CHAPTER XIII

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Watching of actulas and control over expenditure

103. General Responsibilities of the Finance Department and Accountant General :

Under the rules made by the Governor under Article 166 (2) and (3) of the Constitution, the Finance Department is responsible for watching the Government’s balances and their ways and means operations. To enable that department to discharge that responsibility, the Accountant General is required to furnish to it the preliminary figures of receipts in form BM 6 and grant wise/ major head wise expenditure of each month by the 15th of the following month and also a monthly account of the different Department of State Government’s transactions as soon as the accounts of a month are closed The Accountant General warns the Finance Department immediately of the appearance of any appreciable excess in the proportionate outlay under any Grant( or under any subhead or standard object of appropriation if so required by the Finance Department). He also reports any large differences that are likely in the actual as compared with the estimates as soon as reason arises for expecting them.

The responsibilities and duties assigned to Integrated Financial Advisor(IFA) should strictly be followed and all concerned officers must furnish the required information on due date.

104. Book adjustment and maintenance of liability Register :

It is necessary that all book adjustments are properly and promptly carried out. In regard to the adjustments which are to be made periodically or annually, the Accountant General maintains a record showing(i) all such adjustments, (ii) the month in the accounts of which they are to be made, and (iii) the actual dates of adjustments, and see that all such adjustments are so made. He also makes other adjustment in respect of debits which are received by him supported by the acceptance on invoices or which he has already been asked by the Departmental officers concerned to accept without any further reference to them. Other adjustments should however be carried out by him only on receipt of intimation of acceptance of debits by the controlling or disbursing officers concerned. He should send timely intimation of the receipt of advises of such debits to the officers concerned. It must be clearly under stood that it is not open to a controlling or a disbursing officer to incur expenditure or authorise payments in excess of the amounts provided in the Appropriation Acts. If inevitable payments for which no appropriation exists have to be made, Government in the administrative department concerned should be moved beforehand to provide for funds for these if necessary, by sanctioning an advance from the Contingency Fund. A separate Liability Register in statement Form B. M. 7 should be maintained by the disbursing officers in order to keep a proper watch over any liabilities and their timely clearance. Information in that statement should be furnished to the Controlling Officers regularly every month. The Controlling officer will send intimation of adjustments as soon as they are made by concerned Disbursing Officer. If the reasons are not sufficient to create liability, the responsibility should be fixed on the official at fault.

105. Responsibility of Administrative departments and Heads of Departments etc.:

The authority administering a grant is responsible for watching the progress of expenditure under its control and for keeping it within the sanctioned grant or appropriation. In order that the control of departments over the expenditure may be effective and real and the controlling officers may be in a position from month to month to estimate the likelihood of savings and excesses over grants and appropriations, the procedure mentioned and the instructions contained in the preceding and the following paragraphs of this Chapter should be carefully observed by all departments and controlling and disbursing officers, except where the Finance Department may have agreed in writing to some other procedure. The heads of departments will be responsible for controlling expenditure from the grant or grants or charged appropriations placed at their disposal and will exercise control through the controlling officers, if any, and the disbursing officers subordinate to them. Such control must be exercised with reference to the grants or charged appropriations as they stand from time to time. While keeping himself posted with the progress of expenditure under different units of appropriation, a controlling officer should also keep a clear record of all commitments made and liabilities incurred, including those of the previous years. Similar record should also be kept in respect of works taken up on behalf of the Central Government, other state Governments and local or other bodies, etc. He should keep himself informed of any special circumstances which is likely to affect the progress of expenditure during the remaining part of the year and should take action in proper time for obtaining additional funds where necessary.

106. Re-examination of expenditure programme with reference to the sanctioned Grants: As soon as the grants have been communicated by the administrative departments to the head of departments, etc., the first duty of these officers is to compare carefully the amounts actually provided for expenditure in these grants with the amounts which had been proposed in the departmental estimates. A note must be taken at once of all reductions made under various units of appropriation and ways and means devised, right at the beginning of the year, to ensure that the expenditure is restricted to the amounts actually provided. Reductions are mostly made to enforce economy in expenditure. It would be improper on the part of the administrative departments and their subordinate officers to start incurring expenditure without first carefully re-examining the position with reference to the amounts actually provided.

