Basics of Accounting

Accounts are the statements of transactions recorded in the chronological

order
Systematic Recording as per Rules and Standards
Communication of Results
Rendition of various reports and returns

System of Accounting in DAD

Cash Basis of Accounting
Single Entry System of Accounting, using double entry principles
We may switch over to Accrual Basis of accounting

Punching Medium
It serves the purpose of Journal
It forms the basis for various compilations and preparation of ledgers
It has two credit columns i.e. (+) Rt. & (-) Ch and two debit columns (+) Ch & (-)
Rt.
All the Receipts and Expenditure are codified in the form of heads of accounts

Why Two Credits and Two Debits

Bonafide Receipt is compiled as (+) Rt.
Refund of Excess Receipt is compiled as (-) Rt.
Bonafide Expenditure is compiled as (+) Ch.
Recovery of excess expenditure is compiled as (-) Ch.
We can clearly identify the Original/Rectification entries

Why Some heads are operated on one side

Amount realized under Revenue Receipt Heads cannot be expended
Service Heads where allotments are received from the budgetary channel do
not have any receipts.
Only we have to feed the allotments and book the expenditure

How different from Commercial Accounting

Profit earning is the main motive in Commercial Accounting. Our mandate is to
compile the Government Receipts and Expenditure
Companies prepare Manufacturing, Trading, Profit & Loss Accounts and
Balance Sheets. We prepare AROB
They adjust the data within the legal frame work. We report the true picture to
Government.

How different from Commercial Accounting

In the Commercial Accounts, Debit items are recorded on the left side and
Credit items are recorded on the right side

We record the Receipts items on Left side and Charges items on the Right side

Period of Accounts may be different in commercial accounting like Calendar

year, Financial year etc. For us it is the financial year

Important Definitions
Accounts Officer – Head of Accounts Office
Accredited Bank – Appointed to transact G. business
Appropriation – Assignment to meet specified exp.
Bank – RBI/SBI and four private sector banks
DDO – Drawing and Disbursing Officer
Defence Accounting Circles – Code No. by RBI
Re-appropriation
Revenue Heads
Debt Heads
Remittance heads
Consolidated Fund/Contingency Fund/Public Account of India

General points
MOD (Fin) is responsible to ensure that suitable accounts are maintained by
Defence Services

Forms in which accounts are maintained are prescribed by CGDA with approval
of Defence Secretary and FADS

If any change effects Form of Finance and Revenue accounts, prior sanction of
CGA, C&AG required

All returns, accounts and statements required by the CGA and C&AG should
invariably be prepared in the forms prescribed by them.
Departmentalisation of Accounts
01.10.1976

Chief Accounting Authority

Chief Accounting Officer

Principal Accounting Officer

DAD classifies expenditure in respect of DSE & Civil Organizations including

DAD

Civil Grant of MOD

Armed Forces Tribunal
Coast Guard Organization
Department of Defence
Department of Defence Production
Department of Defence Research and Development
Department of Ex-Servicemen Welfare (DESW)
Defence Accounts Department
Defence Estates Organization
Jammu and Kashmir Light Infantry
Canteen Stores Department

Important Duties of CGDA

Consolidation of the accounts of MOD in the manner prescribed by CGA.
Submission of Statement of Central Transactions, material for Finance Account
of Defence and Def. (Civil) to CGA

Preparation of annual SCT of Defence Services Receipts and Charges and

rendition to the CGA on the date prescribed by them

Preparation of the portion of Combined Finance and Revenue Accounts

pertaining to Def. Services and its submission to CGA and DGADS for
incorporation in the combined Finance and Revenue accounts of the Central
and State Government in India
Appropriation Accounts
PCDA/CDA – Accounting Duties
To record/adjust/compile the Receipts/Expenditure under his accounting
jurisdiction and maintenance of statistics

To settle the transactions with Other Ministries

To transfer the transactions pertaining to other DAD circles

To watch the expenditure under locally controlled heads

Preparation and submission of Annual Review of Balances

General principles and methods

Period of accounts, supplementary/Residual accounts
Cash Basis of Accounting
Single Entry System using Double Entry Principles
Indian Currency
Consolidated fund – Article 266 (1)
Contingency fund – Article 267 (1)
Public Account – Article 266 (2)
RDR Heads/CHB Heads
Authority to draw cheques by DAD/DDOs
MRO

Sectors
Revenue Division – Sectors A and B
Capital Division – Sectors A, B and C
Loans and Advances – Sector F
Small Saving Provident Funds – Sector I
Reserve Funds – Sector J
Deposits – Sector K
Suspense and Miscellaneous – Sector L
Remittances – Sector M
Sector –Group of services –Represented by Alphabet
Six Tier Classification
Major Head- 4 digits (Function)

Sub-Major Head- 2 digits (Sub-function)

Minor Head- 3 digits (Programme)

Sub-Head- 2 digits (Scheme/Activity)

Detailed Head- 2 digits (Sub-Scheme)

Object Head- 2 digits

(primary unit of appropriation/Itemized control)

Major Head – 4 digits

If the first digit is
0 or 1 : Revenue Receipt

2 or 3 : Revenue Expenditure

4 or 5 : Capital Expenditure

6 or 7 : Loans

8 : Contingency fund / Public Account of India

Guidelines for opening a new code

CGDA has powers to open the sub and detailed heads with the concurrence of
MOD (Fin) in consultation with DGADS

Homogeneous schemes under a programme should be grouped into suitable

Sub Heads

Sub-Head or detailed Head which is placed under a particular Minor Head by

CGA should not be placed under another Minor Head.
Prior approval of C&AG should be obtained when amendment affects
Major/Minor Head under RDR/CHB

Principles of classification
Voted Expenditure - Charged Expenditure

Classification of transactions shall have closer reference to function,

programme, activity and the object of the Revenue/Expenditure rather than
the Department in which occurs.

