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PUBLIC ADMINISTRA
Volume-2
Functional Structure. and
Administrative Reforms

C.L. Baghel
Yogen dra Kumar
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 9
The Concept of Financial
Accountability in Public
Administration

INTRODUCTION
effective mechanism of accountability is ess~~tial f~r effective
and efficient public administrati~ The adnurustrative reform
commission had given vital recommendations regarding/
accountability in public administration alongwith rewards and
punishment, therefore, hereunder we will discuss only the basic
aspects of this concept:
MEANING AND SIGNIFICANCE
The Oxford English dictionary defines 'accountable' as 'liable to be
called to account, responsible (to, for)'. The Webster's dictionary
gives more or less the same meaning when it explains accountability
as liability to be called on to render an account. Though
accountability and control are used as synonyms, actually 'control'
goes alongside or simultaneously with an action or event whereas
accountability comes in only after an act is accomplished. Only
when one does a job or an act is one called upon to render an
account of it.
Accour:ttability in the positive sense means achieving results.
Public servants have tremendous responsibilities to discharge. To
enable them to do so, they have stability of tenure and administrative
support. If they are unable to deliver the goods or achieve results,
they must be held accountable.
In other words, if administrators have responsibilities, they
also have accountability. Accountability and responsibility are two
sides of the same coin and they go together. In the negative sense,
 The Concept of Financial Accountability in Public Administration 137

accountability implies holding public

k. officials responsible for therr
.
.
lapses. Lapses can be of various mds.
Public servants may not do . what law or custom requires• them
to do for reasons such as. ignorance' indifference or corrupt
influence; or they may be guilty of waste and damage; or a duty may
be undertak~n b~y_ond what law and custom oblige or empower.
In practice, it 1s not easy to enforce accountability. This is
f . d . . so
because o composite ec1s1on-making, diffused responsibility and
frequent tr~sfers. Whenever seriou,s administrative lapses take
place, enqu1r1es are conducted to punish the guilty ones. But it is
difficult to pinpoint responsibility.
So many are involved in decision-making that the range of
accountability is too wiQe to hold any one person responsible for
the lapse. If action is taken on the basis of oral instructions it adds
to the difficulty of fixing accountability.
. This is not to suggest that accountability cannot be enforced.
An aggrieved citizen can go to a court of law. Then there are vigilance
authorities or Ombudsman through which citizens can get redressal
of their grievances.
TYPES OF ACCOUNTABILITY
(So far we have talked of accountability in general. To be more specific,
one can speak of political accountability as distinct from
administrative accountability. In a parliamentary government, such
as ours, the political executive is collectively and continuously
responsible to Parliament.
In other words, the executive is obliged to give an account of its
performance to Parliament. Parliament has ways and means to
ensure this accountability. But there is also the permanent executive
i.e., the bureaucracy whose accountability is not direct but indirect.
It is accountable through the political executive to Parliamenlj
Let us look at ministerial' responsibility a little more closely.
There are certain matters which fall within his competence for which
the minister is responsible in his personal capacity. He is
accountable to Parliament for his actions-or lack of them-as
'\
well
as for all those of the civil servants under him. Parliament holds the
minister responsible for anything that goes wrong in~ ministry .
even if he had no knowledge of it or did not approve_ of it. .
If a civil servant's actions are in accordance with the policy
laid down by the minister or he acts at the bidd~g of tJ_te_minister,
the minister must shield and protect him. Even if the civil servant
 Public Administration - Vol. 2
138 .

