CHAPTER 32

FINANCE AND APPROPRIATON ACCOUNTS

32.1 Appropriation Acts of the Parliament or the Legislature provide the authority for spending money on the various purposes indicating in the Government budgets as passed. Over a period of time public accountability has “become a comparison of the accounts submitted at the end of the (Budget) cycle, with budget laws made at the beginning , a check of performance against legislature authorization a supervision of the managing power which executed the laws on behalf of the legislature which made them”. (Normanton).

Exercise Appropriation Acts of the Parliament or the Legislature provide the authority for :

(A) Expenditure incurred

(B) Spending money on the various purposes indicated in the Government budgets as passed.

(D) Expenditure sanction

Correct Answer:-Option:-(B)

Appropriation Accounts

32.2 Appropriation Accounts are accounts of the expenditure, voted and changed, of the Government for each financial year compared with the amounts of the voted grants and charged appropriation for different purposes as specified in the schedules appended to the Appropriation Acts passed by the Parliament or Legislature, to exhibit the excess or savings, as the case may be, over the final grant or appropriation. These accounts are complementary to the accounts of the annual receipts and disbursements of Government otherwise known as Finance Accounts.

🆀The schedule of Appropriation Act contains details of:

(A) Estimate of net expenditure

(B) Estimate of charged estimate

(D) The amount of the voted grants and charged appropriation for different purposes

🆀Accounts of the expenditure, voted and charged, as specified in the schedules appended to the Appropriation Acts are :

(A) Combined Finance and Revenue Accounts

(B) Public Accounts

(D) Appropriation Accounts

Correct Answer:-Option:-(D)

🆀..........................gives a comparison of expenditure during a financial year to the final Grant/Appropriation.

(A) Finance Accounts

(B) Annual Expenditure Statement

(D) Public Accounts

Correct Answer:-Option:-(C)

32.3 From 1961-62 Appropriation Accounts are compiled by group-heads as to eliminate unimportant matter and to enhance their usefulness. The Appropriation Accounts as at present prepared include:

(i) a consolidated statement titled “Summary of Appropriation Accounts” showing the total amount of funds (original and supplementary) provided by the Parliament/Legislature under each voted grant and charged appropriation, the actual expenditure incurred against each and the saving or excess; and

(ii) Appropriation accounts of each grant/appropriation indicating original grant/appropriation, additional funds provided during the year by supplementary grant/appropriation as a whole and the amount surrendered during the year.

32.4 This followed by “Notes and Comments” which will bring to the notice of the Parliament/Legislature (giving relevant particulars of the group heads) excesses over grants/appropriations requiring regularization, expenditure booked against the grant/appropriation but not really debitable to it, expenditure incurred on a “New Service” without specific authority of the Parliament/Legislature, unjustified or excessive provision of funds leading to large savings and lapses and also cases of defective control over expenditure e.g. excessive, irregular or unjustified re appropriations or surrenders within the grant/appropriation.

32.5 In the summary of Appropriation Accounts provision is made for:

(i) indicating the expenditure met by advances from the contingency Fund which were not reimbursed to the fund during the year by authorization of the Legislature;

(ii) reconciliation of the total expenditure according to Appropriation Accounts with the total expenditure as shown in the Finance Accounts after taking into account recoveries of expenditure; and

(iii) drawing attention to cases of excesses over grants/ appropriations requiring regularization.

32.6 The general rule is that a grant is voted or an appropriation is authorized for the gross expenditure required for each service. The expenditure shown against each grant or appropriation in the Appropriation Accounts thus exclude recoveries of expenditure relating to respective grants or appropriations. The Finance Accounts, on the other hand, show the net expenditure after taking into account the recoveries. A reconciliation statement showing:

(i) total expenditure according to Appropriation Accounts;

(ii) total of recoveries; and

(iii) net total expenditure as shown in the Finance Accounts is therefore included below the summary of Appropriation Accounts. A detailed statement showing recoveries relating to each grant/appropriation is also included as an Appendix to the Appropriation Accounts.

32.7 Appropriation Accounts of each State Government and Union Territory with Legislature are prepared by the Accountant General concerned and submitted to the Comptroller and Auditor General for approval and transmission to the Governor of the State/Administrator of the Union Territory for being laid before the respective Legislature. In respect of the Union Government, Appropriation Accounts are prepared separately for Civil, Railways, Defence, Posts and Telecommunications by the Controller General of Accounts, Railway Board, Controller General of Defence Accounts, Postal Services Board, and Telecommunication Board, respectively and forwarded for vetting to the Principal Audit Officers as indicated below:


Civil	Director of Audit Central Revenues
Railways	Additional Deputy Comptroller and Auditor General (Railways)
Defence	Director of Audit, Defence Services
Posts Telecommunication	Director of Audit, Posts and Telegraphs

After the accounts are vetted they are submitted to the Comptroller and Auditor General for approval and transmission to the President for being laid on the table of Parliament.

