inaction on the part of the Drawing Officers. In many cases even the unspent balances of advances drawn were found refunded.

12.3 A statement of such cases noticed is appended to the Report Statement No. 5 (7).

12.4 Some of the audit objections raised on the outstanding advances are shown below.

12.5 MUNICIPAL COUNCIL – AMUDALAVALASA – SRIKAKULAM DISTRICT – Rs. 3,74,307/-

ADVANCES PAID – EMPLOYEES TRANSFERRED TO OTHER PLACES AMOUNTS REMAINED OUT STANDING.

Advances paid to the employees for various purposes are still pending adjustment from 1995-96 onwards.

Non pursuance by the authorities resulted in the pendency of such advances still. (Para No. 64 of the Audit Report on the accounts of Municipal Council)

12.6 ADVANCES PENDING ADJUSTMENT – VARIOUS TYPES. Advances paid for specific purposes in different Municipalities as listed below

are pending adjustment: (A) CONTINGENT ADVANCES NOT ADJUSTED.

Under this category temporary advances paid for specific purposes which were not adjusted with detailed bills and vouchers for a long time are covered.

Sl. No.

Name of the Municipality &

District

Purpose of Advance

Amount outstanding

Rs.

Audit Para No.

1. Vizianagaram, Vizianagaram.

TA, Training, works

2,67,920/- 29

2. Mandapet, East Godavari

Purchase of bullocks

18,000/- 27

3. Ramagundam, Karimnagar.

Study Tour & Misc., expenses

4,15,035/- 21

4. Bellampalli, Adilabad. Misc., expenses 82,018/- 14 5. Adilabad, Adilabad. Repairs to Jeep,

Water works etc. 92,000/- 20

6. Itchapuram Srikakulam. Civil works, Water works etc.,

1,35,804/- 13

7. Adoni, Kurnool. TA, Works, Misc., 1,65,100/- 11

16

8. VIOLATION OF RULES 13.1 It was noticed in audit that in some cases the Rules, Government instructions

for incurring the expenditure from the funds of Municipalities were violated either due to negligence or ignorance. Certain times, the funds of the Municipalities were utilised for purposes other than the permitted ones under the relevant Act / Rules. It was also noticed that in few cases Government instructions were misunderstood or misinterpreted. Such irregular expenditure incurred was objected in the relevant audit reports. 863 audit objections involving an amount of Rs. 2776.74 lakhs were raised in the relevant Audit Reports as shown in Statement No. 5 (8) annexed to the Report. A few of them are as under.

(a) FAILURE TO DISCHARGE CERTAIN OBLIGATIONS 13.2 MUNICIPAL COUNCIL – RAMAGUNDAM – KARIMNAGAR

DISTRICT. DONATION – DONATION PAID TO JAGROOTI SPORTS & CULTURAL CLUB – GOVERNMENT PERMISSION WANTING – Rs. 20,000/-

In voucher No. 313 dated: 12-04-2002 an amount of Rs. 20,000/- is drawn from Ramagundam Municipality, Karimnagar District and paid as donation to “JAGROOTHI SPORTS AND CULTURAL CLUB” Godavarikhani.

The president of Jagroothi Sports and Cultural Club represented to the Municipal Council for a donation of Rs. 20,000/- in connection with “UGADI” festival for development of the club. The Municipal Council resolved to donate Rs. 20,000/- subject to approval of the Government. But payment was made without the approval of the Government which is irregular. Hence ratification orders of the Government would need to be obtained and produced to audit for verification. (Para No. 27 of the Audit Report)

13.3 MUNICIPAL COUNCIL – ADONI – KURNOOL DISTRICT. LIBRARY CESS – SHORT REMITTANCE OF LIBRARY CESS – NEEDS EARLY ACTION – Rs. 11,30,669/-

During the course of audit, it was noticed that an aggregate amount of Rs. 12,10,150/- towards Library Cess was collected, out of which an amount of Rs. 79,481/- only was remitted to Zilla Grandhalaya Samstha, Kurnool. The remaining amount of Rs. 11,30,669/- is yet to be remitted to Zilla Grandhalaya Samstha.

Immediate action would need to be taken to remit the balance amount of Rs. 11,30,669/- to the Zilla Grandhalaya Samstha, Kurnool and challan produced to audit for verification. (Para No. 16 of the Audit Report)

13.4 MUNICIPAL COUNCIL – SADASIVPETA – MEDAK DISTRICT. ENGAGEMENT OF CONTRACT LABOUR FOR OTHER THAN SANITATION WORK – IRREGULAR – NEEDS RECOVERY – Rs. 3,65,265/-

During the course of audit of the accounts of Municipal Council, Sadasivpet for the year 2002-03, it is noticed that an amount of Rs. 3,65,265/- was drawn and paid to the contract labour engaged to complete the pending the work in various sections such as Taxation, Town Planning, Water Supply and Engineering Sections.

17

Government issued instructions in Memo No. 28711/97/H2 dated: 01-10-1997, duly formulating the methodology for engaging contract labour for sanitation work in the Municipalities where the existing staff was not sufficient as the sanitation is one of the most important item of the work so as to provide the best sanitation.

But in the above memo no provision was made to engage the contract labour for other than the sanitation work.

Hence, the expenditure incurred on the contract labour for other than sanitary work when regular employees are available cannot be admitted in audit. (Para No. 23 of the Audit Report)

(b) APPOINTMENTS / PROMOTIONS MADE CONTRARY TO RULES 14.1 MUNICIPAL COUNCIL – MEDAK – MEDAK DISTRICT. ESTABLISHMENT – MEDAK MUNICIPALITY – ALLOWING LAST GRADE PAY SCALES TO NMRS WITH OUT PERMISSION OF GOVERNMENT – IRREGULAR – Rs. 3,77,898/-

During the course of audit, it was observed that the NMRs working in the Municipal council, Medak filed writ petition in the Andhra Pradesh Administrative Tribunal, Andhra Pradesh, Hyderabad vide O.A.No.5371 of 1994. The Andhra Pradesh Administrative Tribunal, Hyderabad in their Judgment ordered that the cases could be considered in terms of G.O. Ms. No. 212 Finance & Planning, Department, dated: 22-04-1994.

Government issued instructions in the said G.O. that the cases be regularised by the appointing authority subject to the fulfillment of the conditions for the absorption against clear vacancies with the clearance of Government in Finance & Planning (FW.PC.III) Department. The Municipal Council, Medak issued orders to pay the Pay and allowances to the NMRs as per the last grade employees without the clearance of Government in Finance Planning Department. The Payment made to the NMRs without absorbing them in regular vacancies is highly irregular.

