24

CHAPTER 24

WORKS AND FOREST ACCOUNTS AND AUDIT

 (A) PUBLIC WORKS ACCOUNTS

(a) Constitution of the P.W. Department

24.1 Organization- The department as a whole is generally divided into several branches e.g. Buildings, Roads, Irrigation, Public Health Engineering etc. - each branch in a State being generally in charge of a Chief Engineer who controls the Superintending Engineers.

24.2 For purposes of Public Works Administration, each State is generally divided into circles, each circle in charge of a Superintending Engineer. In the Central Public Works Department a functional cum territorial basis is adopted for constitution of circles. Each circle is divided into divisions which are again sub-divided into sub-divisions. The divisions are in charge of Assistant Executive Engineers/Assistant Engineers or Upper Subordinates who are called sub-divisional officers. The Executive Engineers and Sub-Divisional Officers are also called Divisional and District Engineers in some States.

(b) Relation with Treasury

24.3 Payments- Disbursing Officers of the Public Works Department obtain from the treasury the cash which they require for disbursement, in two ways either directly by bills drawn on the treasury or by means of cheques.

24.4 For the payment of pay and allowances of Government servants, bills are drawn on treasuries. In some states the funds to meet contingent charges are also obtained in the same manner. Such payments are brought to account in the treasury accounts in the same manner as similar payments for other civil departments and do not enter the Public Works accounts which the Divisional Officer submit to the Accountant General.

24.5 All other disbursements are made by Divisional Officers by cheques drawn on treasuries with which they are placed in account by the Accountant General. A Divisional Officer may  also empower his sub-Divisional Officers to draw cheques against his own account with a treasury. He keeps a pass book in which each cheque paid by the treasury is recorded by the Treasury Officer. The pass book is sent periodically to the treasury for completion. At the end of each month, the Treasury Officer furnishes a certificate to the Divisional Officer showing the total amount of cheques paid during the month against his account. The Divisional Officer checks the certificates and the Pass Book with his accounts, makes out a list of cheques drawn but not cashed at the treasury and then submits the certificates with the list of uncashed cheques to the Accountant General in support of his account. The paid cheques are also sent to the Accountant General twice a month, by the Treasury Officer, in support of the lump debits in the List of Payments.

Receipts

24.6 Receipts realized by the officers of the department are remitted as soon as possible in lump into the treasury. With each remittance a remittance book accompanied by the usual challan is sent to the treasury and the treasury acknowledgement is recorded in this book. At the end of each month, the Divisional Officer prepares a consolidated receipt for the whole of the remittances made to each treasury for entire division and sends it to the Treasury Officer concerned, for signature.  The Divisional Officer submits this receipt to the Accountant General along with his accounts.

 (c) Preparation of initial accounts

24.7 Divisional and Sub-Divisional Offices- The Public Works Accounts units is the division and it includes one or more sub-divisions. To each divisional office is attached an Accountant, who is a subordinate of the Accountant General but is posted to the divisional office to check and compile the divisional accounts under the supervision and responsibility of the divisional officer. In some States viz. Andhra Pradesh, Jammu and Kashmir, Karnataka and Kerala, the cadre of the Divisional Accountants(=Divisional Accountant Oficer) is, however, under the control of State Governments. Similarly the Divisional Accountants posted at C.P.W.D. Divisions are under the control of the Ministry of Urban Development.

 (i) SUB-DIVISINOAL ACCOUNTS

Funds

24.8 A sub-divisional officer is placed in funds in one of the following ways:

(a) by a fixed imprest or permanent advance which he can have recouped on depletion;

(b) by transfer of cash from the divisional chest;

(c) by a drawing account against the Divisional Officer’s account with a treasury.

24.9 He has a cash chest in which he places departmental revenue realized by him pending its remittance to the treasury, and also if he has drawing account with the treasury, all sums drawn on cheques which he is unable to disburse at once to the payees. If he is financed by a fixed imprest or an advance from the Divisional Officer’s chest, he keeps the balance of the imprest/advance in his cash chest. Payments are made only on prepared bills duly passed for payment in cash from the chest in the case of imprests or advances, or by cheques where there is a drawing account. Cheques are drawn by the Sub-Divisional Officer usually in favour of the actual payees (contractors, etc.) but sometimes in favour of himself to replenish his chest when he has small payments to make.

