Hand Book

http://ams.kar.nic.in/fdhb.htm

Government of Karnataka FINANCE DEPARTMENT

(FD 32 BPA 92)
Hand Book of Instructions for the Speedy Settlement of audit Observations, Inspection Reports, Speedy Disposal of Audit Paragraphs and Timely Action on Matters pertaining to the Public Accounts Committee, committee on Public Undertaking: 1.1 The Audit of the receipts and expenditure of the State Government is conducted by the Accountant General, Karnataka, Bangalore on behalf of the Comptroller and Audit General of India . The aim and purpose of this audit is, among other things, to bring to the notice of Legislature, items of expenditure which are beyond the scope of the authorization made by the Legislature, cases of irregular expenditure, loss of public money caused by default, lack of supervision or other causes, as well as excess or short collection of taxes, erroneous assessments of taxes etc. Such of the Audit observations as have to be brought to the notice of the Legislature are included in the Annual Reports of the Comptroller and Auditor General of India on the Accounts of the State Government. Separate Reports are prepared in respect of Public Undertakings. Under Article 151(2) of the Constitution the Reports of the Governor who will cause them to be laid before the Legislature of the State. The Legislature, in turn refers the Comptroller and Audit General Report (Civil) along with the Appropriate and Finance Accounts to the Committee on Public Accounts, constitute under Rule 250(1) of the Rules of Procedure and Conduct of Business in the Karnataka Legislative Assembly and Rule 255(1) of the Rules of Procedure and Conduct of Business in the Karnataka Legislative Council. 1.2 The Comptroller and Auditor General Reports (Commercial is referred by the Legislature to the Committee on the Committee on the Public Undertaking constituted under Rules 256_A and 228_A under Rules of procedure and conduct of Business in the Karnataka Legislative Assembly and Karnataka Legislative Council respectively 1.3 In the course of audit, the Accountant General raises certain observations or asks for clarifications in respect of the expenditure incurred and revenue realized by the various officers of Government. These Observations are based on the audit Central Office or during local audit or inspection of the accounts in the departmental offices. These observations and other points requiring settlement have to be cleared then and there at the earliest opportunity. Some of the observation memoranda / audit enquiries / inspection reports are likely to lead to audit paragraphs in the comptroller and Auditor General s Reports to be placed before the legislature. The expeditious settlement of these observations is, therefore, most important. Special Reports sent in respect of irregularities such as excess or short audit of sanctions, rules, etc made by Government require immediate attention. Government has issued instructions from time to time regarding these matters. In spite of repeated instructions, the irregularities continue to be on the increase and the Karnataka Public Accounts Committee has taken serious note of these irregularities. In order to enable the Departmental Officer, Chief controlling Officer and Secretariat Departments to deal with these matters expeditiously, the instructions issued from time to time are brought out in one place in this Hand Book. INSPECTION REPORTS 2.1 During the course of local inspection, the Audit staff will be issuing enquiries calling for information on various points. The Particulars given reply to such

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enquiries should be correct with reference to the records so that, at a later stage, the accuracy of the figures and the facts contained in the Inspection Reports are not disputed. To ensure this, the replies so audit enquiries should be furnished only after approval by the proper authority. The audit officer generally discuses with the Head of the Office the more important irregularities before finalizing his inspection report. The head of the office should seize this opportunity to check up enable then to bring out the full facts of each case in the inspection report and by mutual discussion it may be possible to settle on the subject all the minor objection and irregularities. RECTIFICATION OF IRREGULARITIES DISCLOSED DURING AUDIT 2.2 The head of the office should also simultaneously without waiting for the receipt of the inspection report initiate action to rectify irregularities, defects, and omissions etc., which come to light in the course of audit. For example if it is discovered that a sanction issued by the head of the office was in excess of the powers delegated to him immediate steps should be taken to get his action ratified by the competent authority. REPLY TO INSPECTION REPORT 2.3 All inspection reports received from the Accountant General should normally be replied to within a period of one month from the date of their receipt. This time limit should be strictly adhered to except where consultation with other officers is required to be made or orders of the competent authority are required to be obtained for rectifying the defects and omissions pointed out. If replies to certain points mentioned in the Inspection Reports cannot be furnished to the Accountant General within the time limit specified, interim replies indicating the action taken or proposed to be taken to rectify the detects should be sent the Accountant General and action taken to give final replies within a maximum period of three months. The factual correctness of the replies should be ensured and proper steps also taken to avoid recurrences of such detects. AUDIT OBSERVATIONS SPEEDY SETTLEMENT OF AUDIT OBSERVATIONS 3.1 The results of audit are reported to departmental Officers so that appropriate action is taken to rectify the defects and omissions where possible and to prevent their recurrence. The delay in the disposal of audit observations tends to defect the very purpose of audit. Besides, it may involve Government in avoidable loss on account of fraud, defalcation and other serious irregularities, which may remain undetected for want of prompt attention. Moreover, with the lapse of time it may become more difficult to settle the audit observations due to difficulty in locating the relevant records, or death, retirement or dismissal of concerned officers and officials. In the case of taxes, delay may result in the time limit being over, rendering corrections or re-opening of assessments or appeals impossible. In some cases immediate amendments to Legislation to prevent leakage or loopholes may become necessary. RESPONSIBILITY OF OFFICERS 3.2 The responsibility for replying to audit observations and the settlement of other issues raised in audit devolves primary upon Disbursing Officers, Head of Offices, Controlling Authorities and Secretariat Officers according to the nature and responsibility involved TIME LIMIT FOR DISPOSAL OF AUDIT OBSERVATIONS 3.3 Audit observations / notes received from the Accountant General Office should normally be replied to within a fortnight from the date of their receipt by the Officer except where consultations with other Officers is required to be made or orders of Superior Officers are required to be obtained for rectifying the defects and omissions. But in no case should the time exceed three months. REGISTER OF AUDIT OBSERVATIONS 3.4 Heads of offices should maintain a Register of Audit observations in the form given in Annexure 1 to this Hand Book to watch the prompt disposal of Audit

