Appropriation Accounts

Session Overview
Under the provisions of Article 149 of the Constitution of India read with Section 11 of the Comptroller and
Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971, the Comptroller and Auditor
General is required to prepare, for the Central Government, for each State Government and for the
Government of each of the Union Territories with separate Legislative Assemblies, Accounts, that is
accounts of the expenditure (both voted and charged) of the Government for each financial year. These
accounts include in the case of accounts compiled by the Comptroller and Auditor General of India,
Appropriation Accounts
Appropriation Accounts indicate the appropriations sanctioned for each grant by concerned legislature
(Parliament in the case of Union Government and State Legislature in the case of State Governments) and
actual expenditure booked against that appropriation along with reasons for any excess and savings, if any.
Appropriations are sanctioned by the legislature for gross amounts (i.e. excluding deductions and recoveries)
and consequently gross expenditure against each grant is indicated in the Appropriation Accounts. Finance
Accounts, on the other hand, show net expenditure under different heads after taking into account
deductions and recoveries. There is, thus, variation between the figures in the Finance Accounts and in the
Appropriation Accounts.
During this session we will discuss:
1. Objective and concepts underlying Appropriation Accounts;
2. Form and Content of Appropriation Accounts;
3. Reconciliation of figures appearing in the Finance Accounts with those appearing in the
Appropriation Accounts.
Learning objectives
By the end of the session, the learner will be able to define the objective and concept of Appropriation
Accounts of the Government. The learner will also be able to state scope, form and arrangement of material
in Appropriation Accounts and reconcile the expenditure indicated in the Appropriation Accounts with the
expenditure indicated in the Finance Accounts.
Objective and concept
Constitution of India has well defined provisions relating to financial matters of the Union Government and
of State Governments.
Article 266 (1) provides that all revenues received by the Government, all loans raised by that Government
by the issue of treasury bills, loans or ways and means advances and all moneys received by that
Government in repayment of loans shall form one consolidated fund to be entitled the ‘Consolidated Fund of
India or of the State concerned’. Article 266 (3) provides that ‘no moneys out of the Consolidated Fund of
India or the Consolidated Fund of a States hall be appropriated except in accordance with law and for the
purpose and in the manner provided in this Constitution’.
The procedure for appropriation of moneys out of the Consolidated Fund of India for meeting out
expenditure of the Government of India is laid down in Articles 112, 113, 114, 115 and 116 of the
Constitution. Similarly, procedure for appropriation of moneys out of the Consolidated Fund of a State for
meeting the expenditure of that State is prescribed in Articles 202, 203, 204, 205 and 206 of the Constitution
of India.
In this session we will discuss the constitutional provisions on appropriations out of Consolidated Fund of
India only.
Under Article 112 (1), the President is required to lay before Parliament each year an ‘Annual Financial
Statement’ containing the estimated receipts and expenditure of the Government of India for that year.
Under Article 112 (2) ibid, the ‘Annual Financial Statement’ shall show the sums required to meet
expenditure described by the Constitution as charged on the Consolidated Fund of India and other
expenditure and distinguish expenditure on revenue account from other expenditure.
Under Article 113(2) so much of the estimates of expenditure, included in the ‘Annual Financial Statement’
to meet expenditure other than charged expenditure shall be submitted in the form of demand for grants to
the House of People for approval.
Under Article 114(1) after the demands for grants have been approved, a bill shall be introduced to provide
for appropriation out of the Consolidated Fund of India moneys required to meet the charged expenditure
and grants approved in the Demand for Grants.
Article 114(3) forbids that no money shall be drawn from the Consolidated Fund of India except after
appropriations made by law (read with the approval of Parliament) in accordance with the provisions of
Article 114.
Article 115 and 116 of the Constitution deal with the procedure for obtaining supplementary, additional or
excess grants and for vote on account, votes of credit and exceptional grants.
From these Constitutional provisions it is clear that the Government can draw money from the Consolidated
Fund of India only after appropriations have been approved by Parliament as per procedure prescribed in the
Constitution. Drawal of any money out of Consolidated Fund of India without the approval of Parliament is,
thus, a violation of the Constitution.