Account Records

24.10 A sub-divisional officer’s principal account records are (a) cash book; (b) muster roll; (c) Measurement book; (d) works abstract; (e) Records of Receipts and Issues of Stock, Tools and Plant and Road Metal.

(a) Cash Book- The cash book is the most important primary account record. All receipts and payments are posted into it daily. The sub-Divisional Officer regularly examines and initials it and is personally responsible for its correctness. It is balanced at the time of closing for the month and signed by the sub-Divisional Officer, who at the same time personally counts and certifies the cash balance.

(b) Muster roll- The muster roll, as its name denotes, is a nominal roll or list of labourers employed daily on works. 

There is generally a separate roll for each work. Payments on muster rolls are made and witnessed by the official of the highest standing available on the spot, who should certify to the payments individually or by groups, at the same time specifying both in words and in figures, at the foot of the muster roll, the total amount paid on each date.

In exceptional and urgent cases, labourers are employed casually for short periods and are paid on casual labour rolls by a Gazetted Officer or an upper subordinate.

(c) Measurement book- The measurement book is an initial account of the greatest importance in the Public Works Department. It is the basis of all accounts of quantities (and qualities) whether of work done by daily labour or by piece job or contract or of materials received. From the measurement book, or record of quantities (and qualities) made on the spot by personal measurement by Executive, Assistant Executive or Assistant Engineer or by Executive subordinate in charge of the works to whom measurement books have been supplied for the purpose, all bills for work and supplies are prepared.

(d) Works abstract- The works abstract records in detail the cash, stock and other charges on each work whether carried out by departmental agency or contract. In the case of major works (estimates) it shows the works outlay by sub-heads and each sub-heads shows the progress of work done, its value and rate of cost. For manufacture operations, a works abstract is required for each operation, and in addition an account is kept of the quantities and values of the products of manufacture.

(e) Stores accounts- Materials received are examined and counted or measured, as the case may be, when delivery is taken and a record of detailed count or measurement is kept in the Goods Received Sheet. A separate goods received sheet is prepared in respect of goods purchased from one supplier. To facilitate the preparation of the summary of stock receipts separate goods received sheets are prepared in respect of items falling under each sub-head of stock or the articles falling under each sub-head are grouped together in the same goods received sheet as far as possible. Issue of materials from stock is made on receipt of an indent dully signed by the divisional or the sub-divisional officer.

🔲. ...................... is a list of labourers employed daily on a work.

(A) Muster roll

(B) Measurement book

(C) Daily labour report

(D) MAS account

Monthly sub-divisional accounts

24.11 The monthly sub-divisional accounts are prepared and sent to the divisional office as follows. 

The cashbook and initial accounts of stores for a month are closed on the 25^th or an earlier date prescribed by the Accountant General. On closing the cash book the sub-divisional officer counts the cash in his chest and submits a cash balance report to the divisional office. Copies of the cashbook supported by vouchers, are sent to the divisional office twice a month or oftener as directed by the divisional officer, the copy relating to the last period of an account month being submitted with the cash balance report. Within 3 days of the closing of the account of the month the Sub-Divisional Officer also submits the works abstract and the month’s accounts of stock etc. He does not, however, consolidate the transactions into a compiled monthly account; this work is being done in the divisional office for the entire division.

If the sub-Divisional Officer is financed by an imprest, the Divisional officer embodies the Sub-Divisional Imprest Account in his own cash book; if however, the sub-divisional officer has a drawing account on the treasury, or if cash is transferred to him from the divisional cash chest his cash book is not embodied in the divisional cash book but the transactions are consolidated direct into the monthly accounts of the division.

Divisional Accounts

 24.12 As in the case of the sub-divisional officer, a divisional officer has a cash chest, a cash book, a measurement book, works abstracts and muster rolls for works which are directly under his charge and he uses them in the same way. The foregoing remarks under these heads apply equally to him. He has also stores, accounts, and in some cases, manufacture and workshop accounts. He receives revenue and in the same way as the sub-divisional officer makes payments for works, etc. on properly drawn bills duly passed for payment by cheques or if the bills are for small amounts in cash from his chest.

24.13 The main accounts which he keeps in addition to those kept in the sub-division are:(a)Contractor’s Ledger; (b) Register of works; (c) Transfer Entry Book; (d) Priced Stores Ledger.

