CHAPTER 8
SEPARATION
OF AUDIT AND ACCOUNTS
8.1 We have already seen in Paragraph 1.10 why
it is desirable in the interests of honest and sound finance that business
transactions should be subjected to scrutiny of an agency independent to that
charged with the duty of keeping the accounts of those transactions,
Theoretically, the same principle should apply equally to Government
transactions.
8.2 In the pre-independence era, the question of
separation of accounts and audit was raised time and again but could not be
given serious consideration. Apart from the practical difficulties, there were
problems of cost and manpower. Thus, except for the fact that Defence Accounts
remained always separate from Defence Audit, the combined set up of accounts
and audit continued until separation was introduced in the Railways on an
experimental basis from December 1, 1925 and was adopted as permanent measure
in 1929.
Position after independence
8.3 After independence the process of separation
proceeded on a gradual basis. From April 1951, Postal Life Insurance work was
transferred from the Deputy Accountant General (Posts and Telegraphs) to the
Director, Postal Life Insurance, Calcutta, an officer under the administrative
control of the Director General, P&T. A Pay and Accounts Office was set up
in Pondicherry with effect from the November 1, 1954 on the defacto
transfer of French Establishments in India to the Government of India. The
responsibility for making payments and maintaining accounts of the Food,
Rehabilitation and Supply Departments was transferred to the respective
Ministries with effect from the April 1, 1955. Similar transfer regarding
payments and accounting of the Rajya Sabha and Lok Sabha Secretariats was made
with effect from the October 1, 1955, and of the Printing and Stationery
Department with effect from the December 1, 1955. Thereafter the accounts
relating to Goa, Daman, and Diu were departmentalised. The accounts work
relating to Savings Bank transactions was transferred to the P&T Department
in 1962. Subsequently in 1968 the accounting functions in respect of the
Telecommunications Branch were transferred.
Departmentalisation of accounts in 1976
8.4 It was in 1976 that a major exercise of
departmentalisation of accounts covering all the Ministries and Departments of
the Union Government and all the Union Territories except Andaman and Nicobar
was undertaken and completed in a phased manner with the main objective of
integrating accounts with the Administrative Ministries and Departments. Under
this scheme, accounts and Finance will form an integral part of overall
management. Administrative Ministries have been entrusted with the
responsibility of arranging payments and timely compilation and rendering of
accounts.
8.5 The salient features of the scheme are
briefly indicated below:
(a) The Secretary to the Department/Ministry
shall act as the chief accounting authority and discharge this responsibility
through and with the assistance of the Integrated Financial Adviser of the
Ministry/ Department.
(b) The Integrated Financial Adviser shall be
responsible for:
(1) preparation of budget of the
Department/Ministry, distribution of budget allocations to the various wings,
departments/formations;
(2) arranging payments directly to the bodies,
corporations and authorities of grant-in-aid, loans, etc., as may be sanctioned
by the Department;
(3) arranging payments through Pay and Accounts
Offices under him in various regions of the country, all pay and allowances,
office contingencies, miscellaneous payments, all admissible loans and advances
to government servants including provident funds claims in accordance with
prescribe financial and treasury procedures;
(4) compilation and consolidation of the
accounts of the Department/ Ministry in
accordance with the instructions issued by Central Government and/or the
Comptroller and Auditor General and rendering the appropriation accounts;
(5) introduction of a system of management
accounting suited to the functions and requirements of the Department/Ministry;
(6) installation of a sound system of internal
inspection within the department to ensure both accuracy in accounts and
efficiency in operation as a part of the management.
(c) Payment and accounting functions of the
Ministry/Department will be discharged through departmental Pay and Accounts
Offices functioning at the headquarters of the Department/Ministry and regional
Pay and Accounts Offices functioning in the various regions of the country. The
formation of regional Pay and Accounts Offices will be determined with
reference to the number and spread of field organizations in the various
regions of the country.
(d) The payments as well as receipt transactions
relating to the Ministry/ Department and its attached and subordinate offices
will be transacted at the branches of the Reserve Bank of India and State Bank
of India or its subsidiaries or at specified branches of the public sector bank
accredited to the department without intervention of the treasury.
(e) The Regional Pay and Accounts Offices will
compile the accounts of the region and render them to the central accounts
office at the headquarters, which will be responsible for compiling the
accounts of transactions directly paid for by him, or received by him and
consolidating the accounts of the Department as a whole on the basis of the
compiled accounts received from the regional Pay and Accounts Offices and his
own office.