Expenditure incurred for Army Ordnance and Clothing Factories and the
expenditure incurred by the Army for Air Force and Navy and vice versa are
debitable to the Heads pertaining to the Factories or the Arm of Service for
which expenditure is incurred

Principles of classification
Expenditure on Engineer Services required for the Army is charged as Military
Engineer Services Expenditure under the Army Head.

Similar expenditure incurred for Ordnance Factories, the Air Force or the Navy
is classified under the respective heads relating to the Ordnance Factories, the
Air Force or the Navy

Capital/Revenue Expenditure
Significant expenditure incurred with the object of acquiring tangible assets of
a permanent nature (for use in the organization and not for sale in the ordinary
course of business) or enhancing the utility of existing assets, shall broadly be
defined as Capital expenditure

Subsequent, charges on maintenance, repair, upkeep and working expenses,

which are required to maintain the assets in a running order as also all other
expenses incurred for the day to day running of the organization, including
establishment and administrative expenses, shall be classified as Revenue
expenditure
Capital Expenditure is generally met from capital receipts and not from the
revenue
It is open to Government to meet capital expenditure from revenue. Such
cases are expressly authorized

Expenditure on a temporary asset cannot ordinarily be considered as

expenditure of a capital nature

Expenditure on procurements of items costing Rs. 10 Lakhs or more each and

which have a life of 7 years or more/which are required for modernization
programme is debitable to Capital Budget.

Capital/Revenue Expenditure
Capital account should bear all charges for the first construction and
equipment of a project as well as charges for intermediate maintenance of the
work while not yet opened for service

Revenue account should bear all subsequent charges for maintenance, all
working expenses., upkeep of the project, renewals and replacements and
additions, improvements/extensions prescribed by Government

Expenditure on account of repairs of damage caused by extraordinary

calamities such as flood, fire, earthquake, enemy action, should be charged to
Capital account or to Revenue account or divided between them in such a way
as may be determined by Government according to the circumstances of each
case.

Capital receipts, in so far as they relate to expenditure previously debited to

Capital heads, accruing during the process of construction of a project, should
be utilized in reduction of capital expenditure

Receipts and recoveries on Capital Account representing recoveries of

expenditure previously debited to a Capital Major Head shall be taken in
reduction of expenditure except where, under the rules of allocation
applicable, such receipts have to be taken to Revenue.

Capital cost of works which are non productive in nature is met from ordinary
revenues
Expenditure on vehicles irrespective of cost and life shall be treated as Capital
Transit Pay and Allowances
The transit pay and allowances of a Government servant proceeding to join an
office on first appointment or on transfer either permanently or as a
temporary measure or on reversion from one department to another should,
in the absence of special orders to the contrary, be debited to the office to
which he is proceeding

The transit Pay and Allowances both ways, of Officers of the Defence Services
lent to Civil Department (including Post and Railways) or, vice versa, are
debitable to the borrowing Department

Transit Pay and Allowances

The transit Pay and Allowances both ways, of a Government servant
transferred from one Government to another or to Foreign Service, will be
adjusted in such manner as may be mutually agreed upon by Governments
concerned or, as may be laid down in the appropriate Service Rules

The transit pay and allowances both in respect of the forward and the return
journeys of Government servants transferred to or from Missions and Offices
abroad will be borne by the Ministry which plans the transfer of the official

Transit Pay and Allowances

Transit Pay and Allowances in respect of DAD personnel while proceeding on
and reverting from deputation to other Ministries of Central Government, the
advance of pay paid will be finally adjusted to the respective heads by the
department which makes the payment.

The recoveries thereof will be finally adjusted to the respective heads by the
office which effects recoveries and there will be no passing of debits/credits to
other departments, through settlement Accounts.

Travelling Expenses
Cost of TA/DA of officers of one Department in connection with committee or
other meetings etc. of other Department should be debited to those
Departments
The Travelling Allowance of a Government servant transferred from one
department to another is debited to the department to which he is transferred
The Travelling Allowance of a Government servant proceeding to join an
appointment in any department, should in the absence of special orders to the
contrary, whether in respect of a particular case or class of cases, be charged to
the department to which he is proceeding

Travelling Expenses
The advance of TA/DA paid in respect of DAD personnel while proceeding on or
reverting from deputation to other Ministries of the Central Government will
be finally adjusted to the respective heads by the Department which makes the
payments

The Travelling Allowance of Military students under training with survey parties
is debitable to the civil department

The Travelling Allowance of a Government servant both when proceeding on

transfer to Foreign Service and when reverting to duty shall be borne by the
Foreign employer

Travelling Expenses
If a Government servant works for more than one Government, his Travelling
Allowance may be distributed between the different Governments as mutually
agreed

Conveyance charges of witnesses summoned or detailed to attend a criminal

case, a civil suit or a Court Martial:

Criminal case - Department to which the witnesses belong

Civil Suit - Department which is a party to the case
Court Martial - Defence Service Estimates (Army/Navy/AF)

Suspense Account
Items of receipts and payments which cannot at once be taken to a final head
of receipt or charge owing to lack of information as to their nature or for any
other reasons may be held temporarily under the Major head 8659-'Suspense
Account(Defence)‘ in the Sector 'L-Suspense and Miscellaneous' of the
Accounts
A service receipt for which full particulars are not given must not be taken to
the head 'Suspense Account' but should be credited to Other Receipts under
the Revenue Head pending eventual transfer to proper head on receipt of
detailed particulars

No sum shall ordinarily be credited to Government by debit to a Suspense

head. Credit must follow and not precede actual realization

Orders of Addl./Jt. CDA in Main Office/Senior Officer in Sub Office

Survey of India/Scientific parties

All extra expenditure connected with a Survey of India Unit, which would not
have been incurred but for field operations, shall be borne by DSE when
requested by Defence to accompany expedition

Pay & allowances, contingencies of other scientific parties shall be borne by

the respective Civil Dept., while expenditure transport arrangements made by
the Defence shall be debited to DSE

On general mobilization whole cost is born by DSE under special orders, except
initial supply of all technical equipment, material and stores

Write off from balance heads to Government

Ordinarily all amounts due to Government which are found to be irrecoverable
shall be written off from the Debt Head of Accounts concerned to an
expenditure head as a loss to Government

Similarly any amount due by Government remaining unclaimed for such time
as may be prescribed by Government may be credited as Revenue of the
Government concerned by Debit to the Debt or Deposit Head concerned

Amounts outstanding due to book-keeping errors under heads which close to

balance may be written off to Miscellaneous Government Account write off
from Heads of Accounts closing to balance with the specific approval of the
Comptroller and Auditor General
Write off from balance heads to Government
Powers of the C&AG may be exercised by CGDA/Addl. CGDA/PCDA/CDA in
cases where amounts to be written off do not exceed Rs. 1000/- provided that:

Amounts written off have thoroughly been examined by the Internal Audit
Sections

Personally satisfied that the items have been outstanding for over 5 years, and
that a dead end has been reached in all cases and that a write off is
unavoidable

Write off from balance heads to Government

Also satisfied himself that the outstanding is the result of a book keeping error
only

The Dy. CGDA/Addl. CDA/Jt. CDA may also write off the outstanding amount up
to Rs. 100/- in each case under the head 'Provident Fund Suspense' subject to
his having satisfied himself about the conditions. Items written off shall be
submitted to the next higher authority for review.

These writes off are shown in a separate entry under the head "Government"
in the annual Review of Balances

In other cases approval of C&AG and concurrence Govt.

Correction of Accounts
If an item, which properly belongs to a Revenue or Expenditure Head, is
wrongly classified under another Revenue or Expenditure Head, the error may
be corrected any time before the accounts of the year are closed

No formal transfer is, however necessary when the amount involved does not
exceed Rs. 10/- or if accounts of the year have been closed – Suitable not is
sufficient against the original entry

But if the error effects Debt, Deposit or Remittance head, it has to be

corrected irrespective of amount/period
If accounts are open – Remove from head and compile under proper head

If accounts are closed –

An item taken to one debt, deposit or remittance head instead of another-the

correction should be made by transfer from one to the other

An item credited to a debt, deposit or remittance head instead of to a revenue

head or debited to a debt, deposit or remittance head instead of to an
expenditure head-the correction should be made by transfer to the head under
which it should originally have appeared

An item credited to a revenue head instead of to a Debt, Deposit or Remittance

Head-correction should be made by debiting refunds and crediting the proper
head

An item debited to an expenditure head instead of to a Debt, Deposit or

Remittance Head-the correction should be made by debiting the proper head
and crediting the relevant receipt head

After the accounts of the year are closed, corrections or transfers affecting
Capital Major Heads, unless they affect the accounts of different Governments,
should usually be effected without financial adjustment by alteration of
progressive figures, without passing the debit or credit entries through the
account of the year's financial transactions

Should an error or omission in the recorded expenditure of a work come to

light after its accounts have been closed, the accounts may be reopened in
order to rectify the error or omission unless the amount involved is not more
than ten rupees

Transfer Entries
Entries intended to transfer an item from one head of account to another

To correct an error of classification in the original accounts or to revise

classification provisionally made as a matter of convenience in the first
instance
To adjust, by debit or credit to its proper head an item outstanding under debt
heads

To adjust inter-departmental and other transactions which do not involve the

receipt or payment of cash

All particulars explaining both the nature of the adjustment and grounds of the
correction must be clearly stated

Powers of signing TE
Officer Normal Rectification
AAO 25 Lakh -

AO/SAO 1 crore 25 lakh

ACDA/DCDA 5 crore 1 crore

Jt./Addl. CDA 10 crore 5 crore

CDA/PCDA Above 10 crore Above 5 Crore

Inter Departmental Adjustments

A service department shall not make charges against another department of
the Central Government for services which fall within the class of duties for
which the former department is constituted

Film Division of the Government of India may charge any other department for
the cost of production of films and other services on such terms as may be
settled in each case

Defence Services shall, in respect of inter-departmental transactions, charge

and be charged for services rendered and supplies made to or by other
departments of the Central Government, unless decided otherwise by
Government

Defence Services shall not be required to pay rent for building of the Central
Civil Departments other than Commercial Departments and undertakings,
occupied by the Defence Services for non-residential purposes, nor shall rent
be charged for buildings of the Defence Services occupied for non-residential
purposes by the Civil Departments of the Central Government other than
Commercial Departments or Undertakings.

