FINANCE DEPARTMENT

POLICY NOTE

DEMAND No.16

2012-2013

O. PANNEERSELVAM
Minister for Finance

©
Government of Tamil Nadu
2012
 INDEX

Sl.
Subject Page
No.

1. Introduction 1

2. Treasuries and Accounts

3
Department

3. Local Fund Audit Department 13

4. Co-operative Audit Department 32

5. Department of Small Savings 38

6. Government Data Centre 46

7. Internal Audit and Statutory Boards

55
Audit Department
 POLICY NOTE

DEMAND NO.16

FINANCE DEPARTMENT

POLICY NOTE FOR THE YEAR

2012-2013

The main functions of Finance Department are:

i) Managing the public finances of the
Government of Tamil Nadu
ii) Preparation of the State Budget and presenting
it to the Legislature every year
iii) Custodian of the State Exchequer
iv) Overall responsibility of balancing receipts and
payments and ensuring that debt obligations
are met
v) Critical scrutiny and evaluation of expenditure
proposals of the Departments of the
Government with reference to needs, cost
 effectiveness, budget provisions, financial
procedure etc., keeping in mind the importance
of balancing receipts and expenditure and
achieving the fiscal objectives of the
Government.

2. The following seven departments are

under the administrative control of Finance
Department:-
i. Treasuries and Accounts Department
ii. Local Fund Audit Department
iii. Co-operative Audit Department
iv. Small Savings Department
v. Government Data Centre
vi. Internal Audit and Statutory Boards
Audit Department
vii. Directorate of Pension

3. The functions of the departments listed

above at serial No. (i) to (vi) are detailed in the
subsequent paragraphs. The functions of the
Directorate of Pension are included in the Policy

2
Note on Demand No.50. Pension and Other
Retirement Benefits.

TREASURIES AND ACCOUNTS

DEPARTMENT

4. The Treasuries and Accounts Department

which is now in its Golden Jubilee year was formed
in the year 1962. This department is responsible
for accounting for Government revenues and
expenditure. It is also responsible for disbursement
of salary, pension to all the Government servants
and pensioners respectively and disbursement of
funds sanctioned by the Government for
implementing the various schemes by the
departments and agencies of the Government.
This department also handles proper distribution of
judicial, non-judicial stamp papers and stamps to
authorized vendors / institutions. The Treasury
Officers are the custodians of valuables and safe
custody articles deposited by the Government
departments in the Strong Room of the Treasuries.

3
 5. The department now has 32 District
Treasuries and 206 Sub Treasuries with
Manalmelkudi in Pudukottai District being the latest
addition. These are under the supervisory control
of 3 Regional Joint Directors of Treasuries and
Accounts. There are also 9 Pay and Accounts
Offices, 1 Pension Pay Office and 1 Office of the
Assistant Superintendent of Stamps which handle
the activities falling within their domain.

Construction of Building for Treasuries

6. Out of the 32 District Treasuries of the
Treasuries and Accounts Department, 29 are
functioning in Government buildings and the
remaining 3 District Treasuries at Chennai, Tuticorin
and Tiruppur are functioning in the rental buildings.
At the Taluk level, out of the 206 Sub Treasuries,
154 Sub Treasuries are functioning in Government
buildings and the remaining 52 are now functioning in
the rental buildings. For the administrative
convenience and to avoid expenditure on rent, action

4
will be taken to shift all the District and
Sub Treasuries to the Government buildings.

Establishment of new Sub Treasuries

7. 32 Districts of Tamil Nadu have 220
Revenue Taluks. For the treasury functions of the
Government, Sub Treasuries are established at the
Revenue Taluk level. At present 206 Sub
Treasuries are functioning in 190 Revenue Taluks,
16 Revenue Taluks have two Sub Treasuries each
and 30 Revenue Taluks have no Sub Treasury.
Necessary action will be taken to establish new Sub
Treasuries in Revenue Taluks wherever Sub
Treasuries are not available by rationalizing
treasury organization on the basis of “One Sub
Treasury for One Revenue Taluk”.

Automated Treasury Bill Passing System

(ATBPS)

8. The existing system of manual processing

of bills by the Pay and Accounts Offices /
Treasuries implies there is no tracking mechanism

5
and the compilation of accounts is very
cumbersome. In order to ensure quicker
processing of bills and accurate compilation of
accounts, the Automated Treasury Bills Passing
System (ATBPS) was introduced as an
e-Governance initiative towards total
computerization of Treasuries and Accounts
Department. The software, developed for this
system captures the contents of bills, cheques,
ECS, Receipts, etc. and processes bills at various
levels. It is used to track the movement of bills and
challans. It is also useful to generate daily
transaction and compile accounts.

9. Initially, it was implemented as a pilot

scheme in 2007 in the Pay and Accounts Office
(Secretariat), Chennai, District / Sub Treasuries of
Theni and Karur Districts. Later it was extended to
Pay and Accounts Office at Madurai, Pay and
Accounts Office in Tamil Nadu House, New Delhi
and Treasuries in Coimbatore, Tiruchirappalli,
Madurai, Ramanathapuram and Perambalur

6
districts during 2010. The Automated Treasury Bill
Passing System is further extended to Treasuries in
23 Districts (23 District Treasuries and 157
Sub Treasuries), 3 Pay and Accounts Offices and
2 Sub Pay and Accounts Offices at an expenditure
of Rs.21.61crore. The continuous efforts are being
taken to cover the remaining District and Sub
Treasuries under ATBPS. The ATBPS enables
timely compilation of accounts at ease and
preparation of Management Information System
(MIS) which will help in prudent financial
management of the State.

