PERSONAL LEDGER ACCOUNTS

Transcription

1 PERSONAL LEDGER ACCOUNTS DAY 1 SESSION I General: Personal Ledger Accounts (also known as Personal Deposit Accounts) broadly fall into two categories, viz., those operated within the consolidated fund of the State and those in the Public Account. The opening of a Personal Ledger Account under the consolidated fund of the State requires the approval of the State Government in consultation with the Accountant General. According to the guidelines issued by the Comptroller & Auditor General of India in his letter No /65-61, dt circulated vide 00A-3961, dt , P.L. Accounts under the consolidated fund can be opened in special circumstances when normal procedure of drawal from the Treasury by presentation of bills proves unworkable in respect of any special scheme under taken by the Government. Further, such scheme should have gross working expenses of an amount exceeding Rs. 5 lakhs in an year and should have considerable receipts. The Personal Ledger Accounts under the Public Account are opened after the sanction of the Government is issued in consultation with the Accountant General. Preamble: Personal Deposit Accounts have been in vogue since the inception of Government accounts or it can be said to be synonymous with accounting system. The origin of Personal Deposit Accounts can be traced in various accounting systems but for discussion purposes in this article we will restrict it to our accounting system, which has been laid down by the British but almost adopted in toto after independence. So, historically it can be said that our accounting system definitely provides for P D Accounts and the Office of the Comptroller & Auditor General of India especially dealt with the provisions of Personal Ledger Account. Truly, PLA is one of the types of PDA. The creation of this facility was aimed at giving more flexibility to Drawing & Disbursing Officers basically to ensure implementation of government policies in a time bound manner. It was actually intended to give support to the Head of Departments for speedier implementation of policies/projects. But of late it has been seen that the purpose of extending this facility is being vitiated so much so that it amounts to misuse. Though it may be said for the benefit

2 of DDO s that an intention of misusing this facility may be inadvertent, having said so this manner of funding requires a relook. The aim of this is therefore, to deal in totality and present the reader with all the options to make a judgement. Procedure and processes involved in operations of PLA are as below: Definition: The provision for Personal Deposit Accounts is made with the intention to facilitate the administration thereof to credit receipts into and to effect withdrawals directly from the account. This was coupled with pre condition that no withdrawal will result into minus balances therein. PLA essentially refers to those deposit accounts, which are operated by DDO as a banking account in a government treasury. Para 7.6 & 7.7 of Manual of Standing Orders, Accounts & Entitlement of Comptroller and Auditor General of India has defined PLA in the following manner. 7.6 Ordinarily the opening of a banking deposit account or of a Personal Ledger Account is sanctioned by Govt. after consultation with the Accountant General. It is generally recognized that the Govt. should not agree to the opening of such an account unless it is satisfied that the initial accounts of moneys in the Personal Ledger Accounts are properly maintained and are subjected to audit. 7.7 Except where, by law or rules having the force of law, Personal Deposit Accounts are created by transferring funds from consolidated fund for discharging liabilities of the Govt. arising out of special enactments, Personal Deposit Accounts, created by debit to consolidated Fund. This should be closed at the end of the financial year by minus debit of the balances to the relevant service heads in the consolidated Fund, the Personal deposit Account being opened next year again, if necessary, in the usual manner. Looking to the definition, the restraints put for opening of such Personal Deposit Accounts are quite clear and it also tends to discourage any deviation from the codal provisions. 1) What is Personal Ledger Account? Personal Ledger Account is an account, which is opened in the name of a personal/institution fund with prior permission of government and concurrence from Accountant General, Pr. PAO. There should be an Administrator to operate the Personal

3 Ledger Account. Such Personal Ledger Account can be opened in the name of a private personal/institution. However, prior permission from government is necessary. This prior permission cannot be given by government unless concurrence from AG/Pr.PAO/CCA is obtained. Types of PLAs i) There are different categories of the Personal Ledger Account intended to meet other requirements of the Govt s functions, viz: A. For administering moneys tendered by or on behalf of warrants and attached estates under Govt. Management, B. Civil & criminal court Deposits in respect of Chief Judicial Authority concerned, C. In regulatory activities of Govt. the receipts are realized and credited to fund or account to be utilized towards expenditure. D. As per law or rules having the force of law for discharge of liabilities of Govt, out of the special enactments. No lump sum amount should be kept under this as per para 192 of Receipt and Payment rules E. For officers commanding units and others concerned in the administration of Public fund or regimental fund. (ii) The Personal Ledger Accounts being allowed to be opened broadly under D category as mentioned above, on one pretext or the other are classified under two further sub categories. a. PLAs of non Govt. bodies, Public undertakings & Local bodies etc which are directly transferred/created to them by debiting Major heads 3604 Compensation and assignments to Local bodies etc and others likewise. b. Expenses which are classified to other service heads. The balances under PLAs falling under latter category must be surrendered to the Govt. account or allowed to be lapsed to it in the end of the financial year. But the idea of drawing money out of Govt. account to avoid the lapsing of it is absolutely contrary to the principle of Legislative financial control in letter and spirit. (iii) Every PLA so authorized to be opened will form part of Govt. account and will be placed in the Public Account portion thereof. General belief that PLA s have something to do with operation of Government money by any official in his personal capacity is not true at all. It s the government money and to be operated in accordance with Government

