Audit of Market Committee Accounts

1

CHAPTER – V AUDIT OF MARKET COMMITTEE ACCOUNTS

Market Committees are constituted under Section-4 of the Andhra Pradesh (Agricultural Produce and Livestock Markets) Act 1966, with a view to provide for the establishment of recognized open Market for regulation of purchase and sale of any notified agricultural produce, livestock or products of livestock and such facilities in the market as may be specified by Government from time to time by general or special order. The Secretary of the Market Committee is the executive authority, who is responsible for proper maintenance of accounts.

1. Scope of Audit: a) According to Rule-4(1) of the AP State Audit Rules issued with G.O.Ms.No.130, Fin. & Planning (FW-Admn-II) Dept., dt.08-09-2000, the procedure for conduct of Audit of AMC Accounts is post Audit, which means conducting detailed audit locally after transactions are completed. Thus, audit of the transactions in a financial year is being conducted after closure of the financial year.

b) The local audit of the vouchers should be conducted with reference to the original registers and accounts and with regard to receipt portion, all the items of receipts shown in the accounts should be checked with concerned registers and connected files.

2. Commencement of Audit: a) Before taking up the audit, the auditor should study the rules issued by Government under Section-33 of the Act, i.e. the AP (Agricultural Produce & Livestock) Markets Rules, 1969, as amended from time to time and the by-laws framed by the Committee under Section-34 of the Act. According to Rule-97 of the Rules, the procedure laid down in the AP Financial Codes, Accounts Codes, Treasury Codes and instructions, if any, issued from time to time, shall mutadis-mutandis apply, in regard to maintenance of accounts, registers and forms etc, by the Market Committees.

b) The auditors should go through the latest administrative reports, the budget of the year, the previous year’s audit report with special reference to the general defects in accounts and registers and attitude to disposal of objections.

c) The Auditor should identify the major items of transactions i.e.; produce, livestock etc; and total quantities under each item during the year of audit and comment with reference to the transactions of the previous year.

d) The auditors should also comment on the overall performance with reference to income and expenditure during the year of audit.

e) The audit fee is recoverable at the rate of 0.375% of the total annual expenditure audited.

Note:-

The following items of expenditure of Market Committees are exempted for purpose of levy of audit fee

i) 10% contribution towards Central Market Fund,

ii) Expenditure on contribution towards National Defence Fund, CM Relief Fund and PM Relief Fund, and

iii) Expenditure on investments.

(GOMS No.686 Food and Agriculture (Agri IV) department Dt. 27-11-78)

f) The Market Committee fund should be deposited in a single banking account with the nearest govt. treasury. Cheques of the value of rupees one hundred and below drawn on behalf of the market committee has to be signed by the secretary and all other cheques drawn on behalf of market committee have to be signed by the secretary and counter signed by the chairman or by vice-chairman in the absence of chairman

3. Income: The income of a Market Committee is derived from the following sources:

a) License fees under Section-7 of the Act in respect of purchaser and seller,

b) License fees to operate as broker, carting or clearing agent, warehouseman, weighman, measurer, surveyor, lorry owner, cartman or hamal in the notified area under Rule-49 of the AP (Agricultural Produce and Livestock) Market Rules 1969,

c) Market fees levied under Section-12 of the Act.

d) Other miscellaneous receipts such as sale of grass and cattle droppings in the Market yard, sale of badges, electoral rolls, lease of shops, interest on investments, chungdi (Rule-69),

e) Fines and Penalties under Section-23,

f) Securities from officers and servants,

g) Securities from contractors and other deposits.

h) Subscription for Market Intelligences under Rule-34 of the Rules.

4.The process of audit of the several items of Receipts is indicated below:

a) Fees for licence:

It shall be granted under Section-7 of the Act and is valid for 5 (Five) years and shall expire on the last day of the fifth financial year, unless cancelled or suspended under Sub-Section 4(b) of Rule-7.