10. e-Pension Scheme was initially

implemented in Pension Pay Office, Chennai and in
7 pilot Districts viz. Coimbatore, Thanjavur,
Tiruvallur, Krishnagiri, Erode, Madurai and Theni. It
is further proposed to upgrade the software for the
Accountant General’s Office and the Pension
Proposal Forwarding Authorities to have access to
the web based application so as to provide quick
and better service to the pensioners. After

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upgradation of the e-Pension software, this would
be rolled out in a phased manner in the remaining
districts during 2012-2013.

11. This department is administering the

New Health Insurance Scheme which provides
Health Insurance to the employees including their
family members belonging to all Government
Departments, Local Bodies, Public Sector
Undertakings, Statutory Boards and Universities.
So far, 12.48lakh employees have been enrolled
and 1,51,569 members have been benefited up to
31.03.2012 by way of medical assistance
amounting to Rs.411.49crore met by the Service
Provider under this Scheme.

12. The Government in G.O.(Ms).No.62,

Finance (LC) Department, dated 12.03.2012,
orders have been issued to bring the salary and
other establishment related payments in respect of
Public Works, Forests and Highways departments
which are now being paid under Letter of Credit

8
system into Treasury payment mode through
Electronic Clearing Systems with effect from
01.04.2012.

13. During the year 2011-2012, 380 Junior

Assistants were deputed to undergo condensed
foundational training imparted by Civil Services
Training Institute, Bhavanisagar at four centres viz.,
Coimbatore, Vellore, Tuticorin and Trichy as a
special case. Similarly, steps have been taken to
impart foundational training to 656 directly recruited
Accountants during 2012-2013. As the
departmental activities are getting computerized,
computer training is also being given to the staff in
areas like Data Base Management System,
Networking, Operating System (Windows & Linux),
Office Package etc. through Anna Institute of
Management, Tamil Nadu e-Governance Agency,
National Informatics Centre etc. 200 staff members
were trained during 2011-2012 and it has been
proposed to train another 400 during 2012-2013.

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Integrated Financial Management System
(IFMS)

14. The Integrated Financial Management

System (IFMS) is a tool to provide long term
solution for carrying out treasury functions of the
Government and consolidated and consistent
information about the expenditure and revenues of
the State. It tracks financial events and summarize
information. It will be useful for transparent
reporting, policy decisions and preparation of financial
statements. It will reduce the workload and associated
drudgery at various levels besides reducing the
consumption of paper significantly and provide a
hassle free environment for transactions with and
within the Finance Department / Treasuries and
Accounts Department / other Government
departments and thereby ensure robust management
of the State finances.

15. Integrated Financial Management System

will be useful to take budgetary control, improve cash
flow management, promote daily reconciliation of

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accounts, improve accurate and timely preparation of
accounts. It will also bring about transparency and
efficiency in public delivery systems, better financial
management along with improved quality of
Governance and prevention of irregularities.

16. Integrated Financial Management System

(IFMS) in integration with Human Resource
Management System (HRMS) will lead to automation
of the generation and submission of pay-bills, pension
management, sanction of loans to employees and
recoveries thereof, maintenance of service records etc.
The action is being taken to appoint a Total System
Consultant, who will make a thorough study of the
existing systems of administration and formulate
proposal for the implementation of the Integrated
Financial Management System.

Common Payment Gateway

17. The Government revenue receipts are
being collected through banks and the remitter has to
go to the Bank for each and every remittance. The

11
Government departments also receive Cheques /
Demand Drafts and remit it to the Government
Account through the authorized Banks causing
considerable delay. As the accounting is done
manually, there are chances of misclassification and
hence reconciliation is also difficult. In order to
simplify the above said process, it is proposed to
launch Common Payment Gateway services which
has got the advantages of interacting with Banks
for all the payment related requirements to and
from the Government, benefiting the stake holders
through the single gateway service, facilitating
both online and offline payments of the public,
minimizing the time taken and eventually giving
consummate result to the user and optimizing the
cost spent by each Department integrating the
Common Payment Gateway services in their
solutions.

Constitution of core committee

18. In order to monitor the progress of the
implementation of the Integrated Financial

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 Management System, a core committee will be
constituted. In addition to that after selection of
System Integrator, a Project e-Mission Team will be
constituted in each of the participating department.
The consultant would guide the organizational
structure, capability matrix, roles and
responsibilities, staffing pattern of the Project
e-Mission Team.

LOCAL FUND AUDIT DEPARTMENT

19. The statutory audit of Urban and Rural
Local Bodies, Universities, Agricultural Market
Committees, Local Library Authorities and some
other institutions in the State are undertaken by the
Local Fund Audit Department under the provisions
of the respective acts governing these institutions.
Currently the following institutions are under the
audit control of Local Fund Audit Department.

Sl. Total
Name of the Institutions
No. No.
(i) Municipal Corporations 10
(ii) Municipalities 125

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Sl. Total
Name of the Institutions
No. No.
(iii) Town Panchayats 529
(iv) District Panchayats 29
(v) Panchayat Unions 385
(vi) Universities 23
(vii) Local Library Authorities 30
(viii) Agricultural Market Committees 21
Tamil Nadu Agricultural Marketing
(ix) 1
Board
(x) Agricultural Engineering Wings 2
(xi) Koyambedu Market Committee 1
(xii) National Social Welfare Schemes 29
(xiii) Local Planning Authorities 26
(xiv) Village Panchayats ( Test Audit Only ) 2523
(xv) Other Institutions 9

SCOPE OF LOCAL FUND AUDIT DEPARTMENT:

Audit of Local Body Institutions
20. Local Fund Audit team checks the
accounts of the Local body institutions and conduct
proprietary audit on the income and expenditure of
the audited institutions, in order to ensure

14
transactions are as per the Acts, Rules and
Government Orders and that the accounts
represent a true and fair view of the state of affairs
of the Local Bodies. The Local Fund Audit ensure
effective utility of the grants rendered by
Government and other funding agencies and to
safeguard the interest of the tax payers and checks
the money utilized for the society as a whole.

