INTERNAL AUDIT EXPOSES AUROVILLE

THE AUROVILLE FOUNDATION

INTERNAL AUDIT REPORT 2004-05

 

HIGH LIGHTS

 

1)                 In spite of enormous responsibility vested on the Foundation and high volume of transaction carried by about 192 units, the Foundation has no internal mechanism for periodical inspection of books and records of the units to ensure that they are functioning properly within the autonomy given to them.

 

(Para 2.03)

 

2)                 There is no centralized accounting of income reflecting totality of income and expenditure.  There is no overall budget for Auroville.  Foundation has no system to ensure that all money received through various channels have been properly accounted for and utilized.

 

3)                 The Foundation has not prescribed any regulations for fund raising.

(Para 3.1.1)

 

4)                 No regulations were framed u/s 32(2) of the Act 1988 regarding maintenance of accounts  

 (Para 3.1.2)

 

5)                 There is no system of physical verification of assets to ensure their    existence in good condition.

(Para 3.1.3)

 

6)         There are no regulations for borrowings.                                        

(Para 3.1.4)

7)         No investment policy has been laid down.

(Para 3.1.5)

 

8)         There is no system in the Foundation office to watch compliance of various duties assigned to the executives / Trustees

(Para 3.1.6)

 

9)                 There is no mechanism in the Foundation Office to ensure proper accounting and utilization of donations received.

(Para 3.1.7)

 

10)      In the absence of any regulations there were cases of disposal of movable property without the approval of Foundation Office.

(Para 3.1.8)

 

11)      Some of the provisions in the Trust Deeds are at variance with the delegation of powers approved by the Government.

(Para 3.1.9)

 

12)             The Income and Expenditure Account of Foreign Contribution Account does not reflect the total foreign contribution received during a year.  As per FC 3 return submitted to the Government of India under FERA the foreign contribution received in 2004-05 was Rs.13.95 crores as against Rs.6.38 crores shown in the Income and Expenditure Account.

(Para 3.2.1(b))

 

13)             Foreign contributions of Rs.10.16 lakhs received in kind were not accounted for in FC 3 return submitted to the Government of India.

 

(Para 3.2.10(a))

 

14)             As per Foundation Rules 1997 approved by the Government all monies received in Auroville are to be kept in a bank account with State Bank of India.  It is observed that bank accounts were maintained in other banks also.

(Para 3.2.1(d) 3.2. (b) 3.2.4 & 3.2.6(g))

 

15)             Some of the receipts issued for foreign contributions received were subsequently cancelled by pencil and in some cases in ink.  In none of these cases competent authority has authenticated the cancellations.

(Para 3.2.1(k))

 

16)             The Income and Expenditure Account (Indian Donation) does not indicate the actual donations received during the year.  The Indian donations received during 2004-05 amounted to Rs.1.67 crores as against Rs.2.00 crores shown in the Income and Expenditure Account.

(Para 3.2.2 (a))

 

17)             The cash and foreign exchange transactions handled by the Auroville Maintenance Fund ranged from Rs.78.49 crores to 149.33 crores during the last 5 years.  However, no rules and regulations were framed for administering the Maintenance Fund.

(Para 3.2.4(a))

 

18)             As per Delegation of Powers the Finance Committee and the Secretary are empowered to make long and short term investments.  However, the Executive of Maintenance Fund made investments without their approval.  Such investments for periods ranging from 91 days to 6 years stood at Rs.15.66 crores at the end of 31st March 2005. 

(Para 3.2.4(e)

 

19)      The Trust deeds do not contain any provision or authority for the Foundation to select auditors for the trusts. As the Settler of the Trusts the Foundation should have the right to appoint or prescribe a panel of Auditors and review their performance

(Para 3.10.c)

 

20)      Consolidated Receipts and Payments Account as required in the format of

            Account prescribed by Central Govt. has not been prepared               (para3.10.i)

 

 

21)  There is no system of ascertaining the reasonableness of the prices paid for   the land acquired by the Foundation.                                             (Para 3.2.5 (a)

 

21)      There is no practice of obtaining prior sanction of the competent authority before incurring expenditure on stamp duty, commission paid to intermediaries and other related expenses while purchasing the land for Auroville.

(Para 3.2.5(b)

 

22)      No enumeration has been done of the trees available/ planted in the geographical area of Auroville at a cost of Rs.73.62 lakhs.

(Para 3.2.5 (c)

 

23)      The loss on sale / exchange of land is not accounted for.

(Para 3.2.5(e)

 

24)      Approval of the Government is not being obtained for purchase of land wherever the cost involved is more than Rs.1 crore value.

(3.2.5 (i)

 

25)      No master plan based on “Mother’s vision of Matrimandir” detailing its implementation and monitoring mechanism, mobilization of resources, time schedule for completion, etc. has been prepared for systematic and speedy execution of the project.

(Para 3.2.6(a)

 

26)      Refund of customs duty forgone due to non adherence of the prescribed

            Procedures amounted Rs.27.68 lakhs.

(Para 3.2.6 (b)

 

27)      Indigenous and foreign contributions received for Matrimandir during 2004-05

            were not released in full for the purpose.

(Para 3.2.6 (d))

           

 


 

 

 

1. THE FOUNDATION

1.01         Auroville founded by the ‘Mother’ In Feb. 1968, developed as a cultural township with the aid of funds received from organizations in and outside India as also from substantial grants received from the Central and State Governments and the United Nations Educational Scientific and Cultural Organization, contributing to international understanding and promotion of peace. For the purpose of encouraging, continuing and consolidating the aforesaid activities of Auroville it became necessary, in the public interest, to acquire the undertakings of Auroville. Auroville was vested in the Central Government under Sec.3 of the Auroville Foundation Act, 1988 and was held by the custodian till the 31st March, 1992 on behalf of the Central Govt. together with the right, title and interest. Thereafter the said undertaking was vested in the Auroville Foundation established by notification dated 29th January 1991 of the Govt. of India with effect from 01.04.1992 together with the right, title and interest.

1.02    The Auroville Foundation constituted under the Act comprises of three principal authorities via. (i) The Governing Board, (ii) The Resident’s Assembly and (iii) Auroville International Advisory Council.

1.03    The Governing Board consisting of members nominated by the Central Govt. have the power for general superintendence, direction and management of the affairs of the Foundation and exercise all the powers and discharge all the functions which may be exercised by the Foundation under the Act; inter-alia .including :

a)     reviewing basic policies and programmes and giving necessary directions for the future development of Auroville

b)     according approval to the programmes drawn up by the Residents Assembly   and

c)      Monitoring and reviewing the activities of Auroville to ensuring proper management of the properties vested in the Foundation. The Act also envisages that the Foundation shall prepare a master plan of Auroville. The Act envisages that the Foundation shall be accountable to the Govt. and the Parliament and for the purpose shall have Annual Accounts prepared and duly audited by the Comptroller and Auditor General of India (C&AG). The form of Accounts shall be as prescribed by the Central Govt in consultation with the C&AG.