Government has the power in respect of these directions to decide whether a

particular department or particular activities of a department shall be regarded
as a commercial department or undertaking.

The Defence Services shall also not be required to pay for the use of the
Government Civil aerodromes and for other incidental services rendered by
the Civil Aviation Department to Indian Air Force planes nor shall the Civil
Aviation Department be charged, as a reciprocal arrangement, for the use of
the aerodromes of the Indian Air Force by Civil Aircrafts

No inter-departmental adjustment will be necessary on account of damages

caused accidentally by one Department to another e.g., no compensation is
payable for damages caused accidentally to Defence by the Railways and vice
versa

Recovery of Expenditure
Recoveries of expenditure for services or supplies made to non-Government
parties or other Governments (including local funds and Governments outside
India) shall in all cases be classified as receipts of the Government rendering
such services or supplies. Exceptions are the following-

When a Government undertakes a service merely as an agent of a private

body, so that the entire cost of the service is recovered from that body, the net
cost of Government being nil, the recoveries may be taken as reduction of
expenditure

In case of projects jointly executed by several Governments, where the

expenditure is to be shared by the participating Governments in agreed
proportions, but the expenditure is ab initio incurred by one Government and
shares of another participating Governments recovered subsequently, such
recoveries from other Governments should be exhibited as abatement of
charges under the relevant expenditure head of account in the books of the
Government incurring the expenditure initially

Recovery by one Government from another

If the recoveries represent debits to another Government of expenditure
which was so debitable from the moment it was sanctioned, they should not
be treated as revenue of the Government effecting the recoveries but as
deduction from expenditure

In case of joint establishment, where the expenditure is not shared by two or

more Governments ab initio, but is incurred by one of the Governments and
partially repaid by the others, the repayment, if made while the accounts of
the year are still open, should be treated as deduction from expenditure

Above recoveries, if not effected within the accounts of the year in which the
expenditure was incurred, should be treated as revenue

In cases where recovery is made on the basis of calendar year instead of

financial year, the entire amount of recovery may be treated as reduction of
expenditure though a portion of it relates to expenditure incurred during the
previous financial year

All other recoveries, whenever received, should be credited as revenue of the

recovering Government

In case of doubt or dispute, the question whether any particular recovery is

classifiable as revenue or as deduction from expenditure under the rules, it
should be referred to the CGDA for decision in consultation with the C&AG

Defence Proforma Account

Balances of the Defence Services have been created Proforma in the books of
the RBI w.e.f. 01.04.1962

Form part of the balances of the Central Government for regulating ways and
means arrangements
There is one Central Account in the books of RBI for Defence Service as a
whole, but in the details working up to this single account, the total figures for
each Controller will be available separately in the books of the Reserve Bank

The transactions with or on behalf of the Defence Services arising in the

accounts of Post/Railways/Department of Supply in the Ministry of Commerce
(stores transactions) and those relating to High Commission of India, London
and Embassies accounts including ISM Washington received through Principal
Accounts Officer of Ministry of External Affairs will be adjusted with the
Reserve Bank against the balance of the Defence Proforma Account and of the
Government concerned

These adjustments will centrally be effected by the Central Accounts Section of

the Reserve Bank of India at Nagpur

Ways and Means Advances

Ways and means advances (WMA) is a mechanism used by Reserve Bank of
India (RBI) under its credit policy

It provides to banks in States to tide over temporary mismatches in the cash

flow of their receipts and payments.

This is guided under Section 17(5) of RBI Act, 1934 and are repayable in each
case not later than three months from the date of making that advance

Defence Proforma Account

Transactions of the Defence Services taking place in the branches and offices of
the Reserve Bank of India and the State Bank of India and its Associates (other
than Pension payments etc.) will be taken directly against the Defence
Proforma Account

In the case of non-bank treasuries, Defence transactions will be incorporated in

the treasury accounts, and will be accounted for in the settlement Accounts of
the Civil Accountants General concerned

Focal Point Branch

Based on concept of one PAO- one Focal Point Branch
Focal Points Branches introduced in MOD - 01.10.93

Dealing branches of State Bank of India are linked for the purpose of reporting
Defence transactions

Nominated F. Point Branch acts as a dealing branch

It is responsible for prompt and accurate accounting of the transactions

reported to it daily by all the dealing branches linked to it

Dealing branches maintain the account of the DDO /PCsDA/CsDA and prepare
daily Payment & Receipt Scrolls separately for each account holder daily

Each day's scroll is given a running serial number for the accounting year from
1st April to 31st March

Payment and Receipt Scrolls are identified distinctly by prefix DEF (P) and DEF
(R) for payment and receipts separately

Credit scrolls will show receipt number/MIN given by the Bank to each MRO,
the name of Depositor and its amount

Debit scrolls will show the cheque No., date and amount of each cheque

Each dealing branch of SBI/Associate bank will furnish daily scrolls duly
supported by MRO and paid cheques in respect of Defence transactions
occurring in their books to the FPB