Test Audit of Village Panchayats

21. The test audit is being done on 2,523
Village Panchayats representing nearly 20% of the
total Village Panchayats. In addition, test audit of
2% of Village Panchayats are taken up by this
Department based on the receipts, value of works
and specific complaints forwarded by the
Commissioner of Rural Development and
Panchayat Raj.

Audit of World Bank Funded Institutions

22. The World Bank funded institutions are

also audited by this Department. The audit of World

15
Bank funded projects of Tamil Nadu Agriculture
University, Coimbatore has been entrusted to this
Department and the audit was completed
up to 2010-2011.

Concurrent Audit of Urban Local Bodies,

Panchayat Raj Institutions and Universities

23. The audit units are functioning in

10 Municipal Corporations, 15 Municipalities and
14 Universities, where the "Concurrent Audit
System" is in vogue. The concurrent audit system
was also introduced in all the 385 Panchayat
Unions from the year 2000-2001. Audit Parties
consisting of one Inspector, one Deputy Inspector /
one Assistant Inspector for every three or four
Panchayat Unions with headquarters at select
116 Panchayat Union Offices have been formed for
this purpose.

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Implementation of Immediate Post Audit System
in all Municipal Corporations and selected
Municipalities

24. The Concurrent Audit sections are

functioning in 10 Municipal Corporations and
selected 15 Municipalities where the immediate
Post Audit is conducted. Under this system the
payment vouchers are sent to Audit immediately
after payment is made and such vouchers are
audited immediately and the defects noticed are
communicated to administration. This system
facilitates the rectification of defects by the
administration then and there.

25. The audit objections noticed during the

concurrent audit are communicated to the
institutions concerned then and there in the form of
"Audit Slips" by the audit parties and after verifying
the replies received, the objections are admitted
and the Audit Reports comprising unsettled audit
slips are issued. After issue of Audit Reports, the
replies furnished to the audit objections duly

17
rectifying the defects are verified by the audit
parties with reference to the connected records and
registers and the objections settled.

Annual Audit of Non-Concurrent Audit

Institutions

26. The audit of 110 Municipalities and 9

Universities and other local bodies like Town
Panchayats, District Panchayats, Market
Committees, Local Library Authorities, Local
Planning Authorities and Other institutions are
taken up annually on receipt of annual accounts.

Implementation of Accrual Based Accounting

System in Urban Local Bodies

27. The Cash Basis system of Accounting in

Urban Local Bodies was replaced by implementing
the Accrual Based system of Accounting in
Municipal Corporations and Municipalities in two
phases from the accounting year 1999-2000 and

18
2000-2001. This system was introduced in Town
Panchayats with effect from 2002-2003.

28. The object and scope of this accounting

system is to maintain the accounts on Generally
Accepted Accounting Principles with the
preparation of Income and Expenditure Account to
know the financial operation during a year and
Balance Sheet to know the true financial status of
Urban Local Bodies at a given period of time.

29. This system enables the Urban Local

Bodies to identify their available Assets with due
valuation methods and incorporated in accounts
through Asset Register. Because of the improved
method of accounting in Urban Local Bodies,
financial institutions and various funding agencies
have come forward to provide financial assistance
to Urban Local Bodies for the capital projects and
welfare schemes, thereby strengthening the
financial sources available to Urban Local Bodies.

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 30. Tamil Nadu has earned the distinction of
being the first State in India to have successfully
implemented accounting reforms in all Municipal
Corporations and Municipalities in two phases from
1999-2000 and 2000-2001 and in all Town
Panchayats from 2002-2003.

Certification of Annual Accounts of Local

Bodies and Universities

31. The accounts have no meaning without

any proper certification. Based on the orders
issued in G.O.(Ms).No.93, Finance (FC-IV)
Department, dated 28.03.2003 and consequent on
the implementation of the Accrual Based
Accounting System in the Urban Local Bodies, the
annual accounts of Urban Local Bodies are now
certified by the Officers of the Local Fund Audit
Department.

32. The audit certificate in respect of the

World Bank funded Tamil Nadu Irrigated Agriculture
Modernization and Water Bodies Restoration and

20
Management (IAMWARM) project which is being
implemented by Tamil Nadu Agricultural University,
Coimbatore is issued by this Department.

Standardisation of Audit Formats and Revision

of Audit Manual

33. In order to improve the quality of audit

and to ensure uniformity in communicating the audit
objections, the audit formats in respect of Urban
Local Bodies and Panchayat Raj Institutions have
been standardised and the Departmental Audit
Manual in respect of Urban Local Bodies and
Panchayat Raj Institutions has been revised with
corrections up to 2008.

Objections Settlement Procedure

34. Taking follow up action on the Audit
Reports is one of the vital functions of this
department. The irregularities which are serious in
nature, noticed during the course of audit are
immediately taken to the notice of the Executive

21
Authorities of the local bodies concerned. The
serious irregularities and losses pointed out in Audit
Reports are reported to Government and the Heads
of Administrative Departments concerned through
monthly periodicals and special reports for
necessary follow up action.