4 rules and with due care. Interpretation is that PLAs be allowed to be opened/operated only with the annual approval of Accountant General What are the types of Personal Ledger Accounts? Personal Ledger Accounts are of two types:- (i) Normal PLA/cs where Treasury Officer/PAO in banking account with Administrator. (ii) Where the consolidated fund is debited and amount is transferred to PLA/c by means of drawal of a bill or by means of transfer entry. (iii) PLA/cs opened by operation of Account passed by parliament/legislature. These balances in general deposit account lapse to government after three full accounting years if balance is more than Rs 25/- and after one complete accounting year if it is less than Rs 25/-(vide rule 189 of R&P rules 1983 as Rule 506 of MTR 1968) However, this rule is not applicable to the deposits concerned by (i) above viz. the balances in PLA/s do not lapse. But if the PLA/c is not operated for more than three years, it is required to be closed. For this purpose, the permission from A.G is not required. The Treasury Officer/PAO may ask the PLA holder to surrender the cheque book and close the Account. If the PLA holder do not turn upto Treasury the Treasury Officer can give stop payment order to Bank with respect the cheques available in the cheque book and credit the balance to government Accounts misc. receipt by sending a correction memo to A.G. office. In respect of the PLA concerned. by (ii) above, the drawing and disbursing officers are allowed to draw bills for nil-amount as a special case/types of cases by special order of government. The major head in consolidated funds stands debited and contra credit is official to PLA/c. Such accounts are required to be closed at Nil balance by debit to PLA an debit to concern major head. This can be either done by putting condition while giving concurrence for opening PLA or by means of transfer entry by asking Treasury Officer/PLA holder to send the proposal in the suitable form before the account of the year are finally closed. However, if the PLA/c is opened and a lump sum amount is deposited to discharge the liability of government, such amount can be allowed to be carried forward as specified in the account.

5 SESSION II Accounting Procedure:- P.L. Accounts under the Consolidated Fund: A separate Personal Ledger Account is opened under the service head for each scheme. Amount advanced by the Government for operation of the scheme. Amount advanced by the Government for operation of the scheme is drawn and credited to P.L. account as debit to the sub-head Advances by per contra credit to the sub-head Suspense under the relevant minor head of account. All drawals by the Administrator from the P.L. account are debited to Suspense debit under the account and all receipts credited to suspense credit. Money is drawn by the administrator by presentation of cheques on the treasury in which P.L. account is operated. As the service heads under which the P.L. account is operated is closed to Government account, balances carried forward proforma only. P.L. Accounts under the Public Account:- P.L. Account under the Public Account is opened by credit to the accounts concerned, by the parties/officials nominated for operation of the same, moneys directly to the Treasuries. They draw money by presenting cheques on the Treasury Officer. Returns due to Accountant General s office:- From the Treasury:- 1) Plus and Minus Memoranda with the accounts received from the Treasuries as required under Art. 120 of Account code, Volume-II. 2) An extract of the Register of receipts and payments maintained in Form TA-45 in the Treasury/Sub Treasury should also be received monthly supported by the original paid cheques. 3) All the Treasury officers are required to obtain from each Administrator an annual certificate of balances and forward the same to the Accountant General explaining the reasons in detail for difference if any between the balances as per their books and that of the Administrators.

6 From the Administrators Except those which are operated for private bodies, every Administrator should send a detailed account monthly to the A.G. office showing the receipts and withdrawals supported by vouchers by 10 th of the following month as per instructions contained in Government of Orissa, Finance Department Memo dt , circulated in 00A-5048, dt The documents to accompany the monthly accounts are enumerated below. Different state governments may have different documents and monetary limits may also change. (Different State governments may have different documents and monetary limits may also change.) a) Statements showing details of sale proceeds of stores and stock and other receipts separately indicating the challan number and date (cash memo number and date also in respect of cash collection) from whom received, brief particulars and amount (total amounts to tally with the figures shown against 2 (a) and 2 (b) above of the receipt side). b) Statement showing detail of disbursements indicating the cheque number and date, bill No. and date, to whom paid; brief particulars and amount paid duly supported with all sub-vouchers above Rs. 100/ and a certificate signed by the administrator to the effect that sub-vouchers for Rs100/- and below have been retained by him (total amount to tally with the figure shown against item (1) of the Expenditure side). c) Statement of credit adjustment by Accountant General, giving details of A.G. s advice No. and date, particulars and amount against each (Total to tally with the amount drawn against item 3 of the receipt side of the account). d) Statement of debit adjustments by A.G., giving details of A. G. s Advice No. and date, particulars and amount adjusted against each (Total of statement to tally with the amount shown against item 2 of the expenditure side of the account). e) Treasury reconciliation statement closing balance as shown against item 3 of the Expenditure side to be reconciled with the closing balance shown in the plus and minus memo of the Treasury officer (Differences to be detailed under cheques drawn not encashed, cash credited not accounted for by Treasury etc. 2) Annual certificate as required under S.R. 461 of O.T.C, Volume I (For March accounts only).

