Para 3.8.23 — MSO (Audit)
Original Rule Text
3.8.23 Deposit of funds by Government and autonomous bodies such as the DRDAs, Zila Parishads (ZPs), etc. responsible for implementing schemes in the State Public Account in the form of revenue deposits and civil deposits is against the ethos of sound financial management and contrary to the objectives of setting up DRDAs and ZPs, which are supposed to maintain their accounts with banks. Instances of State Finance Departments specifically directing these implementing agencies to deposit their funds in the Public Account should be commented upon after scrutiny of the Secretariat files. DRDAs, District Collectors or autonomous agencies also retain large unspent balances of funds year after year. An analysis of the annual availability of funds for implementation of the project/scheme taken up for review should include details of deployment of unutilized funds, indicating separately the opening balance, receipts during the year, utilization and closing balance, in order to establish the temporary or permanent transfer of funds to Personal Ledger Accounts or deposits and their subsequent utilization. If the funds are deposited in bank accounts, the basis of selection of the bank
(s) as well as the accounting and utilization of the interest earned from such deposits should also be examined. Accountants General should trace the flow of funds from the Central Government to the State Government and to various executing agencies to establish their end use and diversion or misappropriation at each level. Instances of funds being merely retained in Personal Ledger Accounts, civil deposits, banks etc. should be specifically highlighted.
# Relationship of financial and physical performance
What This Means
Government funds meant for scheme implementation should not be parked in the State Public Account as deposits — this goes against the purpose of agencies like DRDAs and Zila Parishads, which should maintain their own bank accounts. Audit should specifically flag instances where State Finance Departments direct implementing agencies to deposit funds in the Public Account. The audit team must trace the flow of funds from the Central Government to the State Government and then to executing agencies, establishing end use and identifying any diversion or misappropriation at each level. Funds merely sitting in Personal Ledger Accounts, civil deposits, or banks must be highlighted.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Parking scheme funds in State Public Account is against sound financial management
- 2DRDAs and ZPs should maintain their own bank accounts, not use Public Account
- 3State Finance Department directions to deposit in Public Account should be flagged
- 4Fund flow must be traced from Centre to State to executing agencies to establish end use
- 5Basis of bank selection and accounting of interest earned must be examined
- 6Idle funds in Personal Ledger Accounts, deposits, or banks must be specifically highlighted
Practical Example
While tracing fund flow for a rural employment scheme, the audit team finds that Rs 200 crores was released by the Centre to the state. The State Finance Department directed DRDAs to deposit Rs 150 crores in the Public Account as revenue deposits, from where only Rs 60 crores was actually drawn and spent over two years. The audit team flags this practice, notes that Rs 90 crores remained idle, and reports that the State Finance Department's directive undermined the scheme's implementation by restricting the DRDAs' access to their own funds.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the 'Public Account'?▼
Why must audit 'trace the flow of funds'?▼
What is a 'Personal Ledger Account'?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.