(a) Contractor’s Ledger- The contractor’s ledger is a running account with each contractor, showing the amounts due by him for advances made to him, and due to him for work done by him, and is closed and balanced monthly.

(b) Register of works- Register of works contains a permanent and collective record of the expenditure incurred in the division during a year month by month on each major or minor work (estimate) and compares the progress of expenditure with the estimates. In the case of major works, or in other cases where specially required by the competent authority, the expenditure is recorded by sub-heads of works, by which is meant item of work such as brick work, doors and windows etc. which are specified in the sanctioned estimate. The object of such a record is to show the divisional officer the rates at which these different kinds of works are carried out and to enable him to obtain the necessary sanction.

 (c) Transfer entry- The transfer entry book contains a record of all transfer entries included in the accounts of the division as for example work done or payments made by other divisions, departments or Governments , write back of an erroneous debit or credit etc. The book is posted as soon as the transactions become known from advices of debit, transfer entry orders, etc.

(d) Priced stores ledger- Priced stores ledger is a chronological record of all the transactions of different items of stock. Separate ledgers are maintained for separate sub-heads of stock materials. It is a value-cum-numerical account of the stores held in the division, receipt of stores being posted from the goods received sheets and issues from the indent.

🆀. ...........is a running account with each contractor.

(A) Register of works

(B) Transfer entry register

(C) Muster Roll

(D) Contractor’s ledger

Revenue Accounts

24.14 The main account records of revenue comprise the registers of revenue realized, refunds or revenue and register of rents of buildings and lands, in which all cash receipts or refunds, as the case may be are entered under the different minor heads prescribed for the purpose.

Monthly divisional accounts

24.15 The cash and stock accounts of the divisional office for a month are closed on the last working day of the month. On closing the cash book, the Divisional Officer counts the cash in his chest and prepares a cash balance report. The cash balance reports for the entire division enable the divisional officer to certify the correctness of the cash balance of the division as given in his monthly account submitted to the Accountant General. The transfer entry book is also closed as soon as possible after the expiry of the month. The cash, stock and transfer entry transactions of the entire division are then posted in the relevant schedule dockets, registers and schedules which are abstracted in the monthly account submitted each month to the Accountant General/ Ministry of Urban Development between the 7^th and 10^th of the month following that to which it relates.

 24.16 This account is accompanied by schedules (supported by vouchers), the more important of which are:

(1) stock account prepared from the sub-divisional officer’s accounts of quantities of stock received and issued during the month after their valuation in the divisional office,

(2) schedules of works expenditure which are prepared from the sub-divisional works abstracts completed in the divisional office as regard stock and transfer entry transactions, 

(3) Schedule dockets showing expenditure on each work,

(4) Schedule of revenue realized,\

(5) Schedule of Miscellaneous Works Advances, and

(6) Schedule of Deposits etc. etc.

Basic rules applicable to works executed by the Public Works Department

 24.17 Each Government frames its own rules governing the execution of works by the Public Works Department. Under the rules framed by the Government of India there are three main stages in the project for work, namely, expenditure sanction, technical sanction and the allotment or reappropriation of funds.

 24.18 These stages are explained below briefly:

(i) expenditure Sanction: Designed so as to fulfil its purpose best. Thus the design has usually to be prepared in consultation with and to be accepted by the department requiring the work. The concurrence of the administrative department in the proposal for the execution of expenditure thereon is called sanction of the specified work with the expenditure sanction.

Expenditure sanction on works beyond certain limits requires previous sanction of the Finance Ministry, while in other cases the act of allotment or reappropriation of funds operates as sanction to expenditure^*.

(ii) Technical sanction- Except for petty works, petty repair works for which lump provision has been sanctioned, a properly detailed estimate is prepared for each work to be sanctioned by the competent authority. This sanction is known as the technical sanction to the estimate and amounts to no more than a guarantee that the proposals are structurally sound and that the estimates are accurately calculated and based on adequate data. Such sanction is accorded by the Public Works Department and should, except in urgent and in emergent cases, be obtained before the construction of the work is commenced. If in working out the detailed estimates or during the construction of the work, it is found necessary to make any important deviation from the design to which administrative sanction has been obtained, such sanction has also to be obtained to the deviation.

