Arpookara
Grama Panchayat

Audit Analysis Report – Arpookara Grama Panchayat (2016–17)

1. Introduction

This report presents an analysis of the Statutory Audit Report of Arpookara Grama Panchayat for the financial year 2016–17, issued by the Kerala State Audit Department under the Kerala Panchayat Raj Act, 1994 and Kerala Local Fund Audit Act. The audit examined the Panchayat's financial statements, receipts, expenditures, project implementation, revenue collection, and internal control systems.

Executive Summary

The audit reveals that while the Panchayat maintained its statutory accounts and implemented several welfare schemes, there were significant weaknesses in financial management, project execution, revenue collection, accounting accuracy, and internal controls. Large differences existed between budget estimates and actual performance, and many audit observations indicate poor compliance with government rules.

2. Financial Performance

Observation

• The Panchayat ended the year with a healthy closing balance.
• However, actual receipts and expenditure were far below budget estimates, indicating unrealistic budgeting and poor execution.

3. Budget Analysis

Budget vs Actual

• Budgeted Receipt:
  ₹30.89 Crore
• Actual Receipt:
  ₹5.21 Crore
• Budgeted Expenditure:
  ₹31.47 Crore
• Actual Expenditure:
  ₹4.94 Crore

Audit Observation

The audit points out that the budget was not prepared realistically, resulting in a huge variance between estimates and actual figures. The Panchayat should prepare budgets strictly in accordance with the Kerala Panchayat Raj Act.

4. Fund Utilization

Major fund utilization was as follows:

Observation

• Excellent utilization of MGNREGS.
• Very poor utilization of:
  • Tribal Sub Plan
  • Road Maintenance Grant
  • Finance Commission Grant

This indicates inadequate planning and implementation.

5. Annual Plan Performance

Major Achievements

• LPG connections supplied to Anganwadis.
• Financial assistance and laptops provided to SC students.

Major Shortcomings

Many agriculture-related projects were not implemented, including:

• Vegetable cultivation
• Grow bag distribution
• Paddy development projects
• Livestock subsidy programmes

Only a small percentage of maintenance grants was utilised.

6. Revenue Analysis

Compared to previous year:

Observation

The Panchayat improved its own revenue collection considerably, mainly through tax collection.

7. Welfare Schemes

Major welfare benefits:

• Old Age Pension
• Widow Pension
• Agricultural Labour Pension
• Disability Pension
• Marriage Assistance
• Unemployment Allowance

These schemes benefited thousands of residents during the year.

8. Major Audit Findings

A. Weak Internal Control

The audit observed serious weaknesses including:

• Lack of expenditure control
• Inadequate documentation
• Payments without supporting records
• Poor fuel monitoring
• Vehicle logbook irregularities
• Split bills to avoid procurement rules
• Irregular sanitation expenditure
• Improper travel allowance payments

Overall internal financial discipline was found to be weak.

B. Accounting Deficiencies

The audit identified:

• Incorrect liability records
• Asset register not updated
• Demand registers not matching accounts
• Deposit and advance registers incomplete
• Property tax records inconsistent
• Hospital kiosk receipts mismatched
• Grant accounts not reconciled

These deficiencies reduce the reliability of financial statements.

C. Property Tax Issues

The audit found:

• Mobile tower tax arrears pending.
• Resort building taxed at lower commercial rate.
• Tax exemption wrongly granted to an ineligible building.
• Property tax mapping in Sanchaya software incomplete.

These resulted in revenue loss.

D. Professional Tax

Several irregularities were observed:

• Under-assessment of professional tax.
• Second half tax not collected from certain institutions.
• 42 employees, including Medical College staff, had not paid professional tax.
• Institution tax not collected from some establishments.

The audit recommended immediate recovery.

E. Tender Fee

Tender fees collected through e-tendering had not been transferred back to the Panchayat account from the Executive Engineer's account.

F. Rent Arrears

Rental arrears remained outstanding, with a large amount yet to be recovered due to ongoing legal proceedings.

G. Joint Projects

Government guidelines were violated by crediting joint project funds into the Panchayat's own account instead of the prescribed Treasury account.

H. Hospital Kiosk

Major issues included:

• Employees not working in prescribed shifts.
• Excess daily wages paid.
• Revenue records not matching accounts.
• Poor supervision.
• Insufficient infrastructure.

The audit recommended corrective action.

9. Overall Assessment

Strengths

• Increase in own-source revenue.
• Welfare pension schemes implemented effectively.
• High utilisation of MGNREGS funds.
• Positive closing cash balance.

Weaknesses

• Poor project completion.
• Unrealistic budgeting.
• Weak internal controls.
• Serious accounting inconsistencies.
• Poor tax recovery.
• Non-compliance with financial rules.
• Weak documentation.
• Delay in recovering government dues.

10. Recommendations

1. Prepare realistic annual budgets based on actual revenue trends.
2. Strengthen internal financial controls and documentation.
3. Update asset, stock, advance, and deposit registers regularly.
4. Recover all pending property tax, professional tax, and rent arrears.
5. Improve project planning and implementation to increase completion rates.
6. Ensure proper accounting reconciliation between software systems.
7. Strictly follow government procurement and financial rules.
8. Strengthen monitoring of Hospital Kiosk operations.
9. Improve utilisation of development and maintenance grants.
10. Conduct periodic internal audits and compliance reviews.