Para 4.15.1 — MSO

ACCOUNTING OF TRANSACTIONS PERTAINING TO RESERVE AND RESERVE FUNDS 4.15.1 Any device of rendering grants non-lapsing by withdrawing amounts to a fund is contrary to the strict theory of Parliamentary financial control. But if such a course is adopted with the cognizance and approval of the Legislature, Accountant General cannot make any demur. Subject to this fundamental condition Reserves or Reserve Funds may be constituted by the State Government under any statutory provision or otherwise, either by allotment of sums from the Consolidated Fund of a State or from grants or contributions made by other Governments or outside agencies, with the object of expending the moneys accumulated in the funds on the specific and particular purposes for which they have been constituted. The procedure of accounting for transactions pertaining to such funds will ordinarily be determined by the procedure followed in budgeting for these transactions. It shall, however, be the duty of the Accountant General to see that the procedure adopted in

(b) It should verify that the accounts exhibit the true financial facts.

(c) It should bring to notice transgression of generally accepted principles of public finance.

budgeting and accounting for such transactions generally conform to the principles mentioned in paragraph 3.4 of the General Directions contained in the List of Major and Minor Heads, and, where departures are made from these principles to suggest to the Executive Government the desirability of following them. The Reserve or Funds referred to may be classified under the following three categories according to the sources from which they are fed:-

(i) funds accumulated from grants made by another Government and at times aided by Public subscriptions, eg., Fund formed from subventions from the Central Road Fund; Fund for Economic Development and Improvement of Rural Areas;

(ii) funds accumulated from sums set aside by the State Governments from the Consolidated Fund of the State to provide reserves for expenditure to be incurred by themselves on particular purposes, eg., the various Depreciation or Renewals Reserve Funds created in respect of commercial departments and undertakings;

(iii) funds accumulated from contributions made by outside agencies to State Governments, eg., deposit account of grants made by the Indian Council of Agricultural Research; 4.15.2 The main principles which should govern the procedure of expenditure from these funds and its exhibition in estimates and accounts are set out below:-