7 PLA viz - a - viz budget i) It is evident that the amounts of money transferred to deposit accounts under PLA system go out of the purview of the consolidated fund and to obviate any misuse, provision for lapsing the unspent balance was made compulsory. ii) Once the budget has been allocated to some service unspent balances thereof can be transferred to a Personal Deposit Account/PLAs for ensuring its uninterrupted progress. But the idea of allocation of money with a view to transferring the same to a Personal Deposit Account/PLAs without even conceiving a project does not conform to the intention and spirit of the rules. The repetition of such practice will result in accumulation under deposit accounts depriving the consolidated fund and creating scarcity of fund for even the regular and routine functions of the Govt. This leads to misuse of this facility. It is indeed an extra budgetary reform but for speedier implementation but not a parking facility of funds to the discretion of DDO. 1) How is accounting done? These PLAs form a part of Public Account of Government Accounts. As such no sanction from legislature/parliament is necessary for making payment form PLA viz. Budget provisions need not be made for making the payments since government acts as a banker as far as the PLA transactions are concerned. The receipts are accommodated under the Major Head 8443 Civil Deposits 106-PD-PLA on credit side. The payment appear under the same head but on debit side. And in the statement no 16 of the Finance Account these are shown as follows Opening Receipts Payments Closing Balance Balance 8443-CD Cr Cr Dr Cr 106-PD PLA X Y Z (X+Y-Z) Every Personal Ledger Account must show credit balance. If it shows debit balance it is treated as adverse balance and it is necessary to investigate the reasons for overdrawal. The Treasury officer sends to the AG office the plus minus memo as prescribed in Act 1109 Account code Vol.II/Rule 98 of Accounting Rules for trgs From this

8 the 1 st memo Broad sheet of PLA is posting and the Broad sheet figure is worked out which is further compared to the Ledger figure which is derive from Account document is Detail book. Generally the figures must be in agreement. If some difference occurs steps should be taken to reconcile. General reason is misclassification. At the end of the year, closing balance of PLA is worked out. 2) How is reconciliation conducted? The Administrator is allowed to deposit authorised amounts in the Personal Ledger Account during the course of the month. At the end of the month say by 10 th of next month, it is necessary to reconcile the receipts which are appearing in the Treasury/PAO Account with those appearing in the records of the Administrator. If this reconciliation is scientifically conducted, there is no room for disagreement of the balances. Generally the PLA holders are keeping the PLA in simple cash book form or in the forms prescribed in the Departmental Registration. At the end of the year, it is necessary for the Treasury officer to approach the AG (A&E) and reconcile the balances appearing in their books with that of A Gs office. This reconciliation is necessary as the Treasury rules provide that the balances of the government are the balances which are appearing in the book of AG. As such, these balances must be in agreement with those derived in Treasury Accounts. This will be an essential condition for transparency in Accounts. The PLA holder will send the balance certificate to AG only when the Treasury Reconciliation is completed. This is an important part in maintaining the Personal Ledger Accounts. The plus minus memo is the replica of the Register in form to be prescribed by each State Government. This is an important record and can be said to be a bridge between AG office and Treasury office. The reconciliation ensures the correctness in balances in both Initial Accounts and Final Accounts.