Parliament needs an assurance or a report that its mandate exercised through the Appropriation Act has been
followed and that there has been no infringement of the Parliamentary control over drawals from the
Consolidated Fund of India.
Appropriation Accounts is a mechanism through which appropriations approved by Parliament and
expenditure incurred by the Government out of the Consolidated Fund of India is submitted to the
Parliament indicating therein any expenditure in excess of appropriation, expenditure on schemes without
parliamentary approval, major savings in appropriations indicating unnecessary appropriations submitted to
Parliament, etc.
Where the Comptroller and Auditor General of India maintain the accounts, he is also responsible for
preparation and submission of the Appropriation Accounts (as per Section 11 of the CAG’s (DPC) Act,
1971.
The object of preparing Appropriation Accounts in a distinct compilation is to report:
(a) that the moneys shown in the accounts as having been disbursed were legally available for, and
applicable to, the service or purpose to which they have been applied or charged;
(b) that the expenditure conforms to the authority which governs it; and
(c) that every appropriation has been made in accordance with the provisions made in this behalf under
rules framed by competent authority.
A grant/appropriation is voted/ authorized for the gross expenditure required for each service. The
expenditure shown against each grant/appropriation in the Appropriation Account thus excludes recoveries
of expenditure relating to respective grants/appropriations.
The Finance Accounts which present the general accounts of the Government are intended to supplement the
accounts separately presented in the form of Appropriation Accounts for each grant and charged
appropriation included in the Appropriation Acts passed by the Legislature.

Form and Content

The Appropriation Accounts are prepared according to the nomenclature indicated in the Demands for
Grants, as approved by legislature, showing the:
1. Original Appropriations approved by legislature, supplementary appropriations, surrenders and re-
appropriations distinctly;
2. Actual expenditure against the sum total of above;
3. Excess (+) or saving (-) under each head.
As provided in the Constitution for preparation of ‘Annual Financial Statement’, expenditure out of
Consolidated Fund has to be shown separately in respect of charged expenditure and other expenditure and
has to distinguish expenditure on revenue account from other (capital) expenditure. Since Appropriation
Act and Demands for Grants are also prepared according to these constitutional provisions, the
Appropriation Accounts have also to show separately charged and other expenditure and revenue and capital
expenditure.
For discussion the form and content of Appropriation Accounts during this session the Appropriation
Accounts of Government of Uttar Pradesh will be discussed.
The Appropriation Accounts are in three parts:
Part-I- Summary of Appropriation Accounts and audit certificate of the Comptroller and Auditor General of
India;
Part-II-Detailed Appropriation Accounts;
Part-III-Appendices, containing two appendices on expenditure met out of Advances from Contingency
Fund and Grant-wise details of Estimates and Actuals adjusted in the accounts in Reduction of Expenditure.
Part-I-Summary of Appropriation Accounts
A summary of Appropriation Accounts showing the total amount of funds (original and supplementary)
provided by the Legislature under each voted grant and charged appropriation separately for revenue and
capital, actual expenditure incurred against each grant. The summary is followed by the grand total of the
amount of Grant/ Appropriation (under Revenue and under Capital) and against Voted Grant and Charged
Appropriation.
The summary is concluded with a reconciliation statement of expenditure indicated in the Appropriation
Accounts with the expenditure indicated in the Finance Accounts. The format of reconciliation statement
used is as under:

Charged Voted
Revenue Capital Revenue Capital
Total Expenditure in Appropriation A B C D
Accounts

Deduct Recoveries shown in M N O P

Appendix II
Net Total expenditure shown in (A-M) (B-N) (C-O) (D-P)
Statement No. 10 of Finance Accounts

The summary concludes with the certificate of the Comptroller and Auditor General of India. The format of
certificate (as per appropriation Accounts of Government of Jammu and Kashmir for the year 2003-04) is as
under:
‘The Appropriation Accounts have been prepared and examined under my direction in accordance with the
requirements of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act,
1971. On the basis of the information and examination that my officers required and have obtained, I certify
that these accounts are correct, subject to the observations in my Report(s) on the Accounts of the
Government of Jammu and Kashmir being presented separately for the year ended 31st March 2004’.