1.04    Present Status

There are at present about 200 units/entities engaged in various activities, some commercial in nature, some service oriented including research, some in manufacture. They are not easily correlated to the main objectives of the Foundation, There does not appear to be any long term policy or plan for these units. They however, are entrusted with the assets of The Foundation, deal with the public and their relationship and accountability to the Foundation and to the Govt and the Parliament is informal and not often enforced. While it may be desirable to democratize various activities in Auroville with the Residents Assembly as the fountainhead of legitimacy, there are serious deviations from the accepted canons of propriety and public accountability as enumerated in the succeeding parts of this report. This raises legitimate concerns about the compliance not only with the letter and spirit of the Act and the Rules, but also the appropriateness of the Foundation acting as an umbrella for organizations that have very little to do with the “Vision”. The manner of appointment of Trustees and supervision over the operations of TRUSTS handling large sums of public moneys need a close review. Selecting a few individuals who are not employees of the Foundation and who are not treated as public servants with no defined accountability or fiduciary responsibility, and entrusting large sums of public moneys, without the discipline of well defined financial rules and procedures appear to be hazardous and certainly not in public interest.

If it is considered that the Foundation should have a minimal role in the operation of Trusts that use its resources (including land), alternative systems including statutory changes are required .This may involve a deliberate and systematic delinking.

 

1.05    The Residents’ Assembly consisting of all the residents of Auroville advises the Governing Board in respect of all activities relating to the residents of Auroville including admission of persons in the Register of Residents of Auroville. A Working Committee of the Residents’ Assembly has been constituted under the Act. The Working committee is empowered to create or constitute other organizations, trusts, societies or associations to carry on activities relatable to Auroville, with the approval of the Governing Board of the Foundation. They are subject to their commitment to the ideals laid down in the charter and are mandated to function in conformity with the decisions of the Governing Board.

1.06    The Auroville International Advisory Council consisting of nominated members by Govt. to advise the Governing Board on any matter relating to the development and management of Auroville.

1.07    The Powers to make Rules governing the operations and management of the foundation and its organs vests in the Central Govt. The Rules currently in force are given in Appendix. The Rules vests the authority to deal with the assets of the Foundation exclusively in the Governing Council. The Governing Council may refer matters relating to Funds and Assets to a Committee called Finance Committee comprising the Financial Adviser to the Ministry, as the Chairman, the Secretary of the Foundation and other representatives of the Govt and the Governing Board as members.

Under the Rules another body constituted by the Residents Assembly – Funds and Assets Management Committee has been empowered to decide on all issues related to funds and assets of the Foundation, subject to a Veto by the Finance Committee or the Board.    

2. REVIEW OF OPERATIONS

2.01 The Institute of Public Auditors of India has been given a mandate by the Foundation to conduct a system review and internal audit of the Foundation’s accounts with a view to introducing financial control and accounting systems. Considering the number of entities numbering about 200, it was agreed that the review and internal audit for the year 2004-05 would be confined to:

(i)                 the Foundation

(ii)               Auroville Fund and some of its major units

(iii)             SAIIER

(iv)              Auriville Export Trust

(v)                Centre for Scientific research and

(vi)              Aurovinda Trust

The first phase of the review/audit is confined to:

(i)                 the Foundation and

(ii)               Auroville Fund and some of its major units viz-

a)     Foreign contribution Account,

b)     Auroville Fund Main Account,

c)      Maintenance Fund Account,

d)     Land and Estate Management Accounts, and

e)     Matrimandir

And the observations thereon are summarized in the following paragraphs.

3. AUDIT FINDINGS

3.01 Asset Management

Under the Act the Foundation is accountable for the funds and assets of the Auroville. The Governing Board has been authorized to co-ordinate fund-raising for Auroville and to secure proper arrangements for receipt and disbursement of funds for Auroville. The Foundation has the special responsibility to review the activities of Auroville and to secure its proper management. The Governing Board is responsible to maintain proper accounts and other relevant records and prepare the annual statement of accounts to be presented to the Parliament. The foreign and Indian donations received by Auroville ranged from Rs.7.98 crores to Rs.16.49 crores during the last five years.

The assets of Auroville stood at Rs.104.21 crores at the end of 31st March 2005. The power to supervise the working of units within the freedom given to them is derived from the Act and also from the following enabling provisions of executive appointment orders and trusts deeds entered into between the Trustees and the Secretary to the Foundation.

(i)                             All liabilities and assets of Auroville are vested in the Foundation under the Act.

(ii)                           The Secretary of the Foundation appoints the Executives and Trustees.

(iii)                         The accounts of the units / trusts are open to inspection by the Foundation.

(iv)                          The units / trusts at all times are subject to the general superintendence of the Foundation.

(v)                            While managing the trusts in an autonomous way, the trustees are accountable to the Foundation.

3.02 Superintendence – System deficiencies

In spite of enormous responsibility vested on the Foundation and high volume of transactions carried out by about 192 units, the Foundation has not framed rules for accounting of transactions by the units, the returns to be submitted to the Foundation, the form of accounts as would reflect the sources of funding the units eg. Govt. grants, donations, internal accruals, etc. There is also no programme for regular inspection of the units.

When the Annual Audited Accounts are received, there is no evidence of any detailed examination of records and propriety of transactions of the units to ensure that they are functioning properly within the autonomy given to them. There were un-authorized borrowings, investments, sale of assets and maintenance of funds, etc. Delegation of powers and Auroville Foundation Rules has been violated in a number of cases. Had there been an internal checking mechanism with the Foundation, repetition of such lapses could have been arrested.

3.3       Absence of Regulations for Fund Raising:

According to Sec. 17(1) of the Act, 1988, the Governing Board has to authorize and co-ordinate fund-raising for Auroville and to secure proper arrangements for receipt and disbursement of funds for Auroville. However no procedure/ rules been laid down in this respect i.e., means of raising the fund, persons authorized to raise and receive the funds and the procedure to be followed in disbursing the funds raised for the activities of Auroville. In its absence the present position is as follows:

·                    Government Grants (plan and non-plan) are received into Auroville Foundation Account and then transferred to the units for utilization. Some of the grants are also directly received by the units;

·                    All foreign donations are received directly into Auroville Foundation Bank Account approved under Foreign Contribution Regulation Act (FCRA). Receipts for the donations are signed and issued by the Auroville Fund Executives. Funds are then transferred to the units for utilization.

·                    Indian donations are routed through Auroville Fund Main Account and also some times directly received by various units and depending upon the purpose of donation, income tax exemption receipts are issued by the receiving units over the signature of Auroville Foundation Officer.

·                    Profits earned by business units are transferred to other Auroville units and projects at the discretion of the Unit Executive or retained in the unit as reserve for liabilities or for development, and

·                    Un-utilized income and reserves are invested and the units holding the deposits utilize interest income.

Under the present system, the income of Auroville is received through a number of channels. There is no centralized accounting of income reflecting totality of income and expenditure. There is no overall budget. The Foundation has no system to ensure that all monies received through various channels have been properly accounted for and utilized.

 

3.4 Non-framing of regulations u/s 32(2) of the Act, 1988

      Under section 32(2) of the Act of 1988 the Governing Board has to make regulations for maintenance of accounts of the Foundation and the maintenance of registers and other records of the Foundation and its various committees.

It is however, observed that no such comprehensive regulations were framed so far.

 

3.5 Physical verification of assets not undertaken

As per the Act of 1988, all assets of Auroville are vested with the Foundation and as on 31st March 2005, Auroville Foundation owns fixed assets worth of Rs.104.21 crores. However, the foundation has not ensured the existence of these assets in good condition by conducting periodical physical verification.

 

3.6 Regulations for borrowings

There are no clear instructions of Governing Board to persons authorized to borrow and the limits for such borrowings. However, as per Foundation Rules, 1997 and the Delegation of Powers, the Governing Board may, with the previous sanction of Govt., borrow on the security of properties of Auroville or any other asset. The trustees are resorting to secured and un-secured loans without any limit without the specific approval of Governing Board / Government. At the end of March ‘05 the borrowings of Auroville Foundation stood at Rs.8.00 crores.