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Observations. 3.5 The following instruction should be followed by the departmental officers in the maintenance of the Register. i. As soon as an audit observation (Memorandum or letter) is received from the Accountant General it should be entered in the Register.

ii. All the Audit Observations received in a calendar year should be serially numbered. Each item of audit observation should be given a serial number. If there are two or more items in a single memo or letter received from the Accountant General, separate serial numbers should be given for each of them. iii. An item should be treated as closed only after an intimation of acceptance of the reply is received from the Accountant General. If, however, a reply is not received during the half-year and the item is not shown as outstanding in the next half yearly list of outstanding objections received from the Accountant General, the item may be treated as closed. iv. v. Items, which cleared, should be rounded off in red ink, under the attestation of the Head of the Office. There should be only one Register for the whole office and one of the clerks should be made responsible for the maintenance of the Register. REVIEW OF AUDIT OBSERVATIONS REGISTER 3.6 The Register should be closed monthly. It should be reviewed by the Head of Office monthly and by the Head Clerk or such other intermediary Supervising Officers, if there is one, every fortnight. 3.7 The Review of the Register by the Head of the Office or any other Officers entrusted with this work should be critical and detailed and special attention should be given to the clearance of old observations still pending. LIAISON WITH AUDIT OFFICE 3.8 The officers entrusted with the work of clearance of audit observations should keep a close contact with the office of the Accountant General, and discuss with the concerned officers if there are any special difficulties. SPECIAL INSTRUCTIONS FOR DISPOSAL OF AUDIT OBSERAVATIONS 3.9 In spite of the instructions issued by Government from time to time the number of audit observations pending and the amount held under objection are on the increase. This is pointed out by Audit in almost every Report. The Public Accounts Committee is distressed about the large number of audit observations pending pretty long periods. Special instructions have been issued for clearing this backlog. It is necessary in the interest of sound financial administration that audit observations should be disposed of with the stipulated time limit. They should not be allowed to accumulate. Instructions issued in this respect in O.M.No: FD 59 BUD 66 dated 5
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August 1966 should be strictly followed.

3.10 In O.M.No:FD (Spl) 686 PEN 67 dated 30.3.1968 (Annexure-1A) orders have already been issued for constituting Ad-hoc Committees in the Secretariat for expediting the clearance of outstanding Inspection Reports and Audit objections. One Deputy Accountant General nominated by the Accountant General is also one of the Member. Finance Department is issuing reminders frequently requesting the Secretariat Departments to call for the meetings. Responsibility Of The Secretaries Of Government And Heads Of Departments

