Financial Audit for MGNREGA - Committee for Co

An Overview of Financial Audit for
Committee For Cooperatives & NPO Sectors
The Mahatma Gandhi National Rural
Employment Guarantee Act aims at enhancing
the livelihood security of people in rural areas
by guaranteeing hundred days of wageemployment in a financial year to a rural
household whose adult members volunteer to
do unskilled manual work.
This act received the assent of the President on
5th September, 2005
It extends to the whole of India except the State of
Jammu and Kashmir.
The Central Government by notification constitute
a Council to be called the Central Employment
Guarantee Council to discharge the functions, and
perform the duties, assigned to it by or under this
For the purposes of regular monitoring and
reviewing the implementation of this Act at the
State level, every State Government shall
constitute a State Council.
Accounts of the scheme shall be maintained in such
form and in such manner as prescribed by the state
government and GPs are required to maintain accounts
in the formats prescribed by the respective State
The following registers are required to be maintained
for MGNREGA as records
(1) Cash book
(2) Receipt and Payment Statement
(3) Muster roll receipt Register
(4) Job Card Issue Register
(5) Employment Register
(6) Works Register
(7) Asset Register
(8) Monthly Allotment and Utilization Watch Register.
 Month wise Bank & Post office Reconciliation
 Vouchers
 Challans, etc.
(9) Muster Rolls issued by the Programme Officer (PO) relating
to payments
At District Level – MGNREGA funds at district level
are audited by Chartered Accountants who are
expected to do a check of the receipts and payment
statements of Gram Panchayats.
At GP Level – In order to improve the accounting of
MGNREGA funds and to ensure transparency and
accountability of GPs the Ministry lays out the scheme
for certification of MGNREGA accounts at GP Level
and financial audit thereof.
The objectives of engaging CA Firms for GP accounts
Getting an expert opinion on the effectiveness of the
accounting arrangement for MGNREGA funds at the
GP Level
Assessing gaps/ deficiencies in maintenance of
Assessing the need of training at GP
Improving the quality of accounts
Bringing transparency and accountability
Ensuring the funds under MGNREGA are being used
for intended purpose
A Chartered Accountant can be appointed as an
auditor by the State Government to certify the
accounts of all GPs selected in a district from a panel of
auditors maintained by C & AG/ State C & AG.
One auditor will be appointed for one district.
More than one CA can also be appointed in case
MORD is of the view that it is not feasible for the
selected CA to certify accounts of all GPs selected in a
An auditor may be assigned more than one district if
adequate number of CAs are not available on the
The remuneration of auditors for certification of
accounts of GPs will be fixed by the MORD in in
consultation with Comptroller and Auditor General.
The audit fee will be borne by the 6% administrative
The period of appointment of auditors will not
be for more than 2 years.
The assignment for second year will be
renewed only upon satisfactory performance in
the first year.
It is proposed that the accounts of 10% GPs in each
state will be certified by CAs for the year 2012-13.
These GPs will be selected based on a criteria to be
decided by MoRD in consultation with States.
After evaluating the results and efficacy of the
system, a decision on extending these provisions to
other GPs/ Implementing agencies will be taken.
The engagement of CAs to be completed before
March 2013. The CA will commence the
certification from May, 2013 and submit the
reports by end July, 2013.
CA can visit the GP headquarters for certification with
the District Programme Coordinator. The DPC will be
responsible to ensure that all necessary documents are
provided to the CA firms for certification and
concerned GP officials are available to the CA when
he/she visits the GP.
Examine the books of accounts or documents
maintained by the GP such as Cashbook, registers,
muster rolls, vouchers, bank passbook, BSR, Job card
registers, work register, etc.
The auditor can express his opinion on
The Quality of accounts
Gaps/ deficiencies and weak areas in systems and
controls and make recommendations for improvement.
Wage Material Ratio.
MGNREGA funds have been deployed only on
admissible activities/works
Other matters which may have significant impact on
implementation of MGNREGA.
An indicative checklist is also drafted for audit of
MGNREGA accounts of GP in which comments on
the following points are to be givenDid the GP provide all books of accounts and records
for audit?
Do the muster rolls tally with the wages paid?
Do other payments tally with vouchers/ bills?
Whether drawal of money or payments made without
proper vouchers or bills has been noticed?
Does the bank/ PO Pass Book balance reconcile with
cash book of GP account?
6. Whether expenditure has been incurred for the
purposes intended for?
7. Whether expenditure incurred by the GP has been
correctly classified and is admissible in accordance
with Operational Guidelines and instructions?
Whether any defalcation or misappropriation of funds
has been noticed?
9. Whether the shelf of projects have been identified in
the Grama Sabha ?
10. Whether all the works taken up are part of the annual
work plan approved by the DPC and covered by
administrative sanction?
11. Were the procurement procedure prescribed by
the State government adhered to by the GP while
making procurement?
12. Is proper record maintained of the job cards
13. Whether the demand for work is registered and dated
receipts given?
Has necessary action been taken on the wrong or lost
cheques issued, if any?
15. Whether all vouchers and receipts are authorized by
GP President and Secretary?
16. Whether the assets created find place in the Asset
register of the Panchayat and MGNREGA?
17. Does the GP make timely data entry in MGNREGA
The auditor will have to submit a report to the PO for
each GP visited within 15 days of completion of
certification of accounts of the GP. The report shall
contain the followingrecords verified
 discrepancies noticed if any
 adequacy of documentation and findings on the
items listed in the check list.
2. A consolidated summary for all GPs taken up for certification
and assigned to the CA within a district, will be submitted to
the DPC within 15 days of completion of certification for all
such GPs. In the consolidated summary the CA firm will
indicateThe GPs visited including the dates of the visit.
Issues which require immediate attention of the DPC
should be highlighted.
 Adverse observations and suggestion for improvement
will also be indicated in the report
 If the CA notices any defalcation or misappropriation of
funds, it shall be immediately brought to the notice of the
DPC who would proceed to take necessary action.
3. District wise summary of observations made by CAs
will also be included as an annexure to the audit
report of the State Employment Guarantee Fund.
4. While auditing the MGNREGA funds at the district
level, the auditor will take into account the certification
and observation of the CAs made while certifying GP
5. The Secretary/ Commissioner, MGNREGA at the State
level and the DPCs at the district level would be
responsible to ensure that the accounts of selected GPs
are certified by the empanelled CAs within a given
time frame.
6. DPC will submit to the State Govt an Action taken
Report (ATR) on the observations of the CA and
likewise, the State Govt will submit to this Ministry by
30th September each year, a consolidated ATR for all
the districts that have GPs that have been audited by
CAs under this arrangement .
7. This certification, observations and the Action taken
reports will be examined by the Ministry while
releasing funds to the State Government

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