Audit Plan- 2018-19

Office of the Principal Accountant General (G&SSA)

Uttar Pradesh, Allahabad
 Objectives of audit plan

• to identify departments, schemes, projects and programmes, significant in

terms of outlay, high risk and high expenditure, sensitivity and
environmental equity, besides being perceived as suffering from weak
internal controls and having history of programme abuse;
• of the State Government to optimise the use of available human resources;
• to minimise redundant audit unit where programmes are too diffused to fix
accountability viz., non-auditable units;
• compliance of related regulations and procedures and executive
instructions; and
• to ensure effectiveness of internal control mechanism in the department.
Audit planning process and methodology
(A) Inherent risk analysis
• Inherent risk is the natural level of risk inherent in a process or
activity before application of internal controls. It is the probability
of loss/irregularity happening in a transaction if no controls or other
mitigating factor are in place.
• Inherent Risks are high in transaction/activities involving high
degree of judgement, discretion or estimation. Transactions which
are highly complex are also likely to have high inherent risk in
view of the complexity involved in their execution. Complexity
enhances the inherent risk of fraud, corruption, favour and other
serious irregularities.
Audit planning process and methodology
Inherent risk analysis (Contd…)
In government accounts, the nature of government expenditure is captured at
Object Head level which are listed in Rule-8 of CCS Delegation of Financial
Rules. Since there are about 70 Object Heads, the expenditure under object
Heads are further consolidated into 07 Object Classes as listed below:
• Object Class 1 – Personnel Services and benefits
• Object Class 2 – Administrative expenses
• Object Class 3 – Contractual services and supplies (supplies and materials,
minor works, professional services, ration, POL, clothing, advertising etc.
• Object Class 4- Grants (Grants-in-aid, subsidies, scholarships)
• Object Class 5 – Other expenditure (suspense, interest, central state transfer of
• resources)
• Object Class 6 – Acquisition of Capital Assets and other Capital Expenditure,
(Plant and Machinery, Vehicles, Major Works, Land and Building, Investments)
• Object Class 7 – Accounting adjustments
 (B) Control Risk Assessment
• Control risk is the risk of financial irregularity arising due to absence of or failure
in the operation of relevant controls of the entity. Hence, entities having weak
control environment will have higher control risk implying that inherent risk will
remain largely unmitigated by control checks of the organization
• Several important developments have taken /are taking place in the government
departments which have significant impact on improving overall control
environment in departments and their field units.
• These developments include introduction of DBT, Aadhaar linking of beneficiaries
of various schemes, online monitoring and reporting of progress of
implementation of important Centrally Sponsored Schemes/Programmes, use of
remote sensing and GIS technology for programme monitoring, introduction of
integrated financial management systems in State Government, mandatory use of
e-tendering in many government departments for procurements and award of
works, online delivery of certain basic services to citizens, etc. and automation of
functions of government departments and offices.
• These positive developments have led to improvement in control environment in
many departments and offices and therefore, these factors have been taken in
consideration in the control risk assessment exercise.
 Control Risk Assessment (Contd…)
• Control risk assessment has been carried out by assigning risk score to
each of the 20 factors, depending upon on the severity of the risks.
Accordingly, total risk weight has been arrived at by adding the total
risk score divided by total maximum score (in this cases 100).
• After computation of Inherent and Control Risks as discussed above,
the risk value of the department/unit has been determined as given
below:
• Risk Value of the Department = (Total Inherent Risk Value of the
Department) X (Control Risk of the Department)

• Risk Value of the Unit = (Total Inherent Risk Value of the Unit) X
(Control Risk of the Unit)
• Process of risk assessment has been elaborated in the Appendix-3.
 At the outset of audit planning data of VLC was considered. Further,
VLC data have been made in the form of object head-wise and DDO
wise, thereafter, the data have been mapped into seven object class
along with department wise and audit units wise. This procedure was
very exhaustive for audit planning.
After taking department wise expenditure and DDO wise expenditure,
we have done many exercise for making of criteria for scoring of
Inherent risk and control risk so that the risk profiling of the entity
could be carried out according to new assessment model.
 Categorisation of auditable units
Sl. No.
Department (Apex units) Audit units
Categorization Ceiling Risk Value Categorization Ceiling Risk Value

1. High risk More than Rs. 1000 crore High risk* More than Rs. 25 crore
2. Medium risk Rs.500 crore – Rs. 1000 crore Medium Risk Rs. 5 crore to Rs. 25 crore

3. Low risk Less than Rs. 500 crore Low risk Less than Rs. 5 crore

* High risk units has been categorised into Extremely High (exp more than 500 crore, Very High (Exp. more than 200
crore) and High risk (Exp. more than 25 crore)
 Total and Planned units of Audit Plan Sep-2017
(Civil Units)
Wing

