CAG audit report tabled in Bihar assembly; flags misappropriation risks

The state finance audit report of the Comptroller and Auditor General (CAG) of India for the year ending March 2022, which was tabled in the Bihar legislative assembly during the monsoon session last week, has recommended steps for inclusion of all detailed contingent (DC) bills in the Comprehensive Financial Management System (CFMS) and ensure that all amount lying in Personal Deposit (PD) accounts at the end of the year are remitted to the Consolidated Fund of State.

It has also underlined the need for a timeline for administrative departments to collect pending utilisation certificates (UCs) and ensure its adherence to fix accountability for non-submission of outstanding UCs.

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Maintaining that CFMS was designed as a single source of truth from April 1, 2019, replacing the Comprehensive Treasury Management Information System (CTMIS), the audit report has also flagged “material accounting entries being still done through the back end of the CFMS without any valid rationale, approval and necessary documentation by passing the treasury code and IT controls”.

“Neither the User Acceptance Test (UAT) of all functionalities, as per the request for proposal (RFP), had been done by April 29, 2022, nor had there been an IT audit, which could have provided assurance about the corrective actions taken since 2019 despite the state government flagging some operational issues earlier.

Later, the reply to the finance department on September 23, 2022, stated that all the issues had been resolved and none had been reported in the recent past and the UAT team had done extensive testing,” the audit report said.

The report has pointed out that the reply of the state government is contrary to its April 29, 2022, statement.

“This is fraught with the risk of misrepresentation of government finances, besides possible misappropriation, as there can be changes at the back end of the CFMS.

The state government had, during the course of preparation of guidelines for audit of CFMS, pointed out through several letters to the service providers TCS, such as duplicate pay bills for approximate 1,500 employees, payments of salary made twice, incorrect and fictitious entries in the production database, back-end tampering of actual information, differences in transactions, correction in digital signature dates and approval dates from back end, incorrect handling of debit notifications and return notifications resulting in account mismatch and subsequent corrections from back end, database changes without approval, updating/deletion of data without the consent of the department, generation of bills without allotment/authorisation, net amount paid exceeding the actual payable amounts, excess withdrawal claims against the available budget allotment amount, aomng others.

Underlining increasing number of outstanding UCs, DC bills and rising amount under suspense heads, the report has further recommended that all controlling officers should adjust abstract (AC) bills pending beyond the prescribed period in a time-bound manner and ensure that AC bills are not drawn merely to avoid lapse of budget.

“Responsibility should be fixed for undue delays in the adjustment of pending AC bills,” it added.