Session -2 Role of Treasury in Budgetary Control of the State Regional Training Institute, Ranchi Structured Training Courseware on Treasury Inspection

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/2 January 2005 Learning Objectives  At the end of this session, the participants will be familiar with –The budgetary control processes of the State Government –The role of the Treasury in budgetary control

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/3 January 2005 Budget  Annual Financial Statement presented to State Legislature –Review of public finances of previous year, including actual receipts and expenditure –Estimates of receipts and expenditure of following year –Proposals for meeting requirements of following year

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/4 January 2005 Grants  Budget consists of Grants for each Department  Grants –Charged  Expenditure not voted, because of Constitutional provisions –Voted  Expenditure, debated and voted by Legislature

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/5 January 2005 Grants (Contd.)  Voted Grants –Plan Expenditure  Developmental projects, programmes and schemes –Non-Plan Expenditure  Generally of a recurring/ revenue nature  Considered less productive than Plan Expenditure

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/6 January 2005 Allotment Orders  Grants sub-divided by HOD amongst Disbursing Officers through Allotment Orders –Breakdown by Major Head, Minor Head, Detailed Head etc.  Allotment Orders sent to Treasury Officer and AG, to ensure that –Expenditure is only against allotment –Progressive expenditure, by account head, remains within allotment

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/7 January 2005 Allotment Orders (Contd.)  Allotment Orders entered by TO in Allotment Register –To be checked while passing bills  Allotment Orders entered by AG in Appropriation Registers –To watch progressive expenditure on monthly basis –Issue of warning slips in case of  Expenditure exceeding allotment  Rush of expenditure

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/8 January 2005 Supplementary Grants  Presented by Government and passed by Legislature –Additional requirement of funds  Distributed through Allotment Orders to DDOs

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/9 January 2005 Re-appropriation Orders  Transfer of allotments between –DDOs –Account Heads  Transfer between Grants not permitted –Requires legislative approval

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/10 January 2005 Surrenders  DDO to surrender excess funds through Surrender Orders to HOD –Well before end of year –Can be re-appropriated to other Drawing Officers  Funds surrendered late, or not surrendered at all –Grant not fully utilised –Savings/ Lapse of Funds

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/11 January 2005 Savings  Adverse comments from AG and Legislature  State Govt. required to provide explanations for savings –Explanations included in Appropriation Accounts

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/12 January 2005 Allotment Register  Allotment Orders from HODs entered into a DDO-wise Allotment Register –Full account classification –To be presented along with every bill  TO to check that allotted funds are available for payment

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/13 January 2005 Passing of Bills – Checks by TO  Bill in proper format  Full account classification –To be checked  Allotment column filled in  Bills accompanied by copy of Allotment Order  Accuracy of Bills  Genuineness of DDO’s signature

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/14 January 2005 Letter of Credit Mechanism  Introduced by Bihar Government in 1983 for cheque-drawing officers  Allotment break-up, approved by SE/CE and communicated to Treasury Officer –Purchases –Payment to work-charged staff –Work contingencies –Payment to contractors –Other payments

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/15 January 2005 LOC Mechanism (Contd.)  Treasury’s LOC Register in three forms –Form I – Register of Allotments –Form II – Register of LOCs issued to Sub- Treasury –Form III – Register of LOCs and Progressive Expenditure  Cheques to be honoured only within LOC limits  LOC lapses at the end of the year

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/16 January 2005 LOC Mechanism (Contd.)  Cheques drawn, but not encashed within financial year, to be cancelled –Fresh cheque issued from next year’s allotment  LOC amount cannot be drawn at one go, and placed in a separate drawing amount  Assignments by CE on quarterly basis

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/17 January 2005 Accounting for PW Cheques  Cheques issued by XEN and encashed –Accounted under PW Remittances – Head II PW Cheques –Entered in a separate register  Monthly division-wise statement of cheques encashed sent to AG

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/18 January 2005 Accounting for PW Cheques (Contd.)  Monthly Certificate of Treasury Issues (CTI) to Divisional Officer –Details of encashed cheques relating to the Division –Division can prepare statement of cheques not encashed  Passbook for reconciliation of Treasury figures and Divisional Figures

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 2/19 January 2005 Accounting for PW Cheques (Contd.)  Similar procedure for Forest Divisions  For Remittances, TO submits a monthly Certificate of Treasury Remittances (CTR) to the concerned Forest Division –Details of Forest Remittances into Treasury