Part-II-Detailed Appropriation Accounts
The Appropriation Accounts are prepared strictly according to the nomenclature used in the Demands for
Grants as approved by the Legislature. Grants/appropriations and actual expenditure are included in these
Accounts upto sub-head level. The Accounts contain following four columns:
Column 1- deals with the Original (indicated by letter ‘O’), Supplementary (indicated by letter ‘S’),
Demand for Grants as Voted and Charged on the Consolidated Fund. As break up of expenditure
between Plan and Non-Plan does not flow out of the Constitutional provisions and has been
necessitated only by the executive orders issued, Appropriation Accounts do not indicate this
breakup. The provision and actual expenditure on Plan and Non-Plan are totaled up under each
sub-head and reflected in the Appropriation Accounts as a single figure of expenditure. In
addition, the executive is vested with powers for re-appropriation of funds from one head to
another head within Revenue Section or within the Capital Section under the provisions of the
delegation of Financial Powers. The letter ‘R’ or ‘-R’ indicates these re-appropriations. The ‘O’,
‘S’ and ‘R’ are indicated separately in Column–I.
Coulumn-2-indicates the total grant or appropriation i.e. the sum total of ‘O’, ‘S’ and ‘R’.
Column-3- indicated the actual expenditure incurred during the year as obtained from the annual accounts.
Coulmn-4- indicates the excess expenditure (as compared to total grant or appropriation as (+) and saving as
(-) between the figures of column (2) and (3).
The re-appropriation orders incorporated in column (1) are to be explained giving reasons. Similarly,
reasons for excess and savings in column (4) are to be explained with reference to the total grant.
The Accounts are prepared separately for Revenue and Capital Sections and exhibit charged appropriations
and voted expenditure separately.
The Appropriation Account of each grant/appropriation will contain ‘Notes and Comments’, wherever
necessary; which will bring to the notice of the Legislature (giving relevant particulars of the group heads)
excess over grant/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 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.
Part-III-Appendices
Appendix-I
In this appendix, expenditure met out of advances from the Contingency Fund, under each grant, not
recouped to the Fund till the close of year is included.
Contingency Fund is placed at the disposal of the President/Governor to meet any unforeseen and urgent
expenditure. The Fund is recouped from Consolidated Fund, as and when occasion arises. Legislative
control over expenditure met from the Contingency Fund is exercised when the Government approaches the
legislature for appropriation to recoup the fund. The intention of this appendix is to bring to the notice of
Legislature expenditure met out of the Contingency Fund, which has not been recouped during the year and
has, thus, escaped the scrutiny of Legislature during the year when expenditure was met out of the Fund.
Appendix-II
In this appendix grant-wise details of estimates and actuals in respect of ‘Recoveries Adjusted in the
Accounts in Reduction of Expenditure’ are included. Actual recoveries under Revenue and Capital are
compared in this statement with the budget estimates to work out the ‘more recoveries’ or ‘less recoveries’.
Responsibility for preparation
The Appropriation Accounts relating to State Governments are prepared by the respective Accountants
General (A&E) except in case of the State Government of Goa and Union Territory Government of
Pondicherry.
Check of Accounts
Submission of draft Accounts to Accountant General (Audit)
The draft Appropriation Accounts along with Finance Accounts after compilation by the Accountant
General (A&E) and, check by ITA wing are sent to Accountant General (Audit), where an independent
check will be exercised on these Accounts with reference to initial records and the accounts will be finally
cleared for printing by the Accountant General (Audit).
