Audit Reports

Financial Performance

Report of 2007 - Financial and Performance Audit of Local Self Government Institutions of Government of Kerala

Date on which Report Tabled:
Date of sending the report to Government
Government Type
Local Bodies
Local Body Types
Local Bodies
Sector -


This Audit Report includes five performance reviews of which three are mini reviews and eight audit paragraphs. In addition, it also includes observations on the structure and finances of the Local Self Government Institutions(LSGIs) and the results of supplementary audit under the Technical Guidance and Supervision arrangement. Copies of the draft reviews and paragraphs were forwarded to the Government and the replies wherever received have been duly incorporated.Accounts of many LSGIs were in arrears since 1996-97. As against the budget provision of Rs.452.74 crore under State and State share of Centrally Sponsored Schemes under Plan funds, the actual expenditure incurred by LSGIs was only Rs.154.22 crore.

As against an amount of Rs.312.36 crore available for the implementation of six Centrally Sponsored Schemes, the expenditure incurred was only Rs.61.34 crore.Supplementary audit of 86 LSGIs conducted during 2007-08 revealed that the maintenance of basic accounting records by LSGIs was defective and there were lapses in preparation of Annual Financial Statement and Budget.As per Second State Finance Commission recommendation, five and a half percent of the State tax revenue has to be provided to the LSGIs as Maintenance Grant. However, no separate provision was made in the budget for maintenance of own assets, assets transferred from Government and assets created after 1995. Government did not evolve formula for horizontal distribution of funds among the LSGIs based on the value of assets transferred.

LSGIs did not conduct the survey of own assets and assets transferred from Government resulting in the improper projection of maintenance grant.The overall utilisation of maintenance grant was 71 per cent only during the period 2004-08.Diversion of maintenance grant of Rs.8.24 crore between non-road and road assets for constructions and improvements was noticed in the test checked LSGIs.Eight LSGIs irregularly utilised Rs.2.72 crore for maintenance of assets not owned by them.Operational expenses in 20 LSGIs, aggregating to Rs.3.26 crore was in excess of the 10 per cent ceiling fixed. During 2004-08, Kozhikode Corporation and Vaikom Municipality unauthorisedly transferred Rs.1.75 crore from maintenance grant to own fund.An emergent repair work to a school building, though posed threat to the lives of school children and teachers remained unattended since four and half years.The internal control system failed to identify/rectify the deficiencies in planning and utilisation of maintenance grant.

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