Therefore the payment of Salaries to NMRs on par with the last grade employees to a tune of Rs. 3,77,898/- as detailed below cannot be admitted in audit and is held under objection.

Sl. No. Vr. No & Date Amount paid 1. 06 / 04-2002 Rs. 37,547/- 2. 122 / 04-2002 Rs. 37,547/- 3. 203 / 06-2002 Rs. 37,979/- 4. 204 / 06-2002 Rs. 34,133/- 5. 324 / 08-2002 Rs. 34,721/- 6. 374 / 08-2002 Rs. 32,780/- 7. 443 / 10-2002 Rs. 33,420/- 8. 539 / 12-2002 Rs. 25,374/- 9. 610 / 01-2003 Rs. 25,676/- 10. 636 / 012003 Rs. 7,946/- 11. 715 / 02-2003 Rs. 33,422/- 12. 719 / 02-2003 Rs. 7,528/- 13. 749 / 03-2003 Rs. 26,338/- 14. 773 / 03-2003 Rs. 3,578/-

Total: Rs. 3,77,898/- (Para No. 42 of the Audit Report)

18

9. NON-REMITTANCE OF DEDUCTIONS / RECOVERIES FROM VOUCHERS / PAY BILLS / CONTINGENT BILLS

15.1 It was noticed during audit that various deductions / recoveries effected from the work bills / pay bills were either not remitted to Government or a part of them only were remitted inspite of statutory obligation to remit the same to Government account with in a prescribed time under the relevant statutory provisions which also include penalty as well as prosecution for non adherence.

15.2 The deductions normally made from work bills / pay bills that are to be remitted to Government account are

Work Bills 1. Income Tax 2. Sales Tax 3. Seigniorage Fees

Pay Bills 1. Income Tax 2. Profession Tax 3. A.P.G.L.I. Premium / Loan recoveries 4. G.P.F. (Government Employees) 5. G.I.S Premium.

15.3 These defects noticed were pointed out in the Audit Reports numbering to 180 Audit Paras involving an amount of Rs. 340.05 lakhs as shown in Statement No. 5 (9) appended to the Report.

Some of them are as under. 15.4 INCOME TAX RECOVERIES NOT REMITTED / PARTLY

REMITTED. Under Section 200 of Income Tax Act 1961, read with Rule 30 (1) (b) the

authority which deducts the Income Tax from work bills or from pay bills shall remit the same to the Income Tax Department within the first week of the next month of such deduction. In case of failure to remit the Tax, the Drawing and Disbursing Officer will be held responsible under Section 201 (1) for payment of interest at 15% per annum, under Section 201 (1 A) from the time of such default till the payment of such tax; and is prone to levying of penalty under Section 221 upto the amount of tax not remitted plus prosecution under Section 276 B for a period ranging from three months to seven years with fine. During the year under audit, it was observed that the Income Tax deducted at source from the work bills was not remitted to the Central Government account till the close of audit. Such irregularities noticed were pointed out in the relevant audit reports. A few of such cases are mentioned below.

Sl. No.

Name of the Municipality and

District

Amount Deducted

Rs.

Amount Remitted

Rs.

Balance Rs.

Para No. of Audit Report

(1) (2) (3) (4) (5) (6) 1. Tandoor, Ranga Reddy. 1,44,824/- - 1,44,824/- 48 2. Machilipatnam, Krishna 1,53,148/- - 1,53,148/- 16 & 6

(1) 3. Bellampalli, Adilabad. 77,187/- - 77,187/- 16

19

(1) (2) (3) (4) (5) (6) 4. Mandapet East Godavari. 4,313/- - 4,313/- 28 5. Mangalagiri, Guntur. 15,159/- - 15,159/- 4 6. Zaheerabad, Medak. 73,242/- - 73,242/- 19 7. Sadasivpet, Medak. 61,067/- - 61,067/- 29 8. Medak, Medak. 8,429/- - 8,429/- 50 9. Siddipet, Medak. 1,67,311/- - 1,67,311/- 37 10. Bhongir, Nalgonda. 7,724/- - 7,724/- 51 11. Nalgonda, Nalgonda. 1,28,780/- - 1,28,780/- 20 12. Yellandu, Khammam. 16,986/- - 16,986/- 33 13. Markapur, Prakasam. 32,878/- - 32,878/- 15

Total: 8,91,048/- - 8,91,048/- 15.5 SALES TAX DEDUCTED BUT NOT REMITTED OR PARTLY

REMITTED. Under A.P.G.S.T. Act 1957 as amended from time to time and as per G.O. Ms.

No. 556 Revenue (CI-II) Department, dated: 07-08-2000 read with Government Memo. No. 4638/CT-II (I) of Revenue (CT.II (I) Department, dated: 02-01-2003, Sales Tax @ 2% of turnover determined as per sub-rule (ii) of sub-rule (3) of Rule 6 for exclusive civil contracts for laying or repairing of roads and contracts for canal digging lining and repairing and @ 4% of turnover for all categories of other contracts not falling in the above mentioned category has tobe recovered from the work bills and remitted to State funds within a week from the date of recovery failing which the Drawing Officer has to pay personally 24% penal interest besides the amount to be remitted to State funds.

It was observed that Sales Tax deducted at source from the work bills was not remitted to the State funds till the close of audit. Such irregularities noticed were pointed out in the relevant audit reports. A few of such cases are mentioned below.

Sl. No

Name of the Municipality and

District

Amount Deducted

Rs.

Amount Remitted

Rs.

Balance Rs.

Para No. of Audit Report

1. Machilipatnam, Krishna. 1,05,253/- - 1,05,253/- 16 2. Jagitial, Karimnagar. 17,782/- - 17,782/- 6 (2) 3. Ramagundam,

Karimnagar. 3,09,303/- - 3,09,303/- 31

4. Mandapet East Godavari. 2,955/- - 2,955/- 28 5. Mangalagiri, Guntur. 9,014/- - 9,014/- 4 6. Zaheerabad, Medak. 96,774/- - 96,774/- 19 7. Sadasivpet, Medak. 18,615/- - 18,615/- 29 8. Medak, Medak. 7,169/- - 7,169/- 50 9. Siddipet, Medak. 1,27,758/- - 1,27,758/- 37 10. Nalgonda, Nalgonda. 1,22,945/- - 1,22,945/- 20 11. Bhongir, Nalgonda. 3,829/- - 3,829/- 51 12. L.B. Nagar, RR Dist. 4,76,458/- - 4,76,458/- 1

Total: 12,97,855/ - 12,97,855/- 15.6 SEIGNIORAGE FEE DEDUCTED BUT NOT REMITTED OR

PARTLY REMITTED. As per G.O. Ms. No. 331, Industries and Commerce (M.I) Department, dated:

21-06-2000 Seigniorage Fee or Dead Rent which ever is higher shall be recovered

20

from the work bills on all Minor Minerals despatched or consumed from the land at the rate specified in Schedule-I and Schedule-II annexed to the said G.O. as the case may be and to be credited to the consolidated fund of State Government through the concerned Assistant Director of Mines & Geology of the District. However, it was observed that though amounts were recovered from the work bills towards Seigniorage Fees the same was either not remitted or partly remitted only to State funds till the close of audit. Such inaction was pointed out in the relevant audit reports. Some of such instances are listed below.