A suitable modus operandi should be evolved by mutual consultation between Accountant General (A&E)
and Accountant General (Audit) to ensure that the work of scrutinizing the accounts by the latter goes on
smoothly and is completed within the time frame. It is also essential that the Accountant General (A&E) and
Accountant General Audit should co-ordinate the work of preparation of the annual accounts and the Audit
Report and checking of the accounts by Accountant General (Audit) in such manner that the printed copies
of all the three documents are forwarded simultaneously to the Comptroller and Auditor General for
countersignature/ signature. This is quite necessary as all the three documents are to be submitted to the
State Legislature simultaneously. The full responsibility for finally submitting both the draft accounts and
printed copies of the Accounts rest with the Accountant General (A&E). The responsibility for translation of
the Accounts into Hindi will also be that of the Accountant General (A&E).
Instruction for Preparation
Adequate care is to be taken while drafting of material for comments in the Appropriation Accounts,
obtaining explanations from the Controlling Authorities and subsidiary information to be included in the
Accounts.
The compiling officer should send to each authority responsible for controlling expenditure against a
grant/appropriation, an advance copy of the draft of the Appropriation Accounts of the grant/appropriation
and the draft notes and comments proposed to be included. The explanations furnished by the Controlling
Authorities should be given due consideration in finalizing the Notes and Comments.
Time schedule for preparation and submission of Accounts
The following time schedule for the preparation of Appropriation Accounts by the concerned Accountants
General (A&E) and the completion of their checks by the respective Accountants General (Audit) is
prescribed for the year 2014-15:-

Sl Appropriation
Stage
No. Accounts
1. Flow of Statements/Grants from A&E to Audit (#) 15 July-17 August
2. Return by Audit 24 July-21 August
3. Vetting of ‘Notes to Accounts’ by GA Wing ----
21 August-31
4. Attending to Audit observations
August
5. Return of vetted ‘Notes to Accounts’ by Audit ----
01 September-07
6. Draft certification by AG (Audit)
September
Vetting of Audit Certificate by Report State Wing- Approval of 04 September-10
7.
Headquarters (with modification/correction etc) (*) September
Modify accounts based on RS Wing observations and making 10 September-15
8.
available ‘print ready’ version (in pdf format) to Audit ($) September
21 September-30
9. Signing of Audit certificate by the CAG of India (**)
September

(#) Immediately on completion of preparation of Statements/Appendices and Grants, draft version (as
furnished to Audit) is to be made available to the Finance Dept, at least 10 days prior to the day, fixed for
the Exit Conference.
(*) A spiral bound ‘bond copy’ version is to be prepared by AG (A&E) and accompany with the draft audit
certificate sent to the concerned Reports States Wing.
($) No correction is permissible consequent to the preparation of the ‘Print Ready’ Version. Major
alterations, therefore are, if required to be carried out only with the concurrence of GA Wing and Audit
Wing of the respective offices.
(**) Signatory copies of printed accounts should reach Headquarters by September 25, 2014 positively.
The observations/comments of the Accountant General (Audit) will be attended to and settled by the
concerned Accountant General (A&E) within one week of the return of the checked copies of the Finance
Accounts and Appropriation Accounts.
Note: the Comptroller and Auditor General of India fix these dates each year.
The Accountant General (A&E) shall furnish full information to the Comptroller and Auditor General of
India after the close of the accounts of the financial year to enable the latter to keep a watch over the
Progress in the preparation, finalizing and printing of the Accounts.
Accountant General (A&E) will furnish five Printed copies of the Appropriation Accounts and Finance
Accounts of their respective States to the Comptroller and Auditor General for signature so as these could be
available for presentation to the Legislature during the Budget Session. The number of copies of these
documents required by the Comptroller and Auditor General is 19 (including one for transmission to the
Press Information Bureau of the Government of India) after the documents are placed before the Legislature.