Units Total Number of Units Units Planned

H M L H M L
G. S. 1848 164 298 1386 118 98 115
SS-I 346 126 166 54 30 18 10
SS-II 1493 118 555 820 81 164 100
SS-III 1351 39 488 824 38 135 179
SS-IV 856 140 325 391 100 60 46
Total 5894 587 1832 3475 367 475 450
 Total and Planned units of Audit Plan Dec-17(Civil Units)

Sector
Units Total Number of Units Units Programmed
H M L H M L
G. S. 1546 103 445 998 103 174 147
SS-I 351 5 168 178 5 39 37
SS-II 1493 110 230 1153 110 102 204
SS-III 1286 30 222 1034 30 112 186
SS-IV 859 103 149 607 103 58 131
Total 5535 351 1214 3970 351 485 705
 Total and Planned units of Audit Plan April-18
(Civil Units)
Sector
Units Total Number of Units Units Programmed
H M L H M L
G. S. 1546 132 329 1085 132 68 98
SS-I 351 13 132 206 13 24 13
SS-II 1493 108 228 1157 108 90 150
SS-III 1286 23 99 1164 23 53 243
SS-IV 859 48 81 730 48 40 133
Total 5535 324 869 4342 324 275 637
 Comparison of total and Planned units of Audit Plan Sep- 17,
Dec-17 & April-18 (Civil Units)
Audit Plan Total Category wise (H, M, L) Total Category wise ( H, M, L) planned
2018-19 Units Number of Units Units

H M L H M L
Sep-17 5894 587 1832 3475 367 475 450
Dec-17 5535 351 1214 3970 351 485 705
April-18 5535 324 869 4342 324 275 637
Overall decrease in the number of total units is due to some audit units have been categorised into
implementing units on the basis of their significant.
H category units have reduced due to risk profiling and categorisation on the basis of financial criteria.
Further, H-cat units have been categorised into Extremely High, Very High, and High risk for proper allocation
of days and deployment of manpower while it was limitation in the model of 2005 that we allotted 10, 8, and 6
days for ‘A’, ‘B’ and ‘C’ category units.
The coverage of H-cat units would be 100 % in every year.
Similarly M-cat units have been reduced and these units would be audited from 2-3 years.
Resultantly the L units have increased, thereby correct resource planning is depicted
Comparison of total and Planned units of Audit Plan Sep-
17, Dec-17 & April-18 (Local Bodies)

Sector Total Category wise (H, M, L) Total Category wise ( H, M, L) planned

Units Number of Units Units
H M L H M L
Sep-17 60696 89 1020 59587 80 127 350
Dec-17 711 55 281 375 55 146 168
April-18 711 49 255 407 49 100 82
• From the above table, it is clear that number of H-cat units reduce as the
risk profiling of auditable units is based on the new risk model developed
by this office.
• Further, H-cat units have been categorised into Extremely High, Very High,
and High risk for proper allocation of days and deployment of manpower
while it was limitation in the model of 2005 that we allotted 10, 8, and 6
days for ‘A’, ‘B’ and ‘C’ category units.
• Further, implementing units have been introduced in this model and these
have been allocated man-days along with the concerned auditee units. This
has facilitated the tier audit giving the holistic coverage of auditee entities.
• in the new risk assessment model we can focus in the high risk areas by
applying inherent risk and control risk factor.
 Wing wise audit plan 2018-19
• In the office of PAG(G&SSA) have five functional wings as below:
• General Sector
• Social Sector-I
• Social Sector-II
• Social Sector-III
• Social Sector-IV
 General Sector
Profile of Department wise and Category wise auditable units
Total no. of
Sl. No. Name of the Department EH VH H M L
units
1 Secretariat Administration 0 1 13 14
2 Language 2 2
3 Revenue 7 58 59 124
4 Estate Property 1 0 5 6
5 Finance 0 1 150 151
6 Home 1 15 98 102 216
7 Home Guard 0 1 73 74
8 Appointment:Public Service Commission 1 0 1
9 Planning Deptt. 0 4 72 76
10 Vigilance 10 10
11 Information & Public Relation 1 0 72 73
12 Law (Judiciary Department) 2 3 87 92
13 Jail Administration 1 0 1 67 69
14 Election 1 140 141
15 Administrative Reforms 1 1
16 PWD 1 100 99 149 349
17 RED 59 67 126
18 AB 4 4
Total (Audit Units) 1 2 126 327 1073 1529
Apex 3 2 12 17
Grand Total (Audit +Apex) 1 2 129 329 1085 1546
 Data analysis for risk profiling of Public Works
Departments
Step-I: Grouping of exp. of 51 Object Heads into exp. of 7 object class)