107. Responsibilities of Controlling Officers : For every grant there is usually one controlling officer, but in respect of certain grants there may be more than one(see Vol. V of Budget literature ). The duties and responsibilities of a controlling officer briefly are:

(i) to ensure that the grant placed at his disposal is expended only on the objects for which it has been provided, keeping in view the standards of financial propriety [see para 12 (iii) of Chapter I];

(ii) to keep the expenditure within the sanctioned grant;

(iii)to keep the expenditure under a particular standard object within the sum allotted to him under that unit, and, where this is not possible, to meet the excess by effecting saving in the sums allotted to him under other units and proper sanction re-appropriations, which may be in accordance with the rules contained in Chapter XIV;

(iv)to move the competent authority, in proper time, to provide additional funds, either by re-appropriation or through supplementary estimates, whenever an excess over the total grant placed at his disposal is expected by him as unavoidable or when he desires to incur some new expenditure;

(v)to surrender appropriations or portions thereof which are not likely to be required during the year as soon as lapses on savings are foreseen;

(vi)to ensure the observance by himself and his subordinates of all financial rules and regulations.

108. Responsibilities of disbursing officers : The responsibilities mentioned above of a controlling officer attach equally to a disbursing officer. In addition, a disbursing must ensure that the conditions preliminary to the incurring of expenditure are satisfied, namely, that the sanction of the competent authority exists and funds to cover the charge fully have been placed at his disposal. The probability of any excess expenditure over the amounts allotted must be foreseen by him and intimation of the likely excess, along with reason for this, should be sent to the controlling officer concerned in sufficient time to enable the latter to arrange additional funds if these are to be allotted at all.

Every controlling officer, in respect of expenditure incurred by himself, is in the same position as a disbursing officer.

109. Conditions for appropriation out of allotments : The heads of departments and subordinate authorities to whom they have distributed allotments under particular units of appropriation, have, subject to any general or special orders, full powers to appropriate sums to meet sanctioned expenditure falling under these units, provided that—

(a) an allotment for ‘charged’ expenditure must not be appropriated to votable expenditure and vice versa ;

(b) an allotment must not be appropriated for any item of expenditure which is not covered by sanction, either general or special ;

(c) an allotment be appropriated only for the objects for which it is sanctioned ;

(d) no expenditure must be incurred without the previous approval of competent authority on an object the demand or the provision for which has been specially reduced by Government ; and

(e) an allotment must not be appropriated to increase the amount of the sanctioned in any grant and specified standard object.

110. Appropriation, its meaning and operation: It will be noted that an appropriation is intended to cover all charges, including any outstanding liabilities of past years to be paid during the current year or to be adjusted in the account of that year. when a provision is originally proposed in the departmental estimate, or when an application is made subsequently, in the course of the year, for additional appropriation, the amount asked for should , therefore, be inclusive of all anticipated liabilities. An appropriation is operative until the close of the financial year when any unspent balance lapses and is thus not available for utilisation in the following year. The accounts of each financial year are however kept open till May of the following year so that, as far as possible, all the transactions of the year may be entered in the accounts of the year. If it is not possible for any expenditure to be booked in the accounts of the year to which it relates owing to the fact that the actual incidence thereof is under dispute, it ought to be charged to the accounts of the year in which the final decision is taken.

111. General system of control : To facilitate control, departmental accounts are maintained by controlling officers and the progressive actual month by month are verified with those entered in the books of the Accountant General, except in the case of the departments and the account heads mentioned in paras. 128-129 infra the control over expenditure on which is based on the progress of actual as reported by the Accountant General.

(Note- The controlling officer given in Vol. V of Budget literature should reconcile its accounts on month to month basis against the account maintained by Accountant General . The Accountant General will, in fact, be acting not as an audit officer but merely as an agent of Government for keeping the record of expenditure).

