3.15.8 The Accountant General should also examine independently the reasons for excesses and savings in at least two departments where substantial excess expenditure or savings might have taken place and frame appropriate comments based on the results of the examination. Such detailed appropriation audit should provide an insight not only into the nature of and reasons for the excess expenditure or savings in relation to the budgeted grants but also focus attention, more importantly, on the control failures and deficiencies, delays in decision-making, etc. that might have facilitated the excesses/savings and on the
failure of superior authorities to detect and rectify them. Comprehensive instructions for examination of the reasons for excess expenditure/savings are contained in the Annexure.
# Annexure (Referred to in paragraph 3.15.8)
- Comprehensive instructions for examination of excess expenditure/savings
1. It will be necessary for audit to examine the veracity of the explanations on excesses or savings in expenditure furnished by the departments. These should be analysed with reference to departmental records and the systems, if any, in place for monitoring expenditure under each unit of appropriation against each Grant or Appropriation. This analysis will be conducted with reference to the excesses or savings under various detailed heads administered by the department concerned and will necessarily be confined to only significant and material variations. While expenditure on Non-Plan items should be examined with greater care, the Plan expenditure should be analysed to ascertain whether the excess expenditure or savings took place in respect of State Plan or Centrally Sponsored schemes and specific and precise reasons therefor should be collected from the relevant files and records. The arrangements, if any, available at the macro level for the scheme-wise monitoring by the department of expenditure on the State Plan and Centrally Sponsored schemes should be examined and failures or deficiencies in such monitoring should be commented upon. In both these cases, the drawing and disbursing officers responsible for the excess expenditure or savings should be identified; it should also be examined inter alia whether large amounts drawn through Abstract Contingent Bills to avoid lapse of budget provision remained unadjusted even though the accounts revealed expenditure was incurred in excess.
2. The following aspects will require special attention and probe with reference to the failure of the controlling and drawing and disbursing officers to restrict their expenditure within the allotted amounts:
(i) Deficiencies in budgetary procedures and processes that might have resulted in under provisioning or incomplete estimation of requirements based on insufficient information.
(ii) Reliability of the estimates and their basis and the extent to which the excess expenditure was avoidable.
(iii) Adequacy of mechanisms for budgetary and expenditure control by controlling officers.
(iv) Arrangements for reporting of progressive monthly expenditure by the drawing and disbursing officers to the controlling officers and their monitoring by the latter and their adequacy.
(v) Adequacy of arrangements for the periodical and prompt reconciliation of expenditure with that accounted for by the Accountant General to facilitate timely detection of the likelihood of the expenditure exceeding allotments and appropriate corrective action.
3. The monthly Civil Accounts, containing the summarised progressive expenditure under each major head, sent by the Accountant General (A&E) to the Finance Department and the administrative Head of the Department concerned should also be seen to determine whether any warning slips were issued by the former to the Executive when the grants were either being exceeded or were almost utilised fully. The corrective action, if any, taken on these intimations by the Finance Department and the
administrative Secretary or the controlling officer should also be looked into to determine if it was adequate.
# Additional avenues of examination by the audit party reviewing departments incurring excess expenditure persistently
4. Reasons for excess expenditure or savings could be many and varied. Audit parties undertaking reviews of specific departments that persistently incur expenditure in excess of allotments could, with advantage, examine the following and frame appropriate comments after obtaining the explanations of the departments concerned:
(i) Scrutiny of proposals for supplementary grants to determine whether these were submitted only after a proper assessment of the trend of expenditure or ascertaining the actual expenditure incurred.
(ii) Instances where amounts surrendered exceeded the overall savings in the grant and analysis of the causes.
(iii) Cases of expenditure exceeding the amount of deposits received for execution of works. The reasons for the excess and the source from which the excess expenditure was met by the departments concerned should also be ascertained.
(iv) Instances of expenditure incurred in fulfilment of decrees, which should correctly have been met out of Charged Appropriations, being irregularly met out of voted provisions.
(v) Cases of excess expenditure attributable to the repayment of overdrafts and shortfall obtained from the Reserve Bank of India. The circumstances leading to the excess expenditure would need to be examined in detail.
(vi) Cases of conversion of loans given to public undertakings and other autonomous bodies into grants or investments even in the absence of the necessary budget provision. The circumstances in which such necessity arose should be examined in depth.
(vii) Instances of failure of drawing and disbursing officers to include in their estimates/demands appropriate provision for meeting undischarged liabilities of past periods.
(viii) Instances of non-adherence by the departments to the prescribed Annual Plan ceilings while incurring expenditure.
(ix) Adequacy of arrangements for periodical reconciliation of departmental expenditure with that accounted for in the books of the A&E office.
(x) Action taken by the Finance Department to intimate details of the cuts imposed in the estimated demands of the departments concerned while communicating the approved budget estimates to them and action taken, in turn, by the departments to inform the field units about these cuts.
(xi) Instances of delays, if any, on the part of the Finance Department in communicating details of approved revised estimates to the departments.
(xii) Cases of default by the department in furnishing regularly the statements of monthly expenditure to the Finance Department and the Accountant General.
(xiii) Instances of budget provision being made by the departments for vacant posts held in abeyance on account of a ban on filling up these posts.
(xiv) Cases of failure of departments concerned to formulate re-appropriation proposals for submission to the Finance Department.
(xv) Instances of issue of financial sanctions by the Government towards the close of the financial year without ensuring the necessity for drawal of funds and feasibility of their utilisation.
- Chapter–16 Certification of Finance Accounts and Appropriation Accounts
# Introduction