Step-II : Getting Weighted Exp.by applying Inherent Risk factors on each object class

Step-III: Getting Final Weighted Expenditure by applying control risk factors on weighted
exp of Step-II

Step-IV: Getting category by applying criteria prescribed in the new assessment model
(Amount >=1000 crore, ‘H’, Amount >=500<1000 crore, ‘M’, below 500 crore- ‘L’)
on the final Weighted expenditure derived in Step-III

• Justification of Control risk and Inherent risk factors

 Social Sector-II
Profile of Department wise and Category wise auditable units
Apex Units Cat. wise Apex Units Cat. wise Audit Units
Name of the Department
Sectt. H M L Total EH VH H M L Total
Basic Education 1 1 1 0 0 64 60 100 224
Secondary Education 1 1 1 0 0 22 68 121 211
Higher 1 1 1 0 1 6 11 168 186
Agriculture, Education & Research 1 1 1 0 0 3 1 0 4
Technical Edu. 1 1 1 0 0 1 5 80 86
Vocational Education 1 1 1 0 0 1 0 73 74
Backward Welfare 1 1 1 1 0 0 0 74 75
Social welfare 1 1 1 1 0 0 32 43 76
Handicap welfare 1 1 1 0 1 0 0 75 76
Minority welfare 1 1 1 0 1 0 25 49 75
Women and Child welfare 1 1 1 0 1 0 17 133 151
Soldier Welfare 1 1 1 0 0 0 0 70 70
Sports & Youth Welfare 1 1 1 0 1 0 1 143 145
Culture 1 1 1 0 0 1 3 21 25
Group Insurance 1 1
Total (Grand Total 14+1479=1493) 14 3 4 7 14 2 5 98 224 1150 1479
 Data analysis for risk profiling of Basic Education
Departments
Step-I: Grouping of exp. of 51 Object Heads into exp. of 7 object class)
Step-II : Getting Weighted Exp.by applying Inherent Risk factors on each object class
Step-III: Getting Final Weighted Expenditure by applying control risk factors on weighted
exp of Step-II

Step-IV:Getting category by applying criteria prescribed in the new assessment model

(Amount >=1000 crore, ‘H’, Amount >=500<1000 crore, ‘M’, below 500 crore- ‘L’)
on the final Weighted expenditure derived in Step-III

• Justification of Control risk and Inherent risk factors

 Social Sector-III
Profile of Department wise and Category wise auditable units
Apex
Apex Units (Category wise) Audit Units (Category wise)
Name of the Department Units

Sectt. H M L Total EH VH H M L Total

Agriculture & Krishi Viparan
1 1 1 1 0 1 23 185 210
Animal Husbundry 1 1 1 0 1 0 3 84 88
Fishries 1 1 1 0 0 0 1 55 56
Food and civil supply &
Consumer Forum 1 1 1 0 0 0 1 157 158
Minor Irri. & Ground Water 1 1 1 0 0 0 1 65 66
Horticulture & Food
processing 1 1 1 0 0 0 3 107 110
Irrigation & Water Resorses 1 1 1 1 2 16 65 489 573
Sericulture 1 1 1 0 0 0 0 16 16
Kumbh Mela(No Apex) 0 0 0 0 1 0 1
Total 8 1 1 6 8 2 3 17 98 1158 1278
Data analysis for risk profiling of Agriculture Departments
Step-I: Grouping of exp. of 51 Object Heads into exp. of 7 object class)
Step-II : Getting Weighted Exp.by applying Inherent Risk factors on each object class
Step-III: Getting Final Weighted Expenditure by applying control risk factors on
weighted exp of Step-II

Step-IV: Getting category by applying criteria prescribed in the new assessment model
(Amount >=1000 crore, ‘H’, Amount >=500<1000 crore, ‘M’, below 500 crore ‘L’) on
the final Weighted expenditure derived in Step-III
Justification of Control risk and Inherent risk factors
 Social Sector-IV
Profile of Department wise and Category wise auditable units
Apex
Apex Units (Category wise) Audit Units (Category wise)
Units
Name of the Department Sectt. H M L Total EH VH H M L Total
Med. Education and Trg 1 1 1 0 4 6 7 7 24
AYUSH 1 1 1 0 0 0 4 153 157
Medical Health and Family Welfare 1 1 1 0 0 33 62 195 290
Labour welfare & Employment 1 1 1 0 0 2 0 142 144
Urban Employment & Poverty
Allviation 1 1 1 0 0 0 6 69 75
Political Pension etc. 1 1 1 0 0 0 0 0 0
Apex with SS-III (PSUs) 0 0 0 0 1 26 27
Apex with SS-III (RFCs) 0 0 0 2 0 16 18
DMUs (Deptly. Managed
undertakings 0 0 0 0 0 3 3
Apex with AG (E&RSA) (Uraban
Planning & Land Ceiling) 0 0 0 0 0 44 44
Apex with GS(Prosecution) 0 0 0 0 0 69 69
CPPC (Banks) No Apex 0 0 0 0 0 2 2
SS-IV 6 1 1 4 6 0 4 43 80 726 853
Data analysis for risk profiling of Medical Health & Family Welfare
Step-I: Grouping of exp. of 51 Object Heads into exp. of 7 object class)