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3.11 The Accountant General forwards to the Heads of Departments and Secretaries to Government in the administrative departments half yearly statements of audit observations outstanding for more than six months. These statements will be forwarded in June and December every year. The statements sent in June / December will detail the items of objections relating to the period ending with the last preceding September / March which are outstanding at the close of the accounts of March / September. ACTION BY HEADS OF DEPARTMENTS 3.12 Immediately on receipt of the half yearly statements, the head of the Departments should address the concerned Drawing Officers to clear all the audit observations expeditiously. He should obtain from the Drawing Officers every month reports showing the details of the objections cleared during the previous month and those awaiting clearance and the reasons for the delay in the clearance of the outstanding items. The Head of the Department should closely watch the receipts of the monthly reports, review the progress in the clearance of the objections and issues suitable instructions to the drawing officers. He should also forward to the concerned Secretary to Government every month a consolidated report showing the extent of clearance achieved during the previous month with reference to the previous half yearly report received from the Accountant General. The serial numbers of the items actually cleared and the year wise analysis of the number and amount of such items should be indicated in the report. The details of the action taken for clearing the outstanding items and the reasons for the non-clearance should also be reported. A copy of this monthly report should be forwarded to the Finance Department. ACTION BY ADMINISTRATIVE DEPARTMENT OF GOVERNMENT 3.13 The Secretary to Government in the Administrative Department should nominate a Senior Officer of the Department to ensure prompt attention to the audit objections. It shall be the responsibility of the Officers to review the monthly reports received from the Heads of Departments with reference to the half yearly statements received from the Accountant General, and assess the progress in the clearance of the objections and the adequacy of the action taken by the Heads of Departments. He should submit his report of the review to the Secretary to Government who will communicate to the Heads of Departments his assessment of the position and give suitable instructions to them for further clearance. Copies of his communications to the Heads of Departments should be forwarded to the Finance Departments. ACTION BY FINANCE DEPARTMENT 3.14 The finance Department should pay special attention to the important items of observations involving Rs.10.000 and above which are specially reported half yearly by the Accountant General, and pursue action thereon until final clearance. Visit to the Accountant Generals Office by Departmental Officers for clearing audit observations and Inspection Reports 3.15 The Head of Department should specially detail a Senior Officer for ensuring prompt attention to the Audit Observations and Inspection Reports. In these departments, which have been provided with Financial Assistants or Accounts Assistants, this work may conveniently be entrusted to them. It shall be the responsibility of that Officers to keep a close watch on the clearance of all observations and inspection Reports. In respect of items outstanding for over a year be should collect from the Officers concerned the details and documents required for the clearance of the observations through correspondence and / or by visiting the Officers. He shall visit the office of the Accountant General, with the particulars and documents so collected from the various offices and handover the required documents to the concerned officers. He should also discuss with the Officer the outstanding items and decide on the further action to be taken for clearance. The process may be repeated until all items, which are more than one year, are cleared.

3.16 In case where audit observations relate to irregular claims or actions of offices, the Officers concerned with the alleged irregularities should never