Forwarding of printed copies
While forwarding the printed copies of Appropriation Accounts to the Comptroller and Auditor General, the
following certificates should be furnished by the Accountant General (A&E) and Accountant General
(Audit):
Certificate of the Accountant General (A&E):
The Accounts of Government of…..for the year……forwarded herewith have been prepared by me in
accordance with the requirement of Article 149 of the Constitution of India read with the provisions of
Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971, I have obtained
all the information and explanations wherever necessary. Subject to the observations in this compilation, I
certify to the best of my knowledge and belief that these accounts are correct statement of the receipt and
disbursements of the Government of……………………….for………
Accountant General (A&E)
Certificate of the Accountant General (Audit)
The Appropriation Accounts of…….for the year………..have been examined by me. On the basis of the
information and explanations that my officers required and have obtained, and according to the best of my
information as a result of test audit of the accounts, I certify, in pursuance of provisions of Article 149 and
151 of the Constitution of India and the Comptroller and Auditor General’s (Duties, Powers and Conditions
of Service) Act, 1971, that these accounts are correct subject to observations in the Report of the
Comptroller and Auditor General of India on the Accounts of the Government of………(Civil) for…..
Accountant General (Audit)
CERTIFICATE OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA
This compilation containing the Appropriation Accounts of the Government of Uttar Pradesh for the
year ending 31st March 2014 presents the accounts of the sums expended in the year compared with the sums
specified in the schedules appended to the Appropriation Acts passed under Articles 204 and 205 of the
Constitution of India. The Finance Accounts of the Government for the year showing the financial position
along with the accounts of the receipts and disbursements of the Government for the year are presented in a
separate compilation.
The Appropriation Accounts have been prepared under my supervision in accordance with the
requirements of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act,
1971 and have been compiled from the vouchers, challans and initial and subsidiary accounts rendered by
the treasuries, offices, and departments responsible for the keeping of such accounts functioning under the
control of the Government of Uttar Pradesh and the statements received from the Reserve Bank of India.
The treasuries, offices and/or departments functioning under the control of the Government of Uttar
Pradesh are primarily responsible for preparation and correctness of the initial and subsidiary accounts as
well as ensuring the regularity of transactions in accordance with the applicable laws, standards, rules and
regulations relating to such accounts and transactions. I am responsible for preparation and submission of
Annual Accounts to the State Legislature. My responsibility for the preparation of accounts is discharged
through the office of the Accountant General (A&E). The audit of these accounts is independently
conducted through the office of the Principal Accountant General (General & Social Sector Audit) in
accordance with the requirements of Articles 149 and 151 of the Constitution of India and the Comptroller
and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971, for expressing an opinion on
these Accounts based on the results of such audit. These offices are independent organizations with distinct
cadres, separate reporting lines and management structure.
 The audit was conducted in accordance with the Auditing Standards generally accepted in India.
These Standards require that we plan and perform the audit to obtain reasonable assurance that the accounts
are free from material misstatement. An audit includes examination, on a test basis, of evidence relevant to
the amounts and disclosures in the financial statements.
On the basis of the information and explanations that my officers required and have obtained, and
according to the best of my information as a result of test audit of the accounts and on consideration of
explanations given, I certify that, to the best of my knowledge and belief, the Appropriation Accounts read
with observations in this compilation give a true and fair view of the accounts of the sums expended in the
year ended 31st March 2014 compared with the sums specified in the schedules appended to the
Appropriation Act passed by the State Legislature under Articles 204 and 205 of the Constitution of India.
Points of interest arising from study of these accounts as well as test audit conducted during the year
or earlier years are contained in my Reports on the Government of Uttar Pradesh being presented separately
for the year ended 31st March 2013.
(SHASHI KANT SHARMA)
Comptroller and Auditor General of India
Date:
New Delhi
Correction of Errors
Utmost care shall be taken in reading the proofs at the various stages so that only the mistakes as a result of
printer’s devil, which sometimes becomes unavoidable, are left for inclusion in the errata. Any error noticed
in the printed copies should be neatly corrected in manuscript in the copies sent to the Comptroller and
Auditor General. Where the number of errors is such as will require the printing of errata, the errata should
be printed after an intimation of the documents having been signed by the Comptroller and Auditor General
of India is received. This will enable the Accountant General (A&E) to incorporate in the errata any errors,
which may be pointed out by the Comptroller and Auditor General of India.