Sl. No

Name of the Municipality and

District

Seigniorage Fees Amount

Deducted Rs.

Amount Remitted

Rs.

Balance Rs.

Para No. of Audit

Report 1. Tandoor, Ranga Reddy. 1,41,118/- - 1,41,118/- 49 2. Machilipatnam,

Krishna. 92,576/- - 92,576/- 16

3. Bellampalli, Adilabad. 1,12,698/- - 1,12,698/- 16 4. Jagitial, Karimnagar. 62,339/- - 62,339/- 6(3) 5. Mandapet,

East Godavari. 6,273/- - 6,273/- 28

6. Mangalagiri, Guntur. 27,383/- - 27,383/- 4 7. Zaheerabad, Medak. 88,493/- - 88,493/- 19 8. Sadasivpet, Medak. 87,993/- - 87,993/- 29 9. Medak, Medak. 1,161/- - 1,161/- 50 10. Nalgonda, Nalgonda. 1,39,841/- - 1,39,841/- 20 11. Bhongir, Nalgonda. 8,697/- - 8,697/- 51 12. Yellandu, Khammam. 22,803/- - 22,803/- 33

Total: 7,91,375/- - 7,91,375/-

15.7 DEDUCTIONS / RECOVERIES OF G.I.S., PREMIA NOT REMITTED OR PARTLY REMITTED In place of the Family Benefit fund, the A.P., State Employees Group

Insurance Scheme 1984, was introduced with effect from 01-11-1984 vide G.O. Ms. No. 293, Finance & Planning (F.W.-Admn.II) Department, dated: 08-10-1984. This scheme is applicable to the Municipal employees. Those employees who were in service as on 01-11-1984 and who join service on or after 01-11-1984 would compulsorily become members in this scheme. Concerned Drawing and Disbursing Officer has to recover Group Insurance Premia from the pay bills as per the classification of Groups and remit to State funds immediately. But, it was observed that in same cases the G.I.S premium deducted from pay bills was not remitted to State funds till the close of audit.

Some such cases are shown in below.

Sl. No. Name of the Municipality and District

Amount deducted

Para No. of Audit Report

1. Rayadurgam, Ananthapur. Rs. 20,940/- 12 2. Ananthapur, Ananthapur. Rs. 1,74,780/- 38 3. Bhongir, Nalgonda. Rs. 21,900/- - 4. Medak, Medak. Rs. 17,110/- 52

Total: Rs. 2,34,730/-

21

15.8 PROFESSION TAX DEDUCTED FROM PAY BILLS – BUT NOT REMITTED. Profession Tax deducted from pay bills was not remitted to concerned Head of

account in some cases fully till the close of audit. Such inaction of the Executive Authority was pointed out in the relevant audit reports.

Some such instances are listed below.

Sl. No

Name of the Municipality and

District

Amount deducted

Rs.

Remitted Rs.

Balance to be remitted

Rs.

Para No. of Audit Report

1. Rayadurga, Ananthapur. 30,600/- - 30,600/- 4 2. Bhongir, Nalgonda. 28,060/- - 28,060/- - 3. Medak, Medak. 18,520/- - 18,520/- 51 4. Siddipet, Medak. 29,020/- - 29,020/- 38 Total: 1,06,200/- - 1,06,200/-

15.9 INCOME TAX NOT DEDUCTED.

Under Section 192 (A) of income Tax Act 1961, it is mandatory for the Drawing Officer to effect tax deduction at source from the salaries paid to the employees. Income Tax to be deducted is required to be calculated for the whole year on an estimation of income if such estimation exceeds basic exemption limit as prescribed in Finance Act (Rs. 50,000/- for the current year (2002-03) For failure to deduct tax, the Drawing and Disbursing Officer is personally held responsible for the payment of tax not deducted under Section 201 (1) and for payment of interest at 15% per annum on such amount under Section 201 (1A) from the time of such default till the payment of such tax and is prone to levying of penalty under Section 221 upto the amount of tax not deducted plus prosecution under Section 276 B for a period ranging from 3 months to 7 years with fine.

Under Section 192 (B) (g) of Income tax Act 1961, Income tax has to be deducted @ 2% plus 0.04% surcharge from the work bills whose estimate rate exceeds Rs. 20,000/-. During the year under audit, it was observed that Income Tax was not deducted at source from the work bills and pay bills till the close of audit. Such irregularities noticed were pointed out in the relevant audit reports.

A few of such cases are mentioned below.

Sl. No.

Name of the Municipality and District

Amount not deducted

Para No. of Audit Report

1. Narasarao Pet, Guntur. Rs. 27,887/- 5 2. Malkajgiri, Ranga Reddy. Rs. 29,782/- 4 3. Quthubullahpur, Ranga Reddy. Rs. 97,214/- 4 Total: Rs. 1,54,883/-

22

10. NON PRODUCTION OF RECORDS 16.1 It was noticed during audit that amounts were drawn and spent towards

various purposes but the connected paid vouchers were not produced to audit. Similarly amounts were drawn and spent for execution of works, but the connected Measurement Books estimates were not produced to audit. A few of such cases are as below. A Statement of such cases noticed is appended to the Report Statement No. 5

(10). 16.2 PAID VOUCHERS NOT PRODUCED

Amounts were drawn and Stated have been spent for various purposes. But the paid vouchers were not produced to audit. In the absence of the same the expenditure could not be admitted in audit. Such irregularities noticed were pointed out in the relevant audit reports. A few of such cases are given below.

Sl. No.

Name of the Municipality and District

Amount involved Rs.