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themselves deal with the observations but should submit papers to higher officers at each stage. 3.17 If the above procedure is strictly followed there should hardly be any scope for the increase in the number of observations. The administration should welcome suggestions from audit to enable them to safeguard public funds by rectifying the errors and take steps minimize the irregularities. Government have also issued orders that each Secretary to Government should constitute an adhoc Committee, consisting of Secretary to Government as chairman, and representatives of Audit and Finance Department and that these Committees should meet at least once in three months to review the action taken to dispose of audit observations and inspection notes. The discussions at these Committee Meeting will be useful if departmental officers in advance of the Committee Meeting and have a preliminary discussion on the outstanding audit observations and also reconcile the differences if any in figures relating to audit observations etc. CONTINUANCE OF PAYMENTS OBJECTED TO BY AUDIT 3.18 If any payment of recurring nature is considered inadmissible by Audit, the Audit point of view should be provisionally accepted by the concerned authority and further payments on that account should not normally be made till a final decision is obtained from the competent authority. 3.19 In exceptional cases where the administrative authorities consider that, the continuance of such payments pending final decision by the competent authority is absolutely necessary in the public interest, payments may be made provisionally but subject to recovery if need be. This condition should be made clear to the payee do that in the event of decision for recovery, the payee is bound to make good the excess payment. The fact that payments are being continued in spite of the audit objection should also be reported to the authority to whom the case is referred for a final decision. Report Of The Comptroller and auditor General And Draft Paragraphs Receipt of Draft Paragraphs and Verification of its contents 4.1 As soon as Accountant General considers that a case deserves to be mentioned in the report of Comptroller and Auditor General, he sends a draft para proposed for inclusion in the Comptroller and Auditor Generals Report to the concerned Secretary to Government by the Finance Secretary to Government. The letter is addressed to the concerned Secretary to government by the name to ensure that the Officers who will appear as witness before the Public Accounts Committee, when the Report is taken up for consideration by the Committee. It is the duty of the Officer receiving the draft para to see that reply to the Accountant General, after verification of the facts, is sent only after obtaining his approval so that the facts mentioned in the audit para are not challenged when the Report is taken up for consideration by the public Accounts Committee. 4.2 The results of the verifications of the facts contained in the draft para should be communicated the Accountant General, Karnataka within six weeks from the date of its receipts(vide O.M.No:F1 (B) 422-64/LFA 652-2, dated 16 April 1952 ). Before sending a reply, the concerned Officers should collect all the facts, which have a direct or indirect bearing on the irregularity commented upon in the draft para; and see that the audit para portrays a true account of the alleged irregularity or lapse. If the draft para proposed by the Accountant General, requires modification to bring out the facts of the case, it should be suggested in the reply. The reply should be sent from the Officer to whom it is referred by the Accountant General. This will ensure that the reply is sent by the proper authority after careful examination of all the aspects of the case. Where however, the reply to the Accountant General, is not issued over the signature of the Secretary, an indication should be given that the reply has had the approval of the Secretary (vide O.M.No: FD 22 BUD 67 dated April 1967). 4.3 There is a tradition at the Centre that important Draft paragraphs and Reviews are usually discussed by Government Officers at Senior levels with the respective Principal Audit Officer. Such a practice may be adopted in all Departments. 4.4 In exceptional cases where it is not possible to furnish final reply to the draft para within the time limit of six weeks referred to above, an interim reply should be given to the Accountant General, by the officer to whom the draft para was forwarded indicating the time by which the final reply could be sent.
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4.5 It is not necessary that he contents or the language of the draft paragraph should be specially agreed to or that there should be any prior agreement as to what should be mentioned in the Report, but it is desirable that, on the facts stated, there should be no dispute thought the conclusions and opinions will be those of the Accountant General. This does not, however, preclude a Secretary from taking up the Accountant General, the desirability or otherwise of mentioning particular cases in the Report. 4.6 Facts coming to the notice of the department or the Secretariat after the draft para has been included In the Comptroller and Auditor Generals Reports should be indicated in the departmental notes to be sent to the legislature Secretariat so that the Public Accounts Committee may be posted with up-to-date information. Facts coming to the notice after submission of the departmental notes may be intimated to the Public Accounts Committee at the time these cases are taken up for consideration by the Committee, or earlier, if there is sufficient time, in the form of supplementary note. 4.7 In the audit paragraphs generally no names of individuals and officials connected with the irregularities commented upon therein will be mentioned. The names of departments, Organizations and parties concerned will, however, be mentioned in the draft audit paragraphs except in cases here the paragraphs bring out some fraud or misappropriation on the part of an official against whom departmental or criminal proceedings have been initiated and any indication of the department or organization would give a clue to his identity. Where however, such a name has been mentioned in the draft paragraph and if the Government consider that it is not desirable, the same should be brought to the notice of the Accountant General well in time. (O.M.No:FD 329 BUD 60 dated 10
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January 1961) WATCHING OF DISPOSAL OF THE DRAFT PARAGRAPHS

4.8 It has to be borne in mind that replies to draft audit paragraphs are to be sent with the prescribed time of six weeks. If no reply is sent within this period the paragraph as prepared by the Accountant General, will be treated as final and incorporated in the Comptroller and Auditor Generals Report. There should therefore be no default on the part of the departments to inform the Accountant General of the correct position well in time. In other words, there should be no occasion to question the correctness of facts mentioned in the draft audit paragraphs at a later stage. 4.9 The Public Accounts Committee has been observing that through the audit para is based on records made available to audit and the para itself para to the Secretary to Government concerned for remarks, the Officers when they appear before the Committee sometimes give an altogether different explanation and try to dispute the facts. Such an attitude is not desirable and any modifications should be communicated to the Accountant General in time before the draft para is finalized. FILES REQUIRED BY AUDIT FOR REFERENCE 4.10 Files required by the Accountant General, in connection with the preparation of audit paragraphs should normally be made available to him. If the contents of the file are of confidential nature the file may sent to the Accountant General, by name specifying that fact. He will deal with the file in accordance with the standing instructions for the handling and custody of such documents. If for any reasons it is not considered desirable to make available the papers asked for by the Audit then orders of Government should be obtained. Rectification of defects, Irregularities, lapses, etc., commented upon in the audit paragraphs 4.11 Normally it has to be presumed that a para forwarded to the Secretary to Government for verification will find a place in the Comptroller and Auditor General Report which will be laid on the table of the Legislature. The Reports so laid will be examined by the Public Accounts Committee, and the concerned secretary to Government will have to appear as witness before the Committee when it examines the particular paragraphs in the Report. There will normally be time ranging from six months to one year between the date on which the draft para is forwarded by the Accountant General, for verification and the date on which the particular para is taken up consideration by the Public Accounts Committee. One of the questions, which the Public Accounts Committee generally put to the witness, is whether at least after the receipt of the draft para, the irregularity commented upon in the audit para has been rectified (whatever possible), whether adequate steps have been taken to see that such irregularities do not recur and also whether is cases o floss to Government,