🆀The Appropriation Accounts of each State Government are prepared by the Accountant General, which is transferred to the State Government with approval of:

(A) The Public Accounts Committee

(B) The Comptroller and Auditor General

(D) The Estimates Committee

Correct Answer:-Option:-(B)

Technical Accounts

32.8 The accounts of Government are based in the main, on the Single Entry System. In regard to the maintenance of a set of Technical Accounts called the Journal and Ledger the Double Entry system is applied.

🆀 The accounts of Government are mainly on the single entry system but in regard to the maintenance of a set of technical accounts called the................ the double entry system is applied

(A) Journal and Ledger

(B) Capital account

(D) Commercial accounts

Correct Answer:-Option:-(A)

32.9 The main purpose of the journal and ledger is to bring out by a scientific method the balances of accounts in regard to which Government acts as a banker or remitter or borrower or lender. Though such balances are also worked out in the regular accounts, their accuracy can be guaranteed only by a periodical verification with the balances brought out in the double entry accounts.

32.10 As the finances of the State Government are separate from those of the Union Government and as the balances relating to each Government have to be worked out separately, State Accountants General maintain separate journals and ledgers for transactions of State Governments. Similar arrangement exists in the separated accounting organization in Central (Civil), Railways, Defence, Posts and Telecommunications.

Journal

32.11 The journal first sets out all the opening balances of the year, then all the transactions of the year and finally all the closing balances of the year. As the opening entries of a year in the journal are the exact replica of the closing entries of the previous year, the former are posted only by group heads, full details under each being available in the closing entries in the previous years’ journal.

32.12 The transactions of each month are posted in the journal by the following entries:


1. Sundry accounts to Revenue Receipts Sundry Accounts	Dr. (for revenue and receipt of month)
2. Service expenditure Sundry Accounts to Sundry Accounts	Dr. (for the disbursement of the month)

32.13 The total in the amount columns of the journal are carried forward at the end of the month. They are noted in pencil only, until the opening entries for the year are posted after the closure of the accounts for the previous year. At the end of the year, the balance is struck and the details of the balances as worked out in the ledger are posted in the portion of the journal in which are recorded in closing entries.

Ledger

32.14 The accounts which are opened in the ledger are classified as follows:

1.. Opening and closing head viz. Govt. Account balance.

2. Revenue Receipts (Being the total of the transactions under Revenue).

3. Service expenditure (Expenditure and Capital heads with the Revenue Account).

4. Capital expenditure outside the Revenue Account.

5. Debt, Deposit and Remittance heads which are closed to Government.

6. Debt, Deposit and Remittance heads which are closed to balance.

7. Personal Accounts of Collectors or Treasury Officers who are in account with the Accountant General, including Local Remittance in transit and also the following special heads, namely, Departmental Adjusting Accounts, Departmental Accounts, Settlement Account Abstract and Transfer under which the entries in both sides must always be the same.

32.15 The object of the ledger is to bring out the balances under the Debt, Deposit and Remittance heads other than those which are closed to Government. The posting of Revenue, Expenditure and Capital heads is requiring only for the purpose of squaring the ledger. The revenue receipts service expenditure and capital expenditure outside the revenue account are therefore posted by totals only, while such of the Debt, Deposit and Remittance heads as are closed to Government are posted by major heads. The Debt, Deposit and Remittance heads which are closed to balance are posted in detail by ledger heads. Each prescribed minor head under Debt, Deposit and Remittance heads which close to balance and each Collector’s Account is a separate ledger head.

32.16 Under the system of book keeping followed in the Indian Government Accounts all ledger heads are closed either to Government or to Balance. All heads whose balances are not carried forward from year to year are closed to Government. The balance under that head therefore represent the cumulative results of revenue, capital and other transactions in respect of which no separate progressive balanced accounts are kept.

32.17 The heads Revenue Receipts, Service Expenditure and Capital Expenditure outside the Revenue Account are closed to Government.

32.18 The Debt, Deposit and Remittance heads and Personal Accounts are closed to Balance except that the heads under Section “7819- Inter- State Settlement” and the heads “Reserve Bank Deposits”, “Appropriation for Reduction or avoidance of Debt- Other Appropriations”, “Remittances adjusted on the Central Books”, Accounts between Civil and Civil, Accounts between Civil and other Departments, and Accounts between England and India are closed to Government.

32.19 The ledger is opened by transfer from balance accounts to the various Debt, Deposit and Remittance heads and Personal Accounts the balance with which they closed in the preceding year’s ledger. It is then posted month by month from the Abstract of Major Head Totals for transactions under Revenue, Service and Capital heads and from the Consolidated Abstract for transactions under Debt, Deposit and Remittance heads. The accuracy of the postings is tested after the closing of the accounts of the year by the preparation of a Trial Balance Sheet.

