Audit Finds Unverified Spending, Ghost Accounts, Constitutional Breaches and Missing Records in Bihar’s Rural Works Department

Bihar’s Rural Works Department failed to account for ₹1,357.21 crore in utilization certificates; surrendered ₹316.84 crore in unspent funds at financial year-end; withheld audit-critical records from constitutional authorities; maintained unmonitored bank accounts holding public funds outside the state treasury; and routed scheme monies through personal ledgers in violation of constitutional norms, according to the State Finances Audit Report for the year ending March 31, 2024 released by the Comptroller and Auditor General (CAG) of India.

The CAG report, tabled before the Bihar Legislative Assembly and published in April 2025, attributes multiple statutory and procedural violations to the department. As of March 31, 2024, ₹1,357.21 crore remained outstanding in the form of utilization certificates for grants disbursed to the Rural Works Department. 

“In the absence of UCs, the actual utilization of the grants cannot be confirmed,” the report stated (Chapter IV, Section 4.5, Page 119). Rule 238 of the Bihar Financial Rules requires that UCs be submitted within 12 months from the end of the financial year.

The department also surrendered ₹316.84 crore in unspent funds, most of it in the last month of the fiscal year. 

The CAG identified this as a breach of Rule 61 of the Bihar Budget Manual, which directs departments to avoid “year-end expenditure rush” and promote proportionate utilization over the financial year (Chapter II, Section 2.3.3.2, Page 36).

In a more severe breach of oversight, the Rural Works Department failed to produce mandated documents for audit examination under Section 18 of the CAG’s (Duties, Powers and Conditions of Service) Act, 1971. 

Records not submitted included contractor vouchers, cashbooks, scheme-specific ledgers, and progress registers. 

“Non-production of records despite multiple requisitions obstructed the audit’s ability to verify expenditure claims,” the CAG noted (Chapter IV, Section 4.19, Page 135).

The department operated several bank accounts outside the consolidated treasury framework in violation of Rule 56 of the Bihar Treasury Code. These included 93 accounts across implementing divisions and subordinate offices -- some held for years -- with ₹7,380 crore in cumulative idle balances as of March 2024. 

The CAG flagged these accounts for lack of reconciliation and absence of scheme-wise expenditure details (Chapter IV, Section 4.10, Pages 128–129).

Named accounts include Account No. 1313310100000037, operated by the Executive Engineer, Rural Works Division, Araria, and Account No. 1461010000126, held by the Rural Works Division, Madhepura. 

Neither account had provided transaction statements or scheme-level breakdowns to the Accountant General despite repeated reminders, according to the audit.

The report further found that the department drew funds into Personal Ledger Accounts (PLAs) and retained them without surrender or clear usage plans, violating Article 266(1) of the Constitution of India, which mandates that all revenues and loans must be credited to the Consolidated Fund unless otherwise authorized by Parliament or the state legislature. 

“Funds drawn and held in PLAs escape the oversight of the legislature and pose fiscal transparency risks,” the audit observed (Chapter IV, Section 4.12, Page 131).

Additionally, the audit documented that the department incurred expenditures without supporting vouchers and created liabilities beyond budget provisions. 

In Nawada district, the Executive Engineer failed to furnish supporting documents for ₹28.5 crore in rural road works claimed under the Mukhya Mantri Gramin Sadak Yojana. 

These practices violate General Financial Rule 57, which mandates that all payments be supported by original bills and verified entries.

The report concludes that the Rural Works Department demonstrated “recurrent disregard for financial norms and constitutional provisions,” calling on the Government of Bihar to initiate departmental action, recover unutilized balances, and submit all pending documentation for audit review (Chapter V: Recommendations, Page 137). 

No response from the Rural Works Department was appended to the audit as of the report's publication.