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necessary action against those responsible had been taken. If the Secretary to Government takes prompt action immediately on receipt of the draft para to rectify the defects and to proceed against the Officers responsible to make good the less, if any, incurred by the government due to their negligence and also to issue detailed instructions for the avoidance of such irregularities is=t should be possible to depose before the committee that he irregularity has since been rectified and action has also been taken to avoid recurrence of such things in future. Hence, the Secretary to Government should on receipt of draft para, examine among other things, the following aspects and take suitable remedial measures immediately; Whether the irregularity committed was due to negligence or culpability on the part of any Government servant. (If so, suitable action should be initiated against him). 2. Whether there was lack of proper instruction or defect in the organization set up (If so, steps should be taken to rectify such defects) 3. If there was a loss to the Government, the responsibility for the same should be fixed and steps taken recover the loss. 4. If the irregularity committed was due to lack of proper supervision or ambiguity in the rules, steps should be taken to enforce adequate supervision or to amend the rules. 4.12 In other words, all possible ways should be though of to prevent recurrence of such irregularity and also to make amends for the irregularity committed. 4.13 The Secretariat to Government should have in their possession all the facts relating to the cases under examination when they appear before the Public Accounts Committee and for this purpose, the departments of the Secretariat should take necessary action well in time, by way of obtaining explanations, comments, etc., on the irregularities cited in the Comptroller and Auditor Reports. Draft Paras relating to Statutory Corporations, Government Companies, State Undertakings, etc. 4.14 The draft paragraphs for inclusion in the Comptroller and Auditor Generals Report in respect of cases relating to Karnataka State Financial Corporation, Karnataka State Warehousing Corporation, Karnataka State Road Transport Corporation, Karnataka State Electricity Board, Government Companies, Government commercial undertaking, etc will be forwarded to the Secretary to Government concerned by name and copies endorsed to Finance Secretary to Government. The Reports relating Public Sector Undertaking are considered by the Committee on Public Undertaking. The procedure explained above in respect of disposal of draft paras will apply in these cases also. MONITORING SYSTEMS 4.15 Finance Department assigned an important role in monitoring Government response to audit and the PAC/COPU. 4.16 As regards regular review at the higher levels, the State Governments shall consider constituting a Monitoring Committee in each department consisting of the Secretary. For the Government as a whole, there shall be an Apex Committee chaired by the Chief Secretary as a permanent member and a selected member of officers heading government departments, autonomous bodies and Public Sector Undertakings as Members for a specifies term by rotation. These panels must be purely internal ones, and the Accountant General need not be included. 4.17 The internal monitoring at the higher levels should not be merely in quantitative terms, but must also be concerned with the quality of the action taken or envisaged. Appropriation Accounts, Finance Accountants and the Report of the Comptroller and Auditor General of India . 5. After the Appropriation Accounts , Finance Accounts and the Report of the Comptroller and Auditor General of India thereon are laid before the Legislature as required by articles 151 (2) of the Constitution of India, copies of the same will be supplied by the Finance Departments to all Secretariat Departments and the Heads of Departments. As soon as the copies of these are received, the departments should verify whether the draft paras proposed by the Accountant 1.