Step-II : Getting Weighted Exp.by applying Inherent Risk factors on each object class

Step-III: Getting Final Weighted Expenditure by applying control risk factors on

weighted exp of Step-II

Step-IV: Getting category by applying criteria prescribed in the new assessment model
(Amount >=1000 crore, ‘H’, Amount >=500<1000 crore, ‘M’, below 500 crore ‘L’) on
the final Weighted expenditure derived in Step-III
Justification of Control risk and Inherent risk factors
 Social Sector-I (Civil)
Profile of Department wise and Category wise auditable units
Apex
Units Apex Units (HML) Audit Units (HML)

Sectt. H M L Total EH VH H M L Total

Name of the Department

Rural Development (Civil) 1 1 1 3 0 5 104 93 205
Panchayati Raj (Civil) 1 1 1 1 0 0 27 48 76
Urban Development (Civil) 1 1 1 1 0 0 0 0 1
Apex with GS (DLFA) 0 0 0 0 1 65 66
Total 3 3 0 0 3 5 0 5 132 206 348
 Social Sector-I (Local Bodies)
Profile of Department wise and Category wise auditable units

Apex Units (HML) Audit Units (HML)

Sectt. H M L Total EH VH H M L Total

Name of the Department
Panchayati Raj (LB) 0 20 52 3 75
Urban Development
(LB) 0 0 3 26 203 404 636

Total 0 0 0 0 0 0 3 46 255 407 711

Significant issues identified for detailed examination during
the implementation of Audit Plan-2018-19

