1. Session - 5 Planning a Treasury Inspection and Areas of Focus Regional Training Institute, Ranchi Structured Training Courseware on Treasury Inspection

2. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/2 January 2005 Learning Objectives  At the end of this session, the participants will be able to –Plan for a Treasury Inspection –Identify major areas of audit focus –Draw up check lists for detailed examination

3. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/3 January 2005 Objectives of Treasury Inspection  Check/ Ensure that –Procedures for preparation of initial accounts are complied with –Accounts and records are complete –Prescribed procedures for passing of bills are observed

4. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/4 January 2005 Objectives (Contd.) –There are no fraudulent payments or deposits –Proper system for reconciliation – of balances –Proper Arrangements for custody/handling of valuables  Treasury Inspection is not a substitute for executive inspection

5. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/5 January 2005 TI Party Composition  One Sr. AO/AO  Two AAOs/ SOs –Senior shall be the party in-charge  One Sr. Accountant/ Accountant

6. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/6 January 2005 Periodicity and Duration  Bihar/ Jharkhand –Annual inspection of all Treasuries / Sub- Treasuries  Biennial for Non-Banking Sub-Treasury –7 working days for District Treasury –3 working days for Sub-Treasury

7. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/7 January 2005 Periodicity & Duration (Contd.)  Orissa –District Treasuries & Sub-Treasuries categorised into ‘A’,’B’ and ‘C’ –Annual inspection of all Treasuries/ Sub- treasuries  Biennial for ‘C’ category sub-treasuries –Varying duration, depending on category  5 to 12 working days for Treasury  3 to 4 working days for Sub-Treasury

8. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/8 January 2005 Scope of inspection – Focus Areas  Accounts to AG –Timely rendition –Missing vouchers –Misclassification  Records/ Registers –Daily posting of accounts –Accountant’s Cash Book –Treasurer’s Cash Book –Subsidiary Registers

9. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/9 January 2005 Focus Areas (Contd.)  Custody-related & Valuables etc. –Security of strong room –Padlocks and keys –Treasury Balance –Custody of Valuables –Stamps and Stamp papers –Receipt Books, Cheque Books, Books of Drawal –Currency Chest and Coinage –Govt. Securities

10. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/10 January 2005 Focus Areas (Contd.)  Deposits & Personal Ledger Accounts  Register of RB Deposits  Accounts of RBI Remittances  Withdrawal through LOC  Payment of Pension  Establishment Audit  Miscellaneous Instructions

11. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/11 January 2005 Timely rendition of accounts to AG  Submission of 1 st / 2 nd LOP on due date  Delay in rendering accounts to AG, because of –Delay in closing daily accounts of Treasury –Late receipt of Sub-Treasury accounts –Delay in receipt of bank scrolls  Resulting in non-inclusion in monthly accounts –Incomplete picture of current accounts –Distorts next month’s accounts

12. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/12 January 2005 Rendition of accounts (Contd.)  TI party to conduct –In-depth analysis of reasons for delay –Suggest remedial measures –Review measures taken by TO to avoid such situations

13. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/13 January 2005 Missing Vouchers –Non-submission of vouchers/ schedules  Amounts placed under Suspense –TI Team to  Examine system followed  Ensure no case of deliberate non-submission of vouchers/ schedules  In case of significant amounts, examine original records in Treasury

14. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/14 January 2005 Misclassification  6-Tier Accounting Classification from 1/4/87 –Major Head –Sub-Major Head –Minor Head –Sub-Head –Detailed Head –Object Head of Expenditure  TI team to see that Treasury accounts reflect proper classification

15. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/15 January 2005 Daily posting of accounts – TI Checks  Dates of bank discharge noted in –Register of Orders for Payment –Register of Challans Issued  Posting of receipts from bank scroll into –Cash book directly or –Through subsidiary registers  Posting of net daily payment/ receipt to –Register of Reserve Bank Deposits

16. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/16 January 2005 Daily Posting (Contd.)  Daily posting into RBD Register tallies with bank’s pass book  Daily sheets from sub-treasuries posted on the date of receipt into Treasury accounts  At least 20% of sub-treasury’s vouchers checked by TO

17. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/17 January 2005 Accountant’s Cash Book – TI Checks  Cash book contains complete details of cash transactions and book transfers –For Treasury and all Sub-Treasuries  Cash totals checked by independent official  Cash book entries tally with daily totals of subsidiary registers

18. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/18 January 2005 Accountant’s Cash Book (Contd.)  One month’s transactions of Cash Book to be checked by TI Team with reference to –Subsidiary Registers –Daily bank scrolls (Banking Treasury) –Treasurer’s Cash Book (Non-Banking Treasury)

19. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/19 January 2005 Treasurer’s Cash Book and Daily Balance Sheet – TI Checks  All transactions are –Entered immediately in the Treasurer’s Cash Book, and –Signed by TO  Sale of stamps entered before closing cash book  Cheques received for service stamps –Entered on both sides of the cash book

20. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/20 January 2005 Treasurer’s Cash Book (Contd.)  Other payments made by transfer entered into the cash book  Treasurer’s Daily Balance Sheet –Tallies with Accountant, and –Signed by TO

21. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/21 January 2005 Subsidiary Registers  TI team to check at least 10% of transactions in subsidiary registers –Selection of subsidiary registers to be made intelligently to cover  Large no. of vouchers in Department  Cases of certain DDR Heads etc. –Cases of non-submission of vouchers can be examined while checking subsidiary registers

22. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/22 January 2005 Security of Strong Room – TI Checks  Annual inspection of strong room by XEN/AE and certificate of safety obtained  Places of posting of sentries approved by SP  Fire extinguishers, including refilling  Inspection of Treasury annually by District Collector for compliance with rules

23. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/23 January 2005 Padlocks and Keys – TI Checks  Register of padlocks in Treasury & Sub- Treasuries –Maintained properly and –Kept in the strong room  Spare padlocks kept without permission  Duplicate keys are sealed and kept elsewhere securely

24. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/24 January 2005 Padlocks and Keys (Contd.)  Security Bond from Treasurer –Obtained, and –In safe custody  Book balance of padlocks agrees with physical balance

25. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/25 January 2005 Treasury Balance  TI team to examine Treasurer’s daily balance sheet –Total value of stamps, opium etc. does not exceed limit –Daily balance sheet signed by TO every evening –Daily balance sheet agrees with Accountant’s daily balance sheet  TI’s responsibility does NOT extend to physical verification of cash, stamps etc.

26. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/26 January 2005 Custody of Valuables – TI Checks  Register of valuables maintained properly  Packets containing valuables properly sealed, and under double locks  Valuables verified by depositors and TO annually  TI team to verify valuables with the book balance

27. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/27 January 2005 Stamps and Stamp Papers – TI Checks  Rules for supply, custody, sale and distribution of stamps are followed  Stamp papers kept in parcels of prescribed quantities –Unopened parcels are intact  Receipt of consignments & issues entered in stock register of stamps and daily balances attested by TO

28. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/28 January 2005 Stamps (Contd.)  Sale register maintained properly –Assigning names of stamp vendors  Discount at prescribed rates –Only to authorised vendors  Vendor’s license revalidated  Appropriate action in r/o damaged stamps

29. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/29 January 2005 Stamps (Contd.)  Monthly Plus-Minus Memos and Bimonthly Report on Time  Security Bond from stamp clerk  Mode of present preservation of stamps is satisfactory

30. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/30 January 2005 Receipt Books, Cheque Books, Books of Drawal – TI Checks  Receipts and Issues accounted properly  Count of Cheque / Receipt Books on receipt, certified by TO  Books of Drawal are page numbered, and certified as such by TO  Proper arrangements for acknowledgement of books issued

31. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/31 January 2005 Currency Chest and Coinage – TI Checks  Maintenance of currency chest (CC) book  On date of inspection, CC book is inside the currency chest  Sl. No. of Currency chest slips sent to Currency Officer are noted in the CC Book  Detailed cash balance report, after Collector’s verification –Sent to AG on 1 st working day of month

32. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/32 January 2005 Currency Chest (Contd.)  All amounts passing in/out of double locks are registered immediately in Treasurer’s balance sheet –By TO  Transfers –From/to Treasury balance –to/from Currency Chest  Are intimated telegraphically to Currency Officer

33. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/33 January 2005 Currency Chest (Contd.)  Cash balance limits set by Govt. adhered to  Procedure for remittances received  Certificate on cypher code sent on 1 st April  Daily balance sheet of Treasurer and Accountant agreed on the same day

34. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/34 January 2005 Currency Chest (Contd.)  Treasurer’s simple cash book  Verification of Sub-treasury cash balance –By TO monthly and by Collector annually  Security from Shroff for cash handling

35. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/35 January 2005 Government Securities – TI Checks  Application Forms and Interest Receipt Forms are in stock  Receipt of interest warrants and intimation to payee  Register for recording enfacement of Promissory Notes  Instructions for payment at a sub-treasury of –Interest on a GP Note enfaced at the Treasury

36. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/36 January 2005 Govt. Securities (Contd.)  Register for recording documents relating to payment of interest  Receipt, custody and return of notes deposited by the public with TO, and interest thereon  List of securities, with undrawn interest for more than 10 years is sent to the Public Debt Office

37. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/37 January 2005 Deposits – TI Checks  Separate registers for each class of deposits  Items, which should not be treated as deposits, have not been taken to Deposits  Rules on refund/ repayment of Deposits  Lapsed Deposit statement to AG on 1 st April

38. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/38 January 2005 Deposits (Contd.)  Authority of AG for making repayment of lapsed deposits  Plus-Minus Memos sent to AG every month  Balances as per Civil and Criminal Court Deposit registers –Verified with Court Extract Registers

39. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/39 January 2005 Personal Ledger Accounts – TI Checks  Proper sanction for opening PL Account –Particulars of scheme and head of account recording in PLA Register  Balances of PLA under Consolidated Fund brought to Nil as on 31 st March –By refund to Consolidated Fund  Lapsed deposit statement in r/o inoperative PL Accounts sent to AG

40. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/40 January 2005 PLA (Contd.)  Administrator-wise plus-minus memoranda sent monthly to AG  Annual balance certificates received from Administrators verified and sent to AG  Balances in PL A/cs struck up to date  Past defects pointed out by TI corrected

41. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/41 January 2005 Register of RB Deposits – TI Checks  2 months entries to be checked with reference to –Daily bank scrolls –With monthly bank statement

42. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/42 January 2005 Accounts of RBI Remittances – TI Checks  Check of 2 months entries of daily drawals/ encashments with entries under RBI remittances in cash book  General check of corresponding draft application forms for drawals

43. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/43 January 2005 Withdrawal through LOC – TI Checks  Issue of LOC by competent authority  Maintenance of proper registers at Treasury  LOC ceiling strictly watched –Excess drawal cases to be checked carefully  In the case of banking treasuries –Excess drawals are immediately intimated to Bank by TO

44. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/44 January 2005 Payment of Pension – TI Checks  Signature on PPO tallies with specimen signature  PPO recorded in PPO register  Before 1 st payment –Identification of pensioner, and signature obtained on PPO –Certificate regarding drawal/ non-drawal of provisional pensionary benefits –Recovery of Govt. dues made –1 st Pension Payment to be listed in Bank Advice List

45. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/45 January 2005 Payment of Pension (Contd.) –No undue delay in making payment  6 monthly declaration of marital status, where appropriate  Certificate of non-employment  Conditions for continuance of family pension  Payments recorded systematically on PPO  Pension revision in accordance with orders, and recorded on PPO

46. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/46 January 2005 Payment of Pension (Contd.)  Payment of arrear pensions, after sanction of appropriate authority and AG’s authority  Return of GPO to AG, if not paid in 1 year  Commutation of pension, and restoration  Pension payments recorded in Pension Enfacement Register, and verified with bank scroll –Life certificate, if payment by Money Order

47. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/47 January 2005 Payment of Pension (Contd.)  Money Order receipts and verification of recipient signatures  Annual identification of pensioners by DDOs, recorded on PPO –Life certificate for exempted pensioners  Payment of life-time arrears of pension on death  Return of PPO to AG  Half-yearly report on undrawn pension

48. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/48 January 2005 Establishment Audit – TI Checks  Compliance with GFR, DFP, Medical Attendance Rules, Service Code  Expenditure within budget  Payment of personal claims as per rules and on time  Short-term advance register

49. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/49 January 2005 Establishment Audit (Contd.)  Service Book maintenance  Establishment cash book maintenance  Pay acquittance rolls, bill register, contingent register, stock store register etc. maintained properly

50. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/50 January 2005 Miscellaneous Instructions  Cheque-Drawing Officers –Monthly CTR (Consolidated Treasury Issues) for each division, with cheques –Monthly CTD (Consolidated Treasury Remittances) for each division, with challan details  Specimen signatues of DDOs  Presentation of bills with Book of Drawals  Payment of dated pay orders without revalidation  Advice lists to bank in locked box

51. RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/51 January 2005 Miscellaneous Instructions (Contd.)  Guard files for circulars of AG, Finance Department, DTI etc.  Up-to-date reference books  Maintenance of Register of Registers  Register of LIC Schedules  Register of Periodical Returns  Notification of defalcation or loss  Half-yearly review of objection slips