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General have been included in the Report of the Comptroller and Auditor General. In some cases the Accountant General, does not include the draft para proposed by him. This may be on accountant of the reasons given by the departments in reply to draft paras. In some cases the paras will have undergone a change. The Secretariat Departments should collect all the relevant files and verify the correct position with reference to the latest facts. They should study the audit paragraphs in these Reports after consulting the Heads of Departments wherever necessary. Furnishing of notes on the Audit Reports to the Public Accounts Committee by the Government 6.1 After laying of the Accounts for Financial year Audit reports thereon before the Legislature, departments of Government shall prepare and send to the Legislature Secretariat:1. Departmental notes relating to excess over voted grants/ charged appropriations requiring regularization under Article 205 of the Constitution by the 31st May of the following the second financial year or with in one month whichever is later in the prescribed pro-forma (Annexure-I). Within 4 months, detailed explanations on audit paragraphs and explanatory notes pertaining to saving and variations, which have been commented upon in the Appropriation Accounts. The departments shall furnish explanatory memorandum in the pro-forma prescribed by the Committee (vide Annexure-11), In addition, detailed replies to the questionnaire, if any issued by the Public Accounts committee should also be furnished. Within 3 months in the pro-forma (annexure-IV) prescribed a list of write-off of losses and of revenue exgratia payments exceeding Rs.10,000/-each included in the Audit Report. Excess Expenditure and Large Savings Substantial excess expenditure or savings vis--vis budget grants have become a nearly universal phenomenon in the States, indicating a continuing weakness of the financial management. The departments may take adequate remedial steps to set right the deficiencies in the system in future. Note-1: In order to avoid disputes regarding the accuracy of facts and figures in the Appropriation Accounts and Audit reports at the time of discussion by the Public Accounts Committee, departmental notes referred to in sum-paragraph (a) should be get vetted by both the finance Department and Accountant general and those referred to in sub-paragraph (b) by the Accountant General, before they are sent to the Legislature Secretariat. Note-2: The notes and replies to questionnaire should not sent piece-meal for a few paragraphs but in consolidated shape covering all paragraphs pertaining to the department in respect of each Audit Report, though paragraphs may relate to different sections in the same department. These notes and relies should be sent in one batch, separately for English and Kannada versions. The Kannada version should be sent along with English version. 6.2 The department while submitting detailed explanatory memoranda to the Committee regarding the ceases of declarations and misappropriations shall furnish complete information about the modus operandi, whether defalcation was due to any defect in the system and is so, action taken to verify it. It should cover all the points mentioned inAnnexure-5. 6.3 During examination of the witness any information required by the Committee shall be readily furnished, provided that when information desired by the Committee is not readily available, the witness shall make a note of it and shall seek from the chair permission to furnish information subsequently. Normally, this information shall be furnished on the next day or latest within a week. In case, where it is not possible to furnish information with in a week, the witness shall seek specific extension of time from the Chair. 6.4 The Department shall furnish 50 copies each of the notes to the Legislature Secretariat, 5 copies to the Accountant General direct sad 2 copies to Finance Department. The notes should be signed by an officer not below the rank of Deputy Secretary.

2.

3.

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6.5 Only the Secretaries to Government have to appear before the Committee to give evidence. They may bring other Officers to assist them, as they consider necessary. Normally all replies should be given by the Secretaries to Government where the Secretary is not fully posted with the information, any other Officer may tender evidence with the permission of the Chairman. 6.6 The Committee expects that the replies and information furnished by the witness should be precise and based on facts with reference to record, rules and regulations. It is necessary to avoid vague and generalized replies as also presumptions and individual adhoc comments. As indicated above if the Secretary to Government has studies the case with reference to the Audit para and notes already furnished by discussion before hand and with reference to connected records it will be possible to furnish many of the points which may be raised while examining the witness. In cases where information is not readily available the same should be admitted and time taken for furnishing the information. It is found that in practice the time schedule is not adhered to because of the lack of due attention by the Secretary concerned and this obviously invites criticisms from the Committees. 1. 2. 3. Due respect to the Chairmen and Committee and Sub-Committee shall be shown by the witness; The witness shall take the seat opposite to the Chairman; The witness should answer specific questions put to him either by chairman or by a member of the Committee/any other person authorized by the Chairman. 4. All submissions to the Chairman and the Committee e shall be couched in courteous and polite language. 5. The witness, without the permission of the Chairman should not smoke or chew anything when he is seated before the Committee. Breach of privilege and Contempt of the Committee 6.8 Subject to the provisions contained in the Rules of Procedures and Conduct of Business in the Legislative Assembly / Council the witness shall note that the following acts shall constitute breach of privilege and contempt of the Committee; Refusal to answer a question, unless, it be on the ground that the disclosure of the information sought for would be prejudicial to the safety or interest of the State; 2. Prevention or willfully giving false evidence or suppressing the truth or misleading the Committee; 3. Trifling with the Committee, or returning insulting answers; 4. Destroying or damaging a material document relative to the enquiry; Action to be taken on the Reports of the Public Accounts Committee 6.9 The Reports of the Public accounts Committee, contain various recommendations and observations. As soon as reports are made available, Secretary to Government should in consultation with the concerned officers take immediate action in all these cases. Wherever there are financial implications the finance Department should be consulted. In cases where there is delay in communicating action taken, the Legislature Secretariat will seek the co-operation of the finance Department. The action taken on the various recommendations should be communicated to the Legislature in the pro-forma as in the Annexure-6 thirty copies of the pro-forma indicating and five copies to the Accountant General. The replies should be complete in respect of each observation or recommendation and replies like the matter is under consideration, action will be taken in due course, report has been called for and such other general remarks should be avoided. If in any case Government desires to furnish a detailed note requiring further reconsideration by the Committee or indicting reasons for non-acceptance of the recommendations, the notes should accompany the pro-forma and the number of copies should be as in the case of the pro-forma. Since the Legislature Secretariat is expected to place the report oft the Committee on the action taken before the Legislature, the Secretariat to Government should avoid delay in taking action. The Legislature Secretariat shall in respect of recommendations of the Public Accounts Committee and Committee ion Public undertakings obtain the remarks of the Accountant General, wherever necessary, before the statement of action taken is considered by the Committees. 1.

