NREGA PPT 2021-22 - FINAL.pptx

Presentation on NREGA Audit

1. Presentation on Quarterly Financial Audit, Monitoring of Own Source Revenue of Panchayat & Handholding support for Strengthening of Financial Management System of PRIs Presented By: CA. Udesh Dassani Partner Dassani & Associates MP STATE TECH E-PANCHAYAT SOCIETY

2. We, M/s. Dassani & Associates, thank you for providing us an opportunity to propose for the “Quarterly Financial Audit” of Panchayati Raj Institutions in the State of Madhya Pradesh. This document sets out our proposition to you. Our enthusiastic team will examine the systems, policies and procedures and bring ideas that might benefit the Institution and deliver on the degree of professionalism and knowledge that you expect from your consultant. Proposal for Financial Audit – Technical Approach & Methodology

3. INTRODUCTION ABOUT US We M/s. Dassani & Associates, a premier Chartered Accountancy firm headquartered at Indore (M.P.) and having our branch offices in Mumbai, New Delhi, Pune, Kota, Bhopal, Shivpuri, Rath & Orai . Firm is having more than 37 years experience in the field of Financial Auditing (PSU/ Government Departments or Institutions/ Companies, Firms, Banks etc.), Financial Planning and Consultancy, Bank Audits, Internal Audit, System & Management Audit, Information System Audit, Forensic Audit, Risk Based Audit, VAT & GST Audit, Stock Audit, Company Audit, CAG Statutory Audit of Limited Companies and Statutory audit of Private Limited Companies. We also provide Management Consultancy Services, Accounting Advisory Services (Including Direct & Indirect Tax Consultancy, Project Finance, Software Development Consultancy & System Analysis) and Market Survey & Equity/ Debt Syndication

4. Working Team Firm is having 14 full time partners including 13 FCA partners & 1 ACA partner having rich experience in their respective areas with additional qualifications in the field of Law, Arbitration, Forensic audit, IFRS, DISA, Concurrent audit, etc. In addition to the rich experienced partners, the firm is also having a well qualified and experienced team of more than 70 members including 5 CA employees. Infrastructure We have a well furnished office equipped with latest technology, Computerized Wi-Fi Environment, Cloud Storage of Data, Phones, Fax, Mobile, Laser Printers, Color Printers, Scanners, 24 Hrs. Internet facility, ISDN Line, State of Art Communication Capabilities and Client & employee friendly working environment. Dedicated Team We have a well qualified and dedicated team having experience of Audits of Schemes of Zila Panchayat, Gram Panchayat and Schemes of Janpad Panchayats to conduct the assignment. Peer review Our firm has been reviewed by the Peer Review board of the ICAI and we follow the quality and control standards prescribed by the board and the Institute of Chartered Accountants of India (ICAI).

5. ABOUT PARTNERS

6. EMPANELMENT We are empaneled with various Government and Regulatory Bodies and Authorities few of them are as under: Reserve Bank of India (RBI) Comptroller & Auditor General of India (CAG) Registrar of Co-operative Societies Income Tax Department for Special Audits (u/s142(2A)) Securities and Exchange Board of India (SEBI) Enforcement Directorate (ED), EOW, MP Police Department Central Bureau of Investigation (CBI) Various Public and Private Sector Banks (SBI, IDBI, J&K, UBI, PNB, BOM, ICICI, BOB, CBI, OBC, Dena Bank, UCO, BOI, etc.)

7. WORK EXPERIENCE We have conducted Audits of various bodies, few of them are as under (PSU): Bank of Baroda (Central Statutory Audit) Northern Coalfields Limited (NCL) South Eastern Coalfields Limited Bharat Sanchar Nigam Limited (BSNL) New India Assurance Company Limited Oriental Insurance Company Limited Oriental Bank of Commerce Central Bank of India, Corporation Bank M.P. State Industrial Dev. Corporation Limited M.P. State Civil Supplies Corporation Limited M.P. Warehousing & Logistic Corporation Limited

8. We have conducted Audits of various bodies, few of them are as under (PSU): M.P. State Agro Industries Development Corp. Limited M.P. Tourism Development Corporation M.P. Rajya Van Vikas Nigam Limited National Rural Health Mission (NRHM) Rajya Shiksha Kendra (SSA), Madhya Pradesh Airport Authority of India Securities and Exchange Board of India Indian Farmer Fertilizer Cooperative Limited STCI Primary Dealers Limited WORK EXPERIENCE

