The mandatory audit of accounts of the government?s flagship job programme ? the National Rural Employment Guarantee Act (NREGA) ? by qualified chartered accountants (CAs) has been virtually put on the back burner after changes have been incorporated in its rollout plans. Instead of a limited review and audit of 24,000 Gram Panchayats (GPs) by CAs, as envisaged by the rural development ministry, now the Institute of Chartered Accountants of India (ICAI), the apex body of CAs, is being asked to prepare a detailed rollout plan for the financial audit of over 2.38 lakh GPs in India at one go.
This is important because NREGA involves disbursement of funds to the tune of over R33,000 crore to millions of unemployed youth in lieu of work. According to officials, the NREGA scheme covers around five crore households, which amounts to 25% of all rural households in India. The minimum daily wage allowance per day per person is R100-150 and varies from state to state. The rural development ministry wants to ensure that the funds reach those whom the scheme is intended to benefit. Hence the audit.
Since GPs implement at least 50% of NREGA schemes, ICAI was to provide the rollout plan of certification of 24,000 GPs by March 2013 and the final report by July 2013. Both these deadlines have not been met, sources told FE.
“Now, ICAI has been asked to prepare the rollout plan for 100% GPs. The matters of fees for auditors is also a stumbling block considering there are only around 2.28 lakh CAs in India while there are 2.38 lakh GPs. The workload on CAs will be enormous,” said a senior CA familiar with the development.
Considering the magnitude of work, ICAI submitted a limited proposal. However, now it is working on a detailed technical guidance note. “ICAI is developing technical literature to guide its members in effective discharge of auditing of financial records to report on a number of other specific aspects relating to the implementation of the scheme,” Subodh Kumar Agrawal, president, ICAI told FE.
As per the June 2012 circular, CAs had limited scope of work, which included examination and certification of books of accounts/documents maintained by the GP as per the state laws. Additionally, CAs had to comment on the quality of accounts, identify and list gaps/ deficiencies and weak areas in systems and controls and make recommendations for improving these. Now, the ICAI is working on a detailed technical guidance note for CAs to undertake NREGA audit.
Fixing of audit fees for CAs is another stumbling block, sources said. As per the initial circular, the government said the auditor’s fees will be met from the 6% funds earmarked for administrative expenses. This works out to around R2,400 crore. CA firms said this fund will be inadequate. “Since the scope of NREGA audit involves traveling to the GPs and other basic expenses, the audit fees at market rate will be much above the funds allocated for administrative expenses. These issues need to be resolved. The finance ministry should grand additional funds if certain professional quality of work is expected,” said a senior auditor from Uttar Pradesh who has been involved with NREGA auditing.