No correction slip should be issued after the Accounts and Reports have been forwarded to Government. If a
serious error or misprint comes to notice after the documents have been forwarded to Government, it should
be immediately brought to the notice of the Comptroller and Auditor General with an explanation of the
circumstances in which the mistake could not be noticed and rectified earlier. If it is decided to issue a
correction, the correction slip will be issued in the name of the Accountant General who is responsible for
the preparation of the Accounts, but it should not bear any date. The Accountant General should ensure that
any such correction slip issued is pasted in the copies signed by the Comptroller and Auditor General which
are to be laid on the table of the legislature.
No correction slips can be issued after the documents are laid before the legislature; if any errors are noticed
they should be reported to the Comptroller and Auditor General with an explanation for the delay in noticing
them.
Confidential Accounts
Since Appropriation Accounts and Finance Accounts are to be presented to the State Legislature along with
the Audit Report, they cannot become ‘Public’ until they have been laid on the table of the House. It is,
therefore, necessary to guard against the disclosure to the public and press till their presentation to the
Legislature. The Accounts and all correspondence relating to them should therefore be classified as
confidential till that time.
General checks to be exercised while compiling Appropriation Accounts
1. It is to be ensured that figures of 'Provision/Expenditure/Excess/Saving' as given under 'Summary of
Appropriation Accounts' tally with those given under individual "Grant/Appropriation-wise Accounts".
2. The classification should follow the budget and no unauthorized head should be opened.
3. The amounts surrendered as shown in the "Summarized Appropriation Accounts" should agree with
those worked out in the "Detailed Appropriation Accounts".
4. The "Plus/Minus" signs should be carefully checked.
5. Month of surrender should invariably be indicated.
6. The comments about excess or saving incorporated in relevant grants should not be ambiguous and
that the comments should be such as can be understood by a layman.
7. It has to be ensured that variations under "Revenue Expenditure", "Capital Expenditure", "Loans" and
"Charged" and "Voted" categories have been separately worked out/commented upon.
8. Errors in totaling/spelling mistakes should be avoided.
9. In order that the main thrust to focus and highlight major excesses/savings is not diffused, only major
savings/excesses should be included as per the guidelines given by the Office of the Comptroller and
Auditor General of India or by the Public Accounts Committee of the respective State.
10. Exhibition of expenditure in Appropriation Accounts should follow the provisions in the budget.
Expenditure to be transferred to other heads as shown below the line in the budget should be carefully
noted and timely action taken for such transfer and an intelligent examination of these accounts is to be
under-taken to find out whether any mistake has not apparently been made by the Accounts General’s
office in carrying out the annual adjustment and/or following the accounting mechanism as stipulated
in the budget estimates etc.
11. Re-appropriation orders relating to the previous years after closure of Accounts should not be accepted
and acted upon.
12. Comments on defective budgeting should be highlighted if the provision is not made under the correct
head of Accounts.
13. When huge provision of funds are made through re-appropriation it should be examined to see whether
they come under ‘New Service’ and, if so, Public Accounts Committed should be briefed and suitable
guidelines issued in the matter.
Checks by ITA
Checks that may be exercised by ITA Section during local scrutiny of the draft Appropriation Accounts are:
(i) The working sheets received from several sections for preparation of draft Appropriation Accounts in
Book/Finance Accounts Section and Journal entries etc., as well as Ledger in Book Section from
which the bulk of the statement for Finance Accounts and Appropriation Account are compiled should
be checked to inter alia ensure that: -
(a) no unauthorized heads of accounts have been opened.
(b) there are no anomalies and obvious mistakes of classification do not exist;
(c) wide variations, if any, between Revised Estimates and Actuals have been properly examined to ensure
that no serious misclassifications have occurred;
(d) per contra adjustments on account of transactions affecting different Accounts Officers or appearing in
the books of two different branches or sections of one and the same Accountant General have been
correctly carried out in the books of both the branches/sections.