Para No. of Audit Report

1. Amudalavalasa, Srikakulam. 3,58,653/- 48 2. Vizianagaram, Vizianagaram. 5,82,458/- 25 3. Mangalagiri, Guntur. 4,37,780/- 6 (a) 4. Nandyal, Kurnool. 13,66,143/- 1 5. Rayadurgam, Anantapur. 5,92,832/- 4 6. Hindupur, Anantapur. 6,45,819/- - 7. Jagitial, Karimnagar. 3,25,500/- 7 (i) 8. Rayadurgam, Anantapur. 5,81,680/- 9

16.3 EXECUTION OF WORKS – CONNECTED MEASUREMENT BOOKS ESTIMATES ETC., NOT PRODUCED. An aggregate amount of Rs. 5,86,49,384/- was drawn in the following

vouchers and stated to have been spent on execution of works during the year. But the sanctioned estimates, Measurement Books and agreement files were not produced to audit for verification.

A few of such cases are mentioned below.

Sl. No.

Name of the Municipality and District

Amount involved Rs.

Para No. of Audit Report

1. Amudalavalasa, Srikakulam. 9,49,978/- 69 2. Mandapeta, Kakinada. 2,75,947/- 25 3. Nandyal, Kurnool. 10,42,658/- 3 4. Jagitial, Karimnagar. 12,76,429/- 7 (5) 5. Bhongir, Nalgonda. 4,82,000/- - 6. Siddipeta, Medak. 20,68,435/- -

16.4 MUNICIPAL COUNCIL – RAYADURGAM – ANANTAPUR DISTRICT.

INSURANCE PREMIUM RECOVERED UNDER SALARY SAVING SCHEME – REMITTANCE PARTICULARS NOT-PRODUCED – Rs. 5,81,680/-

An aggregate amount of Rs. 5,81,680/- was recovered from the pay bills of the employees working in Rayadurgam Municipality during the year 2002-03 towards

23

insurance premium under “Salary Saving Scheme”. But the remittance particulars were not made available to audit.

Sl. No. Month Amount recovered 1. April, 2002 Rs. 35,296-902. May, 2002 Rs. 8,683-503. July, 2002 Rs. 2,15,578-904. August, 2002 Rs. 31,528-505. September, 2002 Rs. 15,404-206. October, 2002 Rs. 38,790-907. November, 2002 Rs. 36,790-108. December, 2002 Rs. 5,519-609. January, 2003 Rs. 79,017-4010. February, 2003 Rs. 44,256-1011. March, 2003 Rs. 70,642-70

Total: Rs. 5,81,680/-(Para No. 9 of the Audit Report) 16.5 MUNICIPAL COUNCIL – JAGITIAL – KARIMNAGAR DISTRICT. WORKS – EXECUTION OF WORKS – MEASUREMENT BOOKS, ESTIMATES AND FILES ETC., NOT-PRODUCED – Rs. 3,20,510/-

During the course of audit of the accounts of Municipal Council Jagitial, it was found that an amount of Rs. 3,20,510/- was drawn and spent towards execution of the works noted below during the year under report. But the connected Measurement Books, Estimates along with files though called for were not produced to audit. In the absence of the said records the amount drawn towards execution of works could not be admitted in audit.

Sl. No.

Vr. No. & Month Name of the work

Amount drawn

Rs. 1. 95 / 04-2002 Construction of special drain in Ward No.9 25,000/-2. 96 / 04-2002 R/M of drain Ward No.31 21,820/-3. 97 / 04-2002 R/M ward No 32 19,909/-4. 99 / 04-2002 Laying of CC road in Ward No. 12 13,256/-5. 299 / 05-2002 Fixing of MS Grill in Old Bus stand 20,290/-6. 336 / 06-2002 R/M of drain & CC road in Ward No.19, 3 and

10 22,843/-

7. 339 / 06-2002 R/M of drain & CC road Ward No.19, 3 and 10 21,703/-8. 395 / 07-2002 Construction of special type drain and laying of

CC road in ward No. 12 29,390/-

9. 777 / 09-2002 Construction of drain in Ward No.7 20,282/-10. 778 / 09-2002 Construction of drain in Ward No. 9 22,499/-11. 786 / 09-2002 R/M of Road in Ward No.14 22,616/-12. 791 / 09-2002 Construction of CRs Well at Ward No.24 12,459/-13. 792 / 09-2002 Construction of CRs Well at Ward No. 24 east 13,669/-14. 793 / 09-2002 Construction of drain in Ward No.3 11,950/-15. 1197 / 02-2003 Laying of CC road Ward Nos. 28 & 29 22,000/-16. 298 / 05-2002 Construction of IS at Chowrasta 20,794/- Total: 3,20,510/-(Par No. 7 (4) of the Audit Report)

24

11. MIS-APPROPRIATIONS 17.1 Cases of Misappropriation of moneys noticed in audit were pointed out in the

Audit Reports.

17.2 A consolidated statement of Mis-appropriations noticed in audit is annexed vide Statement No. 5 (11). A total number of 77 cases involving an amount of Rs. 58.31 lakhs were pointed out in the relevant Audit Reports.

17.3 To illustrate the various types of “Modus Operandi” a few of the cases pointed out are reproduced below.

17.4 MUNICIPAL COUNCIL – NANDYAL – KURNOOL DISTRICT.

PROPERTY TAX BILLS NOT AVAILABLE – AMOUNT – MIS-APPROPRIATED – Rs. 14,86,544/-

During the verification of records it was found that out standing bills in respect of Property Tax to an extent of Rs. 14,86,544/- were found missing. In the absence of outstanding bills, it is construed that the amounts were collected from the tax payees but not brought to account. Thus the amounts were misappropriated. Action would need to be taken for the recovery of the amount from the Bill Collectors responsible as detailed in the statement below and remitted to Municipal funds under intimation to audit besides initiating disciplinary action against the defaulters.

STATEMENT SHOWING THE NAMES OF BILL COLLECTORS AND THE OUTSTANDING BILLS MISSING WITH AMOUNT INVOLVED

Sl. No. Name of the Bill Collector

Bills relating to ward No.

Amount involved Rs.