In cases where, the Associate bank concerned has less than ten of its branches
handling the transaction of a PCDA/CDA/Defence Accounting Circle, they will
directly report such transactions to the Focal Point Branch of the SBI accredited
to the PCDA/CDA concerned

Procedure of sending scrolls through the focal point branches however is not
applicable to payments of Defence Pension made by Public Sector Banks
Based on the daily scrolls received from the dealing branches, the FPBs
prepare Main Scrolls and allot consecutive serial numbers to them

Main Scrolls duly supported with the daily scrolls of branches and MROs / Paid
cheques sent to PCsDA /CsDA daily for their verification and certification

Simultaneously, the aggregate of receipts and payments in the Main Scrolls are
incorporated in a daily memo and the same is reported to SBI, GAD, SBI,
Mumbai/Link Cell of Associate Banks

Two copies of the Main Scroll along with its original copy and the relative
instruments received from various dealing branches will be forwarded to the
PCDA/CDA/Accounting Circle on day-to-day basis

Wherever FPBs of SBI act as FPBs for the Associate Banks also, Main Scrolls will
be prepared separately for SBI and each of the Associates Bank concerned such
as SBH, SBM etc.

Error Scrolls in respect of discrepancies either by the FPB or pointed out by the
Defence Accounts Circle will be prepared by FPBs at the time of certification of
Main Scrolls or the Date Wise Monthly Statements and included in the next
day’s transactions

A/cs Section maintains a Register for the date-wise recording of the receipt of
Bank scrolls (with their No. and amounts-debit and credits separately) and
disposal of accompanying vouchers. Separate pages in the Register will be
allotted for each FPB.

Verification of DMS/MSS
FPB will prepare Date wise Monthly Statement (DMS), a summary of all the
transactions undertaken during the month and submit the same to the
concerned DAC
DAC will verify and reconcile the transactions noted in the Main Scroll Register
and return the same after due verification to FPB
FPB will forward verified copy of DMS to SBI, Govt. Accounts Department,
Mumbai /Link Cell of the Associate Banks
Adjustments on account of discrepancies/errors pointed out by DAC will be
incorporated in a separate Error Scroll and reported to that office in the next
day’s transactions

On receipt of daily memoranda/online data in respect of transactions from

various Focal Point Branches, GAD, SBI, Mumbai/Link Cell will consolidate the
transaction from all FPB figures and report Receipts and Payments separately
to RBI, CAS, Nagpur for eventual settlement

A Monthly Statement of Settlement (MSS) will be generated and forwarded to

the DAC and FPB

DAC will verify and return a copy of the same to FPB/SBI, GAD Mumbai duly
pointed out discrepancies, if any

RBI, CAS, will forward monthly statements of closing balances in the Defence
Proforma Account, for reconciliation with the Main Scrolls /DMS/MSS

A confirmation of the closing balances is sent to the RBI CAS by the DAC

E-payments through e-FPB

SBI Cash Management Product Branch, Mumbai is authorized to act as e-Focal
Point Branch for all Non-Civil Ministries /Departments from Government e-
payment Gateway (GePG)

It acts as a link and FPB for Ministry of Defence

Encrypted and digitally signed payment files are uploaded to CMP which are
credited to the beneficiary accounts in RTGS/NEFT within T+1 day

Downloadable e-Debit Scrolls/DMS and Settlement Reports are received from

the CMP portal

Settlement of fund with RBI CAS Nagpur is processed based on mandate

without any physical instrument. Reimbursement of Funds is claimed from RBI
only after the payment is effected
e-ticketing
E-ticketing system in lieu of Railway Warrant, to Service Personnel has been
developed by the CGDA via web services integration offered by IRCTC.

The system facilitates entitlement check, authorization, payment, accounting

and budgeting of Defence travel

All journeys being performed by the Armed Forces personnel on railway

warrants have been included in the system.
The phase-I of the system, launched on 30-12- 2009 covers only rail travel of
selected units under Army, Navy and AF.

Till 100% stabilization, both the e-ticketing and Railway Warrants will continue

A predefined amount is deposited by the PCDA (Travel) {Presently PCDA (R&D)}

in the Revolving Account at the central level with IRCTC by issue of Defence
Cheques/e-payments through SBI, CMP etc

Confirmation of Defence Cheques/CMP mandates are received through Scrolls

and adjusted in the Defence Proforma Account

Tickets booked by any unit are debited against this revolving account

The money is recouped in the Revolving account periodically

The relevant Service Heads are directly booked online

Advice of Clearance
Total amount due to/from Department of Posts, Railways etc. should be
advised monthly to RBI, Nagpur by PCsDA/CsDA

These advices should be sent to CAS RBI, Nagpur at periodical intervals, viz. on
10th, 20th and at end of the month, the last one being always marked "Final“

Extracts of advice to the Bank should be sent to Post/Railways concerned along

with the supporting schedules or vouchers
Memo of Clearance by RBI – Intimation to Debtor & Creditor
Monthly Settlement Account
As soon as the accounts of a month are closed, the PCsDA/CsDA shall prepare a
monthly settlement account for the amounts booked in his account working up
to the total net debit or credit advised to the RBI during the month and send it
to the Accounts Officer, Post/Railways. This account will cover only those
items, the initiative for which rests with the Defence

Similarly, a monthly settlement account from the Accounts Offices of

Railways/Posts with which the Defence has an account, will be received every
month in respect of items for which the initiative rests with them

Liability of Leave Salary

Liability for payment of leave salary will be borne in full by the department
borrowing for leave availed of during the currency of the deputation

In case of Govt. servants who avail of leave on termination of their deputation

period the liability for leave salary will be borne by the department which
sanctions the leave

Liability of leave salary will be borne by the Department (even if it be a

borrowing Department) from which a Government servant actually retires on
superannuation or dies while in service in regard to cash payment in lieu of
earned leave on that date.