9. EXPERIENCE IN AUDIT OF PRI’s AND SCHEME UNDER RURAL DEVELOPMENT DEPTT. OF MADHYA PRADESH Sl. No. Name of Auditee Department Type of Audit Year of Audit 1 MP State Tech e-Panchayat Society District - Seoni Financial Audit 2020-21 2 MP State Tech e-Panchayat Society District - Seoni Financial Audit 2019-20 3 MP State Tech e-Panchayat Society District - Seoni Financial Audit 2018-19 4 MP State Tech e-Panchayat Society District - Seoni Financial Audit 2017-18 5 Jila Panchayat - Datia Financial Audit 2011-12 6 Jila Panchayat - Shajapur Financial Audit 2011-12 7 Jila Panchayat - Shajapur Financial Audit 2009-10 8 Jila Panchayat - Ashoknagar Financial Audit 2007-08 9 Jila Panchayat - Ashoknagar Financial Audit 2006-07 10 Samagra Swachhta Abhiyan - Ashoknagar Financial Audit 2007-08 11 Samagra Swachhta Abhiyan - Ashoknagar Financial Audit 2006-07 12 MP Gramin Rojgar Guarantee Yojana - Sheopur Financial Audit 2005-06 13 Jila Panchayat - Shajapur Financial Audit 2002-03 14 Jila Panchayat - Shajapur Financial Audit 2001-02 15 Jila Panchayat - Shajapur Financial Audit 2000-01

10. OBJECTIVES OF AUDIT Improving Financial Management and Accounting System of PRIs Quarterly checks and reporting to the concerned Authority Proper control over OSR of all Panchayats to achieve significant growth Evaluate and improve the effectiveness of Risk Management To provide independent, regular & prompt Assurance to Management that - Internal Controls are designed appropriately Internal Controls are properly implemented Internal Controls are working effectively

11. SCOPE OF AUDIT TO CHECK Whether funds have been utilised in accordance with guidelines, directives, acts and rules. Whether there is any diversion of funds. Whether the procurement of goods/ services is in accordance with the rules. Whether the supporting documents for procurement have been kept in records properly. Whether the accounting is done on regular basis and the transactions are in place with Bank Statements . Whether all the receipts and payments have been recorded properly. Whether the irregularities/comments reflected in social/statutory audit reports are duly complied with. Whether the procurement is done through the GeM portal, if required by the orders of Government. Whether TDS returns have been filed within time regularly. TO REPORT That all the expenditure transaction verified online where IT system is already in place. Scrutiny of Bank Reconciliation Statement. Submit system generated Quarterly Report in time. IT systems are in place.

12. SCOPE OF AUDIT TO REPORT (continued..) Complete Receipt & Payment A/c, Income & Expenditure A/c, Trial Balance, Balance Sheet along with Annexures, Bank Reconciliation Statement etc. along with comments thereon. Reporting of irregular/ unreasonable payments. Reporting of Discrepancies observed on the physical verification of Fixed Assets. Reporting of Discrepancies observed in case of deductions have been made from the salary of the employees either on account of PE/ESI/Professional Tax/ TDS. Verification of approval of competent authority in case, actual expenditures exceed the budget allocation/ sanctions. General ledger scrutiny. Physical Verification of Fixed Assets with the Fixed Assets Register. Reporting of Discrepancies observed in case of deduction of different taxes, statutory liabilities and their deposition. Irregularities/ comments in PY report are complied with or not. Scrutiny of quarterly squaring of accounts and advances.

13. 13 “ Policies and procedures adopted by the management for ensuring the orderly and efficient conduct of its operations, including adherence to government’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records, and the timely preparation of reliable financial information.” TECHNICAL APPROACH & METHODOLOGY ON QUARTERLY FINANCIAL AUDIT OF OSR OF PRIs

14. AUDIT TOOLS & TECHNIQUES 14

15. AUDIT PROGRAM Our audit program would involve the following :- 1) Planning 2) Execution 3) Reporting 4) Follow Up and Review

16. PLANNING In order to obtain proper knowledge of the functionality of Panchayat Raj Institution, we are going to undertake the following steps:- Thorough understanding of the applicable legal and regulatory framework. Obtaining Budgets and internal reports prepared over financial aspects for current and previous periods. Obtaining an understanding regarding distribution of responsibilities among various staff members and internal control system. Understanding the Panchayat Raj Institution’s business environment:-

