GOVERNMENT ENGINEERING COLLEGE, THRISSUR

INTERNAL AUDIT REPORT

TECHNICAL EDUCATION QUALITY IMPROVEMENT PROGRAM (TEQIP)

Phase II

Part A: Brief Details of the Auditee&Audit

a. .	Name & Address of the Auditee	: Government Engineering College; Cheroor, Thrissur Kerala, 680 009
b.	Names of the office Bearers	: Principal: Dr.K.P .Indiradevi TEQIP Coordinator:Prof.T.Krishnakumar
c.	Name/s of Audit Team Members	:Partner:Jolly Peter Articled Assistant Ajai Vincent, Alex J Vallavanthara
d.	Days of audit	: 7^th&8^thDecember, 2016 [2 days]
e.	Period covered in the previous audit	: 1^st October 2015 – 31^stMarch 2016
f.	Period covered in the current audit	: 1^st April 2016 – 30^th September 2016

Part B: Executive Summary

Objectives of Audit

i) To evaluate the adequacy of internal control systems and management of funds.

ii) To ensure the compliance of the laid down policies and procedures as documented in the Project Implementation Plan and Financial Management Manual of the project.

Methodology of audit

: Vouching of all bank and cash transactions, Ledger scrutiny, analysis of fixed assets register, cash book, advance register, checking of bank reconciliation statement, scrutiny of all documents relating to purchase of fixed assets, checking of opening balance.

Status of implementation of financial management system. :

Finance Management System was implemented in the project Institution under the Board of Governor headed by the Chairman. Different Committees and sub- committees are formed for the implementation of the project under the scheme TEQIP Phase II.

d.Status of compliance of previous audit reports, including major audit observations pending compliance

(Refer Part C)

e.Key areas of weakness that need improvement

i. Disallowance of expenditure as per the World Bank Rules :-

NIL

ii. Procedural Lapse :-

Observations

Implications with risk involved

Recommendations for improvement

Management Response

Delay in Remittance of TDS collected:-

It is observed that, TDS deducted on April 2016 from Mr. Krishnakumar, Mr.JItheshPk, Mr. K. Balakrishnan, Mr.Rathi K and Mr.Athul Raj amounts to Rs. 240/-, Rs.240/-, Rs. 240/-, Rs. 360/- and Rs. 600/- respectively were remitted to IT dept on 1/7/ 2016.

Penal provisions under the Income Tax Act 1961 would be attracted if deducted tax is not paid to the Government within the prescribed time limit

It must be ensured that the TDS deducted is remitted within the prescribed time limit.

Guidelines noted and implemented accordingly

TDS :

It is observed that TDS is not deducted from the amounts paid to the MIS officer, the data entry operator and the accountant under section 194C of the Income Tax Act 1961, even though the payment exceeded the limits prescribed in the said section.

Penal provisions under the Income Tax Act 1961 would be attracted if tax is not deducted and paid to the Government.

Proper steps must be taken to ensure that the procedures for deduction and remittance of TDS are carried out.

They are temporary staff and will be issued Form 16 after deducting Income Tax (They are availing Casual leave and Salary Arrears as per Rules)

Record of Security Deposits:

The project institution is required to maintain proper records related to Security deposits collected from different parties. Details of security deposits along with its date of expiry are to be recorded clearly in register. We have noticed that some details regarding the deposits are omitted in the register.

Proper control cannot beimplemented on security deposits collected and refunded.

The institution is required to maintain proper records of security deposits.

It’s a clerical mistake and now it is corrected

It is noticed that details regarding fixed deposits from Techser Power solution Pvt. Ltd. have been entered twice in the security deposit register.

Date : 16/07/2013

Package No : 150

Instrument No : 8575208123-3

Amount : Rs.12,240

Proper control cannot beimplemented on security deposits collected.

Rectification has to be done by removing such duplications from the register.

It’s a clerical mistake and now it is corrected.

