Statutory Audit Report Of National Health Mission, Maharashtra R N T C P, Maharashtra For the year 2014-15 KHIRE KHANDEKAR AND KIRLOSKAR Chartered Accountants 1051, Madhavnagar Road Sangli 1 Pa e ÿþKHIRE KHÀNDEKAR & KIRLOSKÀR CHARTERED ACCOUNTANTS H.O. : 1051, MADHAVNAGAR ROAD, SANGLI - 416 416 PHONE : (0233) 2375883, FAX : (0233) 2322893 E-mail : nitin116@hotmail.com S. No. 1 ANNEX- XXIV Independent Auditor's Report (Statutory Audit Report) To Mission Director Maharashtra State Health Society, Maharashtra, Mumbai Report on Financial Statements We have audited the accompanying statements of expenditure of the Revised TB Control Project implemented through the State Health Society, Maharashtra, RNTCP (Society under the Revised Tb Control Project) financed under World Bank Credit/Loan No.4228-IN, which comprise of the Balance Sheet as of 31st March, 2015, Income and Expenditure Account and Receipt and payment Account for the year ended as of March 31, 2015, a summary of significant accounting policies and other explanatory information. These financial statements incorporate the returns of all the District Societies and other periphery units implementing the various programs, which have been certified by the management and independently reviewed by the concurrent auditors for the district. Management's Responsibility for the Financial Statements: Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position in the prescribed format and the as per the accounting principles generally accepted in India, including the accounting standards issued by the Institute of Chartered Accountants of India (ICAI). This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from misstatement, whether due to fraud or error. Y,A Branches: 157, South Shivajinagar, SANGLI - 416 416 B-1, Yashasvi Apartment, Tarabai Park, A-3, Lara Residenc, M ybr Colony, Kothrud, Tel. : (0233) 2376096, Fax : (0233) 2377315 KOLHAPUR - 416 003 Tel. (0231) 2654789, PUNE - 411 029, Cell : 9423871912, E-mail : cakirloskar@gmail.com E-mail : caganeshkhandekar@gmail-com E-mail : mandarkhire@gmail com Auditor's Responsibility. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of risk of material misstatement of the financial statements, whether due to fraud or error. In making those assessments, the auditor considers internal control relevant to the Society's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness -of the- entity's - internal control. -An - -audit ---also---includes- evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the presentation of the financial statements. We have conducted financial audit of the scheme and not the performance audit of the scheme. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. In forming our opinion we have relied upon the audit reports and considered all significant audit finding/observations in 33 (nos) Districts, 23 (nos)Muncipal Coporations, 2 STDC's and State Head Quarter Pune RNTCP Society's (Total Units 59 ) financial statements of which have been audited by us. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our examination. Opinion a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our examination. b) In our opinion, proper books of account have been kept by the State Health Society, so far as appears from our examination of the books. c) The statements of account dealt with this report are in agreement wi the books of account. 31P d) In our opinion and to the best of our information and according to the explanations given to us and subject to audit observations forming part of the audit report and notes to accounts, the said accounts of the State Health Society, gives the information in the manner so required and give a true and fair view:- 1. In the case of the balance sheet, of the State of affairs of the Society as at 31stMarch, 2015. 2. In the case of the Income and Expenditure Account of the NIL excess of income over expenditure / deficit of income over expenditure for the year then ended. 3. In case of Receipts and Payments Account of the receipts and payments during the year then ended. In addition, (a) With respect to FMR/SOEs, adequate supporting documentation has been maintained to support claims to the World Bank for reimbursements of expenditures incurred. However, in the absence of non- availability of World Bank Credit Agreement for the financial year 2014-15, we are unable to comment on the extent to which the expenses are eligible for reimbursement and; (b) which expenditures are eligible for financing, However, in the absence of non availability of World Bank Credit Agreement for the financial year 2014- 15, we are unable to comment on the extent to which the expenses are eligible for