k small nusta• ke or errors on . not too important a matter, the

ma es a k the rap in Parlirunent.
minister.must_ ta ematters where the civil servant acts on his own
But in serio~s
d hi5 conduct 1s repr · . cannot
ehensible the minister . be expected to
an f his officer. Yet, he still remains accountable to
end~rse th; :0:ti~:•
~onduct of such an erring official.
Parhame~ t f ministerial responsibility cannot be stretched
But this concep o h . .t . Id . . .
too far. If applied in a ~igorous manner, t e nurushimerC~oilu insist
•
that every 1Ssue must compulsorily be· referred to thinservants.
. 1v
Id be over cautious and guarded and refer every . g to the
w?~
m.nuster. ,v,,.ery soon, all administration would come . toda ·halt. tt
•M" • ter1a • 1accountability is more a convention an 1s a ma er
lffiS h dl . if
of one's conscience, a moral principle. A minister ~r Yresigns
things go wrong in his ministry, if he has party backing and str?~g
support of the Prime Minister. Nevertheless, the fact of a~countability
cannot be denied or washed away.
- .
THE CONCEPT OF AcCouNTABILiTY AND ETHICS IN
PUBLIC ADMINISTRATlON
In this unit, the emphasis has been on administrative accountability.
Undoubte:dly, a civil servant is accountable to Parliament through
the minister. But in his daily worl<, in the secretariat, he is
accountable to his immediate superior..
Annual confidential reports are an important means of holding
officials accountable. From time to time, review of work is
undertaken by the secretary or minister. It is fyough such reviews
that field administration is held accountable to the ministry.
• Of all the methods of holding administrators accountable, none
is more effective in the long run than self-control or self-regulation.
A public.official will act correctly if he wants, he cannot be forced.
This is s9 important considering the fact that despite rules and
regulations which civil serv<Ults must adhere to, there is still a wide
area of administrative discretion. It is here that ethical standards
come in. There must be that "inward sense of personal obligation"
that assumes that officials have ethical values and professional
standards to guide them.
Peo~le expect public servants to have higher ethical values
~an busme~smen because public service is a public trust and there
is the sanchty of public office. Public officials can render a good
a~coun! of themselves if they do not lose sight of the ethical
d1mens1on.
 Th eConcept ofFinancial Accountability in Public Adm•inis. tration
.
139
But stan~ar~s of ~~cs .a~ not likely to be higher than those,of
the comm~ty fo wti1c ~1v seli1:7_ants belong. Moreover, Public
Administration unc ons ma po tical context and self-re .
is limited by that fact. gu1abon
An interesting device in Scandinavi an countrie · th
Thi ff . 1 . s 1s at of
Ombudsman. d h~ o_b 1c~a ochcup1es a position of high prestige in
government an 1s JO 1s tp andle complaints of citizens •
• ff' • 1 Th O b d • agamS t
Public o 1c1a s. . et m u . sman 1qea has caught on in -Bn·tam, •
Europe, Commurus countries and even India.
The Indi~ counterpar t of the Ombudsma n is the Lokpal who
is to look into complaints against administrat ive acts of ministries
and secretaries at the Centre and in the States. The Lokayuktas are
to be appointed in each state and one at the Centre to look into
complaints of mal-administration in government agencies: The draft
Lokpal Bill is yet to become a law. _ _-
THE CONCEPT OF FINANCIA L ACCOUNTABILITY
- .