(1) (2) (3) (4) 1. Sri Rama Subbaiah 1 34,425/-2. -do- 2 14,4814/-3. -do- 3 45,172/-4. -do- 4 76,309/-5. -do- 5 16,324/-6. -do- 6 17,791/-7. -do- 7 31,725/-8. Sri Fazal Rahaman 8 13,351/-9. Sri Rama Subbaiah 9 7,088/-10. -do- 10 8,660/-11. -do- 11 5,601/-12. -do 12 2,305/-13. -do- 13 7,840/-14. Sri Fazal Rahaman 14 5,493/-15. -do- 15 8,818/-16. -do- 16 2,209/-17. -do- 17 6,751/-18. -do- 18 1,092/-19. -do- 19 5,582/-20. -do- 20 4,822/-21. -do- 21 9,707/-22. -do- 22 5,011/-23. Sri Rama Subbaiah 23 8,653/-

25

(1) (2) (3) (4) 24. Sri Fazal Rahaman 24 604/-25. Sri Ameer Ali Beg 25 4,20,503/-26. -do- 26 3,29,368/-27. Sri M. Subrahmanyam 27 54,114/-28. Sri V.C. Obulesu 28 Part II 44,487/-29. Sri K. Hussain Saheb 28 Part I 24,383/-30. Sri S.P. Ramudu 29 69,940/-31. -do- 30 73,602/-

Total: 14,86,544/-(Para No. 2 of the Audit Report on the accounts of General funds)

17.5 MUNICIPAL COUNCIL – ADONI – KURNOOL DISTRICT.

OUT STANDING BILLS OF PROPERTY TAX MISSING – AMOUNT MIS-APPROPRIATED – Rs. 5,36,764 /-

During verification of Property Tax Arrear Demand Register with reference to the Property Tax bill books, it was found that outstanding Property Tax bills relating to some assessments aggregating to Rs. 5,36,764/- were missing. Further it was observed that no credits were made in the subsequent years. Hence the amount involved is considered to have been collected and misappropriated.

Action would need to be taken to make good the amounts mis-appropriated from the person or persons responsible and remitted to Municipal funds under intimation to audit. (Para No. 19 of the Audit Report)

17.6 MUNICIPAL COUNCIL – SIDDIPET – MEDAK DISTRICT.

(a) VERIFICATION OF CHITTA – COLLECTIONS NOT REMITTED TO MUNICIPAL FUNDS – MIS-APPROPRIATED – Rs. 64,376/-

On verification of chitta with reference to Cash Book and Pass Book, it was found that an amount of Rs. 64,376/- was collected from T. Narayana, Bill Collector towards Property Tax of H.Nos. 9-2-65/1, 9-2-/2. 9-2-66 to 76 and 9-1-76 through Rt. No. 87/8613 to 87/8616, and taken to Chitta on 29-8-2003 at Page No. 5. But the same was neither taken to Cash Book nor remitted to Municipal Funds till the close of audit. In this regard Half Margin No. Spl. 15/04-05, dated: 28-04-2004 was issued to the Commissioner pointing out the irregularity.

But no action was taken to recover the amount from the persons responsible and to credit the amount to the Municipal Funds. (Para No. 34 of the Audit Report)

(b) TAXES AND FEES COLLECTED BY BILL COLLECTORS – NOT TAKEN TO IRUSALNAMA AND REMITTED TO MUNICIPAL FUNDS – MIS-APPROPRIATED – Rs.61,455/-

On verification of the Receipt Books with reference to Irusalnama of the following Bill Collectors it was found that taxes and fees collected by the Bill Collectors were not taken in their Irusalnamas and not remitted to the Municipal funds till the close of the audit, which shows, that collections aggregating to Rs. 61,455/- were mis-appropriated by the Bill Collectors.

26

Sl. No. Name of the Bill Collector

Amount collected

1. Sri M.A. Rawoot, Ex. B.C. (Now at M.C. Sanga Reddy) Rs. 52,127/-2. Sri G. Anandam, B.C. Rs. 7,072/-3. Sri K.G. Mohiuddin, B.C. Rs. 378/-4. Sri B. Rajender, Ex-B.C. (Now at M.C. Medak) Rs. 1,878/- Total: Rs. 61,455/-

(Para No. 29 of the Audit Report)

17.7 MUNICIPAL COUNCIL – ZAHEERABAD – MEDAK DISTRICT.

PROPERTY TAX AND OTHER TAXES – COLLECTED – AMOUNT NOT FULLY BROUGHT TO ACCOUNT – MIS-APPROPRIATED – Rs. 24,706/-

Sri B. Yadaviah B.C. of Municipal Council Zaheerabad has not remitted a total amount of Rs. 24,706/- collected through the receipt books as noted herewith towards Property Tax and other Taxes.

On cross check with Irusalnama, it was found that a part of the amount collected only was taken to Irusalnama as shown below. Thus an amount of Rs. 24,706/- was not accounted for and not remitted to the Municipal Funds. The unremitted amount was mis-appropriated by him.

Sl. No. Receipt No.

Amount collected as per the Receipts

Amount taken to I.R. Difference

1. 19 / 1881 Rs. 2,446/- Rs. 2,246/- Rs. 200/-2. 34 / 3054 Rs. 15,535/- - Rs. 15,535/-3. 35 / 3434 Rs. 1,000/- - Rs. 1,000/-4. 244 / 24343 Rs. 5,000/- - Rs. 5,000/-5. 244 / 24344 Rs. 100/- - Rs. 100/-6. - Rs. 8,947/- Rs. 8,297/- Rs. 650/-7. - Rs. 8,896/- Rs. 6,896/- 2,000/-8. 24 / 2354 Rs. 327/- Rs. 300/- Rs. 27/-9. 26 /2583 Rs. 13,805/- Rs. 13,801/- Rs. 4/-10. 35 / 3496 to

3500 Rs. 8,760/- Rs. 8,570/- Rs. 190/-

Total: Rs. 24,706/-(Para No. 22 of the Audit Report)

17.8 MUNICIPAL COUNCIL – SADASIVPET – MEDAK DISTRICT.

COLLECTION OF PROPERTY TAX AND OTHER TAXES – NOT ACCOUNTED FOR FULLY – MIS-APPROPRIATED – Rs. 20,169 /-

On verification of remittance particulars with reference to Irusalnama and Chitta of the Bill Collectors it has been detected that a total sum of Rs. 20,169/- was short taken from Irusalnama to Chitta as detailed below.

Thus an amount of Rs. 20,169/- was misappropriated by way of short accounting from Irusalnama to Chitta. The same would need to be recovered from the person or persons responsible and credited to municipal funds besides taking disciplinary action against the individuals concerned under intimation to audit.

27

ANNEXURE

Sl. No.

Name of the Bill Collector

Irusalnama Page No & Date.

Actual amount in

Irusalnama Rs.

Amount Taken to

Chitta Rs.

Balance Rs.

