CAG indicts Delhi private schools of financial irregularities
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Last Updated: Thursday, March 17, 2011, 21:16
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 International.

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 schools."

"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 admission.

"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.


First Published: Thursday, March 17, 2011, 21:16

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