17. We would undertake analytical procedures i.e. extensively using our accounting & previous audit knowledge and experience in order to assess the potential for material misstatement in financial statement. The key aspect is to identify the relevant risk indicators and to interpret them properly. This would help us to identify the degree of reliance that could be placed on the accounting system and internal control system. 2. Understanding the Analytical Procedures:- Based on the assessed level of risk involved and material misstatements an appropriate staffing plan would be made which would clarify each member’s role in the assignment based on their skill sets, knowledge and previous experiences. 3. Audit Team Briefing:-

18. To Check the total of Cash/Bank book including carried forwards. To Check whether the sanctioned amount of all vouchers are tallying with cash/bank book. To Check all contra entries of Cash and Bank. Physical verification of Cash. To Check all receipts have been deposited timely. To Check the Demand draft issued has been cleared within reasonable time limit. Checking of credits for interest on bank deposits and saving account with bank statement/bank reconciliation statement. To Check the electronic payment system, that it should be done as per guidelines. To Check the Government money has not been kept in F.D.R. and Current account. (to be continued…….) EXECUTION To Conduct the Audit we looked forward following things:- 1. Cash and Bank Balance

19. (continued…..) To Check that all cheques have been issued by authorised officials & money is drawn only by competent authority. To Check the Bank adjustment vouchers are supported by genuine documentary evidence. Verification of the accuracy of amounts directly debited by bank and the accounting treatment thereof. To Check the Bank balances maintained by the District/Block/GP/SHGs (Self Help Group)/NRLM/Watershed committee/PIA (Project Implementing agency) are in excess of the prescribed requirements (if any) of the District/Block/GP as the case may be. To Check the proper bank account is operational. To Check that no bank account will be opened or closed without the permission of higher authorities. To Check the cash balances are deposited immediately to the bank, no cash is allowed to be drawn neither any cheque book will be used by the agency also all payments made by the electronic transfer (NEFT/FTO/RTGS)

20. Vouching of receipts and payment with supporting documents. Verification of all vouchers entered in Cash/Bank book duly sanctioned /attested by officer in charge. To check the quarterly expenditures incurred & submitted with supporting documents. To Check the receipt & payments vouchers are serially numbered. 2. Documentation and correct posting with vouching (Authenticated/ Approved vouchers) To Check that all the funds have been utilized in accordance with guidelines, directives, acts and rules issued by government. To Check the Counterpart fund, if any, have been provided and used in accordance with the relevant provisions of Act & Rules. To Check, there is no diversion of funds for other purposes. (to be continued…….) 3. Leakages– Proper utilization of funds

21. (continued…..) Reconciliation of fund transferred by:- Government/Council to Zila panchayat. Zila Panchayat to Janpad Panchayat/Gram Panchayat/ line department SHG’s/ Watershed committee/ PIA and other Implementing agencies. Janpad Panchayat to Gram Panchayat/working agencies. To Check the funds are used economically efficiently and economically to the purpose which they are provided. To Check the General Ledger, Accounting transactions are correctly accounted for in the respective accounting head. Scrutiny of monthly squaring of accounts and advances. To Check the calculation of payments and entry in the proper books. 4. Errors– Checking Omission & Commission errors:-

22. To ensure all the transaction have been accounted in books of accounts. Error of commission can be detected by matching all accounting entries with their respective vouchers. To Check, TDS has been deducted as per the provisions of IT Act/GST Act and deposition is made within prescribed time period. Verification of proper deduction have been made from the salary of the employees either on account of PE/ESI/Professional tax and the same have been properly deposited within the prescribed time. Verification of TDS deducted from the salary of the employee as well as payments to contractors, Professionals or others is as per the rules and regulation prescribed by the Income Tax Act 1961 and amended time to time. To Check the TDS returns have been filed within the prescribed time limit also PAN of employees correct and parties have been mentioned. 5. Timely Compliances of all statutory dues and responsibilities:-

23. To Check the Goods & Services have been procured in accordance with the provisions in the rules and orders issued by concerning authorities. To Check the Goods & Services are adequately handed over and used solely for their intended purposes and exit protocols for work completion are followed. To Check adherence to procurement manual by authorities and procurement guidelines at operating levels. To Check irregularities in payment on overwriting on bills. To Check the quality of goods/stores purchased are certified by the competent person and are as per the purchase order in terms of quality, quantity specification and price and store register number is recorded on the bill/invoice. To Check the validity of GST invoice provided by the supplier. To Check supplier has put his initials in all cuttings/corrections in bill. To Check the original bill duly signed by the supplier is submitted. To Check the legal resources that have been taken in due course against defaulting contractors or suppliers. 6. Procurement of Goods and Services:-