Liability for pension including gratuity will be borne in full by department to

which the Government servant permanently belongs at the time of retirement.
No recovery of proportionate pension need be made from other Central
Departments under whom he had served

In the case of Govt. servants who have tendered technical resignation on

selection to another department within Govt. of India the question of
allocation of pension or incidence of leave salary would not arise

In respect of Govt. servants deputed to autonomous bodies/organizations,

leave salary and pension contributions are to be recovered.
As and when a Govt. servant opts for permanent absorption in a Public Sector
Undertaking, the parent department of the employee shall work out the leave
at his credit on the date on which he is permitted to get absorbed in the PSU,
and shall pay a lump-sum equal to leave salary for the leave on average
pay/earned leave due, after ensuring that the foreign service contributions
have been recovered up to that date.

In case of Government servants transferred on Foreign Service, pension

contributions are recoverable from the government servants themselves
unless their foreign employer consents to pay them. They shall not be payable
during leave taken while on foreign service

Leave salary contribution is payable in case the Foreign Service is in India

Liability for pension including gratuity will be borne in full by the Central/State
to which Government servant permanently belongs at the time of retirement

Except in respect of All India Service Officers (retired as well as retiring, both
from the State and Central), in whose case GOI has taken over the entire
liability of Pension including gratuity from 01.04.2008

Leave salary contribution in respect of State Govt. servants on deputation with

the Central Government shall be payable to State Government by the Centre.

Leave salary paid by the Central Government to a State Government officer on

deputation with the Central Government for the period of leave availed of
during the period of deputation shall be recoverable from the State
Government

Works/Stores exp. & services rendered

Receipts and expenditure pertaining to AF, Navy, Factory Works executed by
PWD, whether on a standing arrangement or otherwise, will be passed on by
the concerned Civil AG to Regional CDA in whose area the work is carried out
and not to PCDA (Air Force), (Navy), Factories

In case of transactions requiring adjustment between Defence Services and the

Central Civil Ministries, State Governments and Railways, etc., debits on
account of cost of supplies made or services rendered will be supported by
receipted copies of vouchers/bills or detailed particulars quoting authority for
the debit raised

Adjustment of Defence Proforma Accounts

MRO – Validity – Triplicate – Submission – Adjustment

DMRO Adjustment – Register – Linking – Extracting

OMRO Adjustment – Audit Sections/PAOs – Unlinked

DMRO received and adjusted – OMRO not received

OMRO received and adjusted – DMRO not received

Cheque linking/Fresh Cheques

Cheque is drawn – Punching Medium - Linking

Unlinked Cheques – Schedule III

Fresh cheque – spoilt – Lost

Stop Order/Non Payment Certificate

Indemnity body

Tr. arising in the books of Railways/Postal

Vouchers and accounts are received from CAO Railways, Director of Accounts
Post, ISM London etc. in A/cs section

Entry in Inward Settlement Account Register

Scheduling of vouchers to Audit Sections - Duplicate

AT sections prepare P.M. – Adj. to service head by contra adj. to RBI Suspense
Classified head
Duplicate copy of schedules received back in A/cs Section

After receipt of clearance memo from RBI, P.M. is prepared relieving RBI
Suspense Classified head contra adj. to RBI Deposit Defence

Tr. arising in the books of Defence

AT section prepares P.M. and schedule the vouchers to Accounts section to
take up with Railways/Post

Separate Accounts Office wise segregated and entry in Outward Settlement

Account Register

Separate Advice to RBI and forwarding the vouchers to concerned Accounts

Office

On receipt of clearance memo, P.M. will be prepared by A/cs section relieving

the Railways/Post code head contra adj. to RBI Deposit Defence

Central Purchase – DGS&D

Adjustment through DAD Cells

P & AO will hand over vouchers to Cell and Advise RBI for adjustment through
Proforma Account

DAD Cell will function as one of the sections of CDA with a separate Section
Code, scrutinize the vouchers received from P & AO and sort them out CDA
wise

Value of vouchers will be entered in the Register CDA wise and the segregated
vouchers will be scheduled to the LAOs of the Consignee PCDA/CDA
immediately in batches under a top sheet and the acknowledgement of the
same watched

Forwarding memo in respect of each PCDA/CDA will be boldly enfaced with the
batch number for a particular month
Copy of advice received from the PAO and a PM will be put up by debiting
respective service heads with reference to the entries in the Register contra
credit to RBI Suspense classified head

Copy of advice along with the copy of the PM will be sent to Accounts Section
of the PCDA/CDA of Cell

RBI Suspense (Classified) head will be relieved on receipt of clearance memos

from RBI, CAS, Nagpur by Accounts Section

Action by Consignee PCDA/CDA

Schedules/Vouchers received from the Cell will be scrutinized. In case not
pertaining to the consignee, the same will be returned to Cell for onward
transmission to correct PCDA/CDA.