112. Maintenance of register of allotment and expenditure by disbursing officers: Each disbursing officer will maintain a register of expenditure under each detailed head of account with which he is concerned in Form B.M. 8. Separate registers should be maintained for the Plan and non Plan expenditure. The allotments communicated by the controlling officer at the beginning of the year will be noted in this register under each detailed head in the space provided for the purpose. Should the allotment against any standard object be increased or reduced by the controlling officer subsequently, the amount of the allotment will be corrected in the register by plus or minus entry. Should a disbursing officer receive information from his controlling officer that any particular items have been misclassified, he will correct the accounts of expenditure and the available balances of the allotments by means of plus or minus entries. It will also be entered in the register, the details of each bill cashed at the treasury under the appropriate standard object together with the number and date of each voucher on which money has been drawn, The number and date of voucher will be known from the reconciliation statement provide by the treasury officer in accordance with the procedure prescribed in Govt. order. If the reconciliation statement is not provided, the number and date of the voucher can be filled in later when it is received. At the end of each month the expenditure against each standard object will be totaled. The total expenditure will, at the same time, be deducted from the allotment shown in relevant column of the register in Form BM 8 and the balance brought forward to the account of the next month.

113. Procedure for presentation of bills at the Treasury: Whenever a disbursing officer presents a bill at the treasury he should enter in the bill or through the proposed expenditure, from the major head down to the detailed head of account, and also indicate whether the expenditure is ‘charged.’ With a view to distinguishing expenditure relating to Plans from the non-Plan expenditure, separate bills should be drawn. When a single bill includes charges falling under two or more detailed heads, the expenditure must be distributed by him accurately over the respective heads. The “Code” prescribed for different classification of head of account , source and sector of fund should be correctly entered in the bill.

The Drawing and Disbursing Officer must reconcile every drawl (voucher) from treasury and receive monthly drawl statement duly signed by Treasury Officer.

The reconciliation statement must contain voucher number, date ,grant number to all levels of head of accounts including the standard object of expenditure.

114. Grants-in-aid and contribution : Unless in any case the Government direct otherwise, all bills for grants-in-aid and contributions are prepared and vouched for by the grantees and presented for payment through some responsible Government officer or after they have been countersigned by him. The Treasury officer shall refuse payment of all bills which do not bear the signature or countersignature of the sanctioning authority or such other Government officer as may be nominated by government in this behalf provided that when the sanction of Government is communicated in the form of an express order to the Accountant general to make the payment, the Accountant General may authorise the payment of the bill without requiring the signature or countersignature of a government officer. This procedure will not, however, apply to grants to universities and to cases in which the grants are paid by cheque or by transfer to the account of the grantee or in cash through a responsible government officer after the amount of the grant has been drawn on a bill by the officer himself. The officer who is authorised to sign such bill must reconcile the drawls form the treasury and send it to controlling officer or administrative department like any other voucher being shown in B.M. 8.

115. Prompt availability of reconciliation statement: The submission of monthly statements of expenditure by the disbursing officer to the controlling officer and by the latter to the Accountant General, prescribed in the subsequent paragraphs, should not, however, in any case be delayed on account of any delay in receiving the reconciliation statement. The voucher numbers and dates of encashment of the bills relating to wanting reconciliation, the statement should be sent to the Treasury Officer asking him to verify the statement promptly and report the voucher numbers and dates after check from his office record.

The above instruction must carefully be noted and strictly compiled with, as the procedure is intended to facilitate prompt detection of fraudulent drawls and interpolation in the bills and prevent the inclusion in monthly cash totals of bills which could not be encashed within month . These object will be defeated if there is no return of reconciliation statement .

The controlling officer will, for those parts of the budget allotment which he retains himself, adopt the same procedure as prescribed for the disbursing officer, i.e. he will keep registers of expenditure and liabilities in the same manner and form as a disbursing officer.

116. Submission of monthly statement of expenditure by disbursing officer to controlling officers: On the fifth day of each month, each disbursing officer must submit to the controlling officer concerned statements of expenditure and liabilities in respect of the previous month in Forms B.M. 7 and B.M. 8 being a copy of his registers in these forms. In statements in B.M .Form 8 the numbers and dates of the treasury vouchers against those entries in respect of which reconciliation statement have been received by him from the Treasury should be filled and the reconciliation statement attached to it. The wanting reconciliation statement, if any, should follow, as early as possible with the voucher numbers and date of encashment, on their receipt from the Treasury Officer. If there be nothing to report for any month, a nil statement should be sent. Treasury should supply the reconciled drawl statement to disbursing officer as early as possible .