Verification of Balances

32.20 The accounts of the year are not complete until the balances in the ledger under the Debt and Deposit heads and the outstandings under the Remittance heads have been reviewed and duly verified. This review and verification of balances is conducted periodically. Cases of unreconciled discrepancies between the ledger balances and those shown in the separate register or other records- Broad sheets generally posted from an independent source maintained in the accounts offices/departmental offices for the purpose, are indicated in the Finance Accounts of the Government concerned where the difference is heavy and the discrepancy is outstanding for a long time. Similarly, cases where the verification and acceptance of balances by the department involving large amounts have been delayed are also brought out in the Finance Accounts.

32.21 The balances of Government are given in the Annual Finance Accounts. These balances however do not in any sense claim to represent a complete statement of the assets and liabilities of Government. Government have valuable assets in the shape of land, buildings, workshops, factories, stock and stores etc., which are not included in these balances whereas a commercial concern would invariably include them in its statement of assets. The great bulk of the assets of Government are of such a nature that it is impossible to place upon them a money value of sufficient accuracy to justify their inclusion in a document of the nature of a balance sheet.

🆀Why is it not possible to value all assets of the Govt and include their value in the Annual Financial Accounts?

A:-it is a time consuming process

B:-may not be advantageous

C:-the great bulk of assets of Govt are such a nature that it is impossible to place upon them a money value of sufficient accuracy to justify their inclusion in a document of the nature of a balance sheet

D:-None of these

Correct Answer:- Option-C

Finance Accounts

32.22 As soon as the accounts of a year are closed, the Finance Accounts of each Government of State or Union Territory with Legislature for the year are prepared by the Accountant General concerned and submitted to the Comptroller and Auditor General for approval and transmission to the Governor of the State/ Administrator of the Union Territory to be laid before the respective Legislature. The Finance Accounts of Union Government which comprise transactions of Civil as well as Railways, Defence, Posts and Telecommunications are prepared by Controller General of Accounts and submitted to the Comptroller and Auditor General for certification and transmission to the President for being laid on the table on the Parliament.

🆀After the accounts of the year are closed, the Finance Accounts of each State for the year are prepared by the Accountant General concerned and submitted to C & AG for approval and transmission to :

(A) Finance Department

(B) Governor of the State to be laid before the respective

Legislature

(D) State Cabinet

Correct Answer:-Option:-(B)

🆀Finance Accounts of the Union Government are prepared by :

(A) Comptroller and Auditor General

(B) Controller General of Accounts

(D) Principal Pay and Accounts Officer

Correct Answer:-Option:-(B)

32.23 The Finance Accounts 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 the Public Debt and the liability and assets of the Government concerned as worked out from the balances recorded in the accounts.

The Finance Accounts are generally prepared in two parts:


Part I	Summarized Statements
Part II	Detailed Accounts and other Statements

🆀 Finance Accounts of State Government in respect of each financial year presents:

(A) The results of the audit investigation.

(B) The observations made by the C& AG during the audit of expenditure of the year

(C) The account of the receipts and outgoings of the Government for the year together with the financial results disclosed by the Revenue and Capital accounts,

(D) Accounts of expenditure from the Consolidated Fund.

Correct Answer:-Option:-(C)

🆀The finance accounts of the Govt. are generally prepare how many part/ parts

A:-one

B:-several

C:-three

D:-two parts - summarised statement and departmental accounts and other statements

Correct Answer:- Option-D

32.24 The statements in Part I are intended to give in a summarized form information in regard for:

(i) transactions of the year relating to the Consolidated Fund, Contingency Fund and the Public Accounts.

(ii) (a) Capital outlay outside the Revenue Account and progressive Capital expenditure to end of the year.

(b) Revenue expenditure temporarily capitalized.

(iii) Financial results of irrigation and electricity schemes.

(iv) Debt position of Government including expenditure incurred on the service of debt.

(v) Loans and advances by Government,

(vi) Guarantees given by Government.

(vii) Cash balances and investments of cash balances.

(viii) Summary of balances under Consolidated Fund, Contingency Fund and Public Account.

🆀From which set of Government accounts can one gather details of loans and advances made by the Government :

(A) Audit Reports

(B) Finance Accounts, Part - 1

(D) Appropriation Accounts

Correct Answer:-Option:-(B)

32.25 The detailed statements included in Part II contain:

(1) accounts of revenue and expenditure during the year by minor heads of accounts.

(2) particulars of capital expenditure outside the Revenue accounts during and to the end of the year.

(3) particulars of investments of the Government in the shares of statutory corporations, Government companies, Joint Stock Companies, Co-operative banks and Societies etc.