9 Session III PLA audit, Scope 1) What amounts can be deposited in Personal Ledger Account? All receipts cannot be deposited in Personal Ledger Account. The revenue realized should be credited to Revenue Receipt Account. Such receipts cannot be deposited in PLA While giving permission, government has to lay down. The specific conditions about this while giving concurrence. AG/Pr.PAO/CCA can also lay down certain conditions about type of receipts which can be credited to PLA. Generally, there should not be any objection to credit non government money to PLA e.g. Laboratory Deposits for students hostel deposits from students staying in hostel. If some tax is imposed by Law persons by legislature/parliament, the entire tax proceeding should go to Revenue Receipts in revenue session of account. No refunds/pay &allowance/pension/promissory notes can be credited to Personal Ledger Account. 2) How the withdrawals can be made? Generally, when the Personal Ledger Account is opened, the Treasury Officer/PAO gives the Personal Ledger Account holder a PLA code No & Cheque Book. The Administrator is required to issue a cheque from the cheque Book provided to him by Treasury Officer. It is a limit that the withdrawal should not exceed the receipts. For this purpose, the specimen signature of the authority empowered to sign cheque should be sent to Treasury Officer/PAO. The withdrawals should be for bonafied use as specified in general order. Viz. the expenditure which pertains to Revenue/Capital of section of government account cannot be incurred from PLA. (Pay salaries, Travel expenses, office expenses etc). Scrutiny in Central Audit:- The procedure laid down below may also be followed in addition to the instructions laid down in 0.0.B.1538, dated Proper watch should be kept over submission of the various returns due from the Treasury Officer and the monthly accounts from the Administrators. The audit sections should maintain the following registers for the purpose:- 1) Register to watch the receipt of Plus and Minus Memoranda from the Treasuries. 2) Register to watch the receipt of monthly accounts from the Administrators.

10 3) Register to watch the Annual Certificate of balances from the Treasuries. Some pages may be set apart for each P.L. Account in the Registers mentioned above. These registers should be submitted on 15 th every month to the Branch officer. The registers should be submitted for review quarterly to the Group officer. It has been noticed that proper watch on the receipt of monthly accounts is not kept and the delay in receipt or non- receipt is not properly pursued with the Administrator. Non-submission of monthly accounts has become chronic. Further if with the accounts receipts vouchers and other supporting documents are not received, they are not properly registered in the objection book to ensure proper watch is kept. It should be borne in mind that non-submission of supporting documents might hide a fraud or defalcation and if the receipt of the documents is not ensured such irregularities might go undetected. The following instructions should be followed strictly in Central Audit:- (i) If vouchers and supporting documents are not received in the A.G. s office with the monthly P.L. accounts from the Administrator, the receipt of the same should be watched through wanting voucher register under a separate heading. (ii) The vouchers received should be subjected to audit in the TAD sections like the contingent vouchers and a separate half-margin should be issued to communicate the audit observations to the Administrators. (iii) Discrepancies between the balances as shown in the monthly accounts sent by the Administrator and the plus and minus memoranda sent by the Treasury Officer should be got reconciled by a reference to the officers concerned. (iv) Serious irregularities noticed in the returns submitted by these offices should be specially brought to the notice of the controlling officers and the government. (v) In their letter No.TRA-41/ (28), dt , addressed to all departments (copy attached) the Finance Department has stressed the necessity of timely submission of monthly compiled accounts. The Treasury Officers have been directed to stop payments on P.L. Accounts on receipt of information from the A.G. that monthly accounts are not received. Action to enforce these orders should be taken at once (vi) As per 0.0A.3961, dated , each TAD section is required to review all the P.L. accounts within the service heads once every six months based on, the observations made during the previous six months both in local as well as Central audit. The results of such review are to be communicated to TM.2 section on 25 th January and July for submission to the Accountant General. But such a review is

11 rarely conducted. These dates should be noted in the calendar of returns and submitted regularly. Local Audit:- The audit sections should give details of the balances of the P.L. accounts operated by the head of the office to O.A.D Hd. Qrs on receipt of intimation of local audit. Any special points requiring closer scrutiny during local audit should also be sent to the party. During local audit a thorough examination of all the expenditure and receipts under the scheme, in respect of the months selected for detailed check and the stores accounts, if any maintained by the Administrators, Proforma accounts prepared by the Administrators on the scheme during the previous financial year should be conducted and results incorporated in the inspection report. A copy of the Proforma Accounts should be sent along with the Inspection Report. OAD Hd. Qrs should give copies of all the relevant paras to the Audit section concerned for further action. In respect of inoperative accounts, it should be seen during local audit as to how the store and stock balance if any have been disposed off Sections should pursue with the State Government and the Administrators concerned for closure of the inoperative. P.L. accounts. The Branch Officers should review all such accounts and put up. D.O. references to the Group Officer for taking up with appropriate authorities and pursuing them up to their closure before the Appropriation Accounts for are furnished. A time bound programme for their clearance will be drawn up by the Branch Officer of the section concerned for approval of Sr. D.A.G and action taken against it will be reported in the monthly report. Types of Audit observation: Since Personal Ledger Account operations are done by authorized authorities without having much of the scrutiny at the Treasury Officers/Pay & Accounts officer level, stringent audit scrutiny is necessary to ensure proper control. They also require adequate checks just like regular transactions. As Personal Ledger Account is operated by executives who are otherwise busy in the execution, timely accounting poses difficulties. Therefore, there is likely delay in accounting of the transactions. This will result in lot of unreconciled areas in the PLA

12 operations, which should be subjected to proper scrutiny to avoid likely hood of misappropriation/fraud. Normal Audit Observations: Following are some illustrative cases of audit observations normally found in PLA: Non-closing of Personal Ledger Accounts. Funds remaining unutilized in PLAs without transfer to consolidated fund. Balances lying in bank accounts for more time. Non reconciliation of balances. Temporary withdrawal and crediting of the same fund into PLA after some time. Non transfer of funds to urban local bodies. Non utilization of central funds for the purpose for which they are granted. Opening of Personal Ledger Accounts to avoid lapse of budget grants. Opening of Personal Ledger Accounts without specific concurrence of AG. Opening of Personal Ledger Accounts without the approval of competent authority. Opening of Personal Ledger Accounts under wrong Account heads. Opening of unauthorized accounts.