35. In the normal course, the replies to the

audit objections are verified and the objections
dropped. Further, the settlement of audit objections
is taken up by the Regional and District Level
Officers of this department through joint sittings
arranged by the concerned administrative
departments after getting replies to the audit
objections and settlement made on the spot.

36. The entry discussion and exit discussion

system has also been followed in respect of audit
institutions and this facilitates rectification of defects
pointed out in audit then and there. The
Government has issued detailed guidelines to be
followed for entry and exit discussions for Urban

22
Local Bodies in G.O. (Ms).No.83, Municipal
Administration and Water Supply Department,
dated 01.06.2009.

Formation of District High Level Committees

and State High Level Committees

37. In respect of Panchayat Unions, District

High Level Committees have been formed which is
headed by the respective District Collectors and the
State High Level Committee is functioning under
the Chairmanship of the Commissioner of Rural
Development and Panchayat Raj. During the year
2011, 58 District High Level Committee meetings
were held and decisions taken in respect of
2,043 audit objections by the District High Level
Committees.

38. As regards to the Town Panchayats,

High Level Committees have been constituted at
District level with the Collector as Chairman and
at State level with the Director of Town Panchayats
as Chairman vide G.O.(Ms).No.1, Municipal

23
Administration and Water Supply (Town Panchayat-
2) Department, dated 04.01.2007. With the
constitution of the High Level Committees, the
number of pending objections were reduced
considerably. During the year 2011, 20 District High
Level Committee Meetings were held and decisions
taken in respect of 854 audit objections.

39. In respect of Municipalities and Municipal

Corporations other than Chennai Corporation,
District High Level Committees headed by Financial
Advisor of the Commissionerate of Municipal
Administration and State High Level Committee
headed by Commissioner of Municipal
Administration have been constituted in
G.O.(Ms).No.65, Municipal Administration and
Water Supply Department, dated 22.05.2007.
During the year 2011, 9 District High Level
Committee meetings were held and decisions taken
in respect of 1693 audit objections.

24
 40. The constitution of District High Level
Committees and State High Level Committees for
settlement of audit objections of Urban Local
Bodies and Panchayat Raj Institutions is the first of
its kind in the Country and Tamil Nadu earned the
distinction of the first State establishing such
committees for settlement of pending audit
objections raised by this Department in Urban Local
Bodies and Panchayat Raj Institutions.

Convening of Joint Review Meetings of

Administration and Audit Department

41. The joint review meetings of

Administration and Audit officials at Districts /
Regions and at State Level are conducted in
respect of Urban Local Bodies and Panchayat Raj
Institutions to sort out problems relating to Accounts
and Audit at earlier stage itself. Similarly, in respect
of exit discussion and approval of Audit Report, not
only the executive authorities of auditee institutions
but also the higher officers of administration are

25
participating in the process and thereby the defects
pointed out in audit are corrected then and there.

Issue of Utilisation Certificates for Grants

42. Audit certificates are issued by this
department for the utilisation of various grants
released by the State / Central Government, the
University Grants Commission and other Funding
Agencies in respect of Universities and other Local
Body Institutions which come under the audit
purview of this department. The Utilisation
Certificates are issued immediately on completion
of the schemes and projects by the Local Body
institutions and Universities.

Special Functions

43. Apart from the regular audit functions,

this department is also entrusted with the following
special functions.

26

Authorisation of payment of pensionary
benefits and disbursement of monthly pension
to the retired Municipal, Panchayat Union and
Town Panchayat employees and their family
members

Authorisation of pension to Municipal
Corporation pensioners and University
pensioners

Sanction and disbursement of assistance
under Municipal Pensioners Health Fund
Scheme

Sanction and disbursement of assistance
under Municipal Pensioners Family Security
Fund Scheme

Sanction of Provident Fund interest on
Treasury Deposit balances of Urban and
Rural Local Bodies

Functioning as Treasurer of Charitable
Endowments

Authorisation and disbursement of Pensionary

benefits to Local Body Employees

44. The certification, sanction and payment

of retirement/death benefits to the employees of
local bodies is done by the Director of Local Fund

27
Audit. As on 31.03.2012, 34,504 pensioners are
receiving monthly pension through four nationalised
banks.

Administration of Municipal, Panchayat Unions

and Town Panchayats Employees’ Pension
Fund

45. The funds are being released by the

Director of Municipal Administration, Commissioner
of Rural Development and Panchayat Raj and
Director of Town Panchayats to their respective
pension funds maintained by this Directorate
towards the payment of Monthly Pension and
Family Pension.

Redressal of Local Body Pensioners’

Grievances

46. An Information Desk has been opened at

the Directorate of Local Fund Audit for redressal of
local body pensioners’ grievances / family
pensioners and the pensioners are able to get
information required by them regarding their

28
pension proposals and related matters without any
delay.

Administration of Municipal Pensioners Health

and Family Security Fund Scheme

47. The concessions and benefits of the

Health Fund Scheme and Family Security Fund
Scheme applicable to Government pensioners were
extended to municipal pensioners in
G.O.(Ms).No.120, Municipal Administration and
Water Supply Department, dated 25.05.1999 with
effect from 01.08.1999. These
two schemes are administered by the Director of
Local Fund Audit. The details of claims admitted
and amount sanctioned during 2011 - 2012 are as
follows:-

Family Security Fund

Health Fund Scheme
Scheme
No. of Amount No. of Amount
Claims (Rs. in Lakhs) Claims (Rs. in Lakhs)
347 71.61 306 74.86

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Sanction of Interest on Provident Fund
Balances and Deposits of Local Body
Employees

48. The Provident Fund Deposits of Local

Body Employees and investments thereon were
taken over by Government from 1967. The Director
of Local Fund Audit is authorised to sanction
interest on the balance of Provident Fund Deposits
of Local Bodies. A sum of Rs.19.34crore was
sanctioned by the Government during the year
2011-2012 and the entire allotment has been
utilized for sanction of interest claims to the Local
Bodies.