If any error in classification is discovered before the monthly statement of accounts is submitted to the controlling officer, the statement should be corrected by the disbursing officer. If the statement has already been submitted, the mistake should be set right by means of a clear explanatory footnote in the next statement.

117.Receipt and check of the monthly statements by the controlling officers: In order to watch the receipt of the monthly statements referred to above, the controlling officer shall maintain a broad sheet in Form B.M. 10 in which a serial number will be allotted to each individual disbursing officer. This broad sheet shall be kept up to date and reminders issued promptly if any statements are not received in time.

On receipt of the monthly statements of expenditure and liabilities from the disbursing officers, the controlling officer should carefully examine each statement and satisfy himself that-

(i) the accounts classification has been correctly given (this will appear from the heads shown in reconciliation statement ;

(ii) progressive expenditure has been properly noted and the available balances correctly calculated;

(iii) the new liabilities shown, if any, have been incurred under proper authority;

(iv) the expenditure plus the liabilities up to date are within the appropriation;

(v) the statement has been signed by the disbursing officer himself; and

(vi) reconciliation statement have been attached by the disbursing officer or have been received direct by the controlling officer himself from the treasury.

If the controlling officer finds any defects, he shall take immediate steps to have them rectified.

118.Maintenance of registers of expenditure and liabilities by the controlling officer: The controlling officer shall maintain registers of expenditure and liabilities in Form B.M. 11 and B.M.7. The registers will contain the compatible columns as given in the Forms B.M. 7 and B.M. 8 and will be compiled in a similar manner, except that these will contain only the monthly totals, as reported by the disbursing officers, of expenditure and liabilities under each standard object.

119. The controlling officer shall also maintain another register in Form B.M. 12 in which he will consolidate the statements of monthly expenditure and liabilities received from his disbursing officers with his own monthly expenditure and liabilities. This register will be filled in when all disbursing officers’ returns for a particular month have been received and found to be in order. The controlling officer will also incorporate the totals of adjustments under the various detailed heads which will be communicated to him by the Accountant General on account of transfer entries and expenditure debited to the grant through ‘accounts current’, i.e. expenditure incurred in another state or in a Union Territory and communicated to the Accountant General by the authorities of that State or the Union Territory for inclusion in the accounts of this State. If any adjustment communicated by the Accountant General affects the appropriation at the disposal of a subordinate disbursing officer, the fact that it has been made should be communicated immediately by the controlling officer to the disbursing officer concerned.

120. Watch over important but occasional items of expenditure: The controlling officer shall keep a separate and careful watch on important but occasional items of expenditure (e.g. purchase of uniforms and arms and ammunition for the police force, equipment and medicines for hospitals and dispensaries and food grains, etc., for jails ). He will decide for himself what suitable method he should adopt to watch such expenditure and keep control over it. In some cases he may prefer to keep the entire grant in his hands and direct the disbursing officers to apply for allotment when they wish to incur expenditure. In other cases he may distribute allotments and merely ask the disbursing officers to report the expenditure, as soon as they incur it, separately from the monthly accounts of other expenditure. Whatever method he adopts, it is essential that he should keep himself fully informed from time to time not only of the expenditure already incurred but also of the liabilities incurred which have to be meet out of the sanctioned grant.

121. Watch on the general progress of expenditure: If the controlling officer finds at any stage that the expenditure is progressing too rapidly, he should promptly take such steps as he consider necessary to restrict further expenditure so that the sanctioned grant is not exceeded.