It is an old saying that money is one of the major three sources of

impurity in human character.. The power, which includes financial
power too, corrupts and absolute pow~r corrupts absolutely,
therefore, the concept of financial accountability is of vital concern
in public administrat ion as discussed below:
This is a vital componen t of accountability. It is based on
.the principle that "those who spend public money should give
an accou~of their actions to those who bear the burden of
taxation"~ 4tancial a~coµntabi lliy cpn~!~ts..of..£<?~Eo! exercised
by the l~gis!~~re <!Y~!. thos~Q.__h_and~~~ 1~ ~?~ey. The.
~islatl.!res ~~is~hi s g>t).yol g_~r the ~xes._1::1t~_<:>E: be~~l(.of
tax__::pay ~ . _/l'i . . .
~ - budget _is Cln im.eort.ant to_gLQL leg1s1'at1.ve..iUYln:c1al
CQ!llI.01. In the parlia~~nt ary sy.§tem,Jhe_denw1d.for _grants gives
the Hous_e an _.op~portunity _to discuss_the working of each
d~~-i n great detail. It is only when membi:rs of r~i.~e}:lt
art,satisfied wi~h_ the exElanatio ns _giveq on_E.Q.l!lts. ,ais~d'-_!hat
grants are ~ssed. .
Unfortunately, it.Yoting cannot.be. completed by. the _given
dea~~ then all th~remajni ng d~ds ~e_vot~d to~e~er,~ 0 1;
lot_~y_a pr~c!!ce _gll_~ 'gµil_!Q!ine~ The entire pr~~feth e
Parli~~~! relating to enactm~t (?f ~e ~udget, P~~eJs- of
P~sage of fue apEropri!!_i~p fm~~e is a __ _
. exercising financial control over the executive.
- - - ----- ~- .
140 Publ ic Adm inist ratio n _ Vol.
2
FIN ANC IAL CON TRO L WIT HIN THE EXECUTIVE
Onc e the bud get is I?a~~ed it ha_s to be e~fo rced . The legislatur
e sees
this as the resp onsi bilit y of the exec utiv e beca use the legis
lature
mak es the gran ts to the gov e~e nt as a who le, (~ou gh techn
ically
to the Pres iden t). The mac hine ry of exec utiv e cont rol
expe ndit ure cons ists o f (a) F"man ce M".rms
• t ry f • 0
Ver
o its equi vale nt and
(b) the head s of adm inist rativ e depa rtme nts. The cont rol
is exercised
to ensu re that the bud geta ry gran t ~de r ~y head does
not cross
the stip ulat ed limi t and that ther e 1s no imp rope r, wast
eful or
extr avag ant expe ndit ure.
Fina nce Min istr y
We hav e seen the role of the Fina nce Min istry in the earli er
chapter.
It is conc erne d with not only prep arat ion of the budg et
but its
exec utio n as well . Ofte n estim ates for prop osal s or sche
mes are
mad e by the offic ers of thei r dep~ rtme nts. The se departme
ntal
acco unts are peri odic ally reco ncil ed with the acco unts kept
by the
Acc oun tant Gen eral on the basi s of fort nigh tly acco unts
received
from the trea suri es. But the cont rolli ng offic er does not have
up-to-
date info rma tion and to that exte nt his cont rol is imperfect
. With so·
man y cent res of pay men t disp erse d all over the coun try
even the
Com ptro ller and Aud itor Gen eral of Indi a has no effective
control
over the issu e of mon ey from the Con soli date d Fun d of India
'-.. .
.
\J),,,,.
FIN ANC IAL COM MIT TEE S OF PAR LIA MEN T
In all Parl iam enta ry dem ocra cies , P~li ame ntar y Committe
es play a
pivo ~_role in_ensurh,!g acco unta bilit y of the executive. In Presi
dential
Form of Gov ernm ent like the USA, Con gres sion al Committe
es play
this role . In wha t follo ws we will exam ine the role of Parliamen
tary
Com mitt ees in ensu ring the acco unta bilit y of Executive.
The Pub lic Acc oun ts Com mitt ee
The Pub lic Acc oun ts Com mitt ee (PA C) is annu ally _elec~g--~ th
n e
basi s of prop orti ona l repr esen tatio n by a sing le transferab
le vote.
By conv enti on, cont inui ty is achi eved by allo wing atwO
:yeaffenure
of mem bers hip. It has twen ty-tw o mem bers , fifteen from Lok
Sab~
and seve n from Rajy a Sab ha. Its Brit ish coun terp art has mem
~~
only from the Hou se of Com mon s. The Cha irma n of the
PA
gene rally from the opp osit ion part y.
The PAC Sati sfies itsel f that :
The concept of Financial Accountability in Public Adm
inistration 141
1. The mon ey sho wn -in ~e acc oun ts as bei
ng disb urse d wer e
legally and actu ally disb urs ed for the pur pos es