3.7 Absence of Investment policy

As per Auroville Foundation Rules, 1997, the Governing Board has been empowered to entrust the funds of the Foundation or any other investible funds in such securities or in such manner as may, from time to time, be determined by the Governing Board and in accordance with Govt. of India’s instructions on investments. However, the Governing Board has not yet formulated an investment policy for Auroville. As per the Delegation of Powers, the Financial Committee has the power to invest the funds for periods exceeding one year and the Secretary for less than a year. The Trustees and Executives of the units made investments for periods ranging from 91 days to 6 years without the approval of the Finance Committee / Secretary. The investments in FD, Bonds, Mutual Funds etc., stood at Rs.23.46 crores at the end of 31st March 2005. Out of this, the investments of one unit viz., Auroville Maintenance Fund alone amounted to Rs.15.66 crores.

 

3.8 TRUSTS – Poor compliance verification

3.8.1   The Executive appointment orders and Trust Deeds confer certain powers and duties to the executives of the units and Trustees. For example,

·                    Immovable assets should not be disposed of without the specific written permission of the Security of Auroville Foundation.

·                    The Board of Trustees shall meet thrice in a year and the decisions taken in the meetings should be communicated from time to time to the Secretary.

·                    The Board of Trustees whenever they meet shall record their proceedings regularly in a minute’s book, which is always open for inspection at any time by the Foundation.

·                    Any acquisition of immovable assets should be done only with the prior written permission of the Secretary.

However, it was observed that the Foundation Office has not evolved any system to watch the compliance of various duties assigned to the Executives and Trustees.

3.8.2       Foreign and Indian donations received in Auroville ranged from Rs.7.98 crores to Rs.16.49 crores during last 5 years as shown below. However, there is no mechanism in the Foundation Office to ensure proper accounting and utilization of donations received. The Income Tax Exemption certificates for donations received are issued over the signature of the officers of the Foundation office.

Year

                       Rs. in Crores

Foreign

India

Total

2000 – 2001

9.29

0.84

10.13

2001 – 2002

15.36

1.13

16.49

2002 – 2003

6.94

1.50

8.44

2003 – 2004

6.23

1.75

7.98

2004 – 2005

14.03

2.00

16.03

3.8.3   Under Auroville Foundation Act 1988, all assets, rights leaseholds powers, authorities and privileges and all property (movable and immovable) including lands, buildings, works, workshops, projects, stores, instruments, machinery, automobiles and other vehicles, cash balances, funds including reserve funds, investments, and book debts of the society, trust or body as form part of or relatable to Auroville and all other rights and interests arising out of such properties are vested with the Foundation.

            As per Delegation of Powers the Secretary of the Foundation is empowered to sell, exchange, transfer, lease or other disposal of immovable property. There is no mention in the Delegation of Powers about the disposal of movable properties.

            A perusal of accounts of the following units for the year 2002-03 has indicated the disposal of movable properties without the approval of Foundation office.

(1)  Auromode Trust:

Date

Particulars

Amount Rs.

Remarks

01.04.02

Sale of air conditioner

67,308.00

Sold to: Mr.Genevier, Auroville – individual

08.05.02

Hero Honda

26,442.00

Mr.S.Arumugam, Individual

17.05.02

Kinetic Honda

2,404.00

Mr.Ganesh – individual

30.01.03

TVS XL

4,808.00

Mr.Shyam – individual

03.03.03

Water Effluent Plant

1,95,423.00

Mr.Georgio-individual

03.03.03

Water Effluent Plant

3,77,659.06

M/s.Maroma, Auroville Unit

This is with reference to the resolution passed by the Board of Trustees of the Trust dated 01.04.02 & 28.02.03 permitting the disposal of assets to such persons and at such prices decided by the managing trustee in the best interest of trust.

(2). Decauram: (a unit under Toujour Mieux Trust) With reference to the resolution passed by the trustees dt. 15.03.03, assets with a book value of Rs.89, 170.83 was sold for Rs.2, 10,000 to Village Action Trust. The sale includes building also an (immovable property) and vehicles, furniture and fittings not covered by the resolution.

(3) Altecs Trust: (Unit under Altecs Energy Systems) sale of building – Rs.50, 000/-to Joster, individual (Furniture & Fittings – Rs.49, 500.00)

The Trust Deed empowers the trustees to take all such steps necessary in the best interests of the trusts and accordingly resolutions were passed and assets were sold.

 

3.9       Trust Deeds

For efficient management of units, Trusts are created and Trustees are appointed on the recommendation of Working Committee u/s 20(4) of the Act and the Trust Deed is entered into between the Trustees and the Secretary of the Foundation and is registered and the Trustees manage the Trust properties for realizing the objects of the Trust.

It is observed that

a)                 some provisions of the Trust Deed are at variance with the delegation of Financial & Administrative Powers (DFAP) as shown below:

Provision as per DFAP

Provision in Trust Deed

Investment of Funds:

Long term:  Governing Board is authorized

Short term: Secretary is authorized

No provision- units are investing funds without the approval of competent authority.

Barrowings on the security of the properties of Auroville or any other asset: Governing Board with the prior sanction of the Govt. is authorized to borrow

The Trustees can enter into agreement with outside parties to raise monies by pledging movable assets. Immovable assets can also be pledged for raising a loan after obtaining permission from the Secretary.

b)         The Trust Deed does not provide for appointment of Trustees/ Executives during their temporary long absence from India. As a result in one unit (Imagination) an Aurovillian was given power of attorney to manage the unit by the Executive himself during his absence for eight months. After his return it was found there was total mismanagement of affairs of the unit by the person to whom the Power of Attorney was given.

c)         The Trust Deed does not speak about the manner in which the movable assets are to be disposed of.

d)         As per Auroville Foundation Rules, 1997 made by the Central Govt. all monies received shall be deposited in one or more accounts with the State Bank of India. Approval of the Central Govt. is to be obtained for depositing money in Banks other than scheduled banks. The Trust Deed does not contain this condition. It simply says that the Trustees are empowered to open bank accounts. It is observed that almost all units deposit their money with the Auroville Maintenance Fund without any authority from the competent authority. Some units are having bank accounts in other banks like Vysya Bank, Citi Bank and ICICI Bank.

e)         No limit for borrowings powers has been laid down in the Trust Deeds.

3.10   Annual Accounts

In the absence of regulations framed u/s. 32(2) of the Act, 1988 for maintenance of accounts the following is being followed:

Annual accounts are prepared for all units under Auroville. These accounts are consolidated into 28 Trust Accounts and certified by Chartered Accountants appointed by the Trustees themselves. Consolidating the 28 Trust Accounts, the Auroville Foundation compiles the consolidated annual account, which is certified by the Comptroller & Auditor General of India u/s 26(2) of the Act.

