Role of RBIRTI Jammu1 Finance Accounts. Role of RBIRTI Jammu2 Session Overview Under Article 149 of...

Role of RBI RTI Jammu 1

Finance Accounts


Session Overview

• Under Article 149 of the Constitution of India and Section 11 of the CAGs (DPC) Act, the CAG is required to prepare, for the Central Government, for each State Government and for the Government of each of the Union Territories with separate Legislative Assemblies, accounts of the receipts and expenditure of the Government for each financial year.


Session Overview

• The Government Accounts are like the accounts of a commercial concern, whereby the management of the concern presents to its shareholders or stakeholders a summary of financial transactions for the year and its impact on the concern in the form of Income and Expenditure Account or Profit and Loss Account for the year and the financial position of the concern as on year end date in the Balance Sheet.


Session Overview

• Through these statements, the shareholders or stakeholders are in a position to know how well the finances of the concern have been managed during the year and what are the assets and liabilities of the concern at the end of the year.


Session Overview

• Government Accounts also perform a similar function. Annual Accounts are prepared and presented to the Parliament/State Legislature. Through these Accounts the people’s representatives are in a position to know how well the finances of the State have been managed by the Government during the preceding year, what are the assets and liabilities of the State at the end of the year and how the mandate of the legislature in the form of voted grants have been followed.


Session Overview

• During this session we will discuss:

• Objective and concepts underlying financial statements;

• Financial Statements of Government or Finance Accounts of Government.


Learning objectives

• By the end of the session, the learner will be able to define the objective and concept of financial statements and Finance Accounts of Government. The learner will also be able to state scope, form and arrangement of material for Finance Accounts and general checks to be exercised while compiling Finance Accounts.


Objective and concept

• The objective of financial statements is to provide useful information to the users. Users rely almost exclusively on the information provided in the financial statements and consequently such a statement must be, as meaningful as possible, in order to meet their needs. It is possible to translate any activity into financial terms and prepare statements, for information of users, expressing the activity in financial values.



• Financial value for any activity is the most appropriate and easily understood measure for expressing any activity. Ease in application and comparability across various components of an activity and between different and diverse activities makes the financial value an appropriate measure for comparison and control. The financial values depicted in a usable manner in a statement constitute a financial statement.



• Financial Statements for a commercial activity comprise a Balance Sheet and a Profit and Loss Account (or an Income and Expenditure Account). The balance sheet gives the financial position of the concern through the value of assets held by the concern and liabilities of the concern on that date. The profit and loss account (or the income and expenditure account) gives the results of the operations of the concern during the given period in the form of income earned and expenditure incurred to earn that income.



• The Financial Statements of the Government, prepared at the end of the year, called the Finance Accounts, is a summarized account of transactions of the Government during the year along with other financial information about the debts of the Government, amounts recoverable from other and positions of moneys available in Public Account.


Finance Accounts

• Certificate of the Comptroller and Auditor General of India on Finance Accounts:


Certificate of the CAG

• The CAG is required to certify the correctness of data included in the Finance Accounts (and also in the Appropriation Accounts) to assure the Parliament/Legislature (and also other users) about their authenticity and correctness. A sample of certificate is as under:



• ‘This compilation containing the Finance Accounts of the Government of ____ for the year ended _____ present the accounts of the receipts and outgoings of the Government for the year, together with the financial results disclosed by the revenue and capital accounts, the accounts of public debt and the liabilities and assets as worked out from the balances recorded in the accounts. The Appropriation Accounts of the Government for the year for Grants and Charged Appropriations, presented separately, supplement this compilation.



• These accounts have been prepared and examined under my direction in accordance with the requirements of the CAG’s (DPC) Act, 1971. According to the best of my information, as a result of audit of these accounts, the accounts now presented read with the observations in this compilation, are correct statement of receipts and outgoings of the Government of _______ for the year__.



• Points of interest arising out of the study of these accounts as well as test audit conducted during the year or earlier years are contained in my Report being presented separately for the year ended ________, Government of ________.


Source Material

• The basic material for the preparation of the Finance Accounts is the Consolidated Abstracts and the Detail Book. For the Finance Accounts of the Union Government, the source material is the Statement of Central Transactions, prepared by each of the heads of Accounting Circles at the end of the financial year.


Source Material

• This represents the progressive effect of all transactions during the year, including adjustments, both correcting entries and adjusting entries carried out in March (Final) and in March (Supplementary) accounts and exhibits distinctly charged expenditure, voted expenditure, plan expenditure and non-plan expenditure, under all prescribed heads


Source Material

• In addition material for different statements of the Finance Accounts is sourced from different wings of the office of the Accountant General and also from different offices of the Union/State Government.