financing under the credit agreement and; (c) Procurement of goods and services has been carried out as per the procurement manual issued by the Central TB Division, Gol. For Khire Khandekar & Kirloskar Chartered Accountants FRN No 105148WW ekarf CD CW~ed 6 (CA Ganesh Khandekar) & Partner, M. No.041443 Place: Pune Date: 29t September 2015 41 Page S.NO. 8 ANNEXURE II STATE HEALTH SOCIETY, MAHARASHTRA -RNTCP A) SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting i. The financial statements have been prepared under the historical cost convention, in accordance with the generally accepted accounting policies under the double entry system of accounting ii. Unless otherwise stated here under, the Financial Accounts are drawn up on cash basis. Treatment of Grant in Aid from CENTRE/ STATE Grant-in-Aid has been taken into account on actual receipt from CTD/STCS/Others. However, the Grant sanctioned/funds transferred by Government of India / State Society during the year (usually fag end of the year) but actually received by the Society after the close of the year has been credited to Grant-in-aid by debit to the head "Funds in Transit A/c". TREATMENT OF ADVANCES General Advances are charged off to the relevant account head on receipt of adjustment bill/ utilization certificate / actual receipt of goods or services. Grant-in-Aid to NGO(s) Funds released to the NGO(s) are treated as advance and booked as expenditure only on receipt of the utilization certificate from the NGO. For Civil Works Funds deposited with Public Works Department/ contractor is treated as advance at the time of release. On receipt of certificate of stage of completion, it booked as expense to the extent it is certified by PWD/ to the extent due to the contractor based on the stage of completion / the terms of agreement. 5 Page TREATMENT OF PURCHASE OF MATERIAL (E.G. IEC material, stationery, medicines, lab consumables etc.) The materials purchased are treated as expenditure in full in the year of purchase and the purchase transaction is complete only with the receipt of material and making of the payment. Material supplied by CTD or other donor agencies free-of-cost are not taken into account in the financial books of accounts, and only recorded in the relevant stock registers. TREATMENT OF FIXED ASSETS AND DEPRECIATION Assets acquired under the project are valued at historical cost including all direct costs (i.e. purchase price, transportation expenses, installation charges and other expenses incurred for bringing the fixed asset in working condition), incurred prior to its first use. In consonance of financial guidelines, no depreciation is charged on fixed assets. TREATMENT OF INTEREST EARNED IN THE BANK ACCOUNT No funds are kept in the Fixed Deposit. Interest earned on the funds kept in the Saving Bank Account maintained by the Society is accounted as Receipt and treated like Grant-in-aid, to be utilized for the same purposes for which the grant was received and subject to the same norms/guidelines. TRANSFER OF FUNDS TO DISTRICT SOCIETIES /INTER- DISTRICT TRANSFER OF FUNDS WITHIN THE STATE The receiving Society credits the amount under the head 'Intra-State Transfer (Receipts) and the remitting Society Debits the same under the head Intra-State transfer (Payments) and in consolidated accounts these are set off against each other like contra entries. 61 Page N S TO A oN s ion M ccunts nic head qcuartI. revicus year Figures s year's fig'rcs have cen regruped and reakva ed wherever i1CC ssarv. - gliA 7 ag e S.No.9 ANNEX-XXII MANAGEMENT LETTER (As per Terms of Reference for the audit of Consolidated Financial Statements of the RNTCP implemented through the State Maharashtra, State Health Society, Maharashtra RNTCP Society) As per Audit Observations enclosed herewith For Khire Khandekar & Kirloskar Chartered Accountants FRN No 105148W (CA Ganesh Khandekar) a,1 Partner, M. No.041443 Place: Pune Date: 29th September 2015 Note:- i) It should be on the Letter-head of the Auditors. ii) It should cover all the aspects of working specified vide Annexure-XXII of the Financial Management Guidelines/ Manual 8 Page NO. 16 ANNEX-XVIII UTILIZATION CERTIFICATE State Health Society Maharashtra - RNTCP Consolidated Utilization Certificate for the State of Maharashtra (Covering STCS, STDC and all the DTCSs) for the year 2014-15 (01/04/2014 to 31/03/2015) 1. It is certified that out of Rs.50,43,57,000/- of grants-in-aid sanctioned during the year 2014-15 (which includes Rs.32,01,17,000/- fund in transit) in favour of the State Health Society Maharashtra - RNTCP under the Ministry of Health and Family Welfare sanctions No. given hereunder, Rs.4,85,39,500/- on account of