A test check of the accounts prepared by Foundation office has indicated the following:

Foundation Office:

a)                 The Chartered Accountants are appointed as auditors to certify the annual accounts of the units. The Foundation, despite the duties and powers entrusted to it under the Rules has not issued any guidelines to the auditors in regard to submission of reports, matters that need to be specifically covered in their reports.

b)                 As per Auroville Foundation Rules, 1997 the Governing Board has to approve the Annual Report/ Annual Accounts of Auroville Foundation before presenting it to C&AG for audit. This is not being followed.

c)                  The Trust deeds do not contain any provision or authority for the Foundation to select auditors for the trusts. As the Settler of the Trusts the Foundation should have the right to appoint or prescribe a panel of Auditors and review their performance.

d)                 The consolidated Annual Income and Expenditure Account prepared every year does not reflect the various items of income received/ receivable and the expenditure incurred/ to be incurred in that particular year. It reflects only the net results i.e. excess of income over expenditure or excess of expenditure over income of various units.

e)                 Register of grants received is not being maintained at Secretary’s Office through grants are received from Govt. of India. Un-spent non-plan grant is not being distinctly shown in the non-plan account of the Foundation office. As at the end of 31st March 2005, the un-spent non-plan grant was Rs.3.44 lakhs.

f)                    The consolidated annual accounts of Auroville Foundation do not exhibit distinctly the total donations and grants received, spent and the un-spent balances remaining with the Foundation.

g)                 The consolidated accounts do not bring out the nature of receipts and payments of the Foundation for different activities viz., commercial, research and service activities. There is a serious gap in information as to the nature of capital funds.

h)                  The Sundry Debtors as on 31st March 2005 amounted to Rs.6.92 crores. No confirmation of balances from Sundry Debtors is however, obtained.

i)                    Consolidated Receipts and Payments Account as required in the format of account prescribed by Central Govt. has not been prepared.

j)                    The following misclassifications were noticed while reviewing the accounts Auroville Foundation Office for the year 2004-05.

a.      Rs.17.92 lakhs received as advance payment by Swagatham Trust for a contract work was treated as grant instead of advance.

b.      Rs.1.12 lakhs received from Central Pollution Control Board as first installment of payment for preparation of a document ‘Auroville – the Ecocity in making’ has been accounted for as grants instead of advance.

k)                  Auroville Foundation Office is preparing two sets of accounts – one for transactions after the take over by Auroville Foundation and another for the Assets and Liabilities taken over in 1991 named as ‘Secretary’s Office Account’. This account is operated only for refund of TDS Income and its disbursement to units retaining interest portion of the refund and for meeting staff advances. These two accounts have not been merged so far.

l)                    In the Tenth Finance Committee Meeting it was approved to retain the interest received on TDS refunds by the Auroville Foundation and to return the refund amount of TDS received from the Income Tax Department to the respective Trusts/Units. A sum of Rs.39, 986.00 (20,984 + 19,002) out of Rs.1, 65,000.00 received as interest on TDS from Income Tax Department during the years 2003-04 and 2004-05 was not apportioned as income to the Auroville Foundation during the years 2003-04 and 2004-05.

m)               In letter ADAT-P3-LR-104 dated 11.07.2001 at the time of merger of Assets & Liabilities of Auro Service D Auroville Trust with Pondy Auro Service Consultants Private Limited, it was informed that on receipt of refund of TDS, 50% of the refund amount may be paid to the Auro Service and the balance amount kept by the Auroville Foundation as contribution by the Trust. During 2003-04 TDS refund of Rs.3, 24,844.00 (Rs.1, 67,013 + 1, 57,831 (1, 78,400 (-) 20,581)) received by the Auroville Foundation was refunded. Action has not been taken to treat 50% of the refund of         Rs.3, 24,844 as contribution to the Auroville Foundation and to return the balance to the Trust to adjust the amount of Rs.1, 25,000.00 due to “FAILURE”, a unit of Auroville Foundation.

3.11  Auroville Fund

The FUND has the command over virtually all resources of the Foundation and yet there is no management control system in place to ensure adequate safeguard for public funds and for ensuring public accountability.

3.12  Foreign Contribution Account

a) One centralised unit viz., Auroville Foundation Foreign Contribution Account was established to receive exclusively all foreign contributions received in kind or cash in Auroville. It is however, observed that the other units are also receiving foreign contributions directly without routing through the designated account. For instance foreign contribution of Rs.10.16 lakhs received in kind directly by Matrimandir in 2003-04 & 2004-05 was not accounted for in FC3 return submitted to Govt. of India under Foreign Exchange Regulation Act (FERA)

b) The Income & Expenditure account of Foreign Contribution Account does not reflect the total foreign contribution received during the year. As per FC 3 Return filed with the Govt. of India under FERA, the total foreign contribution received during 2004-05 amounted to Rs.13, 94, 77,776-70 as against Rs.6, 37, 86,897-42 shown in the Income and Expenditure Account.

c) The expenditure incurred out of the Foreign Contributions during 2004-05 amounted to Rs.9,90,33,627.58 as per FC 3 Return as against Rs.98,30,475-17 shown in the Income and Expenditure Account. This needs reconciliation.

d) Some funds of the Foreign Contribution Account are deposited with Auroville Maintenance Fund. The balance with the Maintenance Fund at the end of 31-03-2005 stood at Rs.4.38 crores. As per Auroville Foundation Rules, 1977 all monies received should be deposited in State Bank of India only. There is no authority for depositing the funds with the Maintenance Fund.

e) A Stock Register for Foreign Contribution received in kind is to be maintained in FC 6 format as per FERA. This has not been maintained.

f) It is seen that Mr. Louis Cohers, an Aurovilian donated Rs.24, 000/- to Auroville Future during 2004-05. As he is a Foreigner who has not obtained Indian citizenship his contribution is to be treated as Foreign Contribution as per FCRA. However, this did not figure in FC 3 Return.

g) The Trustees are making transfer of donations from one project / Unit to another Project/ Unit. For instance during 2004-05 Rs.4, 98, 55,210/- of donations were transferred from one project to another (Foreign Donation Rs.4, 74, 02,393/-. Indian Donations Rs.24, 52,817/-. This is not covered by any authority from the donors.

h) One/two percent of donations, both Foreign and Indian is appropriated towards Administrative charges. This appears to have not been covered under any authority.

i) A scrutiny of Bank Reconciliation Statement (BRS) as on 31.03.05 relating the Auroville Foreign Contribution account (SBI A/c. No.01000060095) showed that cheques amounting to Rs.7, 12,185-63 deposited into Bank during February & March, 05 have not been cleared and credited into the account. Subsequently cheques for Rs.6,50,585-63 have been cleared and credited to the Foreign Contribution account during April & May ’05 leaving a balance of Rs.61,600/-. The balance amount represents two Foreign Contribution deposited on 10.2.05 (Rs.56, 000 vide receipt no.1227 on 11.2.05 and Rs.5, 600/- vide receipt no. 1235 Euro 100) the two remittances have not been cleared by the Bank till 20.12.05.

A sum of Rs.8, 560/- was credited by Bank on 4.3.2005, but this amount was not entered in Cash Book till 20.12.05.

Rs.270/- has been shown as a ‘difference in Books’ in the BRS. This has also not been cleared so far.

j) A perusal of details of Donor wise Foreign Contribution attached to FC 3 return for the year 2003-04 showed that donations for Rs.1,88,16,175/- were received from Individuals and Institutions for the purchase of land. However, this amount was not exhibited against “Purchase of Land” in Form FC 3 submitted to GOI for the year 2003-04.

k) During test check of the receipts issued for Foreign Contribution received during the year 2004-05 the following were noticed:-

  • Some receipts were cancelled. Illustrative cases are given below :-

No.

Receipt No., Date & Amount

Authenticated or not

Mode of Cancellation

Cancellation attested or not

Payment by Cash/ cheque/DD/ Bank transfer

Remarks

a)

0978 / 18.01.05
Rs. 13,65,620/-

Not authenticated

Pencil crossings: cancelled not written

Not attested

SBI cheque 456205 / 18.01.05

Reasons for cancellation are not given.

b)

0979 / 18.01.05
Rs,11,396/-

-do-

-do-

-do-

SBI Cheque 456106 / 18.01.05

-do-

c)

0980 / 18.01.2005 Rs.41,621/-

-do-

Pencil crossing with cancelled written

-do-

SBI Cheque 456207 / 18.01.05

2.