(iii) Allotment and re-appropriation- These represent the provision of a particular sum of money to meet expenditure on a specified object; such provision is operative only for the financial year for which it is made.

🆀 Who is responsible for according Technical Sanction for a work?

(A) A competent technical authority to indicate the proposals are structurally by proper and estimate prepared in accordance with the standards fixed

(B) Head of department for when the work is estimated

(C) Government

(D) None of these

Supplementary and revised estimates

24.19 Even with the greatest care and accuracy, it is not always possible to foresee everything that will be required or to frame an estimate which will not be exceeded. Therefore, it is prescribed in the rules that any development of a project considered necessary while a work is in progress, which is not fairly contingent on the proper execution of the work as first sanctioned, must be covered by a supplementary estimate accompanied by a full report of the circumstances which render it necessary and that a revised estimate must be submitted when the sanctioned estimate is likely to be exceeded by more than five per cent.

24.20 But the extra expenditure which has to be covered by a supplementary or revised estimate is often incurred before sanction to the supplementary or the revised estimate can be obtained. This nullifies the value of such estimates, and therefore, it is further prescribed in the rules that when any excess over a sanctioned estimate is foreseen and there is likely to be unavoidable delay in the preparation of a revised estimate, an immediate report of the circumstances should be made to the authority whose sanction will ultimately be required.

 24.21 When excesses occur at such an advanced period in the construction of a work as to render the submission of a revised estimate purposeless, the excesses, if beyond the power of the Divisional Officer to pass, are explained in the completion statement or detailed completion report mentioned in the following paragraph.

24.22 Finally, a consolidated completion statement is prepared monthly of completed works the actual expenditure on which is in excess of the sanctioned estimate by an amount which a Divisional Officer is empowered to pass. But in respect of completed works on which the outlay has been recorded by sub-heads, a detailed completion report for individual work is prepared, instead of a completion statement in the following cases

 (i) When if the work was sanctioned by higher authority, the total estimate has been exceeded by more than 5 percent, and

(ii) When if the work was sanctioned by the Divisional Officer, the total estimate has been exceeded by an amount greater than that which he is empowered to pass.

:

 24.23 The consolidated completion statement shows each work or group of works, the estimated amount, the outlay and the excess. In cases in which the completion statement is utilized instead of a revised estimate the excess is set forth in sufficient detail to satisfy the authority whose sanction is necessary. The detailed completion report gives a comparison and explanation of the differences between the quantity, rate and cost of the work executed and those entered in the estimate. The object of the completion statement or detailed completion is to enable the superior authorities to scrutinize the excess and to sanction it where it is reasonable.

^* Note: In the case of State Government Works, however, concurrence of the administrative departments to the execution of works and sanction of competent authority for expenditure on the work are arranged separately through “administrative approval” and “expenditure sanction” respectively.

Importance of accurate measurement

24.24 Works expenditure is incurred on the utilization of materials and labour. Material may be supplied from stores or bought for the work or provided by the contractor, work may be carried out by daily labour, by piece work (that is to say, work paid for at a fixed rate) or by contract. A contract should be in writing and should contain stipulations as to the quantity and quality of work to be done, the time within which it is to be completed, the terms upon which the payments will be made, etc. Most contract works are carried out by petty contractors who cannot wait for payment till completion of work, and are, therefore, paid periodically according to work done up to date. Thus, whether payment is to be made for work on the basis of a contract or of piece rate, prompt measurement is essential and of course, the accuracy of the recorded measurement of work done is the basis upon which rests the efficiency of the audit of works expenditure. The check by actual measurement is conducted entirely by the executive. It would be impossible for audit to take any part in this work unless it had a staff of measurers in every division in India to make the original measurements or a staff in each State to tour throughout it, checking measurements. The sole check over these initial measurements is exercised by the sub-divisional or divisional officer, or by the Superintending Engineer, who verifies them either by making check measurements or by inspection. The expert knowledge of an experienced engineer enables him in many cases to detect any very gross over measurements or overpayments on inspection and comparison with the recorded expenditure on the work.

But executive authorities do not always realize the extreme importance of accurate measurement. There is always liable to be a rush of expenditure in March, the last month of the financial year and cases have occurred in which payments have been made on measurement reports submitted by subordinates whose travelling allowance journals indicate that on the day on which the measurement was alleged to have been made, they were miles away from the site of the work. Such measurement reports have no value and if Audit detects such cases at inspection, prompt notice should be taken of them.