Form and Content

• Finance Accounts are prepared in two parts:

• Part I consisting of summarized statements numbering eight; and

• Part II consisting of Detailed Accounts and Other Statements.


Form and Content

• The Part II has two parts, Part A Revenue and Expenditure in 6 statements and Part B Debt, Contingency Fund and Public Account in four statements.

• The detailed format of various statements is:


Statement No. 1-Summary of Transactions

• Summary of transactions are included in this statement. All receipts and disbursements for the year are summarized in the statement and arranged under the three parts (Part-I Consolidated Fund, Part-II Contingency Fund and Part-III Public Account). The actuals of the previous year are also shown side by side with the actuals of the year.


Statement No. 1-Summary of Transactions

• The statement is useful for macro analysis of the financial transactions of the Government and for analyzing revenue receipts and revenue expenditure of the Government and analyzing the state of finances of the Government as revealed by current surplus or deficit (revenue surplus or revenue deficit).


Statement No. 2-Capital Outlay

• In this statement the expenditure under each major head upto the beginning of the year, expenditure during the year and expenditure to the end of the year is indicated.

• This statement enables a user to assess the capital expenditure incurred by the Government and total capital expenditure incurred by the Government under a particular major head (activity) upto the end of the year.


Statement No. 3 –Financial Results of Schemes

• This statement has two parts.

• (i) –Financial Results of Electricity Schemes

• (ii) –Financial Results of Irrigation Works


Statement No. 3 –Financial Results of Schemes

• The information in this statement enables the user (and reader) to assess the working of schemes, whether Government is able to absorb costs incurred on running such schemes and whether it is possible to finance the cost of capital invested in such schemes. This statement also enables the user and the reader to assess if usage charges for services generated are sufficient to cover the running cost of these schemes and whether the scheme are able to bear the financing cost (interest on capital invested) of the schemes.


Statement No. 4 –Debt Position

• This statement has three parts: Statement of borrowings Other Obligations Service of Debt


Statement No. 4 –Debt Position

• The information in this statement is useful to the users and readers to assess the gross and net liabilities of the Government as revealed by debts incurred by it. Comparison of the data included in this statement with time analysis of Revenue Receipts enables the reader to understand what part of receipts are utilized to service the debt and how many years Revenue Receipts of the Government represent the net debt position of the Government.


No. 5 –Loans and Advances by Government

• Summarized figures of loans and advances given by the State Government with progressive figures are included in the statement with details in Statement No. 18.


No. 5 –Loans and Advances by Government

• Recoveries of loans and advances in arrears (including arrears of interest on such loans) are included in part-ii of this statement to provide information to the user about the efficiency of recovery process of Government on loans and advances advanced by the Government to different individuals and bodies and authorities.


6 –Guarantees given by the Government

• Government provides guarantees for repayment of loans (and also on payment of interest on such loans) raised by Statutory Corporations, Government Companies and other institutions (also individuals).

• These guarantees, if invoked by lenders, can result in financial liabilities for the Government.



• All guarantees given by the Government to Statutory Corporations, Government Companies, Cooperative Societies, other bodies and authorities and individuals are included in this statement. Maximum amount guaranteed (principal only) and the amount of guarantee outstanding at the end of the year (for principal and for interest) is indicated in this statement.



• This statement enables a reader to estimate the contingent liabilities of the Government, through guarantees extended by it.


No. 7 –Cash Balances and Investment of Cash Balances

• This statement gives the summarized position of the cash balances of the Government at the end of the year (previous year’s figures are also indicated), under Cash in Treasuries, Cash in banks, Remittances in Transit (at the end of the year), Investments held in Cash Balance Investment Account, Cash with Departmental Officers, Permanent Advance for Contingent Expenditure with Departmental Officers and Investment of Earmarked Funds.


No. 7 –Cash Balances and Investment of Cash Balances

• This statement enables a reader to assess the cash balances held by the Government and whether such balances are invested or are idle.


Statement No. 8 –Summary of Balances

• This statement includes balances under debt and other obligations of the Government to repay the money received and other heads which represent claim to recover the amount paid as also the transactions pending adjustments as in suspense and remittance heads. These are assets and liabilities of the Government represented by public debt, transfers to contingency fund and balances in the Public Debt.


Statement No. 8 –Summary of Balances

• To these balances, balance under Government Account is added. The balancing figure between the debits and credits should agree with the closing cash balance as revealed by accounts.