(4) information regarding capital and other expenditure (outside the Revenue Accounts) to end of the year and the principal sources from which the funds were provided for the expenditure.

(5) accounts showing receipts, disbursements and balances under heads of accounts relating to Debt (including loans and advances, deposits, remittances and Contingency Fund) and

(6) detailed statement of debt and other interest bearing obligations of Government.

(7) detailed statement of loans and advances made by Government.

(8) particulars of earmarked balances relating to Reserve Fund etc.

(9) statistical information in regard to revenue and expenditure under different heads expressed as a percentage of total revenue/total expenditure and distribution between Charged and Voted expenditure.

🆀From which set of Government accounts, one can gather details of the investments of the Government in the shares of statutory corporations, Government companies, joint stock companies, Co-operative banks and Societies etc.:

(A) Finance Accounts Part - II

(B) Audit Reports

(D) Proforma accounts

Correct Answer:-Option:-(A)

Combined Financial and Revenue Accounts of the
Central and State Governments in India

32.26 The Combined Finance and Revenue Accounts presents the accounts of all the Governments in India on a common and comparable basis and are prepared by the Comptroller and Auditor General mainly on the basis of the figures continued in the respective Finance Accounts of the Governments concerned. These accounts are in two parts:

(i) General Accounts and

(ii) Subsidiary Accounts, General Accounts give:

(a) a summary of Receipts and Disbursements of all Governments by sectional heads of account; and

(b) accounts of Receipts and Disbursements by Major Heads of Accounts of all Governments in the Revenue Account, Capital Account and all other sections. The subsidiary accounts give details, generally by minor heads of all the figures shown in the General Accounts relating to each type of Governmental activity. Each subsidiary account contains separate statements for

(i) Receipts;

(ii) Expenditure met from Revenue;

(iii) Capital outlay showing also the scheme-wise progressive outlay; and

(iv) Loan Transaction. Notes giving a brief description of the nature of transactions relating to each Account and in some cases, the accounting procedure thereof are incorporated in the subsidiary accounts wherever necessary.

🆀The Combined Finance and Revenue Accounts which are prepared by the Comptroller and Auditor General are in two parts. Which are these two parts ?

(A) Revenue Accounts and Capital Accounts

(B) Revenue Accounts and General Accounts

(D) General Accounts and Subsidiary Accounts

Correct Answer:-Option:- (D)

🆀The Combined Finance and Revenue Accounts of the Union and the State Governments are prepared by the :

(A) Finance Department

(B) Vice-President of India

(D) Chartered Accountant

Correct Answer:-Option:-(C)

🆀From which reports get a glance of accounts of Receipts and Disbursements by the Major Head of Accounts of all Governments in the Revenue Account, Capital Account and all other Sections.

(A) Audit Report of various States

(B) Appropriation Accounts of various States

(D) Finance Accounts of various States

Correct Answer:-Option:-(C)

32.27 The combined Finance and Revenue Accounts are prepared mainly from the following accounts:

Name of Account		From whom received
i	Finance Accounts of the State	Accountant General of the State concerned
ii	Finance Accounts of Central Government	Controller General of Accounts
iii	Accounts of Postal Department	Director General of Posts
iv	Accounts of Telecommunications Department	Director General ofTelecommunications
v	Accounts of Railways	Ministry of Transport (Railway Board)
vi	Accounts of the Defence Services	Controller General of Defence Accounts
vii	Subsidiary returns	Accounting Authorities referred to above.

Who is responsible for the preparation of the finance accounts of the State Government?

A:-Finance Department

B:-Director, Kerala State Audit

C:-Accountant General

D:-Director of treasures

Correct Answer:- Option-C

Who is responsible for compiling the Accounts of Kerala State?

A:-Comptroller and Auditor General of India

B:-Controller General of Accounts

C:-Director of Treasuries

D:-None of these

Correct Answer:- Option-A

Who prepares the Combined Finance and Revenue Accounts?

A:-Ministry of Finance

B:-The Comptroller and Auditor General

C:-Department of Finance of the respective State

D:-Accountant General of the State

Correct Answer:- Option-B

From which reports of the C & AG do you get a glance of accounts of Receipts and disbursements by Major heads of accounts of all Govts in the revenue account, capital account and all ot sections (union and states)

A:-Audit reports of various states

B:-Appropriation accounts of various states

C:-Finance accounts of various states

D:-Combined Finance and revenue accounts of the Central and State Govts in India

Correct Answer:- Option-D

Pages

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CHAPTER 32

FINANCE AND APPROPRIATON ACCOUNTS

Appropriation Accounts

Technical Accounts

Journal

Ledger

Verification of Balances

Finance Accounts

Combined Financial and Revenue Accounts of the Central and State Governments in India

Combined Financial and Revenue Accounts of the
Central and State Governments in India