13 SESSION IV Following case studies are extracted from published Audit Reports of CAG. Audit Report Civil (Government of Madhya Pradesh) Transfer of funds to Personal Deposit Account: Five hundred and thirty one Personal Deposit Accounts (PDAs) of Government and semi Government institutions as on 31 March 2003 were found opened in the treasuries. Following irregularities were noticed in maintenance of PDAs: a) Non-closing of PDAs As per provisions of Rule 543 of Madhya Pradesh Treasury code 531 PDAs with balance of Rs crore were required to be closed at the end of financial year by minus debit to the relevant service head. Of these 128 PDAs with balances of Rs crore remained un-operative during , and none of the above accounts were found closed. b) Funds remaining unutilized in PDAs P.D. Accounts are generally opened by debit to the consolidated fund and the amount debited is shown as expenditure in the respective heads. Financial rules provide that no money shall be drawn from Treasury unless it is required for immediate disbursement. It was, however, noticed that 115 new P.D. Accounts with balances of Rs crore as on 31 March 2003 were opened during This was obviously done with a view to avoid lapse of grants. The expenditure to this extent was inflated and did not depict the factual position of accounts of the State. Non-utilisation of funds by keeping in PDAs not only delayed the implementation of schemes for which funds were released but also defeated the purpose for which budget were provided in financial year. c) A test check of 59 PDAs (Rs crore) conducted (August/September 2003) further revealed the following irregularities. (i) According to instructions issued by Finance Department (January 1998) all amounts pertaining to land acquisition and development schemes excluding funds received from Government of India deposited in Commercial bank accounts were required to be withdrawn and deposited in PDA. Records of Land Acquisition offices shahdol and Joint Director Panchayat and Social Welfare Rewa revealed that an amount Rs 0.85 core (Shahdol: Rs crore and Rewa: Rs crore) was lying in bank accounts in contravention of aforesaid instructions issued by the Finance Department.

14 The concerned officers (August 2003) confirmed the position. Report on further action taken by them was awaited in audit (November 2003). (ii) In another case LAO sehore had credited receipt of Rs crore meant for land acquisition inpost office Sehore instead in PDA to achieve the targets under small saving scheme. (iii) It was noticed that departments did not reconcile the balances in PDAs with treasuries. Resultantly, in 19 PDAs the balance shown by department was less by Rs crore while in other 9 cases it was more by Rs crore as shown I Appendix L. The matter was referred to Government in November in November 2003; reply had not been received (December 2003). Audit Report Government of Madhya Pradesh Transfer of funds to Personal Deposit Account: There were 320 Personal Deposit Accounts (PDAs) having balance of Rs crore in respect of Government and semi Government Institutions as on 31 March A test check of 22 PDAs (Rs crore) conducted (October 2001)/ supplemented by the information furnished by Accountant General (A&E) M.P. Gwalior revelaed the following irregularities. (a) Non closing of PDAs All the 320 PDAs having balance of Rs crore were required to be closed at the end of the financial year by minus debit to the relevant service head as per provisions of Rule 543 of Madhya Pradesh Treasury Code. The closing in these accounts indicates that rules regarding closing of PDAs at the end of the financial year were not observed. Out of these 70 PDAs having balance of Rs crore remained un-operative during (b) Funds remaining unutilized in PDAs: (i) Government of India released Rs crore as Central Assistance for the construction of 1300 houses under housing scheme for Rs. 10,000 per beneficiary. As per instructions of Government of India, houses were to be constructed within the period of two years (including extended period of six months). Test check of records of Labour Commissioner Mahdya Pradesh, Indore (October 2001) revealed that rs crore was deposited (March 1998) in PDA after advancing Rs crore to the Madhya Pradesh

