Para 3.13.21 — MSO (Audit)
Original Rule Text
3.13.21 There exist a number of Reserves and Reserve Funds under the Sector ‘J. Reserve Funds’ in the accounts of the Union and the State Governments which have been created for specific and well-defined purposes and are fed by contributions or grants from the Consolidated Fund of India, of a State or of a Union Territory, or from outside agencies. In relation to the transactions pertaining to such funds, it should be seen in audit that:
(i) the transactions are classified and accounted for according to the principles laid down under the heading “Transactions pertaining to Reserves and Reserve Funds” in paragraphs 3.16.35 to 3.16.37 in the chapter on “Certification of Finance Accounts and Appropriation Accounts”;
(ii) these transactions conform to the rules or orders framed by the competent authority governing the administration of each Fund;
(iii) the balance standing in the account of each Fund at the close of the year has been verified; and
(iv) the instructions relating to investments contained in this chapter are kept in view in cases where the whole or any part of the balance of a Fund is invested.
- Suspense accounts
What This Means
Union and State Governments maintain various Reserve Funds under Sector J in their accounts for specific purposes, funded by contributions from the Consolidated Fund or external agencies. Audit must verify that transactions are classified correctly per accounting rules, conform to the rules governing each fund, that year-end balances are verified, and that any invested portions follow proper investment guidelines.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Reserve Funds exist under Sector J in government accounts for specific, well-defined purposes
- 2They are funded by contributions from the Consolidated Fund or outside agencies
- 3Transactions must be classified per the principles in paragraphs 3.16.35 to 3.16.37
- 4Each fund must comply with rules framed by the competent authority for its administration
- 5Year-end balances must be verified and investments must follow prescribed instructions
Practical Example
A State Government maintains a Calamity Relief Fund under Sector J, receiving annual grants from the Central Government. During audit, the auditor verifies that the Rs 150 crore received is correctly classified under the prescribed account head, that disbursements from the fund are only for approved calamity relief purposes per the fund rules, that the year-end balance of Rs 40 crore is verified, and that any invested portion is in securities permitted by the fund's governing orders.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is Sector J in government accounts?▼
Who frames the rules governing each Reserve Fund?▼
Why is verification of year-end balances important for Reserve Funds?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.