Flatbed Scanner :

The institution can purchase the equipments at more competitive price on direct purchase from companies or agencies who are direct dealers in such equipments. We have noticed that one Flatbed Scanner was procured through shopping. Quotations were obtained from three suppliers. No bids were directly invited from companies or agencies dealing with the equipment. Details of bidders are as follows :

It should be ensured that procurement is to be routed through PMSS software by inviting bids from companies and agencies dealing directly in such equipment

Quotations were invited through publicity. There were no direct dealers available. They are represented by their local representatives.

Bided parties	Make Name	Amount(Rs.)
Smart Soft	HP	81208
Hexagon	Plustek	91795
INTRYS	HP	88922

MFMR

It is observed that there were differences in expenditure reported in MFMR submitted to the SPFU and expenditure accounted in tally as detailed below

MFMR will not reflect the actual position of the amount spent for each activity.

Necessary care should be taken to ensure that the entries passed in tally match with the amount recorded in MFMR.

Details attached in page no.13

	Head of Account	As per MFMR (Rs.lakhs)	As per Tally (Rs.lakhs)	Difference (Rs.lakhs)	Reasons
April	IOC	0.75	0.21	0.54
May	III Cells	-1.42	0.00	-1.42
	FSD	1.85	0.44	1.41
	Assistantship	0.1	0.0	0.1
	IOC	0.57	0.56	0.01
June	Student Support	0.0	-0.05	0.05
June	IOC	1.25	1.27	-0.02
July	Assistantship	10.93	10.94	-0.01
	IOC	0.82	0.84	-0.02
	Student Support	0.00	0.05	-0.05
	FSD	1.55	1.45	0.10
August	IOC	1.24	1.25	-0.01
September	FSD	1.10	1.38	-.28

Return of Guarantees and Fixed Deposit receipts :

During the course of our audit,it was observed that several guarantees and fixed deposits receipts, the tenure of which has expired and which are supposed to be returned to the parties concerned are not yet returned.Details are furnished below

Non returning of Guarantee Certificates and Fixed Deposit Receipts may affect the credibility status of the institution.

It is recommended that necessary steps may be taken to return the guaranteesand fixed deposits receipts at the earliest.

All are returned to the parties

Sl No	Party	Amount	Due date
1	Labtech Electronics Pvt Ltd	28,350.00	30-10-2015
2	Scientific MES- Techcnik Pvt ltd	21,084.00	25-04-2016
3	Mr Mijoy KM	16,172.00	21-03-2014
4	Techser Power solution Pvt ltd	1,22,708.00	20-09-2016
5	indent Techlab Pvt ltd	39,375.00	05-05-2014
6	Smart soft	82,340.00	30-04-2016
7	Techser Power solution Pvt ltd	12,240.00	12-07-2014
8	Techser Power solution Pvt ltd	10,290.00	12-07-2014
9	DUCOM Instrumental Pvt ltd	26,750.00	14-03-2015
10	M/s Prompt machine tools company	39,160.00	03-03-2015
11	Techser Power solution Pvt ltd	12,240.00	12-07-2014
12	M/s Prompt machine tools company	81,480.00	31-12-2014
13	M/s Fluid Hammer consultancy	25,983.00	28-03-2015

iii. Accounting Lapse:-

Observations

Implications with risk involved

Recommendations for improvement

Management Response

Difference in balance as per treasury bank pass book and accounts in Tally :

It is noticed that the following bank accountsare not updated in the accounts intally .

Bank balances under current assets are understated.

The bank accounts in Tally should be updated to match with the actual bank balances.

All are Entered accordingly

Bank A/c No.	Bank Balance as per tally (Rs.)	Bank Balance as per pass book(Rs.)	Difference(Rs.)	Response
Treasury bank a/c no. 14/79	4,88,539.00	54,59,306.00	49,70,767.00	Now all transactions enteredaccordingly and balance updated.


Treasury bank a/c no. 14/80	6,15,804.00	55,86,571.00	49,70,767.00	Now all transactions entered accordingly and balance updated.


Treasury bank a/c no. 14/81	18,52,504.00	68,34,272.00	49,81,768.00	Now all transactions entered accordingly and balance updated.