15 Housing Board. Out of the 1300 houses only 58 houses could be constructed (October 2001). The amount of Rs crore was still lying in the PDA in contravention of rules. On being pointed out Department stated that funds could not be utilized as Hamals had not shown any interest in the housing scheme. (ii) Commissioner, Panchayat and Social Welfare Department credited Rs crore in the PDA (March 2000) provided on the recommendation of 10 th Finance Commission for construction works. During Rs crore was released to District Panchayats, form whom utilization certificates for Rs crore were still awaited (October 2001). An amount of Rs crore was transferred to newly created Chattisgarh State (November 2000). The balance amount of Rs, crore was still lying in the PDA (October 2001). On being pointed out, the commissioner stated (October 2001) that balance amount could not be released to District Panchayats as the utilization certificates of earlier amounts were awaited. (iii) Director Urban Administration Bhopal withdrew Rs crore on account of Octroi Compensation Grant for the months of February and March 2000 which was to be paid to Urban Local Bodies, but deposited the same in PDA (March 2000). Out of this an amount of Rs 9.27 crore was transferred to the newly created Chattisgarh State (November 2000). The balance amount of Rs crore remained untilised for the year On being pointed out Director stated (October 2001) that balance amount would be released to Urban Local Bodies during (iv) An amount of Rs 3.75 crore pertaining to ICMR Project (Central Share) for gas affected persons was credited in the PDA of the Director, Centre for Rehabilitation Studies (CRS) Bhopal in August Another amount of Rs 1.25 crore (State share) was sanctioned by Government of Madhya Pradesh for the said purpose which was also credited in the PDA (Feburary 1996). The PDA (Rs.5 crore) remained uncooperative for last five years. No action was taken by the Department/Treasury for closure of PDA as provided under the rules. On being pointed out Director. CRS state (October 2001) that in lieu of interest on the amount kept in PDA Government released grants to the centre from which research work was being conducted. The action of the Government was not in order as PDA being non-interest bearing account, no interest was payable on such account.

16 (v) According to instructions issued by Finance Department (January 1998) all amounts lying in the bank accounts were to be withdrawn and kept in PDA. (vi)scrutiny of records of Land Acquisition and Rehabilitation Officers. Sardar Sarowar Project (LARO). Khargone and Badwani revealed that in contravention of above instructions of Finance Department LARO Khargone withdrew Rs crore from PDA (Rs crore) and deposited it in the bank account. On this being pointed out LARO stated (October 2001) that amount was drawn for distribution among of the project who did not present themselves for the collection of relief payment. The reply of Department was not tenable as money should not have been drawn in anticipation of demand. c) PDAs opened to avoid lapse of budget grants/surrender of funds Financial rules provide that no money shall be drawn from treasury unless it is required for immediate disbursement. The closing balance under PDA as on 31 March 2001 indicate that money was drawn to avoid the lapse of budget grants. During an amount of Rs crore was transferred to 17 PDAs which includes Rs crore (Assistant Commissioner. Tribal Welfare Khargone Rs crore and Mandla Rs crore) pertaining to centrally sponsored/assisted schemes to avoid the lapse of funds. Since the amount shown under PDA had already been shown as expenditure in the respective heads, the expenditure to this extent was inflated and did not depict the factual position of accounts of the State. In addition, non-utilisation of funds not only delayed the implementation of schemes for which funds were released and also defeated the purpose of providing budget in the respective financial years. d) Opening of PDAs without specific concurrence of Accountant General Rule 623 of the Central Treasury Rules provide that PDA should not be opened without the specific authority of Accountant General. Similar instructions were also issued by Finance Department in February 1962, but these instructions were superseded by Government notification dated 22 November 1994 according to which all administrative departments were authorised to open PDA without specific sanction of Accountant General. With a view to ensure better financial discipline, the matter regarding review of said notification was taken up (October 1997) by Principal Accountant General (A&E). The reply of the State Government was however awaited.

17 During , 49 PDAs having balance of Rs crore (March 2001) were opened without specific authority of Principal Accountant General (A&E) Madhya Pradesh. In addition 4 PDAs having balance of Rs crore (October 2000) were opened in the treasuries during the period April 2000 to October 2000 which now come under Chattisgarh State. PLA operations - Uttar Pradesh Experience: Under Chapter 16 of Financial Hand book of UP Government Volume V Part I there is a provision for government servants, in their official capacity to obtain a special sanction of government accorded in consultation with Accountant General for opening of a banking account with treasury. These types of banking accounts have been treated as PLAs in the Government of UP. It should be used within the same financial year and if not, it should be back with consolidated fund of UP by a minus debit. Further, in UP there is a handbook of instructions called niyamavali on deposits. This booklet has been issued in consultation with the AG, U. P. Further, on scrutiny of PLAs of different departments by O/o AG it was revealed that: I. DDOs are operating banking account in treasuries without the approval of competent authority. Funds were not used in a financial year and not deposited back resulting in unnecessary strain to consolidated fund. II. Arrangement has been made under PLA Manual or niyamavali 1998 (come in force wef ) to open PLA A/c as per provisions of FHB Vol. V Part I but original provision of 340-B regarding closing of the PLA A/c and lapsing the balances to the consolidated fund is not there. This has not been incorporated in the said Manual. UP Government has been making promises for inserting the same. Despite lapse of 5 years the same has not been done though Government had refused once. III. Under the G.O. of UP Govt DRDA/Vidhayak Nidhi has been classified under the Head 8448-Deposit of local funds 120-other funds. But on examination it was seen that it should be opened under Minor Head , civil deposits personal deposits. State Government is yet to respond. IV. U.P. Govt. intimated their opinion that 8229-Development and Welfare fund and Famine Relief Fund are Deposit heads but as per List of Major and Minor heads these are classified in (J) Reserve funds and sub classification thereof (b) Non-bearing interest category. It was pointed out by the AG, U. P that the head 8229 was meant