or serv ices
stated,
2_ Tha t the exp end itur e con form s to the aut hor ity whi ch
governs it, and
3. Tha t eve ry rea ppr opr iati on is ma de in acc ord anc e wit h
pro visi ons and und er pro per rule s.
The PAC also exa min es the aud it rep ort of the Com
ptro ller and
Auditor General. In this wor k, the Com ptro ller and
Aud itor Gen eral
acts as its frie nd, phi loso phe r and gui de. The
PAC can sen d for
records, pap ers and per son s. To exp edi te mat ters
the PAC wor ks
through committees and sub mit s its find ings and
reco mm end atio ns
to Par liam ent in the for m of a rep ort. By
con ven tion , the
recommendations of the Com mit tee are acc epte ~
by the Government.
A vali d crit icis m of the PAC is tha t its inv esti
gati on is in the
nature of a pos t-m orte m exa min atio n. Nev erth
eles s it is des irab le
and useful wor k. The ver y fact that suc h a scru
tiny will be con duc ted
acts as a dete rren t to neg lige nce , was te or slackne
ss of the executive.
There is a PAC in eac h of the Sta tes as ,vell.
The Est ima tes Com mit tee
The Indian Estimates Com mit tee is mod elle d on that
of Britain whi ch
is now kno wn as the Exp end itur e Com mit tee.
We hav e suc h an
Estimates Com mit tee at the Cen tre and in the
States. The Cen tral
Committee has thir ty Lok Sab ha mem ber s elec
ted by the Hou se
itself acc ord ing to pro por tion al rep res ent
atio n by a sing le
transferable vote. The Cha irm an is nom inat ed by
the Speaker. If the
Deputy Spe ake r is a mem ber of the Com mit tee
he automatically
becomes Cha irm an. The term of office is only one
year, but members
are frequently re-elected.
The functions of the Est ima tes Com mit tee are as
follows:
(a) To rep ort wh at eco nom ies, imp rov em ent s~
orgru.1 i~ation;
efficiency or adn lini stra tive refo rm, consistent th th
wi
policy und erly ing the esti mat es, may be effected
,- b
• • 0 rde r to brin g a out
(b:\, To sug ges t alte rna tive po1·1c1e
~ .
efficiency and eco nom y adm ~1stratio~fuin the
(c) To exa min e if the mon ey 1s wel l laid out w limits of
the poli cy imp lied in the esti mat es. . tes sha ll be
.
(d) To sug ges t the form 1n w h'1ch the est1ma
pre sen ted to Par liam ent.
 Public Administration - Vol. 2
142
. uld be seen that the functions of the Indian committees
• that the 1atter cannot suggest
TousitWO ·ts B·n·tish counterpart m
are wider
. than u·· . s but are not as compreh ens1ve
• as those of the
1
alternative po c1e ,
. ti. committees of the_U.S. Congress.
appropria on • of the Est·rmates Comnuttee
. stages in the working • • are
Themain d • t f • .
. f material on the selecte est1ma es or investigation
collect10n o d • • • '
. . f questionnaires to the concerne m1n1str1es and
1ssu1ng o . f" • 1 d •.
departments, recording of ev1de~c~ of of 1c1a. an non-official
•tn ses discussion in the Committee, preparation of draft report,
Wl es I th th • • 1 ff. • ls
d ·scussion of the draft report wi e prmc1pa o 1c1a of the
~stries and departments concerned, finalisation of the report
and its submission. •
The report usually contains recommendations for improving
the organisation, for securing economy and for better presentation
of the estimates. The recommendations are generally accepted by
the Government. The Estimates Committee works through sub-
committees and study groups for a better scrutiny of estimates.
Unfortunately, it does not have expert assistance as the Public
Accounts Committee has of the Comptroller and Auditor General.
It is a layman's Committee first and last, Ulat can call for papers,
persons and recor~s.
The Estimates Committee has been criticised for diverting its
attention from scrutiny of estimates to review of policies and
structure of departmental organisations. It ~s feared that it is
_becoming more a fault-finding rather than a fact-finding
mechanism. But one must not forget that the usefulness of the
Co~ittee lies precisely in its new role of suggesting alternative
policies. It makes for a through investigation and ensures greater
accountability.

