Para 3.16.29 — MSO (Audit)
Original Rule Text
3.16.29 It is the function of Government, and not of Audit, to determine the source from which expenditure of a capital nature shall be financed. According to the decision of Government, the expenditure will be classified under the appropriate major head outside or within the Revenue Section of the Accounts.
Note: The Government of India and State Governments have decided that ordinarily expenditure of a capital nature will not be debited to a capital head outside the Revenue Account except in the case of new works, where the cost individually exceeds Rupees one lakh or where the individual cost is below this limit but the works form part of the scheme having a continuity of purpose, time and space and the cost of the scheme as a whole exceeds Rs 5 lakhs.
What This Means
It is the government's prerogative, not audit's, to decide how capital expenditure is funded. Audit simply ensures the correct accounting treatment follows from the government's decision. The Central and State Governments have adopted a general policy that capital expenditure is charged to a capital head outside the Revenue Account only for new works costing over Rs 1 lakh individually, or for schemes with continuity of purpose costing over Rs 5 lakh in total.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1The government decides the funding source for capital expenditure; audit does not
- 2Classification follows the funding decision — either inside or outside the Revenue Account
- 3Individual new works over Rs 1 lakh go to capital heads outside Revenue Account
- 4Scheme works below Rs 1 lakh but part of a scheme over Rs 5 lakh also go to capital heads
Practical Example
A government department undertakes 15 small road repair works costing Rs 80,000 each as part of a larger highway improvement scheme totaling Rs 12 lakh. Although each individual work is under Rs 1 lakh, they form part of a continuous scheme exceeding Rs 5 lakh. Therefore, the entire scheme's expenditure is debited to a capital head outside the Revenue Account.
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 object to the government's choice of funding source?▼
What does 'continuity of purpose, time and space' mean?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.