Treasury bank a/c no. 14/82	4,87,150.00	54,57,918.00	49,70,768.00	Now all transactions entered accordingly and balance updated.

Difference in petty cash book and physical cash balance:

As per the FM manual the institution is liable to maintain a petty cash book in the

format specified by the FM Manual. The expenses met must be properly documented. Petty cash book is to be closed at the end of each working day, verified, and attested by the In-charge(Finance). A difference of Rs.4613/- was found on physical verification of petty cash with the petty cash book due to non booking of some expenses..

Non compliance of FM manual

The petty cash book should be properly updated and the differences should be reconciled at the earliest.

All are Entered accordingly

Part C: Compliance of previous Audit Reports:

· Internal Audit Report:-

Observation

Description

Management Response

Status of implementation

Physical Verification of Fixed Assets:-

It is observed that physical verification of fixed assets is not being carried out by the management at reasonable intervals of time. Physical verification is carried out by the concerned department head randomly and not by TEQIP department.

Verification of fixed assets by the management is an important measure of internal control to ensure that the assets purchased are actually put in use and are functioning properly. Non verification of the same indicates a weakness in the system of internal control.

Physical verification carried out by verification officers appointed by the Principal, and they are done once in a year. Additional physical verification by TEQIP department will be done in future as per direction from Principal.

This irregularity is rectified.

Analysis Of MFMR and the expenditure booked in Tally:

As per the PIP and FM Manual of TEQIP, each institution is required to submit to SPFU, Financial Monitoring Report containing the details of money expended on various activities. It is on the basis of these reports that the funds are being allotted to institutions. It is observed that the amounts accounted in books (tally) as expenditure are not matching with amounts recorded in MFMR.

MFMR will not reflect the actual position of amount spent for each activity.

Guidelines are noted and implemented accordingly

This irregularity still continues

Delay in Remittance of TDS collected:-

During the course of the audit, one instance of late remittance of TDS deducted by the institution was noticed It was also noted that interest was not paid on such delayed remittance.

Due to delay in payment, the Institution is required to pay interest @ 1.5% p.m from the date of deduction till date of actual payment.

Guidelines are noted and implemented accordingly

This irregularity still continues

Sufficient funds not transferred to the four funds:-

As per the MoU, the Institution has agreed to establish Four Funds each in a separate Bank account, namely the Corpus Fund, Faculty Development Fund, Equipment Replacement Fund and Maintenance Fund (for maintenance of buildings and equipment) with annual contribution into each fund equal to at least 0.5% (total 2%) of annual recurring expenditure of the institution..

We have noticed that the institution has opened four bank accounts but the prescribed amount has not been transferred to respective accounts.

This amounts to a violation of MoU.

Waiting for tuition fee reimbursement from government fund.

Now fund transferred and it has implemented.

This irregularity is rectified.

Expenses incurred on workshop for NBA accreditation wrongly accounted under reforms:-

Registration fees for WOSA 2016, workshop on NBA accreditation, have wrongly been accounted under the head ‘Reforms’ instead of ‘FSD’.

This leads to wrong allocation of expenses as per Project Implementation Plan(PIP)

This training is attended by eight senior officials and allocated in Reforms. Now it is accounted under the head Management Capacity Development

This irregularity is rectified.

Grant received from college accounted as liability:

Grant received from college is accounted as a Loan under liability. It should have been accounted as Income.

Accounting Grant received as Loan has resulted in an understatement of income and an overstatement of liabilities.

Guidelines are noted and implemented accordingly

· Statutory Audit Report:

o GENERAL OBSERVATIONS

Observation

Description

Management Response.

Status of implementation

1. The institution is maintaining its accounts in cash basis.

General Procedure as per Financial Management Manual issued by MHRD.

2. The institute is not annexing the actual bus tickets and train tickets. Instead they are claiming the TA as per Kerala State Rules.

Each faculty/experts can claim their TA/DA according to their grades prescribed in relevant rules. But the same should be supported by actual bills.

Taxi bills should be annexed in case of taxi travels. But the institute in most cases is not annexing any trip sheets for travels, instead of this they are claiming Rs.16 per km as per the Government Order.