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COMMITTEE ON PUBLIC UNDERTAKINGS 7. The instructions paras 6 to 6.9 holds good in respect of the COPU also which considers the departmental notes furnished by the Government on the Report of the Comptroller and Auditor General of India (Commercial). STREAMLINING AND CODIFYING REGULATIONS 8. The existing regulations in regard to the response of Government to Audit and the PAC/COPU may be reviewed, to ensure that they are adequate, such a review may be undertaken by the Department in consultation with the Accountant General 9. The State Government shall resort to printing though External agencies wherever they are not able to ensure timely printing of audit Report of finance and Appropriation Accounts. Pro-forma Prescribed for Furnishing Information to the Public Accounts Committee The following pro-forma is prescribed for furnishing departmental notes/ remarks for the consideration of the Public Accounts Committee:-

1)

Notes on excess expenditure over voted Grants as a whole Annexure-1 requiring regularization 2) Notes on Audit Report (Civil) / (Revenue Receipts) Annexure-1 3) 4) Notes on savings Annexure-1 Notes on write off of losses and revenue exgratia Annexure-1 payments exceeding Rs.10, 000 each included in the Audit Report 5) Notes on defalcation and misappropriation Annexure-1 6) Notes on the recommendations of the Committee made in Annexure-1 their reports

Note: All the notes have to be signed by the Secretary or any other Officer not below the rank of Deputy Secretary. ANNEXURE- I

Pro-forma for furnishing information to the PAC in respect of excess expenditure over voted Grants 1. 2. 3. 4. 5. 6. Name of the Grant / Appropriation. Amount requiring regulations (total grant / appropriation total expenditure incurred and excess expenditure requiring regulations) may be stated. Sub-heads in which expenditure exceeded the budget provision (including supplementary provision) and the nature of the expenditure. Was not the Department aware that adequate provision was not available to cover the expenditure? The circumstances in which the same could not be postpones to the next year. When and by whom was the additional expenditure sanctioned? In which month did the excess actually occurred?

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7. 8. 9. 10. 11.

When did it come to the notice of the controlling Officer / Government? Why supplementary grants could not be obtained before the end of the financial year. Officer by whom unauthorized excess expenditure was incurred and action taken for the irregularity. Any extenuating circumstances for incurring such unauthorized excess expenditure. Whether reconciliation of expenditure has been done for verifying the bonafide of the expenditure. ANNEXURE-A Government of Mysore

No: FD(Spl)686 PEN 67

Mysore Government Secretariat Vidhana Soudha, Bangalore , dated 30 OFFICIAL MEMORANDUM

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March 1968

Sub: Constitution of Ad-hoc Committees in the Secretariat For expediting the clearance of Outstanding Inspection Reports and Audit Objections. Instructions were issued in Official Memorandum No. FD (Spl )186 PEN 66 dated 14.7.1966, FD(Spl)418 PEN 65 (I) dated: 12.5.1967 and No: FD(Spl) 686 PEN 67 dated3.2.1968 for the prompt clearance of Outstanding Inspection Reports and Audit Objections. It has been observed that in spite of these instructions the position has further deteriorated in as much as the total number of outstanding inspection reports and Audit Objections are on the increase. The effectiveness of Audit depends entirely on the timely rectification of the defects and irregularities pointed by the audit. The delay in the clearance of Inspection Reports and Audit Objections not only defeats the very purpose of Audit but will eventually render it difficult to clear them on account of the inherent difficulties involved in tracing the old records. Government have therefore decided in consultation with the Accountant General, Mysore , Bangalore , to constitute Ad-hoc Committee for expending the clearance of Inspection Reports and Audit Objections. The Composition of the Committees shall be as follows: 1. 2. 3. 4. 5. 6. 7. 8. Secretary to Government in the concerned Administrative Department The Head of the Department concerned The budget Officer and Ex-Officio Deputy Secretary to Government, Finance Department Or any representative of the Finance Department One Deputy Accountant General, Nominated by the Accountant General.

There shall be an Ad-hoc Committee for each of the following Departments of the Secretariat:1. 2. 3. Public Works Department Education Department Agriculture and Forest Department

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4. 5. 6. 7. 8. 9. 10.