The Section concerned will also verify the code head indicated therein and
carry out re-adjustment if required

Further action to schedule the vouchers for credit verification by the LAOs will
be taken in terms of codes and manual provisions

In the case of works (MES) Non Effective Transfer Entry

Outward Settlement – Cash basis

Compilation by Audit Sections to relevant PAO Heads

Scheduling of vouchers to Accounts Section

Outward Claims Register

If net amount is credit – Issue cheque & relieve suspense

In net amount if debit – Call for the cheque – Adjust MRO and relieve suspense

Inward Settlement – Cash basis

Inward claims duly supported by schedules/vouchers along with Bank draft (in
case the net effect is a credit to the PCDA/CDA) or a memo requesting for a
cheque (in case the net effect is a debit to the PCDA/CDA) will be received in
the Accounts Section

The credit and debit schedules/vouchers/bills will be carefully scrutinized to

see that the transactions relate to the PCDA/CDA

Payment/Adjustment of MRO

Rectification/Re adjustment if necessary by Audit Sections

Emergency Cash Requisition

Payments made by the bank treasuries on the authority of ECRs will be taken
directly against the Defence Proforma Account in their books

Accounts Section will adjust the amounts of the original copies of the ECRs to
the head "Reserve Bank Suspense Unclassified" by contra credit to the head
"Reserve Bank Deposit-Defence“

Audit section adjusts to the relevant service head by contra adjustment to RBI
Suspense Un Classified

Reconciliation of RBI Balance

After accounts of a month are closed, RBI CAS will furnish Statement of Closing
Balance to each PCDA/CDA by 18th of the following month

These figures should be reconciled with the total figures recorded in the
Outward and Inward Settlement Account Registers and Main scrolls received
from FPBs

RBI will also intimate the balances of each PCDA/CDA to the CGDA monthly,
who will reconcile and confirm the monthly figures for the Department as a
whole to the CGA for necessary reconciliation

Unreconciled amount will be transferred to RB Suspense Unclassified

(020/83)/PSB Suspense (020/76) as the case may be
Incorrect adjustments
When cheques/MROs pertaining to one CDA have been accounted for against
another CDA, the same should be referred back to FPB for rectification through
Error Scrolls

But if the DMS is already certified, then the same should be adjusted in his
own books and passed on to the correct CDA through Defence Exchange
Account i.e. by raising DID Schedule

Defence Exchange Accounts - DIDS

DEA will be operated for adjustment of transactions of the following types
only.

Debt, Small Savings Provident Funds, Loans and Advances, Deposits and
Advance, Suspense and Remittances head

Transactions for the settlement or adjustment of which a particular PCDA/CDA

is centrally responsible. For ex: PCDA New Delhi -ILAC

Imprest Advance Payments to Naval /Air Force personnel from Army sources
and vice versa

In all other cases, the receipts and charges pertaining to Defence Services will
be finally compiled in the books of the Controllers by whom they are realized
or incurred

Expenditure under LCH incurred by one CDA for another need not be passed
on through DEA. Monthly statement is sufficient to enable later to reduce fund

Bulk issue of stores from one service to another service need not be passed on
through DEA. ISA voucher is operated

All issues from OF to Army, Navy and Air Force will be priced and straightaway
debited to Service heads of Army, Navy and Air Force by contra credit to
deduct head of O.F. Organization. No need of DEA
Transfers of unserviceable and salvaged stores between Army, Navy and Air
Force will be made without any financial adjustment. No DEA required

Services rendered by Army to the Air Force and the Navy and vice versa are
treated as free. No DEA

Advance of Pay, TA/DA advance etc. which are shown on LPC – No DEA.
Intimation through LPC is sufficient

The adjustment of departmental charges in respect of works executed by the

MES on behalf of Navy and Air Force will be carried out centrally by the
Controller of Defence Accounts, (Army), Meerut

Proforma adjustment on account of departmental charges in the Factory

Accounts will be made centrally by the Principal Controller of Accounts
(Factories)

All the PCsDA/CDA have respective originating and Responding code heads

While originating a DIDS, originating code head of the Responding Controller is

used

While Responding the DIDS, responding code head of the Originating CDA is
used

Originating (+) should be responded with (+) and originating (-) should be
responded with (-)

Originating can be done through various classes of voucher but responding will
be through Class 8

Action by originating CDA

Compile the PM – Prepare DIDS on IAF CDA 338 A

Automatic Generation of unique DIDS Number

5 copies of DIDS (3 – Resp. CDA, 1 – to A/cs section of orig. CDA and1- Office
Copy) – Entry in Register

Forwarding of 3 copies along with the supporting documents and vouchers to

responding CDA

A/cs section of originating CDA – Entry in Register of DIDS outward –

Verification in Compilation

Action by Responding CDA

A/cs section – Linking in the register

Responding Action by AT section

Noting of 15 digits on DIDS class 8 – Part II

One copy is office copy and second to EDP and third copy to Accounts Section

Verification by A/cs section in the compilation report

Linking and clearing the item from the register

Taking up the matter with CDA (Army) Meerut in case required through change
statement

