THIRUVANANTHAPURAM: Scant regard for financial accountability and transparency is the ‘hallmark’ of several state public sector undertakings (PSUs), despite inviting criticism from the top audit institution. Though successive governments have been adopting a lenient approach towards PSUs by pumping in funds, many of them do not care to submit annual financial statements to the Registrar of Companies (ROC), it is learnt.
Another worrying trend is that many enterprises give little attention to the Comptroller and Auditor General of India’s (CAG) audit observations on their accounts.
On July 20, the finance department issued a circular warning PSUs against not finalising annual accounts and inaction on audit observations. Defaulters will not get government grants and funds, the department said. It is learnt that similar circulars issued in previous years did not get a good response.
“The circulars help the government save its face before the CAG, while erring organisations continue to get funds, thanks to political pressure, ” said a source. According to the data from the Bureau of Public Enterprises under the state government, 82 of the total 131 active public enterprises, including companies and corporations, had audit arrears in 2021-22.
Delay in finalising accounts may result in fraud: Report
Four enterprises had a backlog of six years and 52 enterprises for two years and above. Only 34 enterprises had finalised accounts to facilitate the statutory audit by the CAG. In May this year, the apex committee of PSUs asked all enterprises to ensure that their accounts are up to date and that action is taken on at least 50% of the pending audit observations by June 30, 2023. The committee had warned action against finance officers of erring PSUs, besides stopping funds. A cold response to the committee’s direction forced the finance department to issue the latest warning, it is learnt.
The administrative control of 131 state government enterprises is vested with 34 government departments. The bureau’s data for 2021-22 showed that the state government’s total investment, including paid-up capital and term loans, in these enterprises was Rs 25,233.91 crore. As many as 28 enterprises received Rs 1,753.08 crore as subsidies and grants from the state government in 2021-22. A total of 11 enterprises received Rs 1,946.86 crore from the central government.
All PSUs are mandated to submit annual financial statements to the ROC and annual accounts to the CAG. According to the CAG report on PSUs for the year ending March 2019, only 14 of the total 117 working companies submitted their accounts in time. Out of four statutory corporations, only the Kerala Financial Corporation submitted accounts in time. The KSRTC’s accounts were pending for four years. The report criticised the ROC for not taking action against companies that failed to submit statements. The delay in finalisation of accounts may lead to fraud and leakage of public money apart from violation of statutes, the report said.
The report also flagged the poor standard of accounts submitted by the PSUs. 141 instances of non-compliance to the Accounting Standards were reported from the submitted accounts, it said.