(i) Grant-in-aids
• Grant-in-aids
• Grants-in-aid have emerged as a significant mode of spending from the Government
departments. Grants-in-aid are disbursed by the departments to the bodies & institutions
such as schools, colleges, universities, hospitals etc., mainly for salary & non-salary
requirements and for creation of capital assets. Grants-in-aid expenditure is exhibited in
the budget and accounts at the lowest level of disaggregation, under the object heads viz.,
object head-20 (Non-Salary), object head 31 (Salary) and object head 35 for creation of
capital assets. A summary of district-wise release of GIA amounting to Rs. 55529.34 crore
during 2016-17 is given as Appendix-4
• During the course of data collection exercise, it has been observed that most of the
departments are not maintaining the register of grants providing details of amounts
released to various Autonomous Bodies/Agencies etc. The recipient-wise details of grant-
in-aid released are not available in VLC. Since recipients of grants are not known, it is not
possible to plan and carry out effective audit under section 14 & 15 of C&AG’ DPC Act,
1971.
• Expenditure on Grant-in-aid salary in Education Department
• As discussed in the paragraph no. 2 of this audit plan, about 16 per cent of total
expenditure incurred by the State Government during 2016-17 was under Education
sector, comprising of primary, secondary and higher education departments. In the
Primary education department, Rs. 23869.15 crore (89 per cent) out of total expenditure
of Rs. 26784.86 crore has been incurred only on grant-in-aid salary to 5,85,236 teachers
during 2016-17. The number of teachers included 85,494 teachers of Private Aided
schools. District wise status of expenditure on grant-in-aid salary to teachers in primary
Education department is given in Appendix-5.
• Expenditure under grant-in-aid salary has increased from Rs. 21,786.45 crore in 2015-16
to Rs 23,869.15 crore in 2016-17. This is also to mention that the total salary expenditure
of the State Government for all the departments (excluding GIA salary for teachers of
Primary Education Department) during 2016-17 was Rs. 35722.18 crore. Hence, the
expenditure on GIA salary for teachers (Rs. 23869.15 crore) is very high viz., about 67
per cent of total salary expenditure of the State Government.
• In view of huge expenditure on payment of Grant-in-aid salary in Primary Education
Department and media reports of fake appointments of teachers and significant inter-
district variations in number of teachers and expenditure and involvement of sufficient
number of private schools, this expenditure is considered high risk. It has thus been
planned we have planned to focus on this issue during audit plan 2018-19.
 (ii) Personal Ledger Accounts/Deposit accounts
• The Article 202 of the Constitution of India provides for the system of legislative
financial control over public expenditure through the mechanism of Annual
Financial Statement/ Budget to be passed by the Legislature every year
appropriating funds required to meet the expenditure of the Government from the
Consolidated Fund of the State. The funds provided during the financial year and
not utilised before the close of that financial year shall stand lapsed at the close of
the financial year. The UP Budget Manual (Rule 141) prescribes that all final
savings must be surrendered to the Finance Department by 25th March.
• However, there are many departments/Drawing & Disbursing Officers (DDOs)
who are depositing savings in the Deposit Accounts which are not meant for
keeping such funds as per the Receipt & Payment Rules notified by the Controller
General of Accounts, Govt. of India and the List of Major and Minor heads of
accounts prescribed by the President in consultation with the Comptroller &
Auditor General of India. We have noticed that several DDOs are keeping their
unspent funds (savings) in the deposit accounts/PLAs of other DDOs irregularly.
We obtained Koshwani data (Treasury data) from the Government. Analysis of
Koshwani data shows that there is a closing balance of Rs. 12,404.69 crore in
various PLA account as of January 2018 (Appendix-6). This will be further
examined in the audit of PLA’s administrator to establish cases of irregular
transfer and misuse, if any. In view of large amounts involved, this is considered
as high risk area.
 (ii) Personal Ledger Accounts/Deposit accounts
• The matter of misuse/irregular use of PLA accounts was brought to the
notice of the Finance Department, Government of Uttar Pradesh in January
2018. The Government has since issued order No.
la[;k&7@2018@,&1&08 ,0th0@nl&2018&10 ¼50½@2011 Dated 14
March 2018 directing all the departments to stop the practice of transfer of
funds from the consolidated fund of the State to PLA with immediate effect.
The Finance department has also ordered that the amounts remaining in the
PLA accounts after 01.04.2018 would not be drawn by the department and
will be credited to the respective major heads. No unspent funds shall be
credited to PLA accounts after 01st April 2018 irregularly. However, since
large number of Departments/units were operating PLA accounts, and
transferring unspent funds, instead of surrendering there is a serious risk of
irregularities, diversion of misuse of such funds.
• In view of above, the transactions related to transfer of funds to
PLA/Deposit accounts have, therefore, been planned to examine at the
departments/DDO level during audit as a focus area.
(iii) Public Private Partnership Projects
• Public Private Partnership (PPP) has become the preferred model of infrastructure
development in the country in the last few years. Under the PPP mode, the project
is implemented based on a contract or concession agreement between the
Government or statutory entity on the one side and a private sector company on
the other side for delivering an infrastructure service on payment of user
charges. Build, Operate and Transfer (BOT), Lease, Operate and Transfer (LOT),
Build Own, Operate (BOO), Build, Own, Operate and Transfer (BOOT), Design,
Build, Finance and Operate (DBFO), Design, Build, Finance, Operate and
Maintain (DBFOM) are some of model of PPP projects. During the course of data