122. Review of the monthly progress of expenditure by the Administrative Department & Finance Department: In order that the various administrative departments of the Secretariat and the Finance Department may be able to review the monthly progress of expenditure, each controlling officer should prepare a statement in Form B.M. 13 and forward it to the Departmental Secretary and the Finance Secretary by the end of the month following that to which the expenditure relates. As regards the heads of account directly controlled by a Departmental Secretary, the statement should be prepared in the Secretariat and sent to the Finance Secretary. The figures of actual expenditure shown in this statement should contain only the departmental figures. Reconciliation of figures with the accounts maintained by the Accountant General, referred to in the following paragraphs, takes a little time and it will serve the purpose if the month up to which reconciliation with the Accountant General’s figures has been completed is indicated in a note appended to the statement .The Departmental Secretary shall satisfy himself that the explanation for the variation in each case is adequate and proper and take such steps as he may deem necessary to remove the causes for shortfalls or excesses over allotments.

123. Submission of monthly statement of expenditure and liabilities by the controlling officer to the Accountant General: The controlling officer shall send to the Accountant General each month a statement showing the departmental totals of expenditure and liabilities under each primary unit and secondary unit (if any), that is, a copy of the entries in the register in Form B.M.12. This statement shall be prepared and forwarded so as to reach the Accountant General by the 20th of the month following that to which the accounts relate. It should be accompanied by the disbursing officers’ statements, in original, from which the monthly account has been compiled.

124. Reconciliation of department figures of expenditure with the booked figures in the office of Accountant General : The Accountant General shall check the statement referred to above with the amounts booked in his office which will be based on the vouchers received direct from the treasuries and the accounts received from the accounting officers of other states or Union Territories. The controlling officer and the Accountant General shall be jointly responsible for the reconciliation of the figures given in the accounts maintained by the controlling officer with those which appear in the Accountant General’s books and for correcting misclassifications. [The responsibility of the Accountant General shall, however, be subject to the limitations placed on him under provisions of rules related to his duties, Powers and responsibilities Act 1971]. The variations, if any, between the departmental and the Accounts Office figures or in the classification, noticed by his office, will be communicated by the Accountant General to the controlling officer along with the numbers and dates of relative vouchers. The controlling officer will pass them on to the disbursing officers concerned with the necessary orders for correction which should be made by entries in red ink in the remarks column against the item reclassified and a plus and minus entry in the register , where it is open ,thus : "Adjustment on account of misclassification in voucher no......dated........". The controlling officer shall also intimate the Accountant General, as early as possible, and in any case within a fortnight of the receipt of the statement of discrepancies, that the corrections and adjustments have been made.

125. Objects of reconciliation : The reconciliation of departmental figures with the booked figures in the office of the Accountant General has two objects, viz.

(i) to ensure that the departmental accounts are sufficiently accurate to secure efficient departmental financial control, and

(ii) to secure the accuracy of the accounts maintained in the Accounts office from which the final published accounts are compiled .

126. Discrepancies up to certain limits to be ignored : In view of the very considerable amount of Labor which would be involved in a complete reconciliation of the two sets of figures, which would not be commensurate with the results obtained and also in pursuance of the instructions issued by the Comptroller and Auditor-General to the effect that the reconciliation of discrepancies should not be more Minute than is necessary to attain the two objects mentioned above, difference in progressive expenditure under a minor head to the extent of three per cent of the progressive allotment for that head or Rs. 2,000, whichever is less, may be ignored, provided that the allotment under no standard object subordinate to that minor head is exceeded. If the expenditure under any standard object suggests the possibility of an excess, the figures should be examined in detail and discrepancies reconciled so as to bring them within the permissible limit.

The above relaxation shall not, however, apply to the reconciliation of figures relating to disbursement of loans for which there should be a cent percent reconciliation of the departmental figures with these booked in the Accounts.

