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India's audit report finds irregularities
July, 10th 2009

Amid efforts by the government to revive the cash-strapped Air India, the country's official auditor has reported major operational irregularities, especially in the frequent-flyer scheme.

The Comptroller and Auditor General has also said the frequent flier scheme has deficient information security controls because of which confidentiality, integrity and availability of information could be compromised.

"The income tax audit revealed deficient input controls resulting in issuance of award tickets even when adequate mileage points were not available at credit of members," said the audit report, which was tabled in parliament Thursday.

"Gaps were noticed in the serial number of award letters for redemption transactions and neither the reasons were recorded in the system nor were records made available for explaining such gaps," it said.

"This posed the risk of misuse of award letters," added the report.

The frequent flyer programmes of aviation companies generally award mileage points to loyal customers who can encash them for free tickets or other freebies.

Some other irregularities observed by the auditors included extra expenditure due to higher rates given to catering services and extra payment due to improper assessment of electricity needs.

The carrier is in a financial mess with losses expected to have topped Rs.5,000 crore ($1 billion) last fiscal, forcing Civil Aviation Minister Praful Patel to approach Prime Minister Manmohan Singh for a Rs.10,000-crore (about $2-billion) bailout package for the beleaguered carrier.

Last month, the carrier was also forced to delay the payment of salaries, apart from asking senior executives to forego a month's pay.

The carrier is also heading for a rejig. The government is now in the process of hiring people with proven track record to help in its turnaround.

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