collection, we have collected data regarding 44 PPP projects involving cost of Rs.
6,011.49 crore implemented by different departments (Appendix-7).
• During audit plan 2018-19, audit of PPP projects in the selected departments
would be carried out alongwith compliance audit of respective unit to ascertain
whether public resources are responsibly and effectively managed to achieve the
intended results.
(iv) Manpower recruitment in various departments
• As per the data collected from various departments, it has been noticed that there are huge
shortages of manpower in many departments. Some of the major departments with huge
shortages of key functionaries are Medical Health and Family Welfare department (Doctors:
40 per cent; Nursing staff: 54 per cent), Technical Education Department (Lecturers: 69 per
cent); Police department (Traffic police: 71 per cent; Forensic labs: 69 per cent); Jail
department (upto 64 per cent); Panchayati Raj Department (Gram Panchayat Vikas Adhikari:
88 per cent).
• It has further been observed that in many cases, recruitment of manpower is delayed at the
level of various recruitment agencies as UP Public Service Commission, Police Recruitment
board, Subordinate Selection Commission etc. On the other hand, the departments are also
delaying the process of assessment of requirement of posts to be filled in, submission of
proposals for recruitment to the commissions etc.
• In view of this it has been planned to examine the issue of manpower recruitment in detail at
various level such as Government, Directorates and also at the district level formations. Apart
from this, we would also examine the records at the recruitment commission level to ascertain
the reasons for delay in completing the process of recruitments.
(v) Health services and Hospital management
• The expenditure on health sector as percentage of total expenditure of the State during 2016-
17 was as low as 4 per cent. Due to very low expenditure sharing on the health sectors, the
health services by the Government hospitals in the State is not satisfactory. The unsatisfactory
health services, being provided by the government hospitals is evident from the facts that
there is lack of basic health facilities in the hospitals in the State. Recently, large number
deaths have been reported due to lack of health facilities in the government hospitals. In view
of this, we have planned to examine the critical issues related to health services and hospital
management through performance audit of hospital management and also through the
compliance audits of various auditable units. Areas such as adequacy of medical and
paramedical staff, infrastructure, equipment, medicines, waiting list of patients, diagnostic
facilities, as well as financial audit covering procurements of medical stores (equipment,
medicines, other supply and consumables), construction of hospitals, PPP projects, hiring of
contractual staff, stores accounts, utilisation of grants, timely supply/availability of essential
drugs, oxygen and other support services such as ambulance etc., would be the focus issues
for the performance audit and compliance audits of units of health department. Apart from
above, quality of Health Care covering various areas of concerns relating to service
provisions, patient rights, inputs, support services, clinical services, maternal and child
services, national health programme, infection control would also be examined. Detailed
guidelines, for Performance Audit of Hospital Management are being prepared for approval of
Headquarters office.
(vi) Audit of records of construction of works
• The major construction works related to construction of Roads, Bridges, Canals and other
irrigation structures are carried out by Public Works Department, Irrigation and Water
Resource Department, and Minor Irrigation Department. Apart from this, Rural
Engineering Department carries out deposit works. During 2016-17, Rs. 14159.89 crore
has been spent by PWD (Rs. 9165.70 crore) and by Irrigation Department (5994.19
crore). Effective and systematic audit of records, related to construction activities,
performed by Public Works, Irrigation, Minor irrigation and Rural Engineering
Departments has significance. To improve the outcome of works audit, both in quantity
and quality, a more planned audit mechanism is imperative to be adopted. Issues should
be identified in advance and accordingly records should be examined during the course of
all compliance audits in the works’ divisions across the state. This will enable us to
compile similar issues, emerged during the course of compliance audits and then these
may be highlighted in the AIR, Audit report and in the Management letter, depending
upon the materiality of the audit observations.
• For this, we have collected details of work contracts in Public Works, Irrigation, Minor
irrigation and Rural Engineering Departments from office of the Accountant General
(A&E), Uttar Pradesh, Allahabad. From this, contracts will be selected centrally for
various divisions for detailed examination by Audit team in field audit. Thereafter, the
audit findings will be consolidated. This will be used in examination of contracts in more
systematic and comprehensive manner so that identical audit issues could be scrutinized
in more focused manner and the aggregated audit findings could be used for audit paras.
 (vii) Audit of e-tendering database
• Recently, the State Government has adopted e-tendering in all the
departments for construction of works and procurement of goods and
services. In view of this, we are collecting data of e-tendering in respect of
all types of procurements by the Government departments. We have
collected the e-tendering data (MIS reports) in respect of construction works
executing by Rural Engineering department and Irrigation department.
• These data/information would also be analyzed and inputs would be
provided to the audit teams of work audits for detailed examination of these
issued in field audit. This will also provide aid to the audit team in
examining the important issued, especially related to tendering processes in
lesser time with more assurance.
(viii) Mobilisation/machinery advances

