Para 4.14 — MSO (A&E)
Original Rule Text
4.14 In cases where it is decided to write down capital, it is the duty of the Accountant General to satisfy himself that such writing down is approved by the competent authority for valid reasons and is in accordance with commonly accepted principles, both of commercial accounting and Government financial control.
# ACCOUNTING OF TRANSACTIONS PERTAINING TO RESERVE AND RESERVE FUNDS
What This Means
When the government decides to write down (reduce) the book value of capital assets, the Accountant General must verify that this write-down has been approved by the competent authority for valid reasons and follows accepted commercial accounting and government financial control principles. This prevents unauthorized or unjustified reduction of asset values on government books.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Writing down capital means reducing the recorded book value of a capital asset
- 2The AG must verify that competent authority has approved the write-down
- 3Valid reasons must exist for the write-down
- 4The write-down must comply with commercial accounting principles and government financial control standards
- 5This safeguards against unauthorized devaluation of government assets
Practical Example
A state irrigation department wants to write down the capital value of an old canal system from Rs. 200 crore to Rs. 50 crore because the canal is no longer fully functional. The Accountant General must check that the State Finance Department (competent authority) has approved this write-down, that there is a valid engineering assessment supporting the reduced valuation, and that the accounting treatment follows accepted depreciation principles.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What does 'writing down capital' mean?▼
Why does the AG need to verify capital write-downs?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.