Day 5 – Session: 1 Session Title: Appropriation Accounts – Preparation of Summarised and Detailed Appropriation Accounts, Appendices. Reconciliation between Finance Accounts and Appropriation Accounts. RTI, Nagpur

Session Overview In this session we will quickly recap the topics covered on day 1 – Session 4 and day 2 – Session 1. We will also discuss about the preparation of the summary of the Appropriation Accounts and the detailed Appropriation Accounts, Appendices. Reconciliation between Finance Accounts and Appropriation Accounts will also be discussed.

Learning Objective By the end of the session, we will be understood the Summary of Appropriation Accounts and Detailed Appropriation Accounts and Appendices along with their preparation. Reconciliation between Finance Accounts and Appropriation Accounts will also be discussed.

Responsibility for Preparation The Appropriation Accounts relating to State Governments are prepared by the respective State Accountants General (A&E) except in case of the State Government of Goa and Union Territory Government of Pondicherry. (Para 1.5 of the MSO(A&E) - Vol.II)

PREPARATION OF APPROPRIATION ACCOUNTS Form and Content According to the nomenclature indicated in the Demands for Grants, as approved by legislature. 1. Original Appropriations approved by legislature, supplementary appropriations, surrenders and re-appropriations distinctly; Actual expenditure against the sum total of above; Excess (+) or saving (-) under each head

The Appropriation Accounts are in three parts (Para 1 The Appropriation Accounts are in three parts (Para 1.3 and Appendix I of the MSO (A&E) – Vol. II) Part-I- Summary of Appropriation Accounts and audit certificate of the Comptroller and Auditor General of India Part-II- Detailed Appropriation Accounts; Part-III- Appendices, containing two appendices on expenditure met out of Advances from Contingency Fund and Grant-wise details of Estimates and Actuals adjusted in the accounts in Reduction of Expenditure.

Part I - A summary of Appropriation Accounts It shows- (1) the total amount of funds (original and supplementary) provided by the Legislature under each voted grant and charged appropriation, (2) the actual expenditure incurred against each, and (3) the saving or excess under each grant or appropriation. The summary is concluded with a reconciliation statement of expenditure indicated in the Appropriation Accounts with the expenditure indicated in the Finance Accounts.

The format of reconciliation statement Charged Voted Revenue Capital Total Expenditure according to Appropriation Accounts A B C D Deduct Recoveries shown in Appendix II M N O P Net Total expenditure shown in Statement No. 10 of Finance Accounts (A-M) (B-N) (C-O) (D-P)

4. Expenditure on subsidies disbursed during the year. This statement was also introduced from the year 2005-06 in view of the recommendation made by the Twelfth Finance Commission. The data is arranged Major Headwise under- A. General Services, B. Social Services, and C. Economic Services. (Referred to Statement No. 12) Format: Actuals of the current year in thousands of rupees.

Part II Detailed Appropriation Accounts It shows – (1) the original grant/ appropriation, (2) additional funds provided during the year by supplementary grant/ appropriation, (3) total grant/appropriation, (4) actual expenditure, (5) saving or excess in the grant/appropriation as a whole, and (6) the amount surrendered during the year. Accounts are prepared strictly according to the nomenclature used in the Demands for Grants as approved by the Legislature. Grants/appropriations and actual expenditure are included in these Accounts upto sub-head level.

The Accounts contain following four columns: Column-1 : Original (indicated by letter ‘O’) Supplementary (indicated by letter ‘S’) Voted and Charged Re-appropriations (indicated by ‘R’). Note: the executive is vested with powers for re-appropriation of funds from one head to another head within Revenue Section or within the Capital Section under the provisions of the delegation of Financial Powers. Column-2 : Total grant or appropriation i.e. the sum total of ‘O’, ‘S’ and ‘R’ Column-3 : actual expenditure incurred during the year. Column-4 : excess expenditure (as compared to total grant or appropriation as (+) and saving as (-) between the figures of column (2) and (3).

Part-III-Appendices Appendix-I : expenditure met out of advances from the Contingency Fund, under each grant, not recouped to the Fund till the close of year is included. Appendix-II : grant-wise details of estimates and actuals in respect of ‘Recoveries Adjusted in the Accounts in Reduction of Expenditure’ are included. Actual recoveries under Revenue and Capital are compared in this statement with the budget estimates to work out the ‘more recoveries’ or ‘less recoveries’.

General checks to be exercised while compiling Appropriation Accounts It is to be ensured that figures of ‘Provision/Expenditure/Excess/ Saving’ as given under ‘Summary of Appropriation Accounts’ tally with those given under individual “Grant/ Appropriation-wise Accounts”. The classification should follow the Budget and no unauthorised head should be opened. The amounts surrendered as shown in the “Summarised Appropriation Accounts” should agree with those worked out in the “Detailed Appropriation Accounts”. The “plus/Minus” signs should be carefully checked. Month of surrender should invariably be indicated. The Comments about excess or saving incorporated in relevant grants should not be ambiguous and that the comments should be such as can be understood by a layman. It has to be ensured that variations under “Revenue Expenditure”, Capital Expenditure”, “Loans” and “Charged” and “Voted” categories have been separately worked out/ commented upon.

General checks to be exercised while compiling Appropriation Accounts (contd…) Errors in totaling/spelling mistakes should be avoided. To ensure that the main thrust to focus and highlight major excesses/savings is not diffused, only major savings/ excesses should be included as per the guidelines given by the Public Accounts Committee (PAC) of the respective State. Exhibition of expenditure in Appropriation Accounts should follow the provisions in the budget. Expenditure to be transferred to other heads as shown below the line in the budget should be carefully noted and timely action taken for such transfer and an intelligent examination of these accounts is to be undertaken to find out whether any mistake has not apparently been made by the Accountant General office in carrying out the annual adjustment and/or following the accounting mechanism as stipulated in the budget estimates etc.

General checks to be exercised while compiling Appropriation Accounts (contd…) (11) Re-appropriation orders relating to the previous years after closure of Accounts should not be accepted and acted upon. (12) Comments on defective budgeting should be highlighted if the provision is not made under the correct head of Accounts. (13) When huge provision of funds are made through reappropriation it should be examined to see whether they come under New Service and, if so, Public Accounts Committee should be briefed and suitable guidelines issued in the matter.

Reconciliation of the figures between Finance Accounts and Appropriation Accounts. The General rule is that a grant/appropriation is voted/authorised for the gross expenditure required for each service. The expenditure shown against each grant/appropriation in the Appropriation Accounts will thus exclude recoveries adjusted in the accounts as reduction of expenditure in the respective grants/appropriations. The Finance Accounts, on the other hand, will show the net expenditure after taking into account the recoveries.