Committee on Public Undertakings (CPU)

. This Committee was set up in 1964 on the lines of the Select
Committee on Nationalised Industries set up in 1955 in Britain•
~e CPU consists of fifteen members ten from the Lok Sabha and
.five from
. the Ra1ya
• Sabha elected' for a year on the basis • of•
proportional representation by means of the single transferable vote.
Membership is for five years and one-fifth retire by rotation each
year. • •
d The CPU examines,
• (a) the reports and accounts of pub~.c al
: ~ g s , (b) the reports of the Comptroller and Auditor-Genet
public undertakings, (c) whether in the context of the autonoIIlY
 . . .n 1
The Concept ofFinancial Accountability in Public Administratio
43
and efficiency their affairs are conducte d ac d.
business principle s and prudent commercial pcort· ing to sound
. f rac ices The CPU
cannot d 1scuss matters o governm ent policy as ll •
day-to-day administ ration. we as matters of
__P Ii
The CPU is essentially a fact-finding body and h e1ps
. t bil. f ar ament
in ensuring accoun a 1ty o public undertakings·.

INDEPE NDEN!_ ~_!!PI!_!l_?R FINANC IAL CONTR oE)

It is •n~t sufficien t to _have exec~ti;; ·;;-a'ctrl; ;~y· to ~-~~trol
expendit ure. In the ultimate analysis, it is the business of th
Pa~liament to ens~ financial accountability. This it does throuJ
an independ ent audit by the Comptroller and Auditor-General and
its financial committe es. _
Without accounts , it is impossible to exercise financial c~ntrol.
Accounts enable one to know how much was received, how it was
spent and for what purpose. It is only through systematic accounts,
supporte d by vouchers and receipts that one can convince oneself
that the transacti ons are in order. Also, accounts are a must for the
purpose of audit.
Account -keeping is generally a function of the executive
authorities. Auditing is done by an independ ent agency. -In India,
both the functions are combined and-hand led by the Comptroller
and Auditor General. It means that the audit agency audits the
accounts kept by itself. This is highly objectionable. However, it
was a legacy of British rule, when the legislature had no control
over finances and the executive was all-powerful.
An indispens abl~ part of financial accountability is audit. An
independ ent audit is conducte d by an outside agency, na~ely the
Comptro ller and Auditor- General in India. Hence Parliament
entrusts the work of examinat ion and verification of accounts to an
outside agency in order to discover and report back to it any unsound
. . . . d d ·11egal or irregular
• ·a1s
f1nanc1al practice s, unautho r1se , an 1 . .
expenditures. In this way, audit fixes the accountability of of?c~
Britain was the first country to have public accounts auclite d
order to find out if Parliame nt's sanctions were honeStlyfan
fai'thfully adhered to. In America,• m · d epend ent audit dates rom t'5
1921. The Comptro ller General as he is called, audits governme n
. f d • llowance
. •. a
fmancial transactio ns and has the power O Iisa of India enJ 0 Y5
. G
The Comptro ller and Auditor- enera t He is
constitutional status and is independ ent of G_overm n:e ~ay as
th
appointed by the Presiden t and can be removed.irt e s
 Public Administration _ Vol. 2
144
President
a Judge of the Supreme Cou rt i.e., ~e can be remo ved by the
n addr ess to that effect bein g pass ed by a. spe~ ial maJ·ority f
na . It . o
upo Parl iame nt. mea ns a ma1 or1ty of the tot
. h Hou se of db • . f a1
eac y ma1or1ty o not less than tw
embership of that Hou se an d . o
m ent votin g.
thirds of mem bers pres an
Till 1976 he was concerned_ with audi t and accounting
of all
. Sine
financial trans actio ns of the Unio n and Stat e Governments
audits a~
then, he does not com pile and main tain acco unts . He
a legality
expe nditu res from reve nues on all Indi a:basi s. His is
"legally
audi t. He asce rtain s whe ther mon ey disb urse d was
to which
available for and appl icab le to the serv ice or the purp ose
orms to
they have been appl ied and whe ther the expe ndit ure conf
the auth ority whic h gove rns it".
er in
According to Ash ok Cha nda his func tions go even furth
ptroller
that the audi t also has a disc retio nary basis. Whe n the Com
t satisfy
and Aud itor- Gen eral exam ines the expe ndit ure, he mus
ss and
himself on beha lf of Parliament, as to its "wis dom , faithfulne
rding to
economy". He there fore not only checks expe ndit ure acco
against
budg et prov ision s, laws, rule s and regu latio ns, but also
canons of financial propriety.
rate
The Com ptro ller and Aud itor- Gen eral with his elabo
each of the
head quar ters and field staff prep ares an audi trep ort for
Centre,
Governments who se accounts are audi ted. In the case of the
to ·the
the· repo rt goes to the Pres iden t and in case of the State
respective
Gove~or. These head s have the reports plac ed before their
Accounts
legislature who in tum refe r the repo rts to their Public
reports
Committee. Financial accountability is com plete whe n these
rted back
are examined, investigations cond ucte d and findings repo
to the legis latur e conc erne d in the form of a Report.
ACC OUN TAB ILIT Y THR OUG H COURTS
ssed as
This concep~ is kno wn as judi cial rem edie s and discu
hereunder, in brief:
i.e.,
1. Judicial revi ew of adm inist rativ e acts and decistiions eord er
the pow er of the Cou rt to hold any law or execu v ·th
unco nstit ution al on the grou nd that it is in conflict wt
the Con stitu tion. Ther e are grea t varia tions in the p~tte_rn
• 1 revi•ew from coun try to country.
• d"1c1a In Bnta il\,d
o f JU • w d oes not exten
Parliame nt 1s• supr eme and judic ial revie . of
to all adm inist rativ e acts. In Indi a and USA the doctrine
judic ial revi ew is in vogu e.

