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Karnataka

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

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 four chapters. The first and the third chapter contain a summary of finances and financial reporting of Panchayat Raj Institutions and Urban Local Bodies respectively. The second chapter contains two performance audit reviews and nine paragraphs based on the audit of financial transactions of the Panchayat Raj Institutions. The fourth chapter contains a performance review and six paragraphs based on the audit of financial transactions of Urban Local Bodies. A synopsis of the findings contained in the performance reviews and paragraphs is presented in this overview.

A review of finances of Panchayat Raj Institutions revealed that there was steady increase in the allocation of funds to Panchayat Raj Institutions by the State Government during the period 2005-10. Zilla Panchayats control over expenditure was ineffective to the extent of direct transfer of Government of India funds to the implementing agencies. Medium Term Fiscal Plans were not prepared by any of the Panchayat Raj Institutions, defeating the purpose of enactment of the Karnataka Local Fund Authorities Fiscal Responsibility Act, 2003. Financial reporting was deficient as evidenced from arrears in accounts, non-submission of Utilisation Certificates, non-submission of NDC bills, non-maintenance of subsidiary registers, etc.

In order to provide opportunities to the identified backward Grama Panchayats in the State towards improving their present conditions, particularly with respect to the management of public resources and the delivery of relevant services, the State Government introduced 'Grama Swaraj-the Karnataka Panchayats Strengthening Project' during 2006-07. Implementation of the Project was deficient. Grants were released to Grama Panchayats without ensuring achievement of the envisaged performance indicators. The objective of the Grama Swaraj Project to achieve online communication and face-to-face training suffered due to delay in establishment of Taluk Resource Centres/Satellite Communication Centres.There was no material improvement in collection of taxes and in the response of the rural population towards grama sabhas. Impact study on the effectiveness of service delivery in Gram Swaraj Project areas is yet to be conducted. Among other shortcomings, operation of Project funds through current accounts in banks resulted in loss of interest aggregating Rs.1.06 crore.There were cases of misappropriation of funds because of which subsequent instalments were not released to the Grama Panchayats, depriving the rural poor of the intended benefits.

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