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Financial
Tamil Nadu

Report of 2009 - Financial Audit on Urban Local Bodies and Panchayati Raj Institutions, Government of Tamil Nadu

Date on which Report Tabled:
Date of sending the report to Government
Government Type
Local Bodies
Local Body Types
Panchayat Raj Institutions,Urban Local Bodies
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Sector -

Overview

This Report contains six chapters. The first and the fourth chapter contain a summary of finances and financial reporting of Urban Local Bodies and Panchayat Raj Institutions respectively. The second chapter contains two performance audit reviews on Urban Local Bodies. The third chapter contains thirteen paragraphs based on the audit of financial transactions of the Urban Local Bodies. The fifth chapter contains a performance audit review on Panchayat Raj Institutions and sixth chapter contains a paragraph based on the audit offinancial transactions of Panchayat Raj Institutions. A synopsis of the findings contained in the performance reviews and paragraphs is presented in this overview. A review of finances of Urban Local Bodies revealed that there was steady increase in the overall receipts and expenditure during 2007-08 to 2009-10.Assigned revenue declined in 2009-10 compared to 2008-09. There was increase in outstanding loans at the end of March 2010 compared to last year.

There were arrears in finalisation of accounts by the Urban Local Bodies and there were also arrears in audit of accounts by the Director of Local Fund Audit (DLFA) due to non-submission of annual accounts after rectification as suggested by DLFA. As of January 2011, Audit was completed by DLFA only in seven municipalities and 48 town panchayats for the year 2009-10.Chennai City Municipal Corporation runs 281 schools from Primary to Higher secondary level catering to the needs of 1.07 lakh students with an aim to meet the educational needs of the poor. For the purpose of capital and maintenance expenditure, the Corporation has an Elementary Education Fund, credited with the proceeds of Education tax. The schools were required to be maintained with all necessary basic amenities and to provide a hygienic environment to the students and staff.Performance review revealed that only 47 to 53 per cent of Elementary Education Fund was utilized during 2005-09 and Rs.35.05 crore was diverted to other works not authorized under Elementary Education Fund. Dilapidated buildings were not taken up for maintenance/reconstruction and the schools continued to operate in the dilapidated buildings. None of the school buildings had a license for public safety under the Tamil Nadu Public Buildings (Licensing) Act, 1965. Further, the fire extinguishers provided were not refilled for more than two to three years. The Corporation school students could not utilize the uniforms issued by the Government during 2005-10 under free supply scheme, as they were different from the uniform adopted by the Corporation. None of the 17 short term vocational courses offered by the four community colleges run by the Corporation were recognized by Directorate General of Employment & Training/National Council for Vocational Training.

Government of Tamil Nadu (GTN) constituted Third State Finance Commission (TSFC) in December 2004 as per Article 243 (I) and 243 (Y) of the Constitution of India to analyse the financial position of local bodies and to make recommendations for the award period 2007-2012. TSFC submitted its report in September 2006. Performance Audit on implementation of accepted recommendations of Third State Finance Commission in Urban Local Bodies revealed that an amount of Rs.8.31 crore towards Cable TV tax for the period from 2003-04 to 2007-08 was not assigned to 475 Urban Local Bodies as of November 2010. Surcharge on Stamp Duty of Rs.668.40 crore for the period from April 2007 to March 2010 was assigned to 642 Urban Local Bodies belatedly with delay ranging between one to nineteen months. Urban Local Bodies did not levy the minimum property tax for the years 2007-08, 2008-09 and 2009-10 for want of orders from the Government resulting in loss of revenue of Rs.86.94 lakh in 79 test checked Urban Local Bodies. Reforms recommended by the TSFC are yet to be implemented. State Government failed to implement majority of the accepted recommendations as of November 2010, though High Level Committee under the Chairmanship of the Chief Secretary was formed in May 2007 and did not meet even once to monitor the implementation of accepted recommendations of TSFC, thus defeating the objective of TSFC.

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