Para 3.16.19 — MSO (Audit)
Original Rule Text
3.16.19 Classification of transactions should be scrutinised in audit to verify that:
(i) the major, minor and detailed heads of account mentioned in the paid vouchers are authorised heads;
(ii) the expenditure has been classified according to the provisions made in the annual financial statement approved by the Parliament/Legislature and is in accordance with the provisions of Rules 22 et seq of the Form of Accounts of the Union and States (Basic) Rules;
(iii) no expenditure has been classified as 'charged' on the Consolidated Fund of India, of the State or of the Union Territory, as the case may be, except in accordance with the terms of the Constitution, and conversely that no expenditure that should be 'charged' has been classified as 'voted'; and
(iv) expenditure which should have been classified in the 'Capital' section of the account has not been classified incorrectly in the 'Revenue' section and vice versa.
- B. Responsibility for laying down Principles of Classification
What This Means
Auditors must scrutinize the classification of every transaction to verify four critical things: that the account heads are authorised, that expenditure matches the budget approved by Parliament or the Legislature, that only constitutionally mandated items are classified as 'charged' on the Consolidated Fund, and that capital and revenue expenditure are not mixed up. These checks protect legislative authority over public money.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Verify that major, minor and detailed heads on paid vouchers are authorised heads
- 2Ensure expenditure classification matches the annual financial statement approved by Parliament/Legislature
- 3Confirm only constitutionally specified items are classified as 'charged' on the Consolidated Fund
- 4Check that capital expenditure is not wrongly classified as revenue and vice versa
Practical Example
While auditing paid vouchers, an auditor notices that the salary of a High Court judge has been classified as 'voted' expenditure under a departmental grant. Since judges' salaries are constitutionally 'charged' on the Consolidated Fund, the auditor flags this misclassification for immediate correction to ensure the Appropriation Accounts correctly reflect the constitutional position.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What are the 'Form of Accounts (Basic) Rules' referred to here?▼
Why is the capital vs. revenue distinction so important in classification?▼
What does 'charged' expenditure mean in this context?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.