0996 / 19.01.05 Rs.5,707/-

Authenticated

Cancellation entry by ink

-do-

Bank Swift Transfer dt.13.01.05

3 a)

1073 / 29.01.05 Rs.6,300/-
1074/29.01.05 Rs.8,600/-

Not authenticated

-do-

-do-

SBI Cheque 456243 & 456244 dt.27.01.05

b)

1096 / 29.01.05 Rs.2,570/-

Authenticated

-do-

-do-

Bank Swift Transfer dt.21.01.05

Vide Receipt 1605 dt. 31.03.2005 for Rs.2,570 by D.D.

4.

1111 / 29.1.05 Rs.5,000/-

Not authenticated

Pencil Cancellation

Not attested

Bank swift transfer dt.25.1.05

 

1112 / 29.01.05 Rs.5,000/-

-do-

-do-

-do-

Ch. No.618279 dt.5.1.05

5. a)

1232 / 10.2.05 Rs.25,000/-

-do-

Crossing by pencil cancelled not written

-do-

Bank swift Transfer dt.21.01.05

Reasons for cancellation not given

b)

1276 dt.14.2.05 Rs.1,533.23

Authenticated

-do-

-do-

By AVMF

-do-

c)

1298 / 19.2.05 Rs.21,71,000/-

Not Authenticated

Ink Cancellation

-do-

Bank Swift Transfer

6.

1441 / 07.03.05
24 USD

-do-

-do-

-do-

Cheque 2039

Reasons for cancellation not given

7.a)

1522 / 18.3.05
UKP 25

Authenticated

-do-

-do-

Cheque 540522

-do-

b)

1526 dt.18.3.05
Rs.10,600/-

-do-

-do-

-do-

Ch: 457325
dt.18/3

c)

1537 / 26.3.05 Rs.7,58,864/-

Not Authenticated

Crossing in ink cancellation not written

-do-

Bank Swift Transfer dt.21.03.05

Reasons not given

d)

1577 / 31.3.05
Rs.2,08,500/-

-do-

-do-

-do-

AVMF

-do-

e)

1596 / 31.3.05
Rs.39,204/-

Authenticated

Pencil crossing without Cancellation entry

Not attested

Bank Swift Transfer dt.31.3.05

f)

1602 / 31.3.05

-do-

Cancellation entry made

-do-

 

Original receipt not available.

8.

12 / 9.4.2004
UKP 500

Not authenticated

Ink crossing but cancelled not written

-do-

Ch. 807545 dt.31.3.05

Reasons not given

9.a)

129/7.6.2004
Euro 40

-do-

Pencil Cancellation

-do-

Cash

-do-

b)

130 / 7.6.2004
Rs.90,11,500

Authenticated

-do-

-do-

Bank Swift Transfer

c)

175 / 1.7.2004
UKP 100

-do-

Ink Cancellation

-do-

Postal Order

Receipt 178 for UKP 80 & not for UKP 100 Discrepancy to be reconciled

10.a)

226/19.7
Rs.3,400/-

Not authenticated

-do-

-do-

Ch. 453659 dt.19.7.2004

b)

249 / 31.7
Rs.90,68,379

Authenticated

Pencil Cancellation

-do-

Bank Swift Transfer

11.

841 / 12.1.05
Rs.10,880/-

Authenticated

Pencil Cancellation

Not attested

Ch. 4371 dt. 27.3.04

Original receipt not available

12.a)

1602 / 31.3.05
Rs.39,204

-do-

-do-

-do-

Bank Swift Transfer dt.31.3.05

-do-

b)

1608 / 31.3.05
Rs.18,355/-

Not authenticated

-do-

-do-

E.Transfer

Reasons for cancellation not given

c)

1611 / 31.3.05 Rs.17,120/-

-do-

Ink Cancellation

-do-

Ch. 7859398 & 7859399 dt.NIL

-do-

  • In some cases cancellation has been done by pencil and in some cases in ink. In none of these cases competent authority has authenticated the cancellations. No reasons were also given for cancellation.
  • In some cases the receipts were not authenticated.
  • In some cases subsequent receipts were issued but there are discrepancies in the amounts (Sl.No. 3B and 9C).
  • In some cases, only duplicate receipts are available (Sl.No. 7(f) & 11, 12(a) without original receipts.
  • A receipt for 1936.28 Euros (Rs.1068, 379/-) issued on 30.8.2004 (Receipt No.249 dt. 30.8.04) for bank transfer was subsequently cancelled on 29.9.04 as bank has reversed the entry. There is no system to verify the genuineness of the reversal entries made by Banks.
  • Receipt books for issuing receipts are printed by Auroville Fund. However, no stock register of receipt books is maintained detailing number of books printed, issued for use and the balance available. Hence proper accounting of receipt books could not be ensured.

3.13 Auroville Fund Main Account (Indian Donations)

a)                 The Income and Expenditure Account does not indicate the actual donations received during the year. For instance, the donations received during 2004-05 amounted to Rs.1, 67, 46,703.87 as against Rs.2, 00, 27,298.95 shown in Income & Expenditure Account. This discrepancy was not reconciled.

b)                 Some funds of Auroville Foundation Main Account are deposited with Auroville Maintenance Fund. The balance to end of 31st March, 2005 with the Maintenance Fund stood at Rs.92, 09,162.24. This has no authority. As per Auroville Foundation Rules, 1997 all monies received are to be kept in a Bank Account with State Bank of India.

3.14  Auroville Fund Consolidated Account 2004-05

            Administration Expenses of Rs.98, 30,475.17 pertaining to Foreign Contribution Account has been included under “Establishment Expenses” in the consolidated Income and Expenditure Account of Auroville Fund Trust Account instead of showing under “Administrative Expenses”.

3.15    Auroville Maintenance Fund

a)     The cash and foreign exchange transacted during last five years period ending 31st March, 2005 is as follows:

                                                      i).            2000 – 01      =                      Rs.      78.49 crores

                                                    ii).            2001 – 02       =                      Rs.      90.60 crores

                                                  iii).            2002 – 03       =                      Rs.      104.14 crores

                                                  iv).            2003 – 04       =                      Rs.      106.14 crores

                                                    v).            2004 – 05       =                      Rs.      149.33 crores

No Rules and regulations were however, framed for administering the Auroville          Maintenance Fund. Cash and foreign exchange worth of several crores were transacted through the fund. In the absence of any rules and regulations for operation, the Maintenance Fund is functioning on the following lines.

b)     The Maintenance Fund is acting as a banker. The Projects/Units deposit their money with the Maintenance Fund and withdrawn whenever required. The un-drawn money and un-spent donation are invested in Fixed Deposits and other securities and the interest earned from such investments is transferred to another fund named as “Central Fund” which caters to the needs and services of Aurovillians.

c)      The Maintenance Fund is also acting as a registered dealer in Foreign Exchange. It purchases foreign currencies from the Aurovilians and Tourists at the purchase rate and sells them at selling rates and the profit earned in the transaction is also transferred to Central Fund.

d)     The Governing Board has not authorized the above transactions. As per Auroville Foundation Rules, 1997, all monies are to be kept in a bank account with State Bank of India. The Maintenance Fund is also maintaining bank accounts with Vysya Bank, ICICI Bank and Citi Bank, which is contrary to Foundation Rules. There is no authority for maintenance of Central Fund within the Maintenance Fund. No separate account is maintained for Central Fund. In its absence the receipts and payments passing through this fund could not be verified.

e)     As per Delegation of Powers, the power to make long term investment vests with the Finance Committee and short-term investments with the Secretary of the Foundation. However, the Executives of Maintenance Fund are making short term and long-term investments without the approval of proper authority. The Trust Deed or the appointment order of Executives does not also permit the investments by Trustees/Executives. At the end of 31st March, 2005 the investments for periods ranging from 91 days to 6 years stood at Rs.15.66 crores.

f)        Rs.15.31 lakhs of foreign contributions received during 2004-05 as per FC 3 Return for Maintenance Fund has not been shown in the Income and Expenditure Account of Maintenance Fund.

g)     A test check of payment vouchers has indicated the following:

(i).   Vr. No. 897 / 7.4.2004

Rs.1,000/- was paid to one Shri Shiva. In the account the amount has been shown as Rs.3, 000/-.