unspent balance of the previous year receipt & payment account (as per previous year 2013-14 audited Utilization Certificate closing balance is Rs.4,85,15,856/-. There is difference of Rs.23,641/-) and Rs.59,69,11,677/- for other receipts (which includes Rs.50,44,00,000/- NRHM Loan & advances/EMD/SD/Misc. receipt Rs.18,63,945/- and Rs.24,79,270/- Bank Interest), totaling to amount of Rs. 114,98,08,177/-, an amount of Rs.49,76,80,962/- of RNTCP funds have been utilized by the State Health Society Maharashtra RNTCP and the District Health Socieiies Maharashtra RNTCP for the purpose of various ac''vitjes apploved bY the GGvt. of India for implementation through the iSD1S/ ( S fo, w'vhich it was sanctioned and that the lb-iuc oi Rs 95,466/' (inc Rs.60000!- funds in transit an " :s Ad.r dOc /ED/SD of Rs.27,30,74,749/- and Rs.32,00,57.O - :nd in s wh h rfundi to NHM against advawc C Z(t' ai L' ie (12 d of -ie \--jr W C a- n: i i vc ' a 'q -: A j .. .. 4. The expenditure is related to the programme activities. 5. The expenditure is incurred with proper resolution of the STCS/DTCS. 6. The expenditure on purchase of fixed assets or consumable goods has been verified from relevant stock register. 7. No amount of grant-in-aid or any receipt pf funds from other source is deposited for gains or to generate income by way of interest other than bank interest. 8. Financial grants are released to the bearers of NGOs after their proper scrutiny and verification. --Joint -irecr of-Healt-nrnrissionerW-SrMissionrirector Services Leprsoy and T.B. State Health Society, NRHM Mumbai Joint Director (F&A) State Health Society, NRHM For Khire Khandekar & Kirloskar Chartered Accountants FRN No 105148W (CA Ganesh Khandekar) 4 S Partner, M. No.041443 Place: Pune Date: 29th September 2015 FINANCIAL MANAGEMENT LETTER (Format to be incorporated as part of the Audit Report) 1st April 2014 to 31st March 2015 Name of the State: State Health Society, Maharashtra -RNTCP, Maharashtra Sr. Item Remark/ Observations No. 1 Accounting & Funds flow * Are District Units registered entities Yes, as informed by State HQ. under the Societies Registration Act? Registrations Certificate of Society is not available on / record for verification. * Status in respect of guidelines issued in Generally being followed. December 2006 on financial, accounting auditing, funds flow & banking arrangements at State & district level. * Are the b(oks being maintained as suggested in the Finance & Accounts Yes Cash & Bank Book, Ledgers Maxiua2 c lis the books of Cheque Issue register, accounts narnained at the State & Register of fixed assets, Stock District 1cv Book maintained. In t the ledger Yes c' (i k . ner ur' 1 2 C' * Irl case transfers are recorded as No such system of monitoring. eXpenditures, is there a system of rnpnitoring the expenditures reported transfers, while submitted consolidated Financial Report of the State to MOHFW ? * Is any computerized accounting syste in use & if yes, what are the outputs? Yes. Financial data/reports in, ERP 9 are not 'tally with consolidated financial t ements. At District level manual accounts are being maintained. * Are there any delays in receiving funds As informed to us, there is from the centre to states & states t4delay in receiving funds from districts? Has the project or any the Center but no project or component been out of funds in the last any components has been out one year? of fu ds due to funds being on __h oloan from NRHM. V/ * Are funds transferred by State Health Society to District Societies or directly to Yes. Bank accounts in the same of CHMO or DMO? * Whether the State is transferring the funds to Districts electronically or by electronically Physical transfer? * Whether the fund transfer by State to Districts is being done like RCH flexible State HQ carry out activity pool or does the State carry out activity wise funds transfer to the wise fund transfer to the Districts. Districts. * What is the average frequency of fund transfer in a year? Average 3-4 times in a year * To what extent have financial powers been delegated at the state, district & At State level financial powers block levels? are delegated jointly to Mission Director & Deputy * Are they aware of the new draft Director (F). guidelines circulated by the centre for At District level financial administrative/financial powers are delegated jointly to CEO & DTO, DAM and of powers under NRHM? District. 