Para 3.16.21 — MSO (Audit)
Original Rule Text
3.16.21 It should be borne in mind that the Comptroller and Auditor General would not demur to a decision of the Executive to meet expenditure either from current revenues or from borrowed moneys, so long as this decision is generally in conformity with the budget proposals passed by the Legislature or has otherwise received its specific approval. It is however, the duty of Audit to bring to notice occasions on which the classification of expenditure between revenue and capital or its distribution between current revenues and loan funds appears to be contrary to the dictates of sound and prudent financial administration. The principles upon which such criticism should be based are described in the following paragraphs.
- D. Principles for Classification of Expenditure as Capital Expenditure
What This Means
Audit will not object to the government's decision to fund expenditure from current revenue or from borrowings, as long as it aligns with the budget approved by the Legislature. However, audit has a duty to flag cases where the classification of spending between revenue and capital appears to violate principles of sound and prudent financial management. The following paragraphs set out the principles on which such audit criticism should be based.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Audit does not challenge the executive's choice of funding source if it matches legislative approval
- 2Audit must flag classification between revenue and capital that appears financially unsound
- 3The duty is to bring instances to notice, not to override the executive's decision
- 4Criticism should be based on established principles of sound financial administration
Practical Example
A state government classifies Rs 200 crore spent on temporary event structures as capital expenditure to avoid showing a revenue deficit. The audit team flags this as contrary to sound financial practice, noting that temporary structures do not create permanent assets and should ordinarily be charged to revenue, even though the final classification decision rests with the government.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Can audit force the government to change its capital-revenue classification?▼
What does 'demur' mean in this context?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.