Treasurer of Charitable Endowments

49. The Director of Local Fund Audit also
functions as the Treasurer of Charitable
Endowments with effect from 01.04.1952. The
Government authorizes acceptance of the
endowments and publishes the scheme of
administration of the endowment in the gazette.

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 50. The interest amount realised from the
Endowments is released to the institutions
concerned based on the requisitions received from
them. At present, there are 4 Central Government
Endowments worth Rs.10.60lakh and 869 State
Government Endowments worth Rs.16.64crore
under the custody and control of the Director of
Local Fund Audit in the capacity as Treasurer of
Charitable Endowments. Out of the proceeds of
endowments, a sum of Rs.8.67lakhs has been
distributed to 278 beneficiaries towards award of
scholarships, prizes, medals etc., during the year
2011-2012.

Capacity of improving Audit Development of

Staff

51. To improve the quality of audit by

enhancing the skill among the Auditors, this
Department is now conducting various training
programmes to the staff. Both in service training by
senior official and training by Accountant General
are given to the Auditors of this department.

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Audit Fees
52. This department is collecting 100% of
audit cost as audit fee from the Universities and
50% of audit cost as audit fee from the Municipal
Corporations, Municipalities and Market
Committees. During the year 2011-2012, a sum of
Rs.5.97crore was collected as audit fees by this
Department.
CO-OPERATIVE AUDIT DEPARTMENT
53. The Department of Co-operative Audit
was created from the Co-operative Department and
functioning separately with effect from 17.06.1981.
As per Section 80 of Tamil Nadu Co-operative
Societies Act 1983, the main function of the
Co-operative Audit Department is to conduct audit
of all Co-operative Societies functioning under the
administrative control of 14 Functional Registrars
except the Multi State Co-operatives and Milk
Co-operatives.

54. The Co-operative Societies under the

control of the following departments are coming

32
under the purview of the Co-operative Audit
Department.

Sl. Total Number

Name of the Registrar
No. of Societies
i Registrar of Co-operative 10,511
Societies
ii Commissioner of Handlooms and 1,441
Textiles
iii Commissioner of Industries and 347
Commerce
iv Chief Executive Officer, Tamil 1,543
Nadu Khadi and Village Industries
Board
v Chief Executive Officer, Palm
Products Development Board
vi Registrar of Co-operative 958
Societies (Housing)
vii Director of Fisheries 1,274
viii Director of Animal Husbandry and 282
Veterinary Services
ix Commissioner of Sugar 17
x Director of Agriculture (Oil Seeds) 235
xi Director of Agro Engineering and 215
Service Co-operative Societies
xii Director of Sericulture 37
xiii Director of Social Welfare & 124
Nutritious Meal Programme
xiv Commissionerate of Rural 45
Development and Panchayat Raj
TOTAL 17,029

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SCOPE OF CO-OPERATIVE AUDIT
DEPARTMENT

55. The basic objective of the Co-operative

Audit relates to checking of the accounts of the
societies and to ensure that they represent a true
and fair picture of the state of affairs of the
societies. It is an important tool in the hands of the
members of the societies and ensure that the
operations are carried out as per Acts, Rules and
procedures. It is also ensured that the assistance
given by the Government is utilized for the purpose
for which it is given and the benefit is derived by the
members and the community as a whole.

The Department carries out the following types

of Audit

Societies for which Audit Fees collected

56. This refers to audit of small societies

whose final audit can be completed within a period
of 45 days. Audit fees are levied according to the

34
grade of the auditors conducting audit and on the
basis of the actual time taken for audit of accounts
of Co-operative Societies concerned. A sum of
Rs.1.62crore has been collected as audit fees
during the year 2011 - 2012.

Societies for which Fundamental Rules cost

collected under the terms in Fundamental Rules
127

57. Audit is carried out under Fundamental

Rule 127 in respect of bigger societies having more
transactions with multiple activities. Auditors
perform audit against the posts created and the cost
of establishment is recovered from the societies.
The Government collected 60% of the Fundamental
Rules cost as levied for audit from the societies. A
sum of Rs.8.90crore has been collected as
Fundamental Rules cost during the year
2011-2012.

35
Concurrent Audit of Urban Banks and Central
Co-operative Banks

58. Hitherto, the statutory audit of Central

Co-operative Banks and all Urban Co-operative
Banks were conducted by the Auditors of the
department. As per the recommendation of the
Prof. Vaidhyanathan Committee, the statutory Audit
of all Central Co-operative Banks and as per
recommendation of Reserve Bank of India, the
statutory Audit of Urban Co-operative Bank with
deposits above Rs.25crore, is entrusted to
Chartered Accountant from the year 2009 and 2010
respectively. The Departmental Auditors are
entrusted with the task of Concurrent Audit in these
Banks.

36
SPECIAL REPORTS

59. When serious defects are noticed during

the audit, they are brought to the notice of the
authorities concerned by submitting a Special
Report with full facts of the case. During the year
2011-2012, 258 special reports were received
involving an amount of Rs.109.80crore.

TRAINING TO IMPROVE THE QUALITY OF

AUDIT

60. To improve the quality of audit and skills

among the auditors, the department is conducting
various types of training programmes and also
conducting refresher classes every year, containing
all the basic principles, instructions and guidelines
to guide the auditors while conducting the audit in
various types of co-operative societies. During the
year 2011-2012, five training programmes were
conducted in which 215 officers were trained.

