Para 2.2.17 — MSO

2.2.17 Systems in force for budget formulation and expenditure control are required to be audited so as to ensure that the estimates presented to the Parliament/Legislature are prepared in accordance with established procedure and that the executive has a mechanism in place to monitor expenditure vis-à-vis the budget to ensure that Grants and Appropriations are not exceeded. Audit scrutiny would be specially focused on the following aspects:

(i) Existence of proper and adequate systems in the ministries and departments for budgetary control with duly defined accountability centres for securing the preparation of realistic estimates of both receipts and expenditure.

(ii) Availability with the Union, State and Union Territory Governments of a Budget Manual describing the rules and regulations governing budget formulation and the processes relating to preparation of receipts and expenditure estimates, their examination by the heads of departments and the controlling officers and provision of all relevant and of essential information and explanations.

(iii) Adherence to all procedures prescribed in the Budget Manuals of the respective governments.

(iv) Extent of association and involvement of functionaries at all levels from the drawing and disbursing officers to the heads of the ministries and departments with the formulation of budget estimates.

(v) Adequacy of monitoring mechanism to safeguard against excesses over allotments to drawing and disbursing officers and over the overall grants and appropriations.

Note: Expenditure against grants or appropriations specified in the Schedule to an Appropriation Act is incurred from various receipts (taxes, duties, grants-in-aid, borrowings, etc.) of the Government concerned. Whenever actual receipts fall short of those estimated, there is a resource crunch. To maintain control over resources, the Finance Departments of the States and Union Territories release funds periodically (generally every quarter) to different departments keeping in view the availability of funds. On periodical release of funds by the Finance Department, the departmental heads and the controlling officers reallocate these funds to different drawing and disbursing units. Audit should therefore see that the expenditure incurred by different drawing and disbursing units is within the allotments made to them from time to time.