CAG indicts Delhi private schools of financial irregularities

The Comptroller and Auditor General (CAG) has indicted 25 unaided private schools here for accounting malpractices including faking the loss.

New Delhi: The Comptroller and Auditor
General (CAG) has indicted 25 unaided private schools here for
accounting malpractices including faking the loss.

"The schools did not follow the the accounting standards
while preparing their final accounts. There was no prescribed
accounting format," the CAG said in its 64-page report
submitted to Delhi High Court today.
The report, relating to financial year of 2006 to 2009
was filed in pursuance of an order of the High Court on a
petition of a parents association challenging the city
government`s decision to allow the schools to hike the tuition
and the development fees.

The findings of the CAG, which would come up for hearing
tomorrow, said "there was no evidence of scrutiny of annual
accounts and other returns to ascertain that the receipts and
expenditures of the schools were in consonance with the
projected budget estimates of the schools and any fee hike was
not unreasonable.

"Inspection of the schools by the DoE was inadequate. The
DoE made only 10 visits in 25 schools during 2006 to 2009
against 75 envisaged in the Act... Due to weak governances by
the DoE, the schools continued to enhance the fees despite
having surplus funds."

The report dealt with the accounts of 25 schools, out of
1211 private schools, which were randomly selected from
various parts of the national capital and they include DPS R K
Puram, Modern School, Barakhamba Road, and and Amity

The CAG said the schools, which earned profits, used to
prepare accounts showing losses by transferring the surplus
funds into the next financial year.

"The total cumulative revenue surplus as on March 31,
2009, was Rs 93.79 crore and the average cumulative revenue
surplus per school during 2004 to 2009 ranged from Rs 2.51
crore to Rs 4.42 crore ...Schools build up deficits when they
overspend their budgets and carry forward the overspend to
future years," the report said.
It suggested proper monitoring by the Department of
Education of the accounts of the schools which are not only
shying away from giving admissions to poor children but also
not paying salaries to their staff and teachers on the lines
of their counterparts in government schools.

The CAG also pointed out lapses of chartered accountants
who had audited the accounts of the schools.

"Our scrutiny of audited accounts of the unaided private
schools revealed that none of the auditors had qualified the
audit reports in significant cases of non-compliance with the
directions of the DoE and provisions of the DSE rules by the

"As this amounts to professional lapse, the matter may be
taken up with the Institute of Chartered Accountants of India
for suitable deterrent action," the report said.

The schools had recently enhanced the fees by 15 per cent
without assessing the actual requirement, it said, adding the
Parents Teacher Association was not apprised of actual demand
arising out of the implementation of the sixth pay commission.

They should have first considered their surplus money
and then, if required, should have raised the fees.

"The five schools with the most surpluses were DPS,
Summerfield school, Vasant Valley school, Modern School and
ASN School and their surpluses ranged from Rs 58.67 crore to
Rs 9.26 crore during 2006 to 2009," it said.
Schools did not admit students belonging to the
economically weaker section (EWS) of the society to the
desired extent, the CAG said, adding the process lacked
transparency in dealing with the issue.

The CAG, concluding the report, suggested the DoE should
monitor the efforts made by the schools to ensure admission of
the children of EWS category and pro-actively recommend their

"The DoE should devise a fool-proof system so that these
special arrangements are not hijacked by the schools. The
system should be put on the DoE`s website for adequate
publicity," it said.

It also suggested simplification of rules to ensure
better compliance.