37
 DEPARTMENT OF SMALL SAVINGS
61. Small Savings Schemes are formulated
by the Ministry of Finance, Government of India and
implemented through Post Offices. The
Government of India is sanctioning 50% of the
monthly net Small Savings Collections as loan to
the State Government. The rate of interest for such
loan is 9.5% from 01.12.2011. Small Savings
Schemes are designed to provide safe and
attractive investment options to the public and also
to mobilize resources for development.

Small Savings Schemes

62. A number of Small Savings Schemes are
in vogue to suit the requirement of different sections
of the society. The Government of India has
revised the rate of interest for the Small Savings
Schemes w.e.f. 01.04.2012 as indicated below:-

38
 Rate of Rate of Rate of
interest interest interest
Sl.
Scheme up to from w.e.f.
No
30.11.2011 01.12.2011 01.04.2012
(%) (%) (%)
(i) Post Office 3.50 4.0 4.0
Savings Account
(POSA)
Time Deposit
Post Office Time 6.25 7.7 8.2
Deposit (POTD)-
1 year
Post Office Time 6.50 7.8 8.3
Deposit (POTD) -
(ii) 2 years
Post Office Time 7.25 8.0 8.4
Deposit (POTD) -
3 years
Post Office Time 7.50 8.3 8.5
Deposit (POTD) -
5 years
(iii) Post Office 7.50 8.0 8.4
Recurring
Deposit Scheme
(PORD)
(iv) Senior Citizen 9.00 9.0 9.3
Savings Scheme
(SCSS)
( 5 years)
(v) Post Office 8.2 8.5
8.00 + 5%
Monthly Income
Bonus (No bonus) (No bonus)
Scheme
(6 years) ( 5 years) ( 5 years)
(POMIS)
(vi) National Savings
8.00 8.4 8.6
Certificate
(6 Years) (5 Years) (5 Years)
(NSC-VIII issue)

39
 Rate of Rate of Rate of
interest interest interest
Sl.
Scheme up to from w.e.f.
No
30.11.2011 01.12.2011 01.04.2012
(%) (%) (%)
(vii) 10 Year National
Savings New
8.7 8.9
Certificate Scheme
(NSC - IX issue)
(viii) Public Provident 8.00 8.6 8.8
Fund (PPF) (maximum (maximum (maximum
(15 years) of of Rs.1 of Rs.1
Rs.70,000/- lakh in a lakh in a
in a Financial Financial
Financial year) year)
Year)
(ix) Kisan Vikas
Discontinued w.e.f. 01.12.2011.
Patra (KVP)

Small Savings Collections

63. The Small Savings Collections made in

the last seven years in Tamil Nadu are as follows:

40
 (Rs. in crore)

Sl.No Year Target Gross Net

(i) 2005-2006 5000 12455.75 5594.13

(ii) 2006-2007 5700 10158.54 2637.25

(iii) 2007-2008* -- 7791.11 -965.98

(iv) 2008-2009 -- 8486.64 -1216.73

(v) 2009-2010 -- 12113.39 1539.39

(vi) 2010-2011 -- 13414.56 516.32

2011-2012
(vii) -- 10518.11 -2058.64
(Provisional)

* (The Government of Tamil Nadu has not fixed

target under Small Savings from the year
2007-2008)

41
 64. The Directorate of Small savings plays a
vital role in encouraging the collection under Small
Savings Schemes and to set right the grievances of
investors and agents in Tamil Nadu. The District
Collectors are playing a vital role in the Districts and
the Commissioner of Chennai Corporation is
playing a vital role in respect of Chennai city.

Agents commission and incentive system

65. Agents are appointed throughout the

State for mobilization of savings. They play a vital
role in Small Savings promotion and collection. At
present, 31,620 number of agents are functioning in
Tamil Nadu. The Government of India pay as
Commission and the State Government pay as
incentive to agents at the following revised rate
w.e.f. 01.12.2011 as indicated below:-

42
 Govt. of India

State Government
Commission

(up to 31.03.2012)
Total Number of

incentive
Revised w.e.f..
agents
Sl. Type of Savings

30.11.2011

01.12.2011
No. Agents Products

up to
a. Standardised Post Office 7507 1% 0.5 % 0.5 %
Agency Monthly Income
System (SAS) Scheme (POMIS)
/ National Savings
Certificate (NSC) /
Post Office Time
Deposit 1, 2, 3, 5
Year (POTD)

b. Mahila Post Office 23489 4% 4% 2%

Pradhan Recurring Deposit
Kshetriya Scheme
Bachat Yojana (PORD )
(MPKBY)

c. Authorised Public Provident 624 1% Nil Nil

Agents Public Fund (PPF)
Provident
Fund Scheme
(PPF)
d. Senior Senior Citizens’ - 0.5% Nil Nil
Citizens’ Savings Schemes
Savings (SCSS)
Schemes
(SCSS)

TOTAL 31,620

66. Though the Government of India has

ordered certain restrictions to the State
Government for the payment of incentive to the

43
agents w.e.f. 01.12.2011, the Government of Tamil
Nadu has ordered for the payment of incentive to
the agents till 31.03.2012 without any change as
paid earlier. However, the Government of
Tamil Nadu has requested the Government of India
to restore the payment of commission to the Small
Savings Agents as was paid earlier, by considering
the welfare of Small Savings Agents.