12|P ag e * Problems being faced /outstanding No issues on accounting or fund management or banking arrangements 2 Internal Control: * Are Financial Management Indicators Financial Management being complied regularly? Copy of latest indicators are being complied indicators may be requested. regularly. * How are FM Indicators being used of SOE submission, SOE follow up? Maintenance of accounts, etc are checked as per format. * Has SPMU been carrying out field Yes cheeks on basic financial controls (appendix 13 A of Manual) * Is there a system of recording, Yes monitoring & settlement of advances at all level i.e. State, District & sub districts? * Is there an ageing of the advance & arc Yes there old un-scttled advances with staff Old advances are not settled & others? by District Societies for more than 1 year amounting to Rs.89,40,359/- * Arc c-I vd Ves, Advances are g" wito se erret of Ir'u C3fVCCS '<2 * 1 -' ' 1~ o I *. 1 ~'~lS n 1 i I IA * Problems being faced Joutstanding No such major problems issues on internal controls. observered. * Report any procurement which has not been carried out as per procurement No such instances noted. which has not been carried out as per the procurement manual of the individual programmes such as :RCH- II,RNTCP,IDSP etc 3 Financial Reports: * Are State familiar with the guidelines for Yes preparation of Revised FMR? * Are the reporting heads in the FMR Yes aligned with the AWP & with the ledger accounts in the General Ledger (to check both at the State & District Units) * Are monthly FMRs submitted by the districts to states on a regular basis? H-as-the-state-consolidated-the-monthly -Yes FMRs from the districts for the first quarter of the FY? If so, has it been sent Copy of last FMR Mar 15 is on to the Centre & when ?(a copy of the last record. financial report sent may be requested) * Statement of Fund Position: Whether prepared or not? (Verify the figures from Yes prepared at State Level. the books of accounts for any quarter as a cross-check measure) * Do the FMRs go to FMG & programme Cannot be commented upon divisions. * What checks are being exercised while As informed to us, following preparingZ ? checks are exercised. 1. FMRs are checked with SOE's 2. Bank Reconciliation are being prepared/checked. 3. Balances with districts are reconciled. 4. Schedule of advances from districts are being obtained. 141 Pig e * Is physical progress being captured in Cannot be commented upon. time & consistently? * Problems being faced/outstanding Non receipt of financial data issues on financial reporting at prescribed regular interval. 4 Audit: External: * Is there a TOR for external auditors & it Yes is as per the TOR provided in the FM Manual/RFP ? * Has the auditor(s) been appointed for State & District Societies for the year 2014-15. * If yes/no, what was the process of As per GOI instructions State selections of auditors? For 2014-15 were has appointed Auditors. they from the shortlist circulated by FMG? * Was a tendering processes were followed Yes /will follow to appoint the Auditors? * Are the bids evaluated for contracting Yes auditors based on technical inputs or are thcy cost based? * What are t the coverage & the As per terms of Agnerrent. tmn a wich iditors have been contr c Al r1~J d Aum -- - -- - T ~ ~- along with the records? Internal: * Does the State have a system of Yes. internal/concurrent audit? * Does State plan to have internal or On Quarterly basis concurrent concurrent audit on monthly or audit has been done for 2014- quarterly bases? 15. * Are internal audit observations being Majority of district has send received regularly & being acted upon? compliance. * Please elaborate on effectiveness & Concurrent audit has been implementation of Concurrent Audit done by SHS during the year existed in the on quarterly basis. In some districts report of auditors > State were not submitted to Districts. State should take SDistricts initiative for effective implementation of concurrent audit. 16 P a ge AUDIT OBSERVATIONS FORMING PART OF AUDIT REPORT 1. Compliance with Statutory Requirements a) As per bye laws, every society has to submit its annual account with Charity Commissioner. The Society has not submitted the annual accounts with Charity Commissioner. b) It is observed that, statutory requirement of deduction and deposit of management share under Employees Provident Funds and Miscellaneous Provisions Act, 1952 has not been adhered to. 2. State Head Quarter has not incorporated in the accounts of RNTCP division for all the 59 individual units by passing entries on monthly/quarterly basis in Tally ERP 9 software. The accounts of iividual need t e incorporated in the books of RNTCP division on monthly basis. 