Commerce and Industries Department Health and Municipal Administration Department Home Department Planning and Social Welfare Department Development, Housing and Panchayat Raj Department Food & Civil Supplies and Labour Department Revenue Department

The accountant General, Mysore , Bangalore , will send half yearly statement of outstanding Inspection Reports and half yearly statement of Audit Objections to the Committee (the Secretary To Government concerned). The Committee should obtain the quarterly progress report of the action taken by the Heads of the Departments to clear the Inspection Reports and Audit Objections as prescribed in the foresaid official Memorandum, together with full particulars of objections which could not be cleared within the specified time limits and the reasons for their pendency and make an objective and critical review of the progress achieved in the clearance of the reports and objections and the extent to which the instructions issued by Government form time to time have been implemented. It should also examine the outstanding Reports and Objections and suggest ways and means for their prompt clearance. The Committee may take serious notice of any lapse on the part of Officers in attending to or reviewing or expending the clearance work. Such a step will ensure that at least I n future the Departments would evolve a procedure by which replies can be sent promptly to the Inspection Reports and Objections. The Committee may also issue suitable instructions to the Departments concerned to clear the reports and objections and prescribe time limits for their clearance. The Committee may meet periodically and in any case at least once in a quarter, the nominee of the Accountant General should be given at least a fortnights notice of the meeting so that he can come fully prepared and tender his advice in the deliberations of the Committee. The Secretaries to Government concerned are requested to form the Committees immediately in the Department under their control and to see that they function effectively in expending the clearance of Inspection Reports and Audit Objections. The Secretaries may kindly call for the meeting getting necessary material from the Accountant General. By order an in the name of the Governor of Mysore Sd /(N.S.BHARATH) Deputy Secretary to Government Finance Department (Budget) ANNEXURE-II PROFORMA PRESCRIBED UNDER RULES 5(b) OF THE INTERNAL WORKING RULES IOF PUBLIC ACCOUTNANT COMMITTEE

Name of the Department: _________________________________________ Sl . Reference to the para No. in Audit Notes of the Remarks

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No. 1

the Audit Report 2

Comments 3

Department 4

* Audit Report paras to be reproduced in this column. ANNEXURE-III Pro-forma for furnishing information to P.A.C in respect of Savings 1. 2. 3. 4. 5. 6. 7. Name of the Grant / Appropriation Total amount of Savings (Total Grant / including supplementary grant Total / Expenditure, amount of Saving / Amount Surrendered) Sub-heads in which the savings occurred with reason for savings under each Sub-Head and Details Head Why the Department could not anticipate the Savings and surrender the amount well in advance When were the savings noticed finally by the Controlling Officer/ Government? Officer who is responsible for not surrendering the savings. Whether any action was initiated for the irregularity What is actual amount of savings after reconciling the figures shown in Appropriation Accounts, with those of the departmental figures? ANNEXURE-IV PROFORMA PRESCRIBED UNDER RULE 5(C) OF THE INTERNAL WORKING RULES OF THE PUBLIC ACCOUNTS COMMITTEE Name of Department: _______________________________________ Sl . No. Brief particulars of the Amount case i.e., the nature of written off write off, attempt made to recover the losses etc., information in respect of cases in which the amount written Authority Reasons for for write off writing off the loss Remarks

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exceeds Rs.10, 000 2

Note: Similar information may be given in respect of exgratia payment included in the Audit Report Reports giving details circumstances in which the same was sanctioned etc. ANNEXURE-V Pro-forma prescribed under Rule 6 of Internal Working Rules Public Accounts Committee regarding cases of embezzlement and defalcations etc. Name of the Department: ___________________________________ SL. No. Reference to para Audit Explanatory memorandum to be furnished: and page in Audit Comments if 1) Date of occurrence, amount involved and Report Appropriation any Modus Operandi Accounts 2) Whether defalcations was due to any defect in the system and is so, action taken to rectify it 3) Adequacy or otherwise of supervision and 4) Institution to criminal proceedings 5) Departmental Action taken on the officials as well as supervisory officers responsible for lapses The information should be furnished separately for: a) Fresh cases reported during the year and b) Cases reported during the earlier years including cases closed during the year

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* Audit Report para to be reproduced in extents. ANNEXURE-VI Pro-forma prescribed under Rule 21 (2) of Internal Working Rules of Public Account Committee Statement showing action taken on the recommendations of the Committee on Public Accounts Name of the Department ________________________________ Sl . No. Reference to page and Particulars of para No. of the Report recommendations Reply of Government Remarks regarding action taken / proposed to be taken 4 5

Note: If a detailed note has to be furnished the same should accompany the Pro-forma. The statement of action taken should be precise and should be confined to the recommendations of the Committee Interim replies should be avoided.

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