3. The documentation should be in a correct format as the government rules. In most cases the files are attached in separate file.

The institute is required to keep the files and the supporting in the payment voucher file so as to link the payment voucher with the details.

4. During the course of audit it was observed that the FMR submitted by the institution for the year ended March 2016 doesn’t tallied with actual expenditure incurred till the end of March 2016.The details of which are as follows:

Total expense as per FMR	Rs.135.35 Lakhs
Total expense as per Books	Rs.149.53 Lakhs
Difference	Rs 14.18 Lakhs

o Research and Development


Observation	Description	Management Reply	Status Of Implementation
Any International tour undertaken without CompetentAuthority's approval will not be considered as part of the Project and, therefore, expenditure incurred will not be eligible for reimbursement	On 17.08.2015 the institution incurred Rs1,94,583/- as expenditure for paper presentation by the faculty Mr. Rajesh Vanchippura. In respect of which Government order not produced for our verification. In the absence of government order Rs1,94,583/- will become ineligible	NOC from Govt. of Kerala receivedbefore the ITSS programme, the scanned copyfor the same attached.
Boarding pass of Ms.Preetha K.P and Ms.Remani T for the Air travel was not submitted.	Claiming expenses incurred for Air Travel without submitting Boarding pass of the travel are not allowed. Since Ms.Preetha K.P and Ms.Remani T did not submitted the boarding pass for attending training at IISC Bangalore the amount Rs.5,585/- is disallowed.	Steps are taken to collect boarding passesfrom the incumbent reply received from the incumbent is enclosed for perusal.
If a programme is conducted by a firm then honorarium payable to them is 10000/- per day and it should have been procured through PMSS.	From 10.08.2015 to 13.08.2015 the institution conducted a workshop on “Preparation of research proposals to funding agencies”. In respect of which an amount of Rs.3,84,750/- incurred as course fee & Rs1,38,525/- incurred as TA / DA of the resource persons. The programme was conducted by Engineering StaffCollege of India and it is in the nature of consultancy services it should havebeen procured through PMSS. Sincethe institution does not procured itthrough PMSS total expenditure of Rs.5,23,275willbecome ineligible.	This firm is a Central Government approved training Institute, if 20 research scholars including faculty members have attended the programme in their campus the Total average fees for the programme is Rs.5,70,000/-(25000+14% tax per person) and Total Average TA/DA for participants is Rs2,80,000 and Total average expenses for the programme was around Rs.8,50,000/-. In order to reduce the expenditure to Rs.5,23,275 we have conducted the programme in our campus
As per PIP '"Any international tour undertaken without Competent Authoritiesapproval will not be consideredas partofthe Project and, therefore, expenditureincurred will not be eligible for reimbursement".	During the year Ms.Shibily Joseph,Research Scholar, attend and present a paper titled "A Syntactic Approach forAspect Based Opinion Mining" in the international conference held atCalifornia and incurred Rs 49,031/- as expense.In respect of whichapproval of MHRD not obtained. Hence Rs 49,031/- will becomesineligible.	The International conference, IEEE ICSC 2015 from Feb 7 -09 2015 registered for the programme on 15^th Jan 2015 and paid an amount of Rs 49,031/- towards Registration fee. She got NOC from, Govt. of Kerala onlyon 12.02.2015 so she couldn’tattend theconference.As per mail on 3^rd July' 2015 from Director SPFU. If ShibilyJoseph's paperappeared in the proceedings the BoGcantake decisions on the reimbursement ofregistration fee. The 12thBoG meeting on 07/03/2015approved the proposal.
During the year the institutionincurred the following expenditures towards "Seed Money" provided inearlier years: 1. Dr. ReebaThomas – Rs 50,980/- 2. Mr. Vinod P Raphel – Rs 30,778/- 3. Dr. Jithesh P K – Rs 95,689 4. Dr. PrasanthKumar K P –Rs 1,03,940/- 5. Dr. Joseph K D - Rs 47,486/- 6. Dr. Saji Kumar - Rs60,200/- 7. Dr. Jaison Mathew – Rs 42,224/- With respect to the above the project report submitted to external fundingagency and the details of incomerealized from external agency are notavailable for our verification.	Proposals are in the stage of preparationfor submitting to the funding Agencies
As per Table 18 ofPIP “organizingBoG and other Committee Meetings"are permissible under the head Incremental operating cost. During theyear the college incurred Rs 16,392/- as expenditure for DoctoralCommittee Meeting. It should beaccounted under IncrementalOperating Cost instead of Research and Development.	Guidelines noted and implemented accordingly