• Recent reports of LOU related frauds in some Public and Private

sector banks exposes the risk of unsecured and advances in various
organisations.
• In the execution of works contracts, each department grants
mobilization advance to extent of five per cent of contract cost to
contractor to mobilise the resources to the work site. Similarly,
machinery advances of 5 per cent of contract value or 90 per cent of
cost of equipment, whoever is less, are also provided to the contractors
for procurement of machine and equipment for the contracted works.
Mobilisation advances are given on the security of bank guarantee,
equal to the advances by the contractor. Whereas, machinery advances
are granted on submission of invoices in support of purchase
equipment/machinery by the contractors.
Mobilisation/machinery advances (Contd…)

• It is a high risk area as the figure of advances given to contractors is not

reflected separately in accounts. Further, contractor ledgers are also not
being maintained by many divisions. It has also been observed that the
advances are granted by the engineering authorities without ensuring
submission of required security viz., bank guarantee/invoices. It has also
been observed that in cases where bank guarantee is obtained from the
contractors in lieu of mobilization advances, the same are expired and not
renewed during the currency of such advances. Thus, the advances are
granted without securing government interest.
• It has, therefore, been decided to examine this issue in details across the
selected divisions/offices planned in the Audit plan 2018-19. The audit
observations will then be consolidated to draw Government attention on the
high risk transactions.
 (ix) Uttar Pradesh Government Crop Loan Redemption Scheme -2017 for
the Upliftment and Sustainable Development of Small and Marginal
Farmers
• The Government of Uttar Pradesh (GoUP) launched (July 2017) Crop loan
redemption scheme-2017 for the Upliftment and Sustainable Development
of Small and Marginal Farmers. Under the scheme, crop loans of up to Rs. 1
lakh to individual small and marginal farmers whose crop loan was
disbursed by lending institution as on or before 31 March 2016 are to be
waived off. The State Government has made provision of funds under grant
no. 11, 81 and 83. An expenditure of about Rs. 20,024.36 crore has been
incurred during 2017-18 for benefiting about 33,18,692 farmers.
• In view enormous expenditure, this is considered as high risk area and thus,
it has been decided to put focus on the examination of transactions related
to crop loan redemption scheme at various levels.
 (x) Disbursement of Scholarships
• Various schemes for providing scholarship are being implemented in the State
through Social Welfare, Backward Class Welfare, Minority Welfare departments.
Govt. of India also provides financial assistance for disbursement of scholarship to
the students of SC category students. During 2012-17 Rs. 7332.72 crore has been
spent on the payment of Post Matric Scholarships for SC students.
• Recently we have conducted an All India PA of Post Matric Scholarship for
Scheduled Caste Students. In the performance audit, we have noticed instances of
grant of scholarship twice to the same students, grant of scholarship to ineligible
students, mismatch of income certificate provided by the institutes with the details
available on the scholarship portal, payment of scholarship against High School
Roll Number of others, students with same caste certificate number and same
Board roll number etc. In view of these irregularities noticed in the PA, the
payment of scholarship under various schemes/programmes is considered as high
risk area. It has therefore, planned that the details available on the scholarship
portal (SAKSHAM) will be obtained and the same would be verified from the
records of respective DDOs/Institutes to ascertain the authenticity of the
documents and payment of scholarship.
 (xi) Construction of Roads and Drains by Panchayati Raj Institutions
• During 2012-18, about Rs. 47990.09 crore (State Finance commission
grant: Rs. 21058.97 crore; Central Finance Commission Grant: Rs.
25690.96 crore and own resources of PRIs: Rs. 1240.16 crore) have been
provided to all the three tiers of PRIs. Out of these Rs. 47990.09 crore, Zila
Panchayats received Rs. 7996.57.crore and spent Rs. 3671.42 crore during
2012-18 (upto December 2017). It has been observed that Zila Panchayats
spend about 70-80 % of the funds received from different sources only on
construction of roads and drains. Due to involvement of multiple agencies
for same kind of functions and non-maintenance of records by the PRIs,
possibilities of duplicity of works and misappropriation of government
funds cannot be ruled out. In view of this, expenditure on construction of
roads in PRIs is high risk area. This risk proposed to be addressed a
Thematic audit for construction of Roads and drains by Zila Panchayats for
ATIR of PRI for the year ended March 2018.
• Implementing units
• Para 3.6 of the compliance auditing guidelines stipulate that
organizational hierarchies and implementing agencies below the
Audit Units are to be categorized as Implementing units.
Guidelines also states that these Implementing units would be
audited, based on a sample selection, as a part of their respective
Audit units. Accordingly, 5,72,716 implementation units have
been identified which have been planned to audit on sample basis
with the audit of respective Audit units. All efforts have been
made to identify all implementing units in the State in each
department. But since this exercise has been done first time, there
is a possibility of change of number of implementing units. Final
figure of implementing units would be reconciled and would be
intimated to headquarters office.
• Implementing units (Continue…)
• Sample size of the Implementing units has been decided by
considering the factors like availability of man-power and party days
allocated to cover the respective audit units,
susceptibility/vulnerability to errors and frauds, adequacy of internal
control etc. in the implementing units. Audit Inspection Reports in
respected audit of the selected Implementing Units would not be
issued in respect of units of all the departments except in Panchayati
Raj Department. The implementing Unit of PRIs viz., Block/Kshetra
Panchayats and Gram Panchayats performs important function for the
development of rural areas and also provide citizen services to the
public there performance should be audited and included suitability in
the Audit Inspection reports. Therefore, it has been planned that
Block/Kshetra Panchayats and Gram Panchayats would be audited on
sample basis as implementing unit with the audit of respective Zila
Panchayat (Audit unit) and separate Audit Inspection Reports for each
audit block/Kshetra Panchayats and Gram Panchayats would be
issued, apart from Audit Inspection Report of the respective Zila
Panchayat.
 Execution of Audit Plan
• The audit of units planned under the Audit plan 2018-19 would be
conducted to cover sensitive areas of audit of the Apex, Audit and
Implementing units and to obtain reasonable assurance on the quality
of public spending. The schemes/programmes/activities related to
priorities of the State Government as discussed in paragraph 1 of
Section-1 of this audit plan, performed by various formations of the
State Government, under the audit jurisdiction of the this office, would
be audited through performance, Thematic audit and also through the
compliance audit during 2018-19. To plan the audit effectively and to
make the audit endeavor focused and effective, a desk review would
be carried out prior to commencement of compliance audit of each
planned unit by taking into account the significance of issues
identified under para 3 of Section of this audit plan.
 Execution of Audit Plan (Contd…)
Apart from this, following inputs would also be provided to the audit teams for
conducting the audit effectively:
• DDO-wise, scheme-wise expenditure
• DDO-wise/Object head-wise expenditure
• DDO wise booking in the suspense heads of accounts
• DDO-wise position of Grant-in-aid provided to various agencies
• DDO-wise position of pending UCs
• DDO-wise trend of expenditure (increase/decrease) with respect to previous years’
expenditure
• DDO-wise details of un-posted/missing credits/debits for establishment audit of
GPF
• Important sanctions by the State Government
• Reports of performance audits/thematic audits related to audit units
• Copies of important government orders available at departmental website
(shashnadesh.nic.in)
• Other inputs obtained from data analytics.
Compliance audit
• Risk profiling of all auditable units of various departments of the State
Government has been done by analysing the expenditure of the departments
and audit units (DDOs) on the various parameters of Inherent and Control
risks. Based on the risk analysis and by arriving at the risk weighted
expenditure of departments and Audit units, 3356 (Apex: 27, Audit Units:
1440, Implementing Units: 1889) out of total 5,78,962 units of all
categories (Apex: 48, Audit Units: 6198; Implementing Units: 5,72,716)
units have been planned for audit plan 2018-19.
• Further, Central audit comprising of audit of vouchers, sanctions and other
records is carried out as per prescribed norms by the staff deployed CAP
and CASS sections. During the Audit plan 2018-19, 702 monthly accounts
and 257594 vouchers would be audited alongwith other audit checks and
examinations by deploying 16,184 mandays.
• Besides, 25 DPs and 12 DPs have also been proposed for inclusion in
G&SSA Report and LB Report respectively for the year ending March
2018.
 Performance audits
Topics for G&SSA State Audit Report 2018
• Headquarters office vide its letter no. 89/CR/co-ordn./AAP2018-19/311-2017
dated 15.01.2018 has communicated approval of following topics for G&SSA
report:
Sl. No. Name of topic
1. PA on Hospital Management
2. PA on Ground water management & regulations scheme
 Performance audits (Contd…)
• Topics for the Local Bodies ATIR for the year ended March 2018
• Headquarters office vide its letter no. 424-CR/Rep/UP/441-2017 dated 21.03.2018 has
directed to collect data/information in respect of two thematic audits to ascertain the merit for
inclusion of these two TAs for audit plan and audit report. The two topic are as below:
Sl. No. Name of topic