1. G. Prabhakar, 112 / 31-03-2003 9,942/- - 9,942/-2. -do- 29 / 06-09-2003 17,465/- 16,068/- 1,397/-3. -do- 59 / 04-11-2003 1,414/- - 1,414/-4. N. Sreeramulu 3 / 31-03-2003 800/- - 800/-5. -do- 10 / 31-03-2003 5,315/- - 5,315/-6. -do- 133 / 30-12-2002 4,980/- 4,880/- 100/-7. -do- 16 / 19-04-2003 600/- - 600/-8. K. Ramulu, S.I. 54 / 29-03-2003 2,700/- 2,500/- 200/-9. V. Anjan Kumar 33 / 04-04-2003 5,901/- 5,500/- 401/-

Total: 20,169/- (Para No. 55 of the Audit Report)

17.9 MUNICIPAL COUNCIL – NALGONDA DISTRICT. AMOUNT COLLECTED – NOT TAKEN TO CHITTA FULLY – MIS-APPROPRIATED – Rs. 8,887/-

On verification of the Irusalnama of the following collection staff with reference to the chitta, it was noticed that an amount of Rs. 36,969/- was collected by them on the dates noted against each and handed over to the cashier on the same dates. Out of Rs. 36,969/-, an amount of Rs. 28,082/- only was taken to chitta by the cashier, due to which an amount of Rs. 8,887/-was short taken, and the same was mis-appropriatied. Action needs to be taken to recover the amount from the persons responsible and remitted to the Municipal funds, under intimation to audit.

Sl. No.

Irusalnama Page No. &

Date

Name of the Bill

collector

Amount handed over as

per Irusalnama

Amount taken to

chitta Difference

1. P. No. 221 17-01-2003

K. Hanuman Prasad

Rs. 3897/- Rs. 3787/- Rs. 110/-

2. P. No. 107 10-03-2003

Kattula Yadaiah

Rs. 7174/- Rs. 5475/- Rs. 1700/-

3. P. No. 155 24-04-2003

Ch. Sudarshan

Rs. 3264/- Rs. 2224/- Rs. 1040/-

4. P. No.95 04-11-2003

-do- Rs. 1597/- Rs. 1590/- Rs. 7/-

5. P. No. 101 17-11-03

-do- Rs. 5708/- Rs. 5688/- Rs. 20/-

6. P. No. 231 04-02-2003

R.Chandrashekar

Rs. 4003/- Rs. 3903/- Rs. 100/-

7. P. No. 321 20-05-2003

-do- Rs. 3900/- Rs. 3000/- Rs. 900/-

8. P. No. 12 16-06-2003

-do- Rs. 7426/- Rs. 2416/- Rs. 5010/-

Total: Rs. 8,887/-(Para No. 17 of the Audit Report)

28

12. EXCESS PAYMENTS 18.1 It was observed in audit that in several cases excess payments were made due

to (a) Incorrect calculations (b) Excess totalling in Bills (c) Admission of inadmissible claims (d) Lack of knowledge of government instructions.

18.2 Consolidated statement of Excess payments Statement No. 5 (12) is appended to the Report. The excess payments pointed out in 392 Audit paras were involving an amount of Rs. 662.78 lakhs. A few cases of Excess Payments are mentioned below.

18.3 MUNICIPAL COUNCIL – NIDADAVOLE – WEST GODAVARI DISTRICT.

PAYMENT MADE FOR WORK EXECUTED WITHOUT DEDUCTING LESS TENDER PERCENTAGE – IRREGULAR – NEEDS RECOVERY – Rs. 13,717/- Estimate: - Rs. 1,40,500/- Cr. No. 54, dated: 25-04-2001. Name of the Contractor: - Sri. Akula Appa Rao. Tender percentage: - 20% Less Measurement Book No.: - 19 / 98-99 P 53 and 60. An amount of Rs. 1,14,945/- was drawn in Vr. Nos. 1925 / 03-2002 for Rs. 61,717/- and 1512 / 11-2002 for Rs. 53,228/- and paid to the contractor for the work “Providing B.T. Road, from Boddu Samuel Gari House in Katari Nagar” executed as against the amount of Rs. 1,01,228/- payable to the contractor as shown below.

Value of work done Rs. 1,26,535-40 Less Tender Percentage (20%) Rs. 25,307-00 Amount payable Rs. 1,01,228-40 This resulted in excess payment of Rs. 13,717/- to the contractor.

(Para No. 56 of the Audit Report on the accounts of General Funds) 18.4 MUNICIPAL COUNCIL – VIZIANAGARAM – VIZIANAGARAM

DISTRICT. PRIVATISATION OF SANITATION WORKS – TRACTOR HIRE CHARGES PAID TO CONTRACTOR FOR HOLIDAYS CONTRARY TO AGREEMENT CONDITIONS – EXCESS PAYMENT – NEEDS RECOVERY – Rs. 33,657/-

On verification of records it was found that, Tractors were engaged on contract basis for sanitation work in the Municipal Area. As per the terms & conditions of agreement hire charges of tractor for Public Holidays and Sundays need not be paid except in emergency if they were utilized.

Contrary to the agreed conditions, even hirecharges of the Tractors was paid even for Sundays and Public Holidays without any assigned emergency conditions. The trip sheets of Tractors with certification by the Sanitary Inspectors concerned certifying the utilization of Tractors including on holidays also were not made available. It was also noticed that the Tractors were on field from 6.00 AM to 11.00 AM and from 2.00 PM to 5.00 PM, as against the agreed time of 6.00 AM to 6.00 PM. Hire charges should have been deducted proportionately for the hours that the Tractors were off the field from the payment to the contractors.

29

According to the orders of Government, while engaging Tractors on contract basis preference should be given to the Sanitary Marts or Women Organizations established for the said purpose. But, no efforts were made by the Municipal authorities for obtaining Tractors from the above organizations.

The details of excess payments are given hereunder:

Vr. No.

Month &

Year Tractor No.

No. of days

paid for

No. of days to be paid

for

Excess amount paid Rs.

(1) (2) (3) (4) (5) (6) Name of the Contractor and Hire Charges: B. Suryanarayana, C.R. No. 11 /

