Para 5.15 — This para deals with Proforma Corrections - adjust

5.15 PROFORMA CORRECTIONS 5.15.1 "Proforma Corrections” to balances of earlier years in cases where provisions of Rule 38 of Government Accounting Rules, 1990 are not attracted, are to be carried out by affording relevant contra effect to "Government Account" referred to above. Approval of the CGA is required to be obtained in each case for the incorporation of any such 'Proforma Correction’, by providing full background and justification. This includes cases wherein either-

closing to balance vis-a-vis a head closing to Government Account are involved; or

(b) correction of a balance under a head closing to balance purely as an accounting device is involved.

5.15.2 Expenditure incurred under the CFI and booked under concerned heads is accounted for in the Appropriation and Finance Accounts. However, the balances under the heads of loan, debt etc will also be included in the Finance Accounts.

Certain Government decisions occasionally affect such balances representing progressive effect of bookings made in earlier years, and necessitate alteration in the figures of balances exhibited in the "Ledger of Balances", Finance Accounts, etc. In such cases, the provision of "Proforma Correction" will be used and not by passing (the old transactions of expenditure etc) through the monthly accounts/S.C.T. of the year in which the relevant Government decision is taken.

The following are some of the main types of situations in which "Proforma Corrections" are required to be made:

(i) Change of Classification: Decision may be taken by Government in consultation with the Budget Division,DEA,Ministry of Finance and CGA on the advice of the C. & A.G. for change in classification of any specific type of transaction of a head closing to "Government Account" or for transfer of balance from one to another head under Loan or Debt etc. which closes to balance. The decision would imply that the aggregate effect of transactions booked during earlier years under a relevant head will have to be transferred to a new head selected for the purpose. An example of this type is the consolidation of loans given to State Governments that involves transfer of aggregate balances from one Minor Head/Sub-Major head to another Minor Head/ Sub-Major Head. Specific example for this is the "Loans consolidated on the recommendations of the various Finance Commissions" under the Major Head "7601-Loans and Advances to State Governments."

(ii) Increase or Decrease in the Opening Balances: Based on decisions of Government, the Controller of Aid Accounts and Audit as well as Railway Board effect certain increases or decreases in the opening balances of heads of accounts exclusively operated by them. This is

done without routing the adjustments through the monthly accounts or the SCT of the year for which the Finance Accounts are under preparation.

(iii) Aided Institutions and Departmental Commercial Undertakings: In case of any special orders of the Government or where a Government aided institution is taken over without any cash outgo to be run as a Departmental Undertaking, the balances pertaining to its liabilities like loans and advances and assets and investments owned by it, are taken under the relevant head of account with a contra entry against "Government Account". This will include the head under which loans were granted earlier. Similarly, where a Departmental Undertaking is converted into a Company or Corporation, the balance pertaining to progressive capital expenditure under various heads for the Undertaking, is required to be re-classified under appropriate heads, on account of the change in the status of the Undertaking.

(iv) Conversion of Grants in aid to Loans and vice-versa: It includes cases where any decision is taken by Central Government for conversion of a Grant-in-aid given during any earlier financial year to a State Govt. / U.T. Govt. /Entity into a loan or conversion of a loan given earlier into Grant-in-aid with retrospective effect. This is done after issue of necessary sanction and necessary appropriation as applicable. In the cases whereby the earlier grants are converted to loan, the progressive figure under the respective loan head (see Para 10.9.7 also) will be increased through "Proforma Correction" after affording contra credit for a corresponding amount under "Government Account". This will also be reflected in the ledger of balances in "Form CAM41","Government Account" in Form CAM-42, and indicated in the material for Finance Accounts submitted to CGA. A note will also be kept in the loan register, indicating briefly the terms and conditions of the repayment of loan. In the case of retrospective conversion of a loan given earlier into Grant-in-aid, the relevant sanction order should indicate the treatment to be given to the portion of loan and interest paid to the Govt. by the recipient of the loan. "Proforma Correction" would similarly be required to decrease the progressive figure under the relevant Minor Head under the relevant Minor Head of respective loan head by affording contra debit to "Government Account" in the documents referred to above.

(v) Raising or Lowering of Balances: Paras 10.8.5 and 10.8.6 envisage the raising or lowering of balances under the two Minor Heads "Advances for purchase of other conveyances" and "Other advances", by the Principal Accounts Offices, wherever necessary, with the approval of the CGA. To give effect to this, they will have to make ‘Proforma Correction’ in the closing balances against the affected head in their ledger of balances in form CAM-41, and reflect contra effect in their "Government Account" in form CAM-42, along with the material for Finance Accounts submitted to CGA.

What This Means

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Key Points

• 1Proforma Corrections adjust balances of earlier years where Rule 38 of GAR 1990 does not apply
• 2Each proforma correction requires prior approval of the CGA with full background and justification
• 3Corrections are made through contra effect to 'Government Account'
• 4Two scenarios: (a) corrections between heads closing to balance vs. Government Account, (b) pure balance corrections as accounting devices
• 5These adjustments affect the Finance Accounts and the ledger of balances

Practical Example

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Cross References

Frequently Asked Questions

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.