(e) there are no abnormal transactions of receipts/disbursements requiring investigation, rectification or
insertion of suitable footnotes.
(ii) Reconciliation of figures between the draft Finance Accounts and the draft Appropriation
Accounts should be effected completely for all the heads of accounts.
Public Accounts Committee
Constitution: At present ,it has 15 members from Lok Sabha and 7 members from Rajya Sabha. The
members are elected every year from amongst the members of the respective Houses according to the
Principles of proportional representation by means of a single transferable vote. Some of the national
political parties renominate their members for a second year term on the Committee. Ministers are debarred
from becoming members of the Committee. If a member elected to the PACis subsequently appointed as
Minister, he ceases to be a member of the committee. It is thus ensured that the PAC functions absolutely
independent of the influence of the Government and brings to bear an objective, judicious and non party
approach to the matter under its scrutiny and arrive at its findings and recommendations. Since 1967, a
leading member of the opposition party or group is being appointed as Chairman of the Committee by the
Speaker, Lok Sabha under rule 258(1) of Rules of Procedure and the Conduct of Business for Lok Sabha.
Scope and Functions
According to Rule 308 of the Rules of Procedure of the Lok Sabha, the main function of the PAC is to
examine the Appropriation Accounts, Annual Finance Accounts of the Government and such other accounts
laid before the House as it may think fit. The committee has to satisfy it self that
(a) that the money shown in accounts as having been disbursed were legally available for and applicable
to the service or purpose to which they have been applied or charged;
(b) that the expenditure conforms to the authority which governs it; and
(c) that every reappropriation has been made in accordance with the provisions made in this behalf
under rules framed by the competent authority.
It shall also be the duty of the Public Accounts Committee
(a) to examine in the light of the report of the report of the comptroller and Auditor General, the
statement of accounts showing income and expenditure of State corporations, trading and
manufacturing schemes, concerns and projects, together with the balance sheets and statements of
profit and loss accounts which the President may have required to be prepared or are prepared under
the provisions of the statutory rules regulating the financing of a particular corporation, trading
concern or project;
(b) to examine the statement of accounts showing the income and expenditure of autonomous and semi-
autonomous bodies, the audit of which may be conducted by the Comptroller and Auditor General of
India, either under the direction of the President or under the provisions in the CAG(DPC) Act 1971.
and
(c) to consider the report of the Comptroller and Auditor General in cases where the President may have
required him to conduct an audit of any receipts or to examine the accounts of stores and stocks.
An important function of the committee is to ascertain that money granted by Parliament has been spent by
Government with the scope of the Demand. The implications of this phrase are that
(i) money recorded as spent against Grant must not be more than the amount granted.
(ii) The expenditure brought to account against a particular grant must be of such a nature as to
warrant its record against that grant and no other and
(iii) The grants should be spent on purpose which are set out in the detailed Demand for grants and
they cannot be spent on any New service not contemplated in the Demand
Another important function of the committee is the discussion of points of financial discipline and
principle.
Since one of the functions of the Committee is to act as a check on unwise methods of expenditure, it is
undoubtedly possesses the power, if necessary, to intervene in matters of administration and to examine
the systems under which the Ministries work. Such intervention is, however, rare. The Committee
usually concentrates on the general control to secure economy and leaves questions of internal
administration to the Minstry concerned. It can nevertheless call attention to weak points in the
administration itself, leaving it the Ministry ;to remedy them.
It is not concerned with questions of policy in the broader sense; it is only concerned in a limited degree
with the policy or the method of expenditure.While no opinion is expressed on points of general policy,
any extravagance or waste in carrying out that policy is within its field of investigation. The Committee
is concerned with any lacunae in the system or process of control which had occasioned loss to the
Exchequer, rather than with the individuals involved. But it has to be assured that adequate action has
been taken to prevent recurrence oif such cases including disciplinary action against the officials
concerned.
In short, the examination of the Accounts and Audit Reports by the PAC extends “beyond the formality
of the expenditure, to its wisdom, faithfulness and economy”.