It should be seen

1) that the licences issued by the market Committee are noted chronologically in a Register kept for the purpose with the information regarding the names of the licensees, period of licences, the amount of fees paid and treasury challans or receipts in support of payment,

2) that the licence fee or renewal fee, as the case may be, collected by the Market Committee has been supported by a receipt granted to the person and the amount taken to credit in cash book without delay,

3) that the licence fee or renewal fee, as the case may be, is collected at the following rates as per Rule 48 of the Rules.

Licence Fees

For traders having an annualRs.

turnover of Rupees one crore

and above: 3000/=

For traders having an annual

turnover of Rupees fifty

lakhs and upto Rupees one

crore:2000/=

For traders having an annual

turnover of below rupees

fifty lakhs: 1000/=

4) that the licence granted is renewed only after the licensee has paid the arrears of amounts due under provisions of the Act,

5)whether the licence is granted to a person, who is not eligible to be granted in view of the conditions vide Sub-Section-4 (a) of Section-7 of the Act,

6) that the persons who have taken licences render accounts to the Market Committee,

7) that a special licence fees not exceeding Rs.100/- (Rupees one hundred) only as may be fixed in the bye-laws of the Market Committee has been collected from a person desiring to operate in a notified area of a Market Committee for specific transactions, which may not exceed ten in a year.

Note:-

a) A person purchasing notified agricultural produce, livestock or products of livestock for his own domestic use is not attracted by Section-7 of the Act.

b) No fees shall be charged for the grant of license –

1) to Khadi and Village Commission

2) to a Co-op Marketing Society registered or deemed to be registered under the AP Co-operative Societies Act 1964 selling notified agricultural produce, livestock or products of livestock grown, reared or produced by any of its members.

3) A person merely for curing, pressings, or processing any notified produce or products of livestock.

(sub-rule[2]and[3]ofSection-7 of the Act)

4) Traders having turnover not exceeding Rs.2500/=(Rupees two thousand five hundred only) per day are exempted from obtaining license.

(Sub-Rule-4 of Rule-48 of the Rules)

b)Licence fees to operate as Broker, carting or clearing agent etc. in Notified area.

It should be seen

1) that the licence fees are collected at the rates fixed in the by-laws of the Market Committee not exceeding maximum specified in Rule-49 of the Rules,

Note:-

The Market Committee may in the case of Hamal decide not to collect any licence fee.

2) that the annual list of persons exercising profession has been obtained from the outdoor subordinates and action has been taken either to collect the licence fees due or prosecute them for failure to takeout licences,

Note:-

The annual list should be examined to see that the names of all persons who had taken out licences during the previous year have been included in the list and the cases of omissions have been satisfactorily explained.

3) that licences issued have been chronologically noted in a register maintained for the purpose,

4) that receipts are issued for the fees collected from a printed counterfoil receipt book and that the fees collected have been taken credit in the cash book and noted in the Register of licences and in the annual list,

5) that when the fees are collected by the Market Supervisor, the amounts collected with the particulars of the person from whom the amount was collected etc., is included in the memorandum of collections and remittances or extract from the cash book,

6) that the fees collected according to the entries in the register have been taken credit in the cash book.

c) Market fees

The Market fees is levied on any notified agricultural produce, livestock or products of livestock purchased or sold in the notified market area under Section-12 of the Act read with Rule-74 of the Rules issued thereunder. This fee shall be paid by the purchaser, and where the purchaser cannot be identified, it shall be paid by the seller.