18 otherwise. The request of the state government for operation of PLAs for agriculture development fund under the head 8229 is not tenable and the Govt was not willing to change AG U. P. said that Reserves and Reserve funds might be constituted under the provision of M.S.O. (A&E)-Vol.1 with the approval of State Legislature. The response of State Government was awaited. V. In spite of established provisions under F H B Vol.V Part I and PLA niyamavali consent of A.G. for operating (Opening) of PLA a/cs (Banking a/c) are not being taken in most of the cases by State Treasuries. The following unauthorized PLAs were operated by UP Government. Heads Details of PLA a/cs during As per list of Director of Statistics As per AG office Unauthorized A/cs U.P vi) Further, it revealed that more than Rs.135 crores were out standing at the end of the year making it clear that provision of lapsing these funds to the consolidated fund at the end of the financial year was not being adhered to by most of the treasuries. vii) Yet another discrepancy revealed in some cases was that sanctions for utilization for the next year were being issued by the Govt without adopting the said procedure. viii) Generally after drawing money as per financial sanction, it is considered to be utilized, while these money (amounts) is neither spent nor any financial or physical target achieved. Amounts are being kept for spending next year by debiting expenditure heads and crediting to the PLA/Deposit heads. By doing so, heavy amounts are kept out of budget cycle. ix) The huge accumulations in the PLAs may lead a parallel economy being run within the Govt. as stated earlier. With such a situation there will be heavy strain on budget as the funds kept in PLAs will not be fruitfully utilized for productive purposes. x) The people being deprived of their rights as their genuine basic needs being ignored due to delays in execution of works due to idling of scarce fund/finance in PLA.

19 xi) The statutory provision of opening of such PLAs with the proper authorization of the Accountant General was also overlooked and quite a sizeable number of such deposit accounts are performing with out any authorization by the States A.G. As many as 255 out of total of 1822 PLAs opened under Major Head 8448 of U.P were not authorized by A.G by the end of March The total accumulation under PLAs during amounted to Rs 2165 Crores which is alarming. xii)for the period ending March 2004 AG further reviewed the situation and found it alarming. The picture thus emerged would be 5-6 times more grace if other major heads are taken besides Infact the plan schemes are being ignored, Money lying in the PLA/deposits for long outside the budgetary cycle defeats the purpose of planning being the efficient tool of legislative control. xiii) Over the years it has been observed that more and more money is being channelised through PLA/deposits route. The facility of carrying the balance over to next year gives liberty to the executing agencies to delay the implementation of schemes which lead to cost over-run, inefficiency and chances of misutilisation, although this (PLA deposits) envisaged on the contrary. Due to irregular transfer to this method of funding the unproductive use or depiction there of is glaring as : the appropriation accounts gave a misleading picture of the actual expenditure during the year. Civil works were delayed through non-payment of bills of contractors. The intention of achieving the physical aims quickly through PLA route by the Govt, was not achieved. The amounts kept under the PLAs were deemed to have been spent without the approval of the Accountant General. Position of Law/Rules/Codes: The following guidelines principles about PLA are required to be considered:- i) Article 284of Constitution of India ii) Rules 180 to 196 of Receipt & Payment Rules, 2007 and similar such rules in State Treasury Rules. iii) Rule 50 to Rule 63 of Accounting Rules for Treasuries iv) Other special orders issued by Government for specific purposes. Case I:

20 The Education Department has been provided with the facility of PLA. The government sanctions grants for payment of salaries to non government secondary school teaching and non-teaching staff. As soon as the Administrative Department communicate grants to concerned DDO he drawn the bill for nil amount. The expenditure is deposited to concerned major head in appropriate books grant and credit is shown in the bill itself to PLA/c some department officers are drawing bill for full gross amount and credit the amount by means of challan. These accounts are not closed for nil-balance. The previous balance is allowed to be carried forward to the next year. There is no proper check at Treasury level. This practice shows that the grant made by legislature in the previous year are utilized in the next year. Secondly, the transfer credit system is not applicable for such credits unless AG s concurrence is obtained. The Administrator put fourth the plan that alongwith all other sums which would go to PLA are included in this PLA and therefore they are unable to segregate such sums. What can be solution on this problem? Case-II: While regrestering the documents a charge of Rs 20/- per page was allowed to be made to Registration Department as the registered documents were to be given immediately to the concerned person. Previously, this was taking 4-5 years to receive the original documents. This work was given to a company on contract basis with no cost to government. While giving concurrence it was stipulated that the excess amount should be credited to government on quarterly basis. This amount was not at all credited to government. After five years an amount of Rs 19 crores was given to private company as grant-in-aid for building the bridges. Since this is the breach of the conditions stipulated in concurrence UOR, can this permission be withdrawn by AG? Case-III: A proposal was received from government to credit Rs 100/ to PLA in Transport commissioner s name and Rs 100/- to Motor vehicle Taxes when law passed by parliament provides a fee Rs 200/- to be charged for smart card to be issued to vehicle driver. What should be the action in A.G Office?

21 Case-IV Tendu leaves are extracted from Forest area and then are sold to the contractors on auction basis. Contractor credits the requisite amount in Govt. Treasury. It was proposed by Forest Deptt that the money so received may be deposited in P L Account to be opened in the name of Divisional Forest Officer and utilize these sums for welfare of Labour engaged in extracting the Tendu leaves. Should the proposal made by Govt. be agreed to by A G? Case-V While leaving the hospital, many patients put some donation in Donation Box at their discretion. The P L Account was allowed to be opened where in only such amounts were allowed to be credited & this money was to be utilized for carrying out minor repairs in the hospital with proper sanction. Public Health Department issued an order allowing the hospitals to credit 50% of the O P D charges, X Ray fees and Blood examination charges to above P L Account. Further, it was ordered that all water supply bills, electricity bills, telephone bills should be paid from the P L Account. What are the effects of this order? What action is required to be taken in A G office?

22 Solution Case I The Personal Ledger Accounts which are credited by debit to consolidated Fund, are required to be closed for nil balance by affording minus debit to the Major Head/grant in the consolidated Fund. The Treasury Rules/CGA (R&P) 1983 provide this type of adjustment. If the detailed accounts are kept by the administrator, he should be asked to work out the unspent balance and asked to issue a cheque for the unspent balance to be credited to the Receipt head of Account of the Department and to be accounted as reduction in expenditure/grant which was initially debited. Alternatively a proposal may be sent PAO/AG to make necessary adjustment in accounts by means of Transfer Entry. In order to keep watch on this, rules/subsidiary instructions should provide that the first cheque in the next year will be returned through Treasury/PAO who will not pass that cheque unless the above requirements are fulfilled on the evidence produced by PLA holder.

23 Solution Case II If Accountant General has got power to withdraw the concurrence once given to Administrative department of government, the concurrence may be withdrawn at any time if there is breach of the conditions imposed. Secondly, the Treasury Officers can be asked not to pass the first cheque in the quarter for payment unless the excess receipts are credited to government account. This can be reported through the Audit Report and discussed in PAC meeting. The expenditure which is in the nature of Revenue expenditure is incurred without the knowledge of Legislature/Parliament and remains unbudgeted.

24 Solution Case III This is the Tax Revenue of Government. As per Art 284 of the Constitution, the entire amount of Rs 200/-is required to be credited to government account as Revenue Receipts since the Act is passed by parliament. As such, the proposal to credit Rs 100/- to Personal Ledger Account cannot be accepted. This proposal violates the provisions of Constitution. Any payment to be made to the party can be made after making Budget provision in the Consolidated Fund of the State/Central. No Personal Ledger Account should be allowed to be opened for such transactions. Accountant General may not give concurrence to open the Personal Ledger Account.

25 Solution Case-IV The amount received from auction of Tendu leaves form part of Revenue Receipt of Govt. As such, it should be credited as Revenue Receipt under the head 0406 Forest & wild life vide Rule 50 of A R T, For welfare of the labourers the Budget provision may be made & expenditure incurred, as it is Revenue Expenditure of Govt. This can not be made from the P L Account for the very reason that this is not brought to the notice of legislature. P L Account may be disagreed.

26 Solution Case-V P L Account was allowed to be opened for money in Donation Boxes which is not Govt. money Revenue Receipts are to be credited to Revenue Receipt head in full under the head 0210 Medical & Public Health. Crediting these receipts to PLA violates the provisions of Treasury Rules & it is in contravention of Rule 50 of A R T. Telephone bills, Electricity bills, water charges bills are revenue expenditure and this expenditure can be incurred by making budget provisions only. Incurring it from P L Account violates the provisions of Constitution in the sense that the expenditure which pertains to Consolidated Fund is incurred without the sanction and knowledge of legislature. Further more, due to implementation of such orders, Revenue receipts are shown to the extent of 50% in accounts and the entire expenditure on such items will be excluded from Revenue expenditure.