Contracts

24.25 The purchase of stores, the execution of work, etc. are often done by contract. For this purpose Government enters into contract or an agreement in writing with the person or body concerned. Such a document contains inter alia stipulations as to the quantity and price of stores to be supplied or work to be done and the time within which it is to be completed. As a general rule such contracts should be concluded only after competitive tenders have even invited in the most public manner possible. The general principles applicable to contracts are contained in General Financial Rules. Audit has power to examine contracts and to bring to the notice of the proper authority cases where competitive tenders have not been invited or where high tenders have been accepted or where other irregularities in procedure have come to light.

Audit of Works Expenditure

24.26 The audit of public works expenditure falls under three heads:

(a) preliminary internal check by the Divisional Accountant in the divisional office;

 (b) Audit in the Audit Office; and

 (c) Test audit at the periodical inspection of the divisional office.

Divisional Accountant and his functions

24.27 A trained Divisional Accountant is posted by the Accountant General to each divisional office to assist the Divisional Officer in the discharge of his responsibilities in respect of the accounts of the division. The functions of the Divisional Accountant are three fold-

(i) As Accountant, the compiler of the accounts of the division in accordance with the prescribed rules and from the data furnished to him;

(ii) As internal checker, charged with the responsibility of applying certain preliminary checks to the initial accounts, vouchers, etc.

(iii) Financial assistant- the general assistant and adviser to the Divisional Officer in all matters relating to the accounts and budget estimates, or to the operation of financial rules generally.

24.28 The Divisional Accountant is expected to see that the rules and orders in force are observed in respect of all the transactions of the division. If he considers that any transaction or order affecting receipts or expenditure is such as would be challenged by the Accountant General if the internal check entrusted to the Accountant were applied by the former, it is his duty to bring this fact to the notice of the Divisional officer with a statement of his reasons and to obtain the order of that officer. It will then be his duty to comply with the orders of the Divisional Officer, but if he has been overruled and is not satisfied with  the decision, he will at the same time make a brief note of the case in the Register of the Divisional Accountant’s objections and lay the register before the Divisional Officer so that the latter may have an opportunity either of accepting the Divisional Accountant’s advice on reconsideration and ordering action accordingly or of recording for the information of the Accountant General, his reasons for disregarding that advice. An objection recorded in this register is not considered as finally cleared until it has been reviewed by the Accountant General.

24.29 The Divisional Accountant brings to the Divisional Officer’s notice all instances in which subordinate officers exceed the financial limits placed on their power by the Divisional Officer or a higher authority. He may further be required by the Divisional Officer to undertake on his behalf such other scrutiny of the accounts of the receipts and disbursements of subordinate officer, falling within the Divisional Officer’s own powers of sanction as the latter may consider necessary. He is further expected to inspect the accounts records of sub-divisional officers so as to check a percentage of the initial accounts and to bring the defects to the notice of the Divisional Officer. The results of this inspection are placed on record for the inspection of the Accountant General and any serious financial irregularities are reported at once to him.

24.30 The Divisional Accountant is responsible for examining the accounts returns of the Sub-Divisional Officers to see-

(i) that they have been received in a complete state;

(ii) that all sums receivable are duly realized, and on realization credited to the proper head of account and also to the proper personal account (if any) of the contractor, employee or other individual;

(iii) that the charges are covered by sanctions and allotments and are supported by complete vouchers setting forth the claims and the acknowledgements of the payees legally entitled to receive the sums paid; 

 (iv) that all vouchers and accounts are arithmetically correct;

(v) that they are in all respect properly prepared in accordance with rule;

(vi) That all charges are classified correctly, those which are debitable to the personal account of a contractor, employee or other individual being recorded as such in a prescribed account; and

 (vii) that on the basis of rates sanctioned by competent authorities and of facts (as to quantities of work done, supplies made, etc., or services rendered) certified by authorized Government servants, the claims admitted for payment are valid and in order.

It is not necessary that the Divisional Accountant should check personally the arithmetical accuracy of all vouchers and accounts, but he is responsible that a cent per cent check is exercised efficiently under his supervision.