(ii).  Vr. No. 808 / 8.4.2004

It is seen from the sub-voucher that the receiver of the payment has given a receipt for Rs.85, 228/-. However, in the account the amount paid has been shown as Rs.86, 516/-.

(iii)       Vr.1720/15.4.04 for Rs.59.81 and Vr. No.1722/15.4.04 for Rs.950.07 are not traceable in the Bank Statement of Citi Bank.

(iv)      Vr. 1654/14.4.2004 -Sub-voucher for Rs.75/- for payment of labour charges is not available.

 

 

3.16LAND AND ESTATE MANAGEMENT

 

 

It is said that the Mother desired Auroville to be developed as a Universal Township surrounded by a green belt or forested Zone where men and women of all countries are able to live in peace above all creeds, all politics and all nationalities and the purpose of Auroville is to realize human unity.  The township is designed for an ultimate population of 50,000 in an area of about 2000 h.a.  An inauguration ceremony of Auroville was held on 28th February 1968 symbolising the creation of city dedicated to human unity.  However, the construction of Township was delayed for many years because of much of the land required has not been purchased.  Out of the required area of 491 h.a. for City Area and 1472 h.a. for Green Belt Area, the Foundation was able to acquire 378 h.a. for the City and 437 h.a. for Green Belt Area during last 35 years.  Paucity of funds and non availability of land were stated to be the main constraints.  The Foundation’s efforts to acquire land by Land Acquisition Act through the Government of Tamil Nadu also did not yield the desired results so far.

It is the intention that all land within the geographical region earmarked as the Auroville City and Greenbelt Areas with the exception of the Village earmarked areas will be owned by the Auroville Foundation and the Auroville Foundation will hold the ownership of all lands in trust for humanity as a whole.

 

All lands owned by Auroville Foundation are under the management of Fund and Assets Management Committee (FAMC).  The FAMC delegated part of its responsibility to the Land and Estate Management group (LEM).  LEM is responsible for:

 

(i)                             all purchases of land with the prior approval of Working Committee

(ii)                           sale and exchange of land with the prior approval of FAMC and Working Committee

(iii)                         maintaining a list of all lands owned by Auroville Foundation (AVF) with the details of survey numbers, acreage, village date of purchase and cost etc.

(iv)                          maintaining list of Aurovilians to whom the stewardship was given

(v)                            payment of all land taxes, and

(vi)                          dealing with all land related problems.

 

A review of land records made available revealed the following:

 

a)         Absence of system of ascertaining the reasonableness of the prices    quoted by the sellers of land.

 

            Lands were acquired by voluntary sale/exchange by negotiations with the land owners.  The justification given for accepting the rate offered by the land owners is the same in all cases viz. “the rate offered per acre for the land is reasonable in view of previous rates paid by us”.  The rates offered are compared with the rates already paid by Auroville in previous occasion in the same area.  The guideline value or the prevailing market price was not obtained by independent enquiries to ensure the reasonableness of the rates quoted by the sellers.  For instance on 18th August, 2003 LEM requested the Secretary’s permission for the purchase of 3.90 acres of land at the rate of Rs.4,50,000/- per acre in R.S.No.336/2 and 362/7 of Irumbai village.  In this case the Finance & Administrative Officer called for the guideline value from the DRO. Villupuram.  The guideline value given was Rs.31,500/- per acre in R.S.No.336/2 and Rs.46,500/- per acre in R.S.No.362/7.  As there was huge difference in the rate offered by the land owner and the guide line value the purchase was not finalised.

 

b)        Un-authorised payments

 

            Land worth of Rs.863.05 lakhs were purchased during the five years ending 31st March 2004 as shown below. 

            Year                                                                            Rs. (in lakhs)

            1999 – 2001                                                               346.57 

            2000 – 2001                                                               144.60

            2001 – 2002                                                               179.89

            2002 – 2003                                                              140.91

            2003 – 2004                                                              51.06

                                                                                                863.05

                                                                                                ======

It is observed that permission for purchase of land was accorded by the Secretary of the Foundation.  The cost included price of the land, stamp duty, commission paid to intermediary and other related expenses.  However, sanction of competent authority has not been obtained while making the payment.

 

            A commission of Rs. 4.37 lakhs was paid during 1999-2000 and 2000-2001 to an intermediary while purchasing the land.  The percentage of commission ranged from 1% to 3.2% of cost of land.  Sanction for the basic price of the land alone was accorded by the Secretary.  Hence payment of commission is an unauthorized one.

 

 

 

c)  Non- enumeration of trees in the geographical area of  Auroville.

           

            The Township founded on a barred plateau devoid of any blade of grass in 1968 has become a green area shaded with a variety of plants and trees and over two million trees at a cost of Rs.73.62 lakhs were planted during the last 32 years, regenerating the barren land into a productive and developing site for urban and green use.  However, the Foundation has not carried out enumeration of trees and documented it.

 

d)          Reasonableness of lease rent fixed could not be ascertained.

 

            A test check of receipts for April 2004 has indicated the receipt of lease amounts from the individuals as indicated below.  However, the basis on which the lease amounts were fixed is not on record.  Hence the correctness of fixation of lease amounts could not be ensured.

Sl.

No.

Receipt No.

And Date

 

   From whom received

Amount paid by Cash Rs.

 

     Remarks

 

 1

 

1/3.4.2004

 

Elumalai, Kuilapalayam

 

  1,000.00

Towards of cashew thope 58/47 (R.S.No.)

 2

3/3.4.2004

Gnanasekaran,Kottakarai

 6,000.00

“ Irumbai Rs.314/1,6

 3

6/10.4.2004

Dhanalakshmi

 4,000.00

“ New Farm

 4

7/17.4.2004

Chinnakkannu,Kottakkarai

 14,501.00

“ R.S.No.14/3,4,6,7  and 15/4,5

 5

8/17.4.2004

Anbu, Kottakkarai

 2,000.00

“ Irumbai R.s.No.298/1,2

 6 

9/17.4.2004

Darman, Kuilapalayam

   750.00

Lease of Tamarind Thope

 7

15/28.4.2004

Masilamani, Kuilapalayam

 6,750.90

      

 8

14/28.4.2004

Rajamanikkam

   100.00

(advance)

Lease of mango thope

 9

16/28.4.2004

Ettappan

 1,000.00

“Pattanur 81/1 New Farm

10

17/28.4.2004

Sundaramurthy

 3,700.00

Lease of Cashew thope –Bom 54/5

11

18/28.4.204

A.Sakthivelu, Kottakkarai

   300.00

Lease of Cashew

12

19/28-2004

Aravindan, Kottakkarai

 1,500.00

Lease of Cashew Thope Irumbai 414/4

13

20/28.4.2004

Vishnu,Kuilapalayam

 1,250.00

Lease of cashew thope Bom.39/7

 

 

e)  Non-Accounting of loss on sale of land

            In the cases of exchange of land the value of Auroville land was invariably higher than the value of the private lands exchanged vide instances given below. 

