b. Explanations for the variation denoted by ‘R’ should also be included in Column1, as per norms given in Para 11.5.1 e.g. saving/excess was due to...... ”.
c. In columns 1 & 2 of the Statement of Recoveries, the original budget estimates and the supplementary estimates, shall be given. Surrender of recovery provision (if any) taken for other budgetary purpose will not be shown in the recovery statement.
Note: The recovery should be shown against the correct head from which the amount has actually been reduced while computing the ‘Statements for Central Transactions’ (SCT) figures. The nomenclature in Annexure II should be in conformity with those shown in the SCT. It may be noted that even if a head does not appear in the DDG, it can still be adopted in Annexure II to depict the actual recovery, without the need of obtaining formal approval of the Ministry of Finance, Budget Division.
11.3.3 After the beginning of the new financial year, each Principal Accounts Office will complete Stage I of the Head wise Appropriation Accounts. This shall be done with the help of that year’s Main and DDG, SDG, Re-appropriation Orders and the Surrender Orders as accepted by Ministry of Finance. The Budget Wing of the concerned Ministry/Department shall verify the (Stage-I) Grant Statement before it is issued under the signatures of Head of Accounting Organization i.e. Pr.CCAs/CCAs/CAs(i/c) as the case may be. The Principal Accounts Office will furnish one copy of this Grant Statement to the Principal Audit Officer i.e. Principal Director of Audit (Finance and Communication), three copies to the accredited Audit Officer and two copies to CGA. The Statement shall be sent as per the annual time schedule and details of accredited Audit Offices issued each year by the Office of CGA.
This Grant Statement should be accompanied with the following documents:
(i) Statement indicating the Number, Date and Amount of various Re-appropriation/Surrender Orders taken into account while preparing the Grant Statement, duly certifying that-
(a) the statement is complete and contains all the Re-appropriation/Surrender Orders issued in respect of the particular grant/appropriation during the financial year, and that
(b) all Surrender Orders have been accepted by the Ministry of Finance vide its Audit Order No(s)............. dated ............
(ii) Attested copies of all Re-appropriation and Surrender Orders issued during the financial year and taken into account for preparing the Grant Statement.
(iii) Statement of funds re-appropriated to and from different sub-heads through the Form in APPENDIX 11.7.
What This Means
This section lays down the thresholds for when variations between budget provision and actual expenditure must be explained in the Head-wise Appropriation Accounts. If the variation exceeds Rs 500 lakh at a sub-head, reasons must always be provided. For variations under Rs 500 lakh, explanations are required when excess exceeds 10% or Rs 250 lakh, or when savings exceed 10% of original/supplementary provision or Rs 100-250 lakh depending on circumstances. When the overall grant is exceeded, sub-heads with excess over Rs 25 lakh must be highlighted.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
1Variations exceeding Rs 500 lakh at sub-head level always require explanation regardless of percentage
2Excess under Rs 500 lakh needs explanation if it exceeds 10% of provision or Rs 250 lakh (whichever is higher)
3Savings need explanation based on 10% of original provision or Rs 250 lakh; or 10% of supplementary or Rs 100 lakh
4If overall grant segment is exceeded, sub-heads with excess over Rs 25 lakh must be picked up
5Savings of Rs 100 crore or above require a separate detailed Explanatory Note as per PAC directive
Practical Example
A Ministry's Appropriation Accounts show that under the 'Crop Research' sub-head, the original provision was Rs 27 crore with a supplementary of Rs 2 crore, but actual expenditure was only Rs 24.21 crore — a saving of Rs 4.39 crore. Since this saving exceeds 10% of the supplementary provision (Rs 2 crore), the Pr.AO must record specific reasons for the saving. Vague explanations like 'due to less expenditure' are not acceptable — the reasons must be analytical and specific.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Can explanations like 'savings due to less demand' be used?▼
No. Para 11.5.2 specifically prohibits vague observations like 'due to over estimates', 'based on actual expenditure', 'due to less demands'. The Ministry must provide specific, analytical reasons for the variation.
What is the PAC requirement for large savings?▼
The PAC (10th Lok Sabha) in its 60th Report observed that savings of Rs 100 crore or above indicate defective budgeting or performance shortfall. Each year, a detailed Explanatory Note must be furnished for such savings, vetted by Audit.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
(iv) Statement of Recoveries adjusted in reduction of expenditure.
(v) Statement showing the distribution of SDG up to object-head level- both for Gross provisions and Deduct recoveries, as furnished by the Administrative Ministries/Departments.
(vi) Certificate to the effect that there is/are no case
(s) that attract the provisions of ‘New Service or New Instrument of Service’ in terms of Ministry of Finance, Department of Economic Affairs
O.M. No. F 1(22)-B(AC)/2022 dated 23.2.2024 (APPENDIX ‘2.2’ to Chapter 2 of this manual) and as amended from time to time.