I
 t of financial Accountability in Public Adminis.ration 145
The Concep '1

Statutory appeal: This is possible where the law itself

2
• rovides that, in a given types of administrative act or
~ecision the aggrieved party has right of appeal to courts
or a higher administrative tribunal.
3. Suits against the government by a private party in torts or
contracts. (A _tort is a wrongful act~on or inju~y for which a
suit for damages lies).
4. Criminal suits by private parties against a public officer
and civil suits against a public officer for damages or on
contracts made by him.
s. Extraordinary remedies in the form of writs of various
kinds.
Mention must also be made of administrative tribunals seen in
India and other countries. There are "administrative courts" outside
the ordinary court system which constitute a system of adjudication.
The agencies for administrative adjudication are not only tribunals
but could be the minister himself or the head of the department or a
special committee or commission.
Thus administrative authorities exercise quasi-judicial pow.er
in the process of resolving disputes between a private citizen and
the state. The Administrative Tribunals are cost-effective
expeditious, -accessible, and free from technicality and
knowledgeable. They have their demerits too in that they may not
observe uniform procedures thereby making decisions that are
~bitrary. But these tribunals have come to stay and go a long way
mmaking officials accountable and responsible for their actio~s.

QUESTIONS FOR ANSWER

1. Explain the meaning and significance of accountability and discuss the

•types of accountability in public administration. • -
2
• Wha_t ~o you understand by the term ·accountability and ethics in
administration.
3
• Define the concept offinancial accountability and write a note on financial
4 :'!rol through financial committees ofParliament.

~0
• nte short notes on the following:
1ndependent Audit for financial control.
Accountability through courts.