Government implemented a Department for International Development (DFID) supported Health Sector Reform Programme (APHSRP) during July 2007 to June 2010. APHSRP was within mission period of National Rural Health Mission (2005-12) and most of the outputs and key reform measures initiated by the State Government under APHSRP were aspirations outlined in NRHM. This performance audit was taken up to assess whether reforms in health sector initiated in 2007 and key policy changes enunciated by Government to achieve the outputs outlined in reforms have been implemented effectively in terms of • creation of adequate infrastructure and other envisaged services to facilitate access to quality and responsive health services; • setting up institutional mechanisms for community participation; • optimal efficiency in health care delivery system, including manpower planning through improved governance and management of health sector; and • strengthened financial management systems. Major Audit Findings: The primary objective of health reforms of improving accessibility to health care facilities in rural and tribal areas largely remained unfulfilled. Norms prescribed for infrastructure, manpower and equipment were not complied with. Positioning of ASHAs and providing adequate drug kits to them was not given adequate attention. There were shortages in both medical and paramedical staff, especially personnel skilled in specialised branches of medicine at primary, secondary and tertiary health care centres. The objective of Fixed Day Health Services programme of providing medical facilities to habitations beyond three kilometres from SCs/PHC was partially fulfilled. Release of funds under emergency response is based on actual expenses as per SoEs and there was considerable variation in number of vehicles operated as per CFW and database. Replacement/refurbishment of vehicles was delayed. Implementation of Aarogyasri suffered from several deficiencies. Several inconsistencies were noticed in database like non-matching of ration cards with Civil Supplies data, claims exceeding pre-authorised amounts, etc., indicative of lack of proper internal controls and validation controls for effective implementation of online IT application. Further, due to non-operationalisation of Health Management Information System (HMIS), the envisaged objective of effective control/monitoring of financial as well as physical activities remained unfulfilled. Procurement was marked by delay in supply of drugs/surgicals from suppliers. Monitoring of drug control including licensing functions was ineffective. Thus, the key reform measures initiated by State Government with regard to health sector have not translated into desired levels of action, resulting in the envisaged outputs not being achieved.