1. TA on approval of site plans and construction of Roads and Drains by Zila

Panchayats (PRI ATIR)
2. TA on Water Supply service by ULBs (ULB ATIR)
The data and information in respect of TA on Approval of site plans and construction of Roads
and Drains by Zila
Panchayats (PRI ATIR) has been collected. Based on preliminary study, it is proposed that TA
on construction of Roads and Drains by Zila Panchayats may be attempted for PRI ATIR. In
respect of TA on Water Supply service by ULBs (ULB ATIR), information is being collected to
ascertain the merit of the topic for ATIR of ULB. Detailed proposal in respect of these two
topics would be sent separately.
 Performance audits(Contd…)

• Topics for Union reports (All India PAs)

Sl. No. Name of topic
1. PA on Ground Water management & Regulations
scheme
2. PA on Preparedness for Implementation of
Sustainable development goals
 Financial audits
• Certification of Finance and Appropriation Accounts and
preparation of State Finance report
• For the audit plan 2018-19, 1666 mandays have been allocated
for carrying out audit Certification of Finance and Appropriation
Accounts and preparation of State Finance report.
• Certification of Accounts of Public Sector Undertakings
• Presently there are 27 PSUs including 15 non-working PSUs,
certification of which is done by this office, subject to receipt of
the accounts of these PSUs. For audit plan 2018-19, 238 mandays
have been allocated for carrying out certification of the accounts
of 10 PSUs, under the audit jurisdiction of this office.
.
 Financial audits(Contd…)

• Certification and issue of audit certificate of externally

aided/world bank assisted & GoI assisted programmes
• Certification and issue of audit certificate of externally
aided/World Bank assisted programme is done, subject to
receipt of accounts from the respective entities. For audit plan
2018-19, we have planned to carry out certification and issue
of audit certificate of 13 Programmes/schemes by using 714
mandays.
Thanks