Para 3.16.37 — MSO (Audit)
Original Rule Text
3.16.37 The method of accounting which, having regard to the aforesaid principles, should be applied to the reserves mentioned in paragraph 3.16.35 above will be as follows:
(i) The grants from outside agencies who do not retain control over the expenditure met therefrom and the grants from other Governments will be taken to the relevant receipt head of account of the Government and the expenditure on the scheme or projects recorded under the expenditure major head concerned.
(ii) In the case of funds of the first and second categories referred to in paragraph 3.16.35 above, the amounts set aside by the Union/State/Union Territory Government from the Consolidated Fund of India/State/Union Territory to provide reserves for expenditure to be incurred by themselves
on particular purposes should be taken to the deposit head opened for the purpose.
(iii) In both cases, in order to bring the expenditure from the fund into the Appropriation Accounts, the expenditure should be accounted for under the relevant service head of expenditure under which provision of funds has been made and an equivalent amount will be credited to the service head concerned by transfer from the deposit head concerned and shown as a deduct entry thereunder.
Note: In cases where the outside agencies retain control over the execution of schemes/projects, the grants-in-aid received from such agencies and the expenditure on the scheme/project will be accounted for under a deposit head opened for the purpose.
What This Means
This paragraph prescribes the specific accounting method for reserve fund transactions. Grants from agencies without spending control and inter-government grants go to the relevant receipt head and expenditure to the service head. For funds created from government's own set-asides or controlled grants, the amounts go to a deposit head. In both cases, actual spending is shown under the service expenditure head, with an equivalent credit transferred from the deposit head to bring expenditure into the Appropriation Accounts.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Uncontrolled grants: credited to receipt head; expenditure under service head
- 2Government set-asides: transferred to a deposit head opened for the purpose
- 3Expenditure from funds is shown under the service head with a matching credit from the deposit head
- 4This mechanism brings fund expenditure into the Appropriation Accounts for legislative review
- 5Grants from agencies retaining spending control go entirely to a deposit head
Practical Example
A state receives Rs 20 crore from the Central Road Fund and deposits it in a reserve (deposit head). When the state spends Rs 5 crore from this reserve on road construction, the expenditure is recorded under the relevant road construction head of expenditure. Simultaneously, Rs 5 crore is transferred from the deposit head and shown as a deduct entry under the same service head. This ensures the Appropriation Accounts reflect the true expenditure position.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why is a deduct entry used under the service head?▼
What happens when an outside agency retains control over its grant?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.