(vii) Certificate to the effect that “Increase of budget provision by ₹ five crores and above under a sub-head has been made with the approval of Secretary Expenditure”. Ministries/Departments would not be required to seek approval of Ministry of Finance on re-appropriation proposals above ₹5.00 crore in cases where supplementary demands have already been approved by the Parliament. Re-appropriation proposals for augmentation of provisions by more than ₹5.00 crore under object heads like Stipends/Scholarships, contribution to international bodies etc. which do not attract provisions of NS/NIS and for which no supplementary is obtained by the Ministries/Departments would continue to be processed by the Budget Division for approval of Secretary (Expenditure).
(viii) Certificate to the effect that “All savings/excess included in the Appropriation Accounts are covered by valid re-appropriation/surrender orders issued by competent authority under delegated powers and no re-appropriations have been made subsequently to cover the actual expenditure”.
Note: A few Demands would encompass provision for more than one Department under a Ministry. In such cases the provision would be made department wise within the Revenue and Capital Section, and thereafter the grand total would be struck under each section. A separate sheet showing major head wise-combined provision of all the departments will be attached after both Revenue and Capital sections.
Stage-II - Head wise Appropriation Accounts indicating:
The figures of actual expenditure.
The variations of (+) Excess or (-) Savings between the figures of Columns 2 and 3 with the reasons for variation will also be given in Column 4. For example, saving/excess was due to ........................................”. In the Statement of Recoveries etc., the actual recoveries will be shown alongside the total estimates, indicating the variation (+) More or (-) Less.
11.3.4 After complying with all the observations made by the Accredited Audit Officer, Pr. Audit Officer and the Office of CGA on the Grant Statement (Stage I), Principal Accounts Office will initiate action for Stage II of the Head wise Appropriation Accounts due for rendition to Audit/CGA as per time schedule issued by the CGA every year. Each account will be accompanied by the following certificates and statements also:
(ii) Certified that the expenditure figures included in the Head wise Appropriation Accounts stand reconciled and accepted by the concerned Heads of Departments / Controlling Authorities.
Note: In the case of composite grants and expenditure incurred by agent Ministries/Departments on behalf of functional Ministries, sub-head wise details of expenditure will be furnished on monthly and annual basis by the various accounting agencies viz. PAOs, AG etc. to the Pr.CCA/CCA/CA responsible for preparing the Head wise Appropriation Accounts of these grants. If the LoA amount is not fully utilised by the Agent Ministry/Department on behalf of Functional Ministry, the unspent amount should be surrendered within a specific timeline so that the surrendered/unspent amount can be utilised by the functional Ministry for its own commitments.
(c) Statement showing sub-head wise Reconciliation of figures in the Head wise Appropriation Accounts as well as Statement of Recoveries adjusted in accounts in reduction of expenditure. This will be done up to and Minor Head wise in the Statement of Central Transactions, as shown in APPENDIX 11.4.
(d) Statement showing the “Amounts met from Advances out of Contingency Fund of India” (APPENDIX 11.6), but remaining un-recouped at the end of the year. If there is no case of such advance remaining un-recouped, a Nil statement shall be furnished.
(e) Account
(s) of earmarked Fund
(s) containing the brief description of the Fund, its accounting operation, the year’s receipts and payments along with opening and closing balances. Figures as given in the statement should tally with the figures as given in Finance Accounts.
A certificate in the following form must also be given on a separate sheet to be enclosed with the Head wise Appropriation Accounts:
“Certified that the earmarked funds included in the Union Government (Civil) AppropriationAccounts for the year.........................................are eligible for inclusion and have the prior concurrence of the C&AG of India.
“Certified that there is/are no fund
(s) which is/are eligible for inclusion in the Union Govt. Appropriation Accounts (Civil) for the year”. (Deleting whichever is not applicable.)
(f) If the expenditure has exceeded the sanctioned provision or appropriation in any segment, viz. Revenue-Voted, Revenue-Charged, Capital-Voted, or Capital-Charged of the grant or appropriation, a certificate shall be furnished to the effect that the expenditure has not exceeded due to misclassification/erroneous adjustment in the accounts, and the actual figures of excess amount in units will also be shown.
(g) Certified that all the expenditure incurred during ............... relevant to grant/appropriation No............. has been included in the Appropriation Account for the year.................., and no amount/amounts pertaining to it has/have been left unadjusted under any suspense/remittance heads for want of paid vouchers etc.
(h) Statement indicating Major Head-wise /Grant-wise totals of the CFI as appearing in SCT.
(i) Reasons for variations between figures of total grant or appropriation in Column I (Original + Supplementary) if any, and actual expenditure in Column 3 under various sub-heads will be obtained by the Principal Accounts Office from the Budget Wing etc. of the Ministry/Department and incorporated in the Head wise Appropriation Accounts. Such reasons will be obtained in the cases qualifying for comments in view of the principles given in para 11.5.1. The copies of
Appropriation Accounts will be sent for audit scrutiny to the accredited Audit Officer, Principal Director of Audit (Finance and Communication), and the CGA, duly signed by the Principal Accounts Office, as indicated
belowa. Accredited Audit Officer, 3 copies; b. Principal Director of Audit (Finance and Communication), 1 copy; and c. CGA, 2 copies.