It should be seen that –

1) that the fees is levied at such rate not exceeding two rupees as may be specified in the by-laws, for every hundred rupees of the aggregate amount for which the notified agricultural produce, livestock or products of livestock is purchased or sold, whether for cash or deferred payment or other valuable consideration,

2) that the fees collected either from the purchaser or seller are correct with reference to the aggregate amount realized and entered in the schedule or statement, sale docket sheet, daily return received from traders and the weekly returns of brokers,

3) that the amount of market fees payable by a trader has been assessed by the assessing authority on the basis of the return of turnover submitted by the trader after having satisfied about the correctness and completeness of such returns as required under Section-12-B,

4) whether penalty equal to two times the market fees due on the turnover that has not been disclosed by a trader in his return has been collected from such trader,

5) whether there are cases where traders liable to pay market fees have failed to submit returns before the date specified in that behalf or produced the accounts, registers and other documents after inspection or submitted returns subsequent to the date of inspection and whether the assessing authority has taken action to assess fees as required in Sub-Section-4 of Section-12-B of the Act and directed such traders to pay in addition to the market fees so assessed, a penalty equal to two times the market fees due,

6) whether there are cases of omissions or discrepancies in the assessment and action taken thereof under Sub-Section-5 of Section 12-B of the Act and the traders have been directed to pay a penalty equal to two times the market fees,

7) whether the market fees assessed and the penalty levied have been paid by the trader in such a manner and within such time not being less than fifteen days from the date of service of the notice of assessment or of the levy of penalty as specified in such notice ( Section-12-C of the Act),

8) whether interest at 12% per annum from the date when the market fees became due has been collected on the sums relating to market fees assessed or any installment thereof and penalty if any, in addition to the said sum, in cases where such sums are not paid within the time specified therefor in the notice of assessment or in the order permitting payment in installment,

9) that the fee levied has been entered in a Register maintained in the Committee’s office for the purpose,

10) that the Register is posted from a schedule or statement of the fee collections received from the employees entrusted with the collection work,

11) that the fees collected by the licensees are correct as seen from the schedules received from them along with each remittance and the weekly returns received from them,

Note: The correctness of the fees levied need be checked in about 10% of the cases.

12) that the Market fees collected by the licensed commission agents have been paid to the Market Committee not later than 25th of the succeeding month and also traders have paid the market fees to the Market Committee not later than 25th of the succeeding month.

Note: The Takpattis (Sale slips) received from the commission agents should be hecked in audit for the selected months.

Exemptions from payment of Licence Fees and Market fees :

The following exemptions have been granted by Government from time to time.

1) Exemption from payment of licence fees due under section-7 of the Act:

a) Girizan Co-operative Corporation Limited, Visakhapatnam and its branches (G.O. Ms.No. 326, Food and Agricultural Department, dated 10-4-1975).

b) National Seeds Corporation Limited, Vijayawada and its units (G.O. Ms. No. 462, F. & A. Dept. dated 28-5-1975).

c) A.P. Civil Supplies Corporation (Private) Limited, Bhimavaram (G.O. Ms. No. 1001, F.& A., dated 18-11-1975).

d) Nizam Sugar Factory Limited, and its units companies (G.O. Ms. No. 624, F.& A. Dept. dated 25-8-1977).

e) A.P. Dairy Development Corporation (Private) Limited, (G.O. Ms. No. 83 F.& A. Dept. dated 14-2-1977).

f) Cotton Corporation of India, (G.O. Ms. No. 876, F.& A. Dept. dated 25-10-1976).

g) A.P. Fisheries Corporation Limited Kakinada and its branches (G.O. Ms. No. 530 F.& A. Dept. dated 12-9-1979).

2)Exemption from payment of Market Fees due under section 12(1) of the Act.

a) Sri. Sitharama Kuteera Parishramala Sangham, Tenali, Guntur district in so far as it relates to the levy of fees on the paddy purchased by it for the purpose of being converted into the hand-pounded rice. ((G.O. Ms. No. 1054, F.& A. Dept. dated 30-12-1976).

b) Agricultural Department, Government of Andhra Pradesh on the purchase of paddy seeds. (G.O. Ms. No. 125, F.& A. Dept. dated 12-2-1976).

c) Retail vegetable and fruit traders in so far as it relates to payment of Market fees.