09-05-2001 @ 432/- per day 167 / 04-02

11/ 2001

AP 35T 0542 27 days 25 days Rs. 432 x 2 days = 864/-

679 / 04-02

12/ 2001

AP 35T 0542 1086

26.5 days 25.5 days

24 days 24 days

Rs. 432 x 4 days = 1,728/-

1/02 AP35T0542 086 0684 ADN

8530

27.5 days 26.5 days 26.5 days 26.5 days

24 days 24 days 24 days 24 days

Rs. 432 x 11 days = 4,752/-

2/02 AP35T0542 086 0684 ADN

8530

25.5 days 24.5 days 24.5 days 24.5 days

@ 23 days 4

Tractors

Rs. 432 x 7 days = 3,024/-

3/02 AP 35 0542 086 0684 ADN

8530

25.5 days 24.5 days 24.5 days 24.5 days

@ 23 days 4

Tractors

Rs. 432 x 7 days = 3,024/-

1993 / 02-03

4/02 AP35 0542 086 0684

ADN 8530

27 days 25.5 days 25.5 days 26 days

@ 23 days 4

Tractors

Rs. 432 x 12 days = 5,184/-

1994 / 02-03

5/02 AP35 0542 086 0684

ADN 8530

28 days 26.5 days 26.5 days 26 days

@ 25 days 4

Tractors

Rs. 432 x 7 days = 3,024/-

2129 / 03-03

6/02 AP35 0542 0684 26 days 26 days

25 days 25 days

Rs. 432 x 2 days = 864/-

2130 / 03-03

7/02 AP35 0542 086 0684

ADN 8530

28.5 days 28 days 28 days

27.5 days

@ 27 days 4

Tractors

Rs. 432 x 4 days = 1,728/-

Total: 22,896/-Name of the Contractor and Hire Charges: B. Sri Ch. Murthy (CR. No. 59 /

09-07-2001) @ Rs. 422/- p.m. 168 / 04-02

11/01 AP35T3264 AP35T2020 AP37T3787

25.5 days 25 days 25 days

@ 25 days for 3 Tractors

Rs. 422 x 0.5 days = 211/-

30

(1) (2) (3) (4) (5) (6) 680 / 07-02

12/01 AP35T3264 AP35T2020 AP37T3787

25 days 26 days 25 days

@ 24 days for 3 Tractors

Rs. 422 x 4 days = 1,688/-

1995 / 02-03

4/02 AP5U 5383 AP37T3787 AHP

6192

25.5 days 25.5 days 25.5 days

@ 23 days for 3 Tractors

Rs. 422 x 7.5 days = 3,165/-

1996 / 02-03

5/02 AP5U 5383 AHP 6192

26 days 26.5 days

@ 23 days for 3 Tractors

Rs. 422 x 2.5 days = 1,055/-

2132 / 03-03

7/02 AP35 3463 AP37 3787 AHP 61927

27.5 days 27.5 days 28 days

25 days 25 days

Rs. 422 x 2 days = 844/-

1/02 AP35 3463 AP37 3787 AHP 6192

@ 26.5 days

@ 27 days for 3 Tractors

Rs. 422 x 7.5 days = 3,165/-

2/02 AP5U 5383 AP37T3787 AHP

6192

@ 23.5 days

@ 23 days for 3 Tractors

Rs. 422 x 1.5 days = 633/-

Total: 10,761/-Grand Total: 2896 + 10761 = Rs. 33,657/-

Therefore, suitable action may be taken for recovery of the excess amount paid from the person or persons concerned and credit pointed out to audit. (Para No. 5 of the Audit Report on the accounts of General Funds)

18.5 PAYMENT OF ENHANCED FAMILY PENSION BEYOND 7 YEARS – IRREGULAR – EXCESS PAYMENT – NEEDS RECOVERY.

(a) MUNICIPAL COUNCIL – VIZIANAGARAM – VIZIANAGARAM DISTRICT – Rs. 1,08,705/- During verification of Pension Payment Establishment Register, other

connected records and files, it was noticed that Enhanced Family Pension was paid to the following family pensioners beyond 7 years without observing time limit.

According to Rule 50 of A.P. Revised Pension Rules, 1980 the eligibility of pension to the Family Pensioners is as follows: i) Where a Government Servant dies while in service after putting in a

continuous service of not less than 7 years the rate of family pension payable shall be equal to 50% of the pay last drawn for a period of 7 years from the day following the date of death, or till the date on which the Government Servant would have reached the age of 65 years had he remained alive.

ii) Thereafter 30% of the pay last drawn until death or remarriage whichever is earlier. Contrary to the above rules, the payment of Enhanced Family Pension at 50%

of Last Pay drawn to the pensioners beyond 7 years is irregular as they are eligible to normal family pension @ 30% of pay last drawn only.

As a result of the above lapse an amount of Rs. 1,08,706/- was paid in excess over the admissibility which should be recovered from the persons responsible and remitted to Municipal Funds under intimation to audit besides stopping further payments.

31

Pension fixed and period Pension already drawn Admissible pension

Sl. No.

Name of the Pensioner

Date of

Death E.F.P. to 7 years

N.F.P. after 7 years

Pension Rs.

D.R. Rs.

Total Rs.

Pension Rs.

D.R. Rs.

Total Rs.

Excess Paid Rs.

Period

Total Excess Paid Rs.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) 1. Smt. Kalyani

Sannamma, W/o late Sriramulu, P.H. Worker

25-07-1995

Rs. 1,793/- w.e.f. 26-

07-1995 to 25-08-2002

Rs. 1,275/- from

26-07-02 onwards

1,793/- 308/- (17.178%)

2,101/- 1,275/- 220/- 1,495/- 606/- 26-7-02 to 31-7-02 &

8/02 to 4/04 (21 months)

118 + 12,726 = 12,844/-

2. Smt. Koraa Desamma, W/o late Suryanarayana, Night Watcher

18-09-1995

Rs. 1,793/- w.e.f. 19-9-95 to 18-9-

2002

Rs. 1,275/- from 19-

09-02 onwards

1,793/- 308/- 2,101/- 1,275/- 220/- 1,495/- 606/- 19-9-02 to 30-9-02 & 10/02 to 4/04 (19 months)

243 + 11,514 = 11,757/-

3. Smt. Bandi Narasamma W/o late Rma Rao, P.H. Worker

13-06-1995

Rs. 1,793/- w.e.f. 14-

06-1995 to 13-06-1995

Rs. 1,275/- from 14-06-2002 onwards

1,793/- 308/- 2,101/- 1,275/- 220/- 1,495/- 606/- 14-6-02 to 30-06-02 & 7/02 to

4/04

344 + 13,332 = 13,676/-

4. Smt. Dasamantula W/o late Jagannadham, P.H. Worker

24-12-1995

Rs. 1,793/- w.e.f. 25-

12-1995 to 24-12-2002

Rs. 1,275/- from 25-12-2002 onwards

1,793/- 308/- 2,101/- 1,275/- 220/- 1,495/- 606/- 25-12-02 to 31-12-02 & 1/03

to 4/04

137 + 9,696 = 9,833/-

32

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) 5. Smt. K.