67. Agents are offered incentive by the State

Government for mobilization effort. The year-wise
incentive paid by the State Government to Small
Savings Agents are indicated below: -
(Rs. in crore)
Year Incentive Paid
2005-2006 70
2006-2007 45
2007-2008 32
2008-2009 25
2009-2010 25
2010-2011 40
2011-2012 40

44
Publicity
68. In order to cultivate thrift and savings
habit among the common masses and School
Children, World Thrift Day function is celebrated on
30th October every year in Chennai city and in
District Headquarters. Various competitions viz.
Essay, Drama, Dance, Oratorical are being
conducted among school children in order to
cultivate thrift and savings habit at the young age
itself and distribute certificates and prizes to the
children in the World Thrift Day function.

69. In order to create awareness among the

public, Small Savings Department participate in the
Government Exhibition by erecting Small Savings
pavilion and pamphlets are distributed in Trade Fair
at Chennai and District Head quarters. 42" LCD
(High Definition) TV, DVD Player, Media Player
have been supplied to all Districts along with High
Definition short films with small savings
advertisements for publicity. The Projectors have
been supplied to Chennai, Madurai, Coimbatore,

45
Trichy and Tirunelveli Districts to exhibit / screen
short films for Publicity.

Award Schemes
70. In order to encourage Small Savings
collection, the Government ordered for Block,
District and State level awards for the best Mahila
Pradhan Kshetriya Bachat Yojana (MPKBY) Agents
and the District and State level awards to best
Standardised Agency System (SAS Agents) and
Pay Roll Small Savings Group leaders (PRSS).

GOVERNMENT DATA CENTRE

71. A Central Budget Data Processing Centre
was established in 1971 with the objective of
ensuring a more meaningful analysis of financial data
and better budgeting through analysis of the
accounts of the State using electronic data
processing equipment. It was also the main intention
of the Government to utilize the electronic data
processing facilities in due course to form the
nucleus of a Management Information System for

46
Government. Hence, established a full-fledged
Government Data Centre in 1972. For administrative
convenience both the above Centres were merged
and the Government Data Centre was established in
1975. This centre now deals with the following
functions:
(i) Processing of results for the
examinations conducted by the
Directorate of Government
Examinations.
(ii) Teachers’ Provident Fund
(iii) Contributory Pension Scheme
(iv) Tamil Nadu Nutritious Meal and
Integrated Child Development
Employees General Provident Fund

Examination Works
72. All the data processing work relating to the
examinations conducted by the Director of
Government Examinations were entrusted to
Government Data Centre by an order of the

47
Government in G.O. (1D) No.324, School Education
Department, dated 15.10.2010.

73. Government Data Centre has been

processing the results of various examinations
conducted by the Director of Government examinations
with utmost care and accuracy. The following are the
list of such processing work:
a) Higher Secondary Examination
b) Secondary School Leaving Certificate
Examination
c) Matriculation Examination
d) Anglo-Indian Examination
e) Eighth Standard School Leaving Certificate
Examination
f) Others School Leaving Certificate Examination
g) Rural Talent Search Examination
h) Diploma in Teacher Training Examination
i) National Talent Search Examination
j) National Means cum Merit Scholarship
Examination
k) Technical Examination

48
 74. Every year, Government Data Centre is
processing the examination work with utmost care
and maintaining confidentiality for nearly 25lakh
candidates. The works undertaken by the
Government Data Centre for the previous academic
year are as below:

Special
March Supple- October
Examination mentary Total
(2011) (2011)
(2011)
HSE 7,82,826 1,09,132 48,597 9,40,555
SSLC 9,64,402 1,13,662 81,943 11,60,007
MATRICULATION 1,49,056 7,221 4,239 1,60,516
ANGLO INDIAN 5,000 264 112 5,376
OTHER SCHOOL
LEAVING 1,456 90 30 1,576
CERTIFICATE
EIGHTH
STANDARD
SCHOOL 10,331 - - 10,331
LEAVING
CERTIFICATE
RURAL TALENT
SEARCH 41,489 - - 41,489
EXAMINATION
DIPLOMA IN
TEACHER 1,00,998 - - 1,00,998
TRAINING

49
 Special
March Supple- October
Examination mentary Total
(2011) (2011)
(2011)
NATIONAL
TALENT SEARCH 22,141 - - 22,141
EXAMINATION
NATIONAL
MEANS CUM
33,919 - - 33,919
MERIT
SCHOLARSHIP
TECHNICAL
11,253 - - 11,253
EXAMINATION
GRAND TOTAL 21,22,871 2,30,369 1,34,921 24,88,161

75. In order to introduce additional security

feature such as photograph in the certificates to be
issued to the candidates of SSLC/ Higher
Secondary Examinations from March 2012, the
Government has proposed to strengthen the
infrastructure facilities in Government Data Centre
to cope up with the additional task. In order to
ensure the timely implementation of the scheme,
the Government entrusted the pre-examination
work through Electronics Corporation of Tamil
Nadu Limited (ELCOT) by sanctioning a sum of
Rs.45.72 lakhs vide G.O.(Ms).No.34, Finance (CA)

50
Department, dated 07.02.2012 and in order to
ascertain the required infrastructure facilities, the
Government, in G.O.(Ms).No.37, Finance (CA)
Department, dated 09.02.2012 have constituted a
Technical Expert Committee.

Teachers Provident Fund

76. The Government, in G.O.(Ms).No.38,
Finance (Allowances) Department, dated
23.01.1992, has entrusted the work of
computerization of the Teachers Provident Fund
accounts in respect of Panchayat Union Schools /
Municipal Schools / Collegiate Education /
Government Aided Schools / Government Aided
Technical Institutions to Government Data Centre.
Initially, accounts slips were issued to the
Teachers of Panchayat Union Schools,
authenticated by the Assistant Elementary
Education Officer concerned through the Director
of Elementary Education.