Sl.

No.

Details of Auroville land

Value of land

Details of lands to be exchanged

 

Value

 

Difference

(Loss)

1

Irumbai 73/1 0.12

73/3 1.22

Achrampet

64/3 0.24

60,000

6,10,000

 

1,20,000

7,90,000

——–

Irumbai 314/1.0.36

314/6.0.62

314/6.0.60

of Shri R. Gnanasekaran

1,35,000

2,32,500

2,25,000

5,92,500

———-

 

 

1,97,500

2

Irumbai 73/3.0.45

2,25,500

Irumbai

411/2 0.45

of Shri B. Jothi

 

1,68,750

 

56,750

3

Bommaiyarpalayam

127/8 0.11

67,144

Bommaiyarpalayam

54/5.0.11

 

45,925

 

21,219

4

Thiruchitrambalam

12/1&19/1  0.87

Value of Trees

2,70,375

 

21,875

2,92,250

217/5

0.67 ½

Value of Trees

1,68,750

 

22,250

1,91,000

1,01,250

5

Irumbai

71/1 & 73/1.0.12

Acharampet

53/3 A & 64/3

0.24

 

 

1,80,000

Irumbai

313.2&314/1

0.36

 

 

1,26.000

 

Total

 

 

54,000

 

   4,30,719

 

The loss in the land value amounting to Rs. 4,31 lakhs sustained in the exchange deal by Auroville has not been reflected in the accounts.

 

f)   Non-availing of lowest rate

            On 28.01.2002, LEM sought permission to purchase 0.60 acre of land belonging to Shri S. Jayakumar in R.S.No.302/2 in Irumbai village for Rs. 2,10,000/- (at Rs.3,50,000/- per acre).  Permission was accorded by the Secretary in letter No. AF/M/3/222 dated 30.1.2002.  It is observed that permission was again sought for the same piece of land on 10.06.2002 for Rs. 2,25,000 (at Rs. 3,75,000/- per acre) and the land was purchased at Rs. 2,25,000/-  Reasons for not acting upon the earlier permission given on 30.01.2002 are not on record.

 

g)                  Payment of higher rate

 

Permission was sought for on 09.04.2003 to purchase 1.25 acres of land in Irumbai village (R.S.No.103/1, O.S.No.101/1) at Rs.1,70,000/- per acre and the Secretary accorded permission on 11.04.2003.  Subsequently on 24.04.2003 permission was sought and obtained for purchase of another 1.10 acre of the same survey in the same village at Rs.2,25,000/- per acre.  Justification for payment of a much higher rate just within 15 days is not on record.

h)         Purchase of land under litigation

            It is seen that purchase of 11.06 acres of land at cost of Rs.16.59 lakhs in Bommayarpalayam (Rs. No.3/3,22/1,231/1) was permitted on 17.01.2002.  It is however, observed that the land purchased in the same area in 1971 could not be registered as on date due to litigation in the court.  Purchase of land under litigation, which is doubtful of getting registered, is not justified. 

 

i)          Government sanction not obtained for purchase of land  

            50 acres of land at Irumbai (RS 426/1FI) was purchased in March 2000 at a cost of Rs.1.50 crore @ Rs.2.60 lakhs per acre and 40,000 per acre towards improvement and development charges already incurred.  At that time the seller agreed not to develop any further area within the designated Auroville Township with the condition that Auroville would purchase the remaining 50 acres from him.  After 3 years, consent was given for the purchase of remaining 50 acres @ Rs.2,75,000 per acre + 47,600 per acre towards development and improvement.  The consent given for Rs.23.80 lakhs towards improvement and development was not justified.

 

As per delegation of powers the Central Government alone is empowered to purchase or to receive as gift any immovable property of the value of more than Rs. One Crore.  The Government sanction for the above transaction was not obtained though the value exceeded Rs. One Crore.

 

 

j)                         Encroachments of Auroville lands

            It is observed that there were un-authorised constructions and encroachments on Auroville lands vide instances give below. 

Sl.

No.

 

Village

 

R.S.No.

 

Extend of land

 

Type of Activity

 

1

Irumbai

   

385/3.4

 

 

189,193,231/2

and 241

1.95acre

 

 

Not available

Unturhotised construction of workshop and rooms

 

Encroachments

2

Pulichapallam

    461/1

    458/1

1.2 acre

7.31 acres

Encroachments

     

 

 

There is no mechanism to prevent such encroachments before they occur.  Register of Encroachments indicating village S.No. and extent of land encroached and action taken for eviction is also not maintained.

 

k)                       Non-obtaining of valuation certificates:

It is observed that in the cases listed below along with the land, buildings, motors, bore well, trees, electricity fittings, etc. were also purchased at the rates quoted by the sellers without obtaining any valuation certificate from the approved valuers to verify the reasonableness of the rates quoted by the sellers.

 

Sl.

No.

Village Survey No.& names of seller

Extent Value of land

Value of other items

1

Irumbai 130/2,128/2,102/5

        169/3 & 92/1

P.Karthavarayan

   9.215 acres

Rs.9,90,562.56

1900 sq.m.

Cashew Trees

Rs.90,062.50

Rs. 1,65,000

2

Nadukuppam

761/3

J.Venkatesan

 

Rs.45,000

 

3

Irumbai

288/3,4,5,7,8,11

288/11

291/10

Lingasamy & Pandurangan

1.78 acres

 

0.26 acre

0.06 acre

Rs.9,45,000

 

Coconut, Mango, teak and neem trees bore well Electrical fittings and motor

Rs.2,25,000

 

3.17    MATRIMANDIR

 

             The Matrimandir, a huge sphere which contains a white chamber in which sun light pours down upon a glass globe, is both the geographical and spiritual centre of Auroville.  The Matrimandir is a place of silence and concentration.  The Mother approved the model of Matrimandir and the foundation stone there for was laid on the 21st February 1971.  The major areas of work on the structure are under completion and attention is being given to the development of surrounding garden and a lake. Completion of main structure alone (sans lake and garden) is scheduled for completion in February 2007.  The Matrimandir together with its gardens extends over an area of 28 ha.  Mr. Roger Anger a close disciple of Mother has been named by her as Chief Architect of Auroville Town Ship and Matrimandir.  It was stated The Mother has explained her vision of Matrimandir to Mr. Roger Anger and Matrimandir is being executed as per her vision.

 

            A perusal of records made available revealed the following:

 

a)        No Master plan based on Mother’s vision detailing implementation and monitoring mechanism, mobilization of resources, time schedule for completion etc. has been prepared for systematic and speedy execution of the project. 

 

b)        Before a project is taken up for execution, a project report is to be prepared  containing inter alia,

 

i)                    detailed estimate indicating the nature and volume of work to be done.  This should be supported by designs, plans and other related documents.

ii)                  The approximate cost of execution based on the above estimates indicating the cost of the materials to be purchased, labour charges to be incurred and administrative / other incidental expenses.  The rates adopted would be supported by schedule of rates prevailing in the locality; and

iii)                The time schedule for the completion of each activity and the project as a whole.

 

Once this is prepared, this should be scrutinized by a competent technical authority who would examine its technical viability and its cost effectiveness. After the technical sanction, financial sanction of the nominated authority is to be obtained before the work is taken up. 