o Academic Support for Weaker Students

Observation

Description

Management Response

Status Of Implementation

During the year the institutionconducted a finishing school on"Autocad for Electrical Engineers" and the programme was carried out by M/s Radical Technologies at ahonorarium of Rs50,000/- for 5 days.

Since it is in the nature of procurementof Consultancy Service the sameshould have been procured throughPMSS. Hence the total expenditure of

Rs.58,318/- will become ineligible.

As per G.O.(Rt.) No:1993/2013/H.Edn

dated" Tvm 08.10.2013 states that

remuneration to an expert firm for

minimum seven hour class duration per

day handled by at least two experts as

whole package as per ToR approved by

BoG for conduct of finishing school as

part of Equity Action Plan.

o Capacity Development

Observation

Description

Management Response

Status Of Implementation

During the year Dr. Jayan M V, Asso.Prof. of EEE department attended a

management capacity enhancement

programme and incurred Rs 25,062/-

as expenditure. Flight charges of Rs 19,982/- included in it and in respect of which Boarding pass is notavailable for our verification. Hence Rs. 19,982/- will become ineligible.

Steps are taken to collect boarding passes

from the incumbent reply received from

theincumbent is enclosed for perusal.

o Research and Development and Consultancy activities

Observation

Description

Management Response

Status Of Implementation

On 28.07 .2015 the institution incurred

Rs 13,095/- as expenditure towardsconducting a meeting of Teqipcoordinators and nodal officers withan expert to prepare revised IDP. Out

of which Rs 4,800/- relating to TA/DA

was not supported by any TA bills/invoices. Non production of

supportings will leads to disallowance

of Rs 4,800/-

Original bills and vouches areavailable in the office voucher file scanned Copy

enclosed.

Part D: Serious Observations:

NIL

Part E: Other Observations:-

NIL

	Head of Account	As per MFMR (Rs.lakhs)	As per Tally (Rs.lakhs)	Difference (Rs.lakhs)	Reasons
April	IOC	0.75	0.21	0.54
May	III Cells	-1.42	0.00	-1.42
	FSD	1.85	0.44	1.41
	Assistantship	0.1	0.0	0.1
	IOC	0.57	0.56	0.01
June	Student Support	0.0	-0.05	0.05
June	IOC	1.25	1.27	-0.02
July	Assistantship	10.93	10.94	-0.01
	IOC	0.82	0.84	-0.02
	Student Support	0.00	0.05	-0.05
	FSD	1.55	1.45	0.10
August	IOC	1.24	1.25	-0.01
September	FSD	1.10	1.38	-.28

April	IOC	0.75	0.21	0.54 March salary dt.31.03.2016 but in MFMR wrongly accounted April
May	III Cells	-1.42	16 staff from ME Dept., attending a training at FTI Bangalore +B PCL training attending Industrial visit amt +FACT programme me &EEE Dept., +chemical Dept., VSSC training Total amt 1.42 changed to FSD for advice from statutory Auditors.
	FSD		1.41	Total amt 1.42 changed to FSD for advice from statutory Auditors.
Assistantship	0.1	0.0	0.1	Point adjustment
IOC	0.57	0.56	0.01	Point adjustment
September	FSD	1.10	1.38	-.28 An amount 0.28 lakhs (settlement amt ) by mistake this amount not included in the FSD head
Student Support	0.0	-0.05	0.05	Cheque cancelled
July	FSD	1.55	1.45	MFMR & Tally 1.54 same amount
Sep	FSD	0.28		Rajesh P., amt by mistake not entered in MFMR