51
 77. In G.O.(Ms) No.509, Finance (CA)
Department, dated 15.10.2009, the Government
has permitted the Commissioner, Government
Data Centre to issue authenticated account slips
for Teachers Provided Fund in respect of
Panchayat Union Schools teachers from the year
2007-2008 onwards. The authenticated account
slips for the year 2007-2008 have been issued
through the Director of Elementary Education. The
processing work of the account slips for the year
2008-2009, 2009-2010 and 2010-2011 are under
progress.

Contributory Pension Scheme

78. The Government, in G.O.(Ms).No.201,
Finance (Pension) Department, dated 21.05.2009,
has entrusted the work of assigning Index
Numbers for Contributory Pension Scheme and
maintaining the Contributory Pension Fund
accounts under Contributory Pension Scheme to
Government Data Centre for the following
employees.

52
 a) Teachers of Panchayat Union Schools.
b) Teachers of Aided Schools/Institutions.
c) Non-Teaching Staff of Panchayat Union
Schools.
d) Muncipal Corporation and Municipal
Employees.
e) Non-Provincialised Employees of Town
Panchayats.
f) Non-Provincialised Employees of
Panchayat Unions.
In the first phase, the allotment of
Contributory Pension Scheme Index Number has
been taken up and so far 82,311 Index Number
have been allotted to the employees.

79. As per orders issued in G.O.(Ms)No.42,

Finance (CA) Department, dated 17.02.2012, the
Drawing Officers concerned should maintain
separate ledgers for each and every subscriber
and these ledgers should be verified and certified
by the Local Fund Audit Department. Based on the
Audit certificates, the maintaining of Accounts of

53
Contributory Pension Scheme and computerization
(online) of the accounts will be done with the
co-ordination of the coordinating officers being
appointed by the Department concerned.

General Provident Fund for the Tamil Nadu

Nutritious Meal and Integrated Child
Development Services Employees

80. The Government, in G.O.(Ms)No.108,

Social Welfare and Nutritious Meal Programme
Department, dated 19.04.2010, has entrusted the
work of maintaining the General Provident Fund for
the Tamil Nadu Nutritious Meal and Integrated
Child Development Services employees to the
Government Data Centre. At present, the number
of subscribers of General Provident Fund of
Nutritious Meal Programme and Integrated Child
Development Services are 2,06,776.

81. The applications for assigning new

account numbers are received through online with
the coordination of National Informatics Centre.

54
So far, the online data entry work for 1,76,791
applications have been completed. Out of this, the
data relating to 69,650 subscribers have been
verified by the concerned Drawing and Disbursing
Officers.

INTERNAL AUDIT AND STATUTORY

BOARDS AUDIT DEPARTMENT

82. The Internal Audit and Statutory Boards

Audit Department was created from the Local Fund
Audit Department in the year 1969 and it has been
entrusted with the Internal Audit functions of the
Government Department in addition to the audit of
various statutory Boards and other Non Statutory
audit. The following Boards and Institutions are
coming under the purview of the Internal Audit and
Statutory Boards Audit Department.

55
Statutory Audit

Sl. Name of the Institution

No.
(i) Tamil Nadu Khadi & Village Industries
Board
(ii) Tamil Nadu Slum Clearance Board
(iii) Tamil Nadu Housing Board
(iv) Chennai Metropolitan Development
Authority
(v) Tamil Nadu Wakf Board
(vi) Tamil Nadu Labour Welfare Board

The audit of the above institutions in Sl.No.(i)

to (iv) are conducted annually on concurrent basis
and paras of serious nature are brought to the
notice of the Government and Public Undertaking
Committee.

Non Statutory Audit

The departmental audit is conducted in the

following non-statutory institutions by this
department.

56
 No. of
Sl.
Name of the Institution Centres /
No.
Institutions

(i) Puratchi Thalaivar M.G.R. 97,325

Nutritious Meal Programme

(ii) Agriculture Extension Centres 878

(iii) Weights and Measures 300

Institutions

(iv) Institutions receiving Grants-in- 724

Aid of Recurring grant of
Rs.0.20lakhs and
Non-Recurring grant of
Rs.1.20lakhs p.a.

Audit Certificate
83. This department is certifying the
entitlement of grants to grants–in–aid institutions
besides certifying pension and Provident Fund
closure proposals of employees of some of the
auditable institutions.

57
Other Functions

84. This department is conducting the audit

of 14 Government departments by deputing
persons in the cadre of Assistant Director/Inspector
to supervise the audit functions of the respective
Department. Wherever no Internal Audit staff are
available, this department is conducting the audit of
the following departments.

a) Secretariat Departments

b) Tamil Nadu Labour Offices under the

control of the Commissioner of Labour

c) Office of the Commissioner of

Disciplinary Proceedings

d) Directorate of Vigilance and

Anti-Corruption

This department is also conducting the annual audit

of the Hon’ble Chief Ministers’ Public Relief Fund
both at Secretariat and District levels and also

58
verifying and certifying the Teachers Provident
Fund account as well as Contributory Pension
Scheme in respect of the institutions for which audit
is entrusted to this department.

New Audit Offices

85. In order to establish an office in every

district, six new Inspector’s Offices have been
started functioning at Thiruvallur, Theni,
Perambalur, Ariyalur, Thiruvarur and Krishnagiri
from January 2012.

O. PANNEERSELVAM
Minister for Finance

59