Note: Principal Accounts Office would prepare Appropriation Accounts of the expenditure incurred by the PAOs under its control as well as the expenditure figures reported by the Agent Departments on behalf of the Functional Department, based upon the sanctions issued by the latter. This is in terms of this Office Memorandum No.1(8)(7)/86/TA/1099 dt.30-10-1986.
11.3.5 Any important feature seen in the Head wise Appropriation Accounts should be brought to the notice of the Chief Accounting Authority, through the Financial Adviser.
11.4 STAGE-III HEADWISE APPROPRIATION ACCOUNTS: DULY AUDITED AND APPROVED BY THE CHIEF ACCOUNTING AUTHORITY ON FILE.
11.4.1 After the Appropriation Account of each grant/appropriation pertaining to the Ministry/Department is audited and “No Comments” certificate is issued by the Accredited Audit Officer, the finalized account would be put up on file to the Secretary, for his approval. This shall be put up through the FA of the Ministry, bringing to notice any important variations, points or features arising out of the audit scrutiny.
Note: The Audited Head wise Appropriation Accounts has to be submitted within one week of receiving ‘No Comments’ certificates from Audit. If the ‘No Comments’ Certificate received is subject to some Audit Observations, the audit observations must be complied with and the accounts finalized at the earliest, without waiting for a clear ‘No Comments’ Certificate from Audit.
11.4.2 The copies of the finalized Account will be furnished for condensation at this stage as under:
a. To the Accredited Audit Officer, 2 copies; b. To the Principal Director of Audit (Finance and Communication), 2 copies; and c. To the CGA, 2 copies.
11.4.3 The fact that the Chief Accounting Authority has approved the Accounts on file will also be indicated in the forwarding letters sent with the copies.
RECORDING REASONS FOR VARIATIONS AND THEIR PRESENTATION
11.5.1 The sub-heads for which reasons for variations of savings and excesses are required to be included in the Head wise Appropriation Accounts, will be selected on the following laid down limit:
(a) If the variation in a sub-head exceeds ₹500.00 lakhs*:
This includes all variations irrespective of the percentage under both savings and excesses, against the sanctioned provision of Original or Supplementary grants/appropriations or both taken together.
(b) If the variation in a sub-head does not exceed ₹500.00 lakhs*:
268
(i) Where variation is an excess - This includes all cases where the excess exceeds either 10% of the total sanctioned provision or ₹250.00 lakhs*, whichever is higher. The total sanctioned provision in this clause means Original provision if there is no supplementary provision or
Supplementary provision (except token supplementary) if there is no Original provision, and Original and Supplementary provision taken together, if both of them exist. (O or O+S or S)
(ii) Where the variation is a saving - This includes all cases where the savings exceed 10% of the original provision or ₹250.00 lakhs* whichever is higher, if there is no supplementary provision in that sub-head. If there is a supplementary provision (except token supplementary) in a sub-head either with or without any original provision, all cases in which the savings exceed 10% of the supplementary provision or ₹100.00 lakhs*, whichever is higher, will be included.
(c) If the Grant/Appropriation as a whole has been exceeded - This includes all cases where excess has occurred in any of the four segments as a whole viz. Revenue-Voted, Capital-Voted, Revenue- Charged and Capital-Charged.
In such instances only the sub-heads that involve an excess of over ₹25.00 lakh* each, may be pickedup. If none of the individual sub-heads involve an excess of over ₹25.00 lakh*, the sub-heads that mainly account for the overall excess may be included. The criteria laid down in
(a) and (b)
(i) will also be followed for the purpose.
*The revised limits effective for the accounts from the year 2018-19.
Note (1): Notwithstanding the working principles mentioned in the preceding para, occasions may arise where it may be considered necessary at any stage of the processing of the Appropriation Accounts, to include any additional sub-heads for the purpose of explaining the variations. This may occur either during Audit, or after the completion of Audit of the Head wise Accounts, or even at the stage of condensation. In such cases, explanations for variations in those sub-heads shall also be included in the Head wise Appropriation Accounts, before they are signed by the Secretary of the Ministry/Department as the Chief Accounting Authority.
Note (2): For the purpose of this para, variation implies the variations under column 1 (reappropriation including surrender element only) and column 4 taken together.
11.5.2 The reasons for variations should be brief, lucid and analytical to be mentioned as per their importance. Vague observations like ‘due to over estimates’, ‘based on actual expenditure’, ‘due to less (or more) expenditure’, ‘due to less (or more) demands’ etc. should be avoided and Ministry/Department shall be requested to elucidate correct and specific reasons.
11.5.3 The PAC (10th Lok Sabha, 1990-91) in its 60th Report vide paras 1.22and 1.24 had observed that savings of ₹100.00 crores or above are indicative of defective budgeting as well as shortfall in performance in a Grant or Appropriation. It has therefore been decided by the PAC, that each year a detailed Explanatory
Note in respect of savings of ₹100 crores or above shall be furnished by the respective Ministry/Department, to the Committee.
Note: Explanatory
Note for savings of ₹100.00 crores or more and for all excess expenditure may be submitted to audit for vetting, with a copy to the CGA by the concerned Ministries/Departments. It should be submitted along with the Head wise Appropriation Accounts (of this Stage).