 

c) It is observed that no such procedural formalities indicated in (b) above were adhered in the case of Matirmandir. 

 

            It is observed that the Matirmandir project cost would work out to several crores of rupees.  A sum of Rs. 26.60 crores has been spent on the project to end of March 2005.

 

d)  In spite of the huge volume of work and cost involved no detailed procedure has been laid down for preparation of estimates, getting technical and financial sanctions, fixing norms for calling for tenders/quotations and placing of purchase orders for procurement of materials, etc.  The system of maintaining Measurement Books to record, measure and check measure the work done, which is a requisite in the execution of civil works is also not in vogue.

 

            On 26th August 2003 the Matrimandir core group appointed a Consultant Engineer for Matrimandir Project and decided that henceforth all work proposals should be presented to the core group after they are approved by the Consultant Engineer.  The Consultant Engineer desired that all work proposals sent to him for approval should be accompanied by:

i)                    sketches/drawings approved by Shri Roger Anger, Chief Architect or site architects.

ii)                  detailed estimated quantities of various items of work

iii)                detailed financial estimates supported by enquiries, quotations etc.

The Consultant Engineer also named three site engineers for the project.   

 

            In July 2004 a cost estimate for completing the remaining works of Matrimandir building structure at cost of Rs.506 lakhs was prepared.  It could not be ensured whether the approval of Consultant Engineer was obtained after following the above procedure laid down by him as the relevant records were not made available for verification.

 

            It is observed that there was no provision in the estimate to incur expenditure on “Water proofing of hemisphere”.  However, an expenditure of Rs.32.03 lakhs has been incurred to the end of October, 2005 on this item of work.  Further, there was an excess expenditure over the provisions made in the estimate to an extent of Rs.62.30 lakhs to the end of October 2005 in respect of other items.

 

            It is observed that monetary resources were not a constraint in the execution of the project as seen below:-

 

Year            Fixed         Donations received            Expenditure

                     Deposits      (Foreign & Indian)

 

2000-01          75.16 lakhs            3.31 crores                                2.99 crores

2001-02         88.17                        1.84                                       1.71   

2002-03         89.02                        1.36                                       1.20   

2003-04         95.39                        1.99                                       1.33   

2004-05         68.57                         2.41                                       3.23   

 

            The work started in February 1971 involving an investment of Rs.26.60 Crores up to the end of March 2005 still remains incomplete and the Mother’s wish that “the Matrimandir will be the soul of Auroville” is yet to fructify even after 34 years.

 

Other observations:

a)     Refund of customs duty not obtained  - loss of Rs.27.68 lakhs.

 

Matrimandir is eligible to import goods without the payment of customs duty on the production of essentiality certificate.  It is observed that the goods were cleared by paying customs duty due to delay in the receipt of essentiality certificates from DSIR of Science and Technology Ministry, as non-clearance of goods would result in payment of demurrage charges.  Under Section 27 of Customs Act, one year time is allowed in such cases for filing applications for the refund of customs duty already paid.  In the case of materials  listed out in annexure, it is observed that the Matrimandir lost a sum of Rs.27.68 lakhs on account of

(i)         belated receipt of essentiality certificates and

belated filing of return for refund                                          Rs.   1,94,124

(ii)        essentiality certificate recd. in time but filed belatedly      Rs.   8,50,954

(iii)       essentiality certificate applied for in 1999-2000

but not received so far                                                          Rs.  17,22,459

                                                                        Total                            Rs.  27,67,537

 

There is no mechanism for effective follow up of receipt of essentiality certificates and refund claims.

 

b)  Non-Maintenance of FC 6 Register.

            As per FERA, organizations receiving foreign donations in kind should maintain a separate stock register of such donations in FC 6 format.  It is however, observed that Matrimandir receiving foreign contributions in kind directly is not maintaining FC 6 register.  Further there is no system of intimating the receipt of foreign contributions in kind to Auroville Fund (Foreign Contribution Acccount) which complies FC 3 return of foreign contributions received in Auroville for submission to Government of India.  As a result foreign contributions of Rs.12.09 lakhs received in kind during 2003-04 to 2005-06 did not figure in the FC 3 returns of respective years.

 

c)  Non-releasing of funds.

Foreign and Indian contributions received for Matrimandir during 2004-05 were not released to Matrimandir in full.

                                                                              Received                  Released

                                                                                          Rs.                     Rs.

 

Foreign contributions                                          98,62,282                   65,91,770

Indian contributions                                             96,74,503                   49,73,661 *

 

*including Rs.60,660 relating to 2003-04

           

The reasons for short release of funds are not on record.  Matrimandir is also not being informed about the total contributions received so that is could plan the execution of works in time.   

 

d) Gliding Equipment returned not reflected in the accounts.

On the recommendation of FAMC gliding equipment with accessories worth of Rs.8,00,806 received was returned in 2003-04 to the donor as they are not required at Matrimandir. However, this Transaction was not reflected in the accounts for the year 2003-04.

 

e) Materials lying outside Auroville not reflected in the accounts.

A perusal of the Balance Sheet as at 31.03.2005 revealed that an amount of Rs.3,50,000 advanced to M/s Hindustan Safety Glass Ltd. paid on 24.04.1998 was shown as outstanding advance and the value of materials amounting to Rs.9,30,909 unloaded on 20.09.1997 at the premises of the company has not been disclosed in the accounts.

 

f)  Depreciation of assets

Matrimandir has been under construction from 1971 and the work is still in progress as it involved different kinds of works viz. Inner Chamber, Inner skin, construction of petals, completion peace trees, etc.  The cumulative cost of this project from 1971 amounted to Rs.26.60 crores as on 31.03.2005 and no depreciation have been provided on this asset.  Though the project has not been completed as a whole and in principle no depreciation is chargeable, the assets created during the last 34 years would be subject to wear and tear due to efflux of time.  Hence, non-provision of depreciation is not in accordance with the generally accounting principles.

 

g) Banking transations

 

i)  As per Auroville Foundation Rules, 1997 all monies are to be kept in a bank account with State Bank of India.  It is however, observed that Matrimandir is having bank account with Karur Vysya Bank, Vysya Bank, and State Bank of India which is against the Rules of the Foundation.

 

ii)  It is observed that Matrimandir requested the Foundation Office on  11.08.2004, to release a sum of Rs.25,00,000/-.   As there were no sufficient funds in the account of Foundation, over draft facility was availed and Rs.25 lakhs was released to Matrimandir.  For availing the overdraft the Foundation incurred an interest of Rs.47, 470. It is however, seen that on 14.08.2004 Matrimandir deposited this sum of Rs.25 lakhs  in one of its bank account for 3 months.  Obtaining an over draft and depositing the same in term deposit account is not justified.

 

iii)  It is also observed that moneys were transferred from one account to another in the last week of a month vide instances given below:-

 

Date of Transfer   Amount Transferred      Balance available

                            From Karur Vysa Bank                  Date             with S.B.I.

                            To S.B.I (Rs.)        

 

27.05.2004                1,50,000                                 31.05.2004                2,25,634

30.07.2004                1,50,000                                 31.07.2004                1,75,700

27.08.2004                2,50,000                                 31.08.2004                2,72,655

 

Note:  There were no transactions in between these dates.

 

            As transfer of funds after 10th of every month results in foregoing interest such transfers are to be avoided except in case of actual need.

 

For Institute of Public Auditors of India

Dated: March 22, 2006

(John Varghese)

Secretary, Chennai Chapter

 

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