24.31 It is one of the functions of the Divisional Accountant to see that expenditure which is within the competence of the Divisional Officer to sanction or regularize is not incurred as a matter of course under the orders of the subordinate disbursing officer without his knowledge.

24.32 The Divisional Accountant conduct the detailed check of muster rolls and petty vouchers which are not submitted to the Audit Office, and of all accounts of stores.

24.33 The Divisional Accountant is responsible for the arrangements for checking the computed tenders, i.e., for seeing that satisfactory and efficient arrangements are made for checking and that the comparative statement incorporates the totals as checked of the individual tenders. He should also personally conduct a test check of the Compiled and checked tenders in order to satisfy himself that the checking work has been properly done.

 24.34 The Divisional Accountant checks the works expenditure with the estimates to ensure that the charges incurred are in pursuance of the objects for which the estimate was intended to provide. In the case of work the expenditure of which is recorded by sub-heads (that is, items of work such as brick work, etc.) the Divisional Accountants is responsible for checking the expenditure on each sub-head with the estimated quantity of work to be done, the sanctioned rate and the total sanctioned cost, so as to bring to notice all deviations from the sanctioned estimate.

Audit in the audit office

24.35 The audit of works expenditure in the audit office is conducted mainly with reference to-

(a) the sufficiency of the authority for incurring the expenditure;

(b) the accuracy of the classification of the charges against the works, persons, services and heads of accounts concerned;

 (c) the proof of payment to the correct individual;

(d) the observance of standards of financial propriety; and

(e) the execution of schemes and projects economically and the achievement of anticipated targets.

24.36 The basis upon which audit relies for exercising the first check is the technical sanction to detailed estimates. For this purpose sanctions are communicated to the Audit Office either individually or in a consolidated monthly statement. These are scrutinized as explained in Chapter 20. Unless, with the concurrence of the Comptroller and Auditor General the Government concerned has specially desired this, the Audit Office is not required to see that the amount of the technical sanction does not exceed without proper authority the amount of the administrative approval-cum expenditure sanction. It has, however, to be seen that expenditure sanction has been accorded for each work for which such a sanction is necessary under the rules, and that all charges which under the rules require the sanction of an authority superior to the Divisional Officer are duly sanctioned by such authority. The monthly expenditure on each work (the name of which appears in the works audit register) is posted in the register month by month from the monthly accounts of the division. Objections in respect of such works regarding cases for want of sanctioned estimates, excess over sanctioned estimates, want of allotment, Excess over allotment, want of administrative approval, Excess over administrative approval and inordinate delay in regularization of objectionable expenditure are brought to the special notice of the Superintending Engineer through monthly audit note.

24.37 The second check consists in seeing (i) that, if the charge is debitable to the personal account of a contractor, employee or other individual, or is recoverable from him under any rule or order, it is recorded as such in a prescribed account so as to facilitate watch of the recovery of the amount due; (ii) that the charge is classified under the proper heads of account; and (iii) that the expenditure is incurred in pursuance of the precise objects for which the detailed estimate for the work was intended to provide. The first check is not complete till the contractor’s ledger (containing the personal accounts of contractors, which are credited with the value of the work done and supplies made by them and debited with the amounts paid or the value of stores supplied to them) is test checked during local inspection of the division. The last item of the check cannot be exercised properly in the Audit Office as the detailed estimates which define the objects on which expenditure is to be incurred are not available there. Charges are therefore examined generally for verification that there is no apparent misclassification; but the detailed check with estimates is left to the Divisional Accountant.

24.38 The third check consists mainly in seeing that a properly receipted voucher is sent for every payment. The responsibility for making payments to the person entitled to receive payment rests with the paying officer.

24.39 As regards the fourth and fifth check, the standards of financial propriety to be applied and the lines on which efficiency audit has to be conducted have already been explained in Chapters 16 and 17.

24.40 Besides these five checks, each voucher for payment on running account is compared with the last bill and it is seen that the up to date and other figures which are dependent on the entries in that bill are correct. The arithmetical calculation of the bills are also checked.

Loan Inspections

24.41 The third of the heads mentioned in paragraph 24.44 concerns the procedure under which the audit conducted in audit office is supplemented by the local inspection of divisional office. This duty is explained in Chapter 18.