Government Account

• Under the system of bookkeeping followed in the Government Accounts, the amounts booked under revenue heads (both receipts and outgoings), capital heads (both receipts and outgoings), balances of which are not carried forward from year to year in accounts are closed to a single head called ‘Government Account’.


Government Account

• The balance under this head represents the cumulative result of all such transactions so that after adding thereto balances under the heads of account relating to debt, contingency fund and public account, the closing cash balance at the end of the year may be worked out and proved.


Statement No. 9-Statement of Revenue/Expenditure

• This statement shows the tax revenue and non-tax revenue and expenditure on revenue account together with the percentage to total revenue/total expenditure.



• This statement shows the tax revenue and non-tax revenue and expenditure on revenue account together with the percentage to total revenue/total expenditure.



• This statement allows a reader/user to assess the importance of revenue from each source to the total revenue collection of the Government and its relative importance to total revenue expenditure of the Government.


N. 10- Distribution between Charged and Voted Expenditure

• This statement shows the distribution of all expenditure under the Consolidated Fund of the Government between the Charged Expenditure and Voted Expenditure.

• This statement allows a reader/user to assess what part of expenditure out of the total expenditure is outside the legislative control.


No. 11-Deatiled Account of Revenue by Minor Heads

• In this statement all the receipts under Revenue Receipt Heads is included with minor head-wise details.

• The data in this statement allows a reader to assess the revenue sources of the Government for microanalysis of data.


No. 12-Deatiled Account of Expenditure by Minor Heads

• This statement details the revenue expenditure and capital expenditure for the year, with breakup between Plan expenditure and Non-Plan expenditure and also showing charged expenditure separately.

• Like the data in statement No. 11, the data in this statement allows a reader to assess the main items of expenditure of the Government for microanalysis of data.


Statement No. 13-Deatiled Statement of Capital Expenditure• Capital expenditure of the Government

during the year is included in this statement with minor head-wise details and breakup between Plan expenditure and Non-Plan expenditure. In addition, progressive total of expenditure upto the year-end is also indicated minor head-wise.


Statement No. 13-Deatiled Statement of Capital Expenditure• As the system of write-off of assets is not

followed in Government Accounts nor are assets depreciated, this statement simply rolls over the progressive expenditure incurred under various major/minor heads and, therefore, has no relevance to the real assets in possession of the Government on any particular date. Nevertheless, the data in the statement is vital for users to know about the total capital expenditure incurred by any Government till date for comparison with the outstanding debt.


Statement No. 14-Details of Investment

• This statement shows the investment of the Government in Statutory Corporations, Government companies, Cooperative Societies, etc. Nature or type of investment, details of investment, years of investment are also indicated in the statement including the amount of dividend declared/interest received and credited to the Government during the year are also indicated.

• This is an important statement giving out the financial creditworthiness and operating efficiency of the Public Sector Undertakings.


No. 15-Capital/other expenditure and sources of funds

• This statement brings out the capital and other expenditure outside the revenue account for the year and upto that year and the chief sources from which funds were provided for such expenditure, namely from internal debt, external debt, public account, revenue surplus, etc. This statement is prepared sub-sector-wise and not with major head-wise details.


Statement No. 16-Receipts, Disbursements and Balances

under Debt, Contingency Fund and Public Account


Statement No. 16

• Details of receipts, disbursements and balances under Heads of Account (upto Minor Head level) relating to debt, deposit and remittance and contingency fund are included in this statement.

• This statement is useful in analyzing the balances under the Public Account, especially under the Suspense and Remittance Heads.


No. 17-Debt and other interest bearing obligations

• This statement indicates balances under various heads (with minor heads wise details), additions during the year, discharges during the year and closing balances at the end of the year of all debts outstanding against the Government, and other obligations of the government.



• Apart from furnishing information on internal and external debt, small savings, provident funds and deposits which are interest bearing obligations of the Government, it also indicates different debts outstanding against the Government.



• In case of Union Finance Accounts this statement (No, 14-Finance Accounts of the Union Government) also indicates country-wise details of loans outstanding and interest paid during the year and the balances outstanding at the end of the year at exchange rate prevalent as at 31st March of that year.


Statement No. 18-Details of Loans and Advances

• Opening balances, Loans and advances advanced during the year, loans and advances repaid during the year and closing balances together with details of interest received and credited to revenue during the year for each loan (details upto minor head level) are included in this statement.