127. Reconciliation of figures by personal contact :It is very necessary that the reconciliation of the departmental figures of expenditure with those booked in the office of the Accountant General is carried out as early as possible. If on any occasion the controlling officer finds that observance of the procedure prescribed in paragraphs 123 and 124 is leading to protracted correspondence and causing undue delay in effecting a complete reconciliation, he may depute to the Accountant Generals Office for a day of more in a month, as may be necessary, one of more clerks or assistants, as the need may be, for the purpose of reconciling discrepancies by personal discussion and verification. The staff so deputed should have papers proving their identity and a letter of authority signed by the controlling officer himself. They should take with them requisite records and statements and, with the help of the Accountant General’s staff, compare the departmental figures with those recorded in the Accountant General’s books. A statement of discrepancies will then be prepared in triplicate in two columns bearing the stamp of the office of the Accountant General, one showing the mistakes, misclassifications and omissions on the part of the departmental officers and the other those on the part of the Account Office. The original statement will be kept in the Accounts Office. One copy will be made over to the departmental staff and the other sent by post to the controlling officer concerned by name in a closed cover, with an endorsement signed by a gazetted officer of the Accounts Office to the effect that the mistakes, misclassifications and omissions on the part of the departmental officers may be corrected and an intimation of compliance sent to the Accounts Office within a fortnight. On the authority of this statement, which should be seen by him personally, the controlling officer will correct his statements and registers and also direct the disbursing officers concerned to make such corrections as are necessary in their accounts and registers. The procedure mentioned above is intended to reduce the volume of correspondence and to expedite reconciliation.

128. Separate procedure for certain department :The general procedure does not apply to the Remittance Departments, e.g. Forest, Public Works, Irrigation, Rural Engineering Services, Minor Irrigation etc. except that in the case of drawl of establishment expenditure from treasuries.

(Special rules and procedure applicable to the Forest Department are detailed in Chapter XII of Financial Handbook, Volume VII while those applicable to other Engineering Departments are contained in Chapter XXV of Financial Handbook, Volume VI).

129. Expenditure controlled by Secretaries to Govt. : The above procedure are applicable to Secretariat level Drawing and Disbursing Officers. Such authorities are suppose to prepare the information prescribed for Drawing Disbursing Officer as well as Controlling Officers. The IRLA cheque sections(civil, vidhan sabha, vidhan parishad and governor’s secretariat) will submit its accounts directly to Accountant General.

130. Functions of the Administrative Department: The functions of the administrative departments of Government in respect of control of expenditure (except in those cases in which ;the expenditure is controlled by Secretaries to Government) are generally supervisory, and it is undesirable that they should assume any of the direct responsibilities which devolve properly on the controlling ;and disbursing officers. They will, however, either on the report of any head of a department subordinate to them or at the instance of the Finance Department or the Accountant General or on their own initiative, take any action which maybe necessary in the general interest of economy or to check extravagance or to obviate excesses over allotments. They will also take action, when necessary, to restrict expenditure and to investigate the causes of extravagance and excess and also to meet out suitable punishment, after observing proper procedure, to the officials found to be at fault, to prevent the recurrence of any irregularity or impropriety in expenditure.

131. Deleted

132. Procedure for dealing with anticipated excesses :When on an examination of the monthly statement of expenditure of a disbursing officer, or on a separate report received from the disbursing officer himself, it appears that the allotments placed at his disposal need readjustment or supplementing, the controlling officer should proceed as follows:

1. He should, in the first place, examine the allotments made to other disbursing officers under the same detailed head inside the unit of appropriation and transfer to the disbursing officer who requires additional allotment such sums as can be spared, informing the disbursing officers whose allotments are so reduced.

2. Should he find such re-distribution impossible he should examine the allotments against other detailed heads inside the same unit of appropriation with the object of discovering probable savings and effecting a transfer. If he has been invested with the necessary powers, he should carry out the transfer. Otherwise he should obtain the sanction of the competent authority for re-appropriation

3. If provision of funds from within the same unit of appropriation proves to be impossible, an examination of the whole grant placed at his disposal should be undertaken to see whether there are likely to be savings under any of the other units of appropriation. If such savings are anticipated, he should process as indicated in clause (ii) above.

4. If savings are not available, it should be examined whether special economies can be effected or whether special economies can be effected or whether the excess should be met by postponement of expenditure on unessential or less urgent items.

5. If none of the methods indicated above is feasible, an application for additional funds should be made to Government in the administrative department concerned which will, if necessary, move the Finance Department for provision of additional funds by re-appropriations or through the supplementary estimates. Normally, an application for a supplementary grant will not be entertained by Government unless the anticipated excess is due to causes beyond the control of the authority concerned and funds cannot be found by any legitimate postponement of expenditure for which provision already exists in the budget or the expenditure in question cannot be postponed.