Audit of Works Receipts

24.42 Much of the Public Works receipts are realized by the civil authorities and adjusted through the accounts. In such cases, the ordinary principles regarding the audit of receipts are applicable (see chapter 19). Of the receipts realized direct by Public Works Officers, the most important are the rents of residential buildings and other services and it is the duty of Audit to see in respect of these (a) that the standard rents are correctly determined in accordance with the relevant rules, (b) that the rent recoverable from each tenant is correctly calculated, and (c) that the rents due are realized.

 24.43 In exercising the first of these checks the Audit Officer verifies the capital cost and sees that the allowance for maintenance and repairs is according to the scale fixed by Government and is reasonable. In regard to the second check it is seen that the rent assessed is either the standard rent or such lower rate as may be prescribed. If the recovery is appreciably below the standard rent, the Audit Officer has to satisfy himself that the scale of accommodation provided does not exceed that which is appropriate to the status of the occupant.

24.44 In some States the accounts of rents are not submitted to the Audit Office. In such cases the checks, contemplated in para 24.42 are left to be exercised by the Divisional Accountant and a test check is exercised at the time of the periodical inspection of the division.

ACCOUNTS OF LARGE CONSTRUCTION PROJECTS

Accounting principles

24.45 The accounting rules set forth in the Account Code are not intended to cover fully the requirements of large construction projects. The exact form of the accounts, whether direct or proforma, which are to be maintained for these projects (other than Railways, for which separate rules exist) must be governed by the following four main considerations:

(i) the form of the project estimate;

(ii) the requirements of the Engineer-in-charge to enable him to exercise adequate financial control during the construction period;

(iii) the ultimate form of the capital and revenue accounts to be maintained for the project after construction; and

(iv) the form of the report which the Engineer in charge will desire to write after the completion of the project, describing the manner in which the work has been undertaken and the cost of the main items of the work.

24.46 As regards item (i), it may be theoretically possible to prepare project estimates in such a form that accounts maintained on the lines of the estimate would not only serve the purpose of item (ii) but would also be the basis on which items (iii) and (iv) would rest. It is however customary to prepare project estimates in a form which groups together under the head general charges all such indirect charges as tools and plant, establishment (other than that charged to works), interest, and all other miscellaneous charges, instead of allocating them in advance proportionately to the several units of the project. When writing his final report however the Engineer-in-Charge will desire to show the real cost or the work under each of the more important units of that work. For that purpose in his report, the Engineer in Charge may work on the basis of the sub divisions of the works as they appear in the project estimate, or of the subsequent sub divisions as determined by the allocation to revenue producing units of the capital at charge of the work. In either case, such a report of real cost by units must necessitate a corresponding ultimate distribution of all the indirect charges mentioned above.

 24.47 It might be feasible to overcome the difficulty  of allocating in advance most of the general charges between the several units. But there are peculiar problems in the way of framing in advance an estimate, the competent items of which shall correspond with the sub-division of the completed work into revenue producing units of the allocation of charges connected with (a) Special Tools and Plant, and (b) Interest.

Special tools and plants

24.48 Where special tools and plant are used or any large labour saving machinery is employed, the question at once arises of the debit of a proportion of the capital cost of different units of the project. The capital cost of special tools and plant is ordinarily debited in the first instance to a separate head and the question of charging depreciation on such account raises difficult issues. It is in some cases held to be impossible to calculate the depreciation and to determine the relative utility to individual items of work, with sufficient accuracy, to justify and attempt to clear this separate head by debit to units of the work. On the other hand, the Engineer may desire that the cost of special tools and plant should be written off against the several works on which they are used, so that he may know the real cost of the works and also exercise proper control over expenditure. This cannot be done without the determination of suitable rates of depreciation on account of tools and plant and a reasonable estimate of their residual value on the completion of work. These have to be fixed by the executive in consultation with Audit.

24.49 In regard to the following matters the executive will consult Audit, though the final decision rests with the former:

 (a) what items of plant are to be regarded as ordinary and what as special.

(b) what item of plant are to be depreciated and distributed and what are to be charged finally to special tools and plant. In the latter case, the sale proceeds will of course be credited to the same head.

(c) the method of charging of depreciation whether on a time or on an output basis.