Statement No. 18-Details of Loans and Advances

• Apart from furnishing information on loans and advances made by the Government during the year and cumulative amount of loans and advances advanced by the Government under various schemes (minor heads), it also indicates interest received and credited to revenue during the year.


Statement No. 19-Details of Earmarked Balances

• All earmarked balances under Reserve funds and Deposits and Advances (not bearing interest) are included in this statement with opening balances and closing balance (showing whether the balances under the earmarked funds have been invested or are merged with the general cash balance of the Government)


Responsibility for Preparation

• Prepared by the Accountant General (A&E) and after check by ITA wing are sent to Accountant General (Audit), where an independent check and audit is exercised


Time schedule for preparation and submission of Accounts

• Laid down each year by Headquarters Office;

• Generally the prescribed dates are:



• (I) Transmission of Finance Accounts by the Accountant General (A&E) duly checked by Internal Test Audit to the Accountant General Audit): 18th July each year

• (ii) Return of the Finance Accounts duly checked by the Accountant General (Audit) to the Accountant General (A&E): 1st August each year.



• The Accountant General (A&E) shall furnish full information to the Comptroller and Auditor General after the close of the accounts of the financial year to enable the latter to keep a watch over the progress in the preparation, finalizing and printing of the Accounts.


Correction of Errors

• Utmost care to be taken in reading the proofs at the various stages so that only the mistakes as a result of printers devil are left for inclusion in the errata.

• Any error noticed in the printed copies should be neatly corrected in manuscript in the copies sent to the CAG.



• Where the number of errors is such as will require the printing of errata, the errata should be printed after an intimation of the documents having been signed by the CAG is received.

• This will enable the Accountant General (A&E) to incorporate in the errata any errors, which may be pointed out by the Comptroller and Auditor General of India.



• No correction slip should be issued after the Accounts and Reports have been forwarded to Government.

• If a serious error or misprint comes to notice after the documents have been forwarded to Government, it should be immediately brought to the notice of the CAG with an explanation of the circumstances in which the mistake could not be noticed and rectified earlier.



• If it is decided to issue a correction, the correction slip will be issued in the name of the Accountant General who is responsible for the preparation of the Accounts, but it should not bear any date. The Accountant General should ensure that any such correction slip issued is pasted in the copies signed by the CAG which are to be laid on the table of the legislature.



• No correction slips can be issued after the documents are laid before the legislature; if any errors are noticed they should be reported to the Comptroller and Auditor General with an explanation for the delay in noticing them.


Confidential Accounts

• Since Appropriation Accounts and Finance Accounts are to be presented to the State Legislature along with the Audit Report, they cannot become ‘Public’ until they have been laid on the table of the House. It is, therefore, necessary to guard against the disclosure to the public and press till their presentation to the Legislature.


Finance Account and Appropriation Account figures

• It is of utmost important that there should be no discrepancy in any respect between the figures incorporated in the Finance Accounts and those incorporated in the Appropriation Accounts and the Audit Report.


General Check while preparing Finance Accounts

• The nomenclature of the Head of Account should conform to the classification given in the list of Major and Minor Heads of Accounts.

• No unauthorized head of account should be exhibited in the Accounts.

• Reconciliation of figures in the draft Finance Accounts and the draft Appropriation Accounts should be carefully done.

• Per contra adjustments wherever carried out should be linked at different places.



• Minus balances wherever occurring in the Finance Accounts should be analyzed and corrected, otherwise suitably explained

• Opening balances in the Finance Accounts should invariably agree with the closing balances of the previous years' accounts and any difference should be suitably explained by means of a footnote.



• Updated position in respect of difference in the accounts figures of Deposits with the Reserve bank and those intimated by the R.B.I should be exhibited in footnote below Statement Nos 1,7 and 16 as also in Chapter I of the Audit Report, and these should be the same at all these places.



• The totals and calculations of percentages in statements should be checked and correctness ensured.

• Advances from the Contingency Fund and their subsequent recoupment should be carefully watched so as to ensure that they are properly accounted and that there is no omission.

• It has to be ensured that all statements forming part of the Finance Accounts are attached and that there is no omission in this regard.



• Differences between Accounts figures and Reserve Bank of India Deposit figures should be reconciled. It should be ensured that payments made by Reserve Bank of India through daily scrolls are properly accounted for by Treasuries and that there is no omission requiring rectification.

• Discrepancies between Statements 13 and 14, if any, should be checked and corrected.

Role of RBIRTI Jammu1 Finance Accounts. Role of RBIRTI Jammu2 Session Overview Under Article 149 of...

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