24. Thorough checking of attendance records and salary calculations accordingly. To ensure salary paid is as per calculations done considering the pre decided norms. To Check TDS has been deducted as per section 192 and deposited on a timely basis. To verify and comment upon the system being followed for claims of employees. To Check only the competent authority has utilized the powers delegated to them. To Check whether any advances are given to employees, if yes whether it is sanctioned by appropriate authority or not. To Check whether recruitment criteria being followed are as per given guidelines and competent people are appointed for appropriate job profile. Proper training has been given to staff from time to time to update their knowledge regarding changes in policies and procedures. 7. Staff Recruitment & salary payment compliances:-

25. To Check quarterly expenditure incurred and submitted with supporting documents. To Check expenditure incurred is strictly in accordance with the prescribed financial norms. Verification of approval of competent authority in case, actual expenditure exceeds the budget allocation/sanctions. To Check each item of expenditure has been covered by a sanction, either general or specific, accorded by competent authority, authorizing such expenditure. To Check the expenditure is incurred with due regard to the broad and general principal of financial propriety. Verification of whether any capital expenditure has been charged to revenue and vice versa. 8. Regarding expenditure incurred and payments made:- 9. Physical Verification:- To Check Investment/Deposits and its timely renewal /realization the maturity along with interest. Physical verification of Fixed Assets with Fixed Assets Register.

26. 10. Reconciliation of books of accounts including bank:- Scrutiny of Bank Reconciliation Statement. To Prepare complete receipt & payment, income & expenditure, trial balance and balance sheet etc of accounts along with comments. To Give comment on old outstanding items in bank reconciliation along with reasons and whether the same have been reversed if stale. To Check the brought forward of opening balance on 1st April of each year. Reconciliation between intermediaries agencies Use of Gram Swaraj/ Priya Software/ Panchayat Darpan (PFMS Software) /SSSM/PES/all other applicable software of the department. Use of audit software for tracking of audit paras. 11. In Relation to Software:-

27. HIERARCHY OF TEAM FOR EXECUTION OF AUDIT Note: Apart from above, we have Qualified/Semi qualified staff who will join the audit team as and when required.

28. HIERARCHY OF TEAM FOR EXECUTION OF AUDIT Note: Apart from above, we have Qualified/Semi qualified staff who will join the audit team as and when required.

29. Man Days Table for a Cluster Designation No. of Persons deployed No. of days to be devoted per quarter/ Per Person Total No. of Man days in a quarter Total no. of Man days in a Year Project Head 1 25 days in a quarter 25 100 Partner (Cluster Level) 5 25 days in a quarter 125 500 Team Leader/CA’s (District Level) 5 40 days in a quarter 200 800 Paid Assistants (At Janpad Level) 5 55 days in a quarter 275 1100 Articles/Paid Employees (At Gram Panchayats Level) 2 5 55 days in a quarter 1375 5500 Total No. of Man Days Deployed in the Project 8000

30. REPORTING REQUIREMENTS REPORTING

31. REPORTING

32. Yearly Reports

33. REPORTS WILL BE SUBMITTED WITH FOLLOWING STATEMENTS TO THE CONCERNING STATE HEAD QUARTER:-

34. Flash Reports / Executive Summary A flash report is a report that provides upper management in the department with a quick snapshot of how the department is performing. The report will be prepared by us about the matter which is require immediate attention & action. Executive Summary / Flash Reports highlighting the critical issues which require the attention of the management and the status of actions on the previous recommendations will be submitted as and when considered necessary. Hand Holding Support The Auditors will be physically present at the panchayat level most of the time, the panchayat staff can be trained conveniently and a parallel handholding support system can be formed which heads to improved accounting system. Also, the Auditor’s staff trains the panchayat’s staff that helps them delivering more efficient services on regards with the accounting system of panchayat.

35. We have to prepare database initially and submit report within 3 months from appointment which will include:- Report on Own Source Revenue (OSR):

36. Report on Own Source Revenue (OSR):

37. Report on Own Source Revenue (OSR):

38. CAG REPORTS SHOULD BE PREPRAED AND SUBITTED IN 8 FORMATS:

39. THANK YOU 1B, Sagar Matha Apts., 18/7 M.G. Road, Indore - 01 Tel: [phone] , [email protected]