🆀The authority to the final decision to classify a plant as ordinary and special is:

(A) The mechanical engineer having jurisdiction

(B) The chief engineer

(C) The executive

(D) The Audit

Interest Charges

24.50 The interest charges on capital outlay are classified ordinarily under the general heads of account and adjusted periodically by debit to the accounts of the project. In exceptional cases, when the size of a project necessitates a delay of many years before it can begin to be productive, special sanction may be accorded for the adjustment of interest during the construction period by an increase of the loan capital at charge. In either case, the adjustment of interest as between the units of the project will follow the same lines as the adjustment of the capital at charge for the purpose of determining the allocation as between those units for the purposes of the capital and revenue accounts.

24.51 A consideration of these general principles will make it clear that the initial accounts of such a project must follow the form of the project estimate, and that audit must follow the same lines in order to ensure that financial control is being exercised through a comparison of expenditure with the relevant figures in the project estimate.

24.52 At the same time it is essential that, as soon as possible after construction is started, a decision should be reached regarding items (iii) and (iv) mentioned in paragraph 24.25 above, namely:

(a) the ultimate form of the capital and revenue accounts which will have to be opened when the work has been constructed and comes into operation; and

(b) the form of the report which the Engineer in charge will desire to produce on the termination of his work.

24.53 Accounting will have to be so ordered that the material is prepared in suitable form for both these purposes. So far as the latter is concerned, this is essentially work done on behalf of the Executive and is therefore subject to the orders passed by the Executive. For the former the Comptroller and Auditor General has a definite responsibility. For the fulfilment of that responsibility audit must in this case follow the form of the accounts, to enable the Comptroller and Auditor General, on the completion of the project and the closing of the accounts, to satisfy himself as to the correct allocation of the capital at charge between the separate working units.

(B) FOREST ACCOUNTS

(a) Constitution of the Forest Department

24.54 Organization- As in the Public Works department, the Forest administrative and accounts unit is the division, which includes one or more sub-divisions. The division is under the charge of a Divisional Officer, on whom rests the responsibility for the effective internal check and control of the accounts of the entire division, in respect of both revenue and expenditure.

 24.55 The Conservator, who is in charge of a circle comprising of a number of divisions, is responsible for exercising a strict control over the whole outlay for conservancy and works and for examining the charges on account of travelling allowance and contingencies.

(b) Relations with the Treasury

24.56 Cash collections and funds- The Forest Department is not required to maintain a pass book for treasury receipts and payments. The receipts are remitted into the treasury with a challan in duplicate, one copy is retained by the treasury while the other is returned as an acknowledgement. The treasury furnishes to the Divisional Forest Officer a consolidated receipt for the entire month’s remittances.

24.57 Funds are supplied to officers in the Forest Department, by means of cheques drawn on civil treasuries with which the drawing officers may be placed in account by the Accountant General. The debits in the List of Payments are, as usual, supported by the paid cheques.

(c) Preparation of initial accounts

24.58 Account records- Like the divisional officer in the Public Works Department, each (Divisional and Sub-Divisional) Forest Officer has a cash chest in which he keeps receipts not remitted to the treasury and money drawn from the treasury but not paid away. The cash is counted by the Forest Officer himself on the last day of the month and a report is sent to the Accountant General.

24.59 The main divisional account record is the Cash Book, in which are recorded the daily transactions as they take place as well as the monthly total of the sub-divisional cash books received towards the end of the month.

24.60 In addition to his Cash Book the Divisional Officer maintain a Register of Cheques Drawn, a Register of Works, an Account of Stores and a Contractor’s and Disburser’s Ledger which is a sort of running account with each departmental contractor and disburser.

 24.61 Besides a copy of the monthly Register of Cheques Drawn the Divisional officer renders to the Accountant General the following monthly accounts and such accounts of revenue due and outstanding and of timber and other transactions as the Accountant General may from time to time require: (i) Cash Account (ii) classified abstract of revenue and expenditure; (iii) schedule of remittances to the treasury; (iv) schedule of transactions with other Governments and Railways; and (v) Abstract of Contractor’s and Disburser’s ledger.

 24.62 The cash account is a general account of the receipts and disbursement of the whole of the division and is compiled from the divisional cash book. In the classified abstract of revenue and expenditure all items of revenue and expenditure for the month are classified and arranged in accordance with the prescribed accounts classification, the entries being made in such detail as may be required by the Accountant General. The schedule of Remittance is supported by the consolidated treasury receipts and shows each item of remittance separately.