Financial Administration in India

How transactions with other Governments are made?
The Treasury Rules of each State Govt. provide that money may be received and payments on behalf of the State Govt. as well as Govt. of India including Union Territories and other State Governments under the following heads of the accounts:
(a) Central Government/Union Territories transactions including Rail and Defence – Major Head – 8658 – Suspense Account
(b) Transactions of other State Governments – Major head – 8793 – Inter-State Suspense Account of the Govt.
Receipts and payments of the Govt. of India including Union Territories and other State Governments are made initially through Suspense Account mentioned above. The same are shown to the List of Payment and Cash Account of the Treasury which are sent to the State Accountant General who forward the same to the Accountant General of the concerned State or the concerned Pay and Accounts Office of the Union. Final payment relating to Govt. of India is made by Cheque/Demand draft. But in case of other State Governments transactions, the same are made through the Central Accounts Section of the Nagpur which acts as a Clearing House of the Government for final settlement of accounts. Only Loans/Grants from the Central Govt. to State Govt. and repayment of loan and interest by State Govt. are made through R.B.I., Nagpur.

What would you consider to be fundamental principles of Audit as conducted by the Accountant General/C.A.G.?
It is the first principle of Govt. audit to recognise the clear distinction between auditorial and administrative functions. It is the function of audit to verify that financial rules and orders etc. are properly observed. It is not the function of the audit to prescribe what such rules and orders shall be or to interfere with their administrative applications. Audit of the Accountant General should he comprehensive and includes the following:
(A) Regularity Audit
(i) Sanction of making expenditure as per general rules or special order of the competent authority.
(ii) Provision of fund authorised by competent authority fixing the limits, within which the expenditure can be incurred.
(iii) The expenditure should be made as relevant provision of the constitution and laws made thereunder and also should be in accordance with financial rules and regulation framed by the competent authority.
The work of the auditor in relation to regularity of the expenditure is of a quasi-judicial character. Audit will verify that the expenditure have been made after observing relevant provisions of the Constitution and the Laws and Rules thereunder, and with financial Rules and Regulations.
Propriety Audit
There is no precise rules laid down for audit of propriety. Following, matters should be examined by the audit :
(i) High standard of public financial morality.
(ii) Sound financial administration.
(iii) Devotion to financial interests of the Govt.
Standard financial propriety.
(a) The expenditure should not be prima facia more than occasion demands. Every public officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.
(b) No authority should exercise its power of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.
(c) Public moneys should not be utilised for a benefit of a particular persons or section of community, unless :—
(i) Insignificant expenditure
(ii) Claimed for the amount could be enforced in a court of law.
(iii) Recognised policy or custom.
(C) Efficiency—Cum—Performance Audit
(i) Whether the scheme is running economically.
(ii) Whether they are actually producing the result expected from the scheme.
Examinations are required in respect of the following grounds
(i) Inefficient handling, lack of foresight, expensive delay, wasteful expenditure through lack of co-operation, loss etc.
(ii) To ascertain physical target, return, financial object of the scheme.

Describe the Audit Report of the C.A.G.
The results of these audits are mentioned in the Audit Report of the C.A.G. which are given below:
(a) Variation from the fund voted by the Legislature;
(b) Excess over voted grants and charged appropriation;
(c) Expenditure New Service not contemplated in the budget;
(d) Irregular expenditure, losses, wasteful, uneconomical expenditure;
(e) Reviews about performance of development programme and schemes. On the basis of these reports the Parliaments/State Legislature as the case may be control over implementation of policies and its exercise. The Comptroller and Auditor General submits the following reports to the President of India or the Governor of the State or Administrator of the Union Territory as the case may be who places the same to the Parliament or State Legislature as the case may be:
(a) Audit Reports;
(b) Finance Accounts i.e. comprehensive accounts of Receipts and Expenditure including classification of transactions under respective heads;
(c) Appropriation Accounts.
The said reports have been placed before the Parliament/ State Legislature as the case may be. The same are examined by Public Account Committee of the Legislature.

What is Committee of Public Undertaking?
Public enterprisers are financed from the public funds. This Committee examine the reports submitted by the C.A.G. in respect of the Public Sector Undertakings on behalf of the Legislature. The Committee consist of 10 members from Lok Sabha and 5 members from Rajya Sava, The term of office is one year.