THIRUVANANTHAPURAM: In a significant move, the state government has firmly stated that officers in key positions within state-run public sector enterprises (PSUs) will only be considered for extensions or reappointments if the institution effectively meets audit requirements. This directive reflects the government’s last-ditch attempt to motivate PSUs to finalise their annual accounts and fulfil statutory audit obligations.
The directive, issued by the Bureau of Public Enterprises (BPE) under the state government, acknowledges the significant backlog in finalising accounts among PSUs, which is a matter of concern for the government. This backlog hinders the assessment of PSU performance. As a result, the finalisation of accounts and the statutory or CAG audit of an entity within the statutory timeline will now be prerequisites for considering proposals for the extension or reappointment of the managing director, chief executive officer, and head of finance of that entity.
The order stipulates that a certificate affirming compliance, countersigned by the secretary of the relevant administrative department, must be included in the proforma for extension or reappointment. In a one-time exception, secretaries of entities with over one year of pending audits may set the earliest feasible targets for finalising all accounts.
TNIE had earlier reported that only a small portion of the 131 state government enterprises had completed their accounts on time. Data from the Bureau of Public Enterprises indicated that 82 out of the 131 active public enterprises had audit arrears in the 2021-22 fiscal year. Four enterprises had a backlog of six years, and 52 enterprises had a backlog of two years or more.
The finance department had previously issued multiple circulars warning PSUs about delays in finalising accounts and their failure to address audit observations. The most recent warning, issued on July 20, threatened that defaulting PSUs would not receive government grants and funds. However, these warnings did not elicit a substantial response from the enterprises.
CAG FLAYS DELAY IN FINALISING ACCOUNTS
BPE’s order also cited criticism from the Comptroller and Auditor General (CAG) regarding delays in finalising accounts. All PSUs are required to submit annual financial statements to the Registrar of Companies (ROC) and annual accounts to the CAG. According to the CAG report on PSUs for the year ending March 2019, only 14 of the 117 working companies submitted their accounts on time.