3. As per Consolidated Receipt & Payment account opening balance of cash, bank and advances are Rs.48539500.0O as on 1/4/2014. As per Utilizwcn Certificate of 2013-14 closing balance of cash, bank and advances wS RA4l556.00 as on 31/3/2014. Thus there is di17rencfR.2L,641.OO in Opening balances. SPECIFIC AUDIT OBSERVATIONS Name of Unit RNTCP - Pune State HQ State Maharashtra Person In-charge Mr. Prasad Latkan Audited attended by Mr. Vidhate Mob.No. 9763826244 Date of audit 02/07/2015 Record produced for verification (Yes/no) ( '1) Cash book i Ledgers ' Receipt & 1 BRS Payment FA i Journal ' Advance 1 Stock J Register Register Register A) Irregularities observed during the vouching - Sub A/c Date Amount Account Paid Remarks Head particula rs ---902-5O-. W vehicle--=ain± Paid for vecle-re pairs M!-1-2- 25/06/14 7819.00 Maintena Auto RR 0150 and MH12 AH 8102 08/08/14 14315.00 nce Wheels and other. (P) Ltd. > Service engineer's approval not on record for many payments of repairs during the year. 30/04/14 16099.00 Supervi Dr. M.H. > Lodging charges of Rs.7699/- sion & Pawar reimbursed incurred in Monitori (JDHS) Mumbai for attending training. ng > As per guidelines, room tariff allowed is Z3000/- day. > But as per voucher - Name of Bill Tariff Hotel no. paid/ I day Hotel 188 Z3699 Landmark Hotel 260 Z4000 Jayashree > Thus Society has paid excess amount of f1699/- (;699 + e1 000). 09/06/14 21359.00 Supervi Dr. M.H. > Lodging charges of sion & Pawar Rs.4727.45/- reimbursed Monitori (JDHS) incurred in YMCA, Mumbal ng vide bill no.964 dt. 01/06/2011 for attending meeting. > As per guidelines, room tariff allowcd is Z30200j/- day. 20 o > Thus Society has paid excess amount than guidelines. 06/08/14 41000.00 Training Balaji Tea > Paid for lunch and tea House expenses for meeting. > Quotation procedure is not followed. C) Statutory Deduction > For all payments of salary during the year 2014-15, TDS is deducted @ 1% u/s 194C instead of deducting u/s 192B. TDS should be done u/s 194B for salary payments. E) Other Observations 1) Advance tracking register is not signed by authority. 2) Ledger book is not signed by the concerned authority. 3) Professional tax return is not filed for FY 2014-15. 4) TDS return not made available for verification. 5) For all P pavm,nt! during FY 2014- 1'. PT is deposited manually and not depos,x e Ycufcically as per guidclmes. 6 Tor afl TD- pyments Cur ;g FY 2014 .TD is deposited manually -1 c- c;t e1(C,(11:t1V a X!Ie CCOF ni Name of Unit RNTCP- STDC NAGPUR Taluka & District Taluka - NAGPUR District - NAGPUR Person In-charge Mr. RAHUL PATIL. Audited attended by Mr. H.H. PATEL Mob.No. 9823678627 Date of audit 03/07/2015 Record produced for verification (Yes/no) Cash book 1 Ledgers X Receipt & 1 BRS I Payment FA J Journal X Advance ' Stock < Register Register Register A) Irregularities observed during the audit Date Amount Account Paid Remarks Head particulars 17/04/2014 2000 POL Diesel Vehicle log book is not made 2000 Expenses available for verification. 1341 250 T284720T4 6T2D Training Mr.D.P. . As per guidelines TA Sakalker Travelling allowance should be paid actual producing ticket but majority of tickets are not on record. 2. Amount as per ticket 930 and TA given 1860 Hence, excess amount ____________should be recovered. 05/06/2014 53300 Training Indian Amount paid for providing Caterers Break fast, Lunch, Tea but TDS is not done. .16/06/2014 171124 M-isc. Kasturi Kasturi Suppliers is 12/03/2015 180323 Account Suppliers appointed 'as supplier of drugs for various DTO but Tender procedure is not made available For Verification TDS is not done. 19/06/2014 147600 -Contract Dr.Farah TDS is not done. (u/s 194 C) 95180 ual Mohammad Services Dr.B.R. Amte 30/06/2014 46668 STS Amount paid PiAvsent is made in cash Training to STS's instead of account payee ,TA,DAh 23/01/2015 62960 TrainmChano riucter S not made 23/01/2015 9400 Treacle Links -a-iabi2 for verrfication. Ma Tganki aTesDS isnotdone 22 P c 04/02/2015 225000 Lab Unique Laboratory Stock book is not 05/03/2015 225000 Material Traders made available for 23/03/2015 555000 ACME verification. Fharam 31/03/2015 309213 Equipme Sharma Stock book is not made 323850 nt Electricals & available. Maintain Electronics s 31/03/2015 65816 Security Bharat TDS is not done. Bill - Securities office operation s B) Other Observations 1. Vehicle log book is not made available for verification. 2. STDC is entered into agreement with SPS Security and Multipurpose Services Pvt.Ltd. but total Amount paid to Co. is exceeds Rs.75000/- in a year but TDS is not done. 3. Concurrent Audit of STDC is not done. 4. Salary paid to Dr.Farah Mohammed and Dr.Amte, Dr.Shweta Kulkarni for whole year but TDS is not made available. 5. Medicine stock book is not made available for Verification. 6. Stock book of Stationery Register is not made available for Verification. 7. STDC is maintained Cash Balance of Rs. 39702.