The Times of India       07.01.2011

MUMBAI: The new municipal
commissioner Subodh Kumar, on Thursday, promised on the floor of the
House to correct the BMC’s faulty bookkeeping system. But, many warn,
the rot runs so deep that revealing the corporation’s malpractices could
open a whole new can of worms.

Kumar said the BMC would submit
three pending accounts by the end of May and file comprehensive fiscal
records later this year. But many in the BMC believe that matching these
accounts would open a Pandora’s Box, exposing financial mismanagement
and unethical accounting practices of the last three years.

“In
all probability, when these books are completed, coupled with this
year’s increasing expenditure and administrative cost, the BMC could
well end up in a heavy deficit. The question is which political party
would like to be in that position just before the crucial elections,”
said a senior civic official.

An internal audit note prepared a
few weeks ago hinted at deliberate attempts by civic officials to keep
its financial books unclosed besides violations of the Mumbai Municipal Corporation Act.

So what has caused the rot?

The audit note says that the BMC’s accounts department has been
illegally avoiding the practice of making available a summary of
receipts and expenditure for the year to the standing committee and the
audit department. What is worse, the annual accounts have not been
closed and no settlement has been made with banks. “This has not only
left the liquidity position unknown, but left officials with no account
of liabilities,” said an official.

Over the last three years,
the BMC has been guilty of blatantly violating its own MMC Act and what
basic accounting practices and ethics.

Under section 135 (1) of
the MMC Act, the BMC is supposed to prepare monthly summary of receipts
and expenditure, which it has not since April 1, 2007. And under
section 124 (1) of the Act, the chief accountant is expected to prepare
and submit annual accounts to auditors and the standing committee;
again, the norm has not been followed since April 1, 2007.

“The
actuals of the last three years, eight months in the current year and
four months in the next, (a total of 12 months shown as revised
estimates) have not been done since the budget in 2006-07,” the note
says.

To bail the BMC out of its present crisis, the note
recommends appointing a qualified accountant either by way of an
examination or by hiring a former employee of a professional body as per
the National Municipal Account Manual ( NMAM).