Ramayyamma, W/o late Ramu Naidu, Attender

16-10-1995

Rs. 2,270/- w.e.f. 17-

10-1995 to 16-10-2002

1,275/- w.e.f. 17-

10-02 onwards

2,270/- 390/- 2,660/- 1,363/- 235/- 1,598/- 1,062/-

17-10-02 to 31-10-

02 & 11/02 to

514 + 19,116 = 19,630/-

6. Tanari Seetharavamma, W/o late Appa Rao

11-09-1996

Rs. 2,483/- w.e.f. 12-

09-96 to 11-9-03

1,490/- w.e.f. 12-

09-03 onwards

2,483/- 427/- 2,910/- 1,490/- 256/- 1,746/- 1,164/-

12-9-03 to 30-9-03 & 10/03 to

738 + 8,148 = 8,886/-

7. Bni Pydiraju, W/o late Ramu Naidu, SRR Driver

16-11-1993

Rs. 1,936/- w.e.f. 17-

11-93 to 16-11-2000

1,275/- w.e.f. 17-11-2000 onwards

1,936/- 301/- 2,237/- 1,275/- 199/- 1,474/- 763/- 17-11-00 to 30-11-2000 & 12/2000

356 + 763/-

1,936/- 333/- 2,269/- 1,275/- 220/- 1,495/- 774/- 1/2001 to 04/2004

30,960/-

Total: 1,08,705/-

(Para No. 3 of the Audit Report on the accounts of General Funds of Municipal Council)

33

(b) MUNICIPAL COUNCIL – MACHERLA – GUNTUR DISTRICT – Rs. 28,908/-

Name of the Family Pensioner

Date upto which

Enhanced F.P. to be paid

Period of excess payment

Amount of excess payment

Rs.

Sri.Ch. Chennaiah, H/O Late Ch. Kotamma, Scavenger

31-03-2001 04 / 2001 to 03 / 2003

9,984/-

Smt. J. Saidamma, W/o Late Guravaiah, Pump Watchman.

30-06-1999 07 / 1999 to 03 / 2003

18,924/-

Total: 28,908/-(Para Nos. 23 & 24 of the Audit Report on the accounts of General Funds)

(c) MUNICIPAL COUNCIL – YEMMIGANUAR – KURNOOL DISTRICT – Rs. 19,981/-

(1) Smt, T. Lakshmi W/o T. Anjinaiah.

She was paid enhanced family pension of Rs. 2,100/- inclusive of Dear ness relief instead of normal family pension of Rs. 1,275/- with effect from 12-05-2002 as shown below.

Pension

already paid Rs.

Pension to be paid Rs.

Excess payment

Rs. Pension 1,792-00 1,275-00 517/-D.R. 308-00 220-00 88/-

Total: 2,100-00 1,495-00 605/-12-05-2002 to 30-09-2003 i.e., For 16 months 19 days

10,051/-

(2) Smt. T. Rajmabee W/o T. Nabisal.

She was paid enhanced family pension of Rs. 2,157/- inclusive of Dearness relief instead of Normal family pension of Rs. 1,275/- with effect from 01-07-2002.

Pension

already paid Rs.

Pension to be paid

Rs.

Excess payment

Rs. Pension 1,840-00 1,275-00 565/-D.R. 317-00 220-00 97/-

Total: 2,157-00 1,495-00 662/-01-07-2002 to 30-09-2003 i.e., For 15 months.

9,930/-

Total Excess Payment Smt. T. Lakshmi Rs. 10,051/-Smt. T. Rajabee Rs. 9,930/- Rs. 19,981/-

(Para No. 28 of the Audit Report on the accounts of General Funds)

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18.6 MUNICIPAL COUNCIL – VIZIANAGARAM – VIZIANAGARAM DISTRICT.

(a) IRREGULAR SANCTION OF ADVANCE INCREMENT FOR HAVING M.ED. QUALIFICATION WITHOUT COMBINATION OF (POST GRADUATION) – EXCESS PAYMENT – NEEDS RECOVERY – Rs. 55,959/- Sri M. Satyanarayana Murthy, was appointed as B.Ed. Assistant with B.Sc.,

B.Ed., qualifications. One advance increment @ Rs. 60/- p.m. was sanctioned with effect from 01 / 1990 for acquiring of M.Ed. vide G.O. Ms. No. 40 Finance & Planning dated: 02-02-1993 vide Progs. No. 1535/93/C3, dated: 26-06-1993.

But, according to the clarificatory Memo. in Roc. No.5399/115/P3/99, dated: 23-11-2000 of the Director of State Audit, A.P., Hyderabad read with Letter No. 39816-A/494/A1/PC-II/2000, dated: 10-11-2000 of Finance Department, the advance increment for qualification of M.Ed. shall be released only when the teacher in question is having P.G. qualification also.

Contrary to the above orders, the advance increment was sanctioned to the teacher for having qualification of M.Ed. only, without Post Graduate Degree.

Therefore, the orders would need to be cancelled and the pay fixations made would need to be revised as detailed below besides recovering the excess payment made.

Pay already fixed Rs. Pay admissible

Rs. 01 / 1990 1810+60 (FP) + 60 (M.Ed.) 1810+60 FP 02-08-1990 (15 years Scale)

1830+60+60 / (1550-3050) 1830+60 / (1550-3050)

01 / 1991 1900 1900+60 01 / 1992 1970 1970+60 01-07-1992 (R.S.P’93) 4010 (3110-6380) 3880+60 / (3110-6380) 01 / 1993 4140 4010 01 / 1994 4270 4140 01 / 1995 4400 4270 01 / 1996 4560 4400 01 / 1997 4720 4560 01 / 1998 4880 4720 01-07-1998 (R.S.P. 1999) 9600 / (5980-12100) 9300 / (5980-12100) 01 / 1999 9900 9600 02-08-1999 24 years 10250 9900 08 / 2000 10600 10250 08 / 2001 10950 10600 08 / 2002 11300 10950 08 / 2003 11650 11300

EXCESS PAYMENT:

Period Advance Increment D.A. H.R.A. Excess Total Rs.

(1) (2) (3) (4) (5) (6) 01 / 1990 to 06 / 1990 60 23 8 Rs. 91 x 6

Months 546/-

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(1) (2) (3) (4) (5) (6) 07 / 1990 to 12 / 1990 60 26 8 Rs. 94 x 6

Months 564/-

01 / 1991 to 06 / 1991 60 30 8 Rs. 98 x 6 Months

588/-

07 / 1991 to 12 / 1991 60 36 8 Rs. 104 x 6 Months

624/-

01 / 1992 to 06 / 1992 60 43 8 Rs. 111 x 6 Months

666/-

07 / 1992 to 12 / 1992 60 50 8 Rs. 118 x 6 Months

708/-

01 / 1993 to 03 / 1993 60 55 8 Rs. 123 x 3 Months

369/-

04 / 1993 to 04 / 2004 60 x 133 79