(G.O. Ms. No. 1098 Food & Agrl. (Agri.IV) Dept., dt.29-12-75)

Explanation: - A retail vegetable trader or retail fruit traders, one who is not a whole saler, but who sells vegetables or fruits as the case may be in small quantities in retail on wheeled and hand pushed cart or in basket, or gunny bag or in small heaps on road side or by roaming about in the streets and whose turnover of sale or purchase of such vegetables or fruits does not exceed Rs.70 on any single day.

(G.O. Ms. No. 1389 Food & Agrl.(Agri.IV) Dept., dt.3-8-1977)

d) Sale of Grass, Cattle Droppings, Lease of Shops. Etc.

It should be seen:-

I) that these have been sold in public auction:

II) that the agreements have been obtained from

the lessees

III) that the instalments of kists are regularly Collected:

IV) that the realization of instalments is watched by means of a register (Miscellaneous Demand Register) maintained for the purpose.

V) that the collections are supported by printed receipts issued from a counterfoil receipt book.

VI) that the collections have been promptly brought in the cash book.

Note: - Under Rule 69 no buyer should refuse to buy chungdi at the same price as declared for the lot of which the former forms a part; any sweepings of the market shall be the property of the market committee and the cost thereof should be credited to accounts at the end of each day’s transactions.

e)Fines:

Under sub-section 3 of Section-25 of the Act all fines realized would be credited to the State funds and a grant equal to fines would be paid to the Market Committees. The grants on account of the fines are paid in the manner indicated in the Andhra Pradesh Treasury Code Volume-I and also Government Memo No. 123983/Accounts/57-3 Finance dated 5-11-1958.

f)Fees for Arbitration and Appeals:

It should be seen that a separate Register is kept for noting arbitration of disputes and appeals disposed of by the Committee with information regarding the amount of fees collected in each case. The collections should be checked with the entries in this Register, and the counterfoil of printed receipts issued.

g)Securities from the Officers and Servants:

It should be seen that the securities fixed under Rule 39 of the Andhra Pradesh (Agricultural Produce and Live Stock) Markets Rules 1969 have been obtained from the Officers and servants of the Committee and that an account of the securities so obtained, is kept in the Security Deposit Register.

h) Deposits from the Contractors and Others:

The following are the deposits of the Market Committee:

a) Weighmen’s deposits;

b) Contractor’s Deposits for the due fulfillment of contracts;

c) Unclaimed dues;

d) Election Deposits;

e) Other Miscellaneous items.

It should be seen in audit that all the above Deposits have been entered in the Register of Deposits.

It should also be seen:

1) that a register of deposits is maintained in the prescribed form and separate pages have been allotted for each class of deposits,

2) that the deposits are in cash or in such kind of securities as Government may specify,

3) that the following items have not been credited to deposit head of account,

a) sums that can be clearly brought to account under any revenue head of account;

b) Pay, Pension, Leave salary or other allowances;

c) Fines;

4) that no item has been credited to any deposit head of account except with the written order of the Secretary,

5) that a certificate by the Secretary at the end of each quarter to the effect that the entries in the register are maintained uptodate, is forthcoming,

6) that no deposit is refunded except under the written orders of the Secretary,

7) that election deposits received at the time of filing nomination have been refunded only under the orders of Election authority,

Note: At the end of each year, any deposit or balance thereof should be credited to revenue head of account, if it has remained unclaimed for a period of three years from the date on which became payable or in case the deposit has been received in cash and the deposit or balance thereof does not exceed one rupee, if it has remained unclaimed for a period of one year from the date on which it became payable.

8) that no deposit credited to a revenue head has been refunded except with the sanction of the Market Committee on an application preferred by the person entitled to refund.

4.2Write off of Irrecoverable Amounts:

A Market Committee is competent under section-24 of the Act to write off any amount due to it, if in its opinion such amount is irrecoverable. It should be seen in audit,