Adjustment of Foreign Transactions

The following concepts of accounting may be referred as the process is same,
but agencies are different
Defence Proforma Account
DIDS
Adjustment of Pension against PCDA (P) Allahabad
PCDA New Delhi
PCDA AF
PCDA Navy
Punching Medium
Class 1 – Cash Vouchers
Class 2 – Transfer Entries
Class 3 – Civil ID Schedules
Class 4 – Abstract of Receipts and Charges
Class 5 – Cash Accounts
Class 6 – Railway Bills
Class 8 – DID Schedules
Class 9 – MES Bills

Various Compilations
Sectional Compilations
Book Compilation of RDR heads
Consolidated Compilation of All India Defence Services Receipts & Charges
Consolidated Compilation of RDR heads
Analysis of All India Defence Services Receipts and Charges
Compilations for March (Supplementary) and March (Supplementary
Corrections) Accounts

Defence Ledger
Prepared in the form of statements showing Receipts, Charges and balances
under Revenue, Debts, Provident Funds, Reserve Funds, Loans and Advances,
Deposits, Suspense and Remittance heads

The heads which are closed to Government have been grouped and prepared
in different format showing monthly balances to facilitate control and
preparation of AROB

Entries in Defence Ledger are posted annually

Preparation of AROB by due date

Annual Review of Balalnces

It is in the form of statements

Certification of balances
Review of outstanding balances - Acknowledgements

Submission by due date

Proforma dropping

All the Nominal Accounts i.e. balances under CHB heads are closed to
Government

All the RDR Heads are closed to balances and carried forward to the next year

Data is presented by PCsDA/CsDA in the form of various statements prescribed

Reports submitted by PCsDA/CsDA will be consolidated by CGDA and

presented to CGA

Report of CGDA represents the portion of the Combined Finance and Revenue
Accounts pertaining to Defence Services

Codification is converted into 15 digits in the CGA’s account, through a

concordance (Major, Sub Major, Minor, Sub, Detailed and object heads)

CGA incorporates the data in the combined Finance and Revenue accounts of
the Central and State Governments in India

Budget Estimates
Total 6 Demands For Grants out of DSE
2 Demands for Grants for Pension & MOD (Civil)
Expenditure falls under the following categories
Pay and Allowances of Armed Forces
Payments to Industrial Employees
Transportation Charges
Miscellaneous Expenses
Payment for Stores
Works Expenditure
Pensions
Budget Estimates
Estimates under CCH and LCH
Unit, Sub area, Area, Command, Army H.Qrs. MOD
Check by PCDA/CDA
MES - Schedule of Demands
Budget Estimates – DAD
Vote on Account
Voting by Parliament and signing by President
Charged Expenditure provision
Release of Budget through channel
Reserve/Sub Allotment

Control over Expenditure

Centrally Controlled Heads
Locally Controlled Heads
Watching the progress of expenditure by PCDA/CDA
Monthly Expenditure Report
Re-appropriation of funds
Receipts/Expenditure, Voted /Charged, between sub heads
GOI – Minor heads, New activity, Error in estimate, savings due to non
utilization of funds for specific purpose
Excess over Estimates
Provisional Payments
Supplementary Grants

Cash Assgnment
Please refer to OM II D section Class

Deposits
Sums which are clearly not due to Government but are held in trust, or as a
security will be credited to the appropriate "Deposit" head

Ex: Security Deposits from Contractor, Government Servants

Returned to the parties to whom they belong.

When deposits are returned, the corresponding Deposit Head will be relieved
Items which can be credited to the specific head should not be compiled under
Deposits

For ex: Un disbursed pay and allowances – credited to Pay head as originally
booked under that head

Deposits head cannot be used as a Suspense head

Erroneous Compilation made under any of the Deposit head should be

readjusted by deduct entry and not by a fresh debit or credit

Different kind of Deposits

Donations/Contributions towards the National Defence Academy.
Security Deposits
Treasure Chest Deposits
Field Deposits
Miscellaneous Deposits
Trust Interest Fund
Unclaimed General Provident Fund Deposit
Unclaimed Deposits in Defence Savings Provident Fund
Unclaimed Deposits in Defence Services Officers' Provident Fund
Unclaimed Contributory Provident Fund Deposits.
Unclaimed Deposits in Defence Services Personnel Provident Fund
Unclaimed Deposits in other Miscellaneous Provident Funds

Lapsed Deposits
Please refer to FR I class on Security Deposits

Advances
All payments made which are subject to recovery or adjustment, other than
advances of pay, pension or traveling allowances or any other advances which
are compilable to Service Heads of Accounts.

All payments made by Military Disbursing Officers into Military Treasure

Chests, and vice versa.
Permanent Advances sanctioned for current expenditure, such as the local
purchase of petty stores, contingent charges and payments for extra temporary
labor

Loans and Advances

Advances head should not be used as Suspense head

Payments specially sanctioned by Government subject to recovery, with or

without interest, are treated as Loans

Sanction of Competent Authority is must before release of Loans/Advances.

Recovery to be enforced

When the government is transferred to jurisdiction of other Controller –

outstanding amount to be passed on through DEA by debit i.e. (-) credit

Recoveries of loans from monthly pay and allowances of Government servants

on deputation between Central/State departments settled in cash

Between Central Government Departments, outstanding balance of loan is

transferred

Interest Bearing Advances – Receipts - Mortgage bonds – Insurance premium

Contingency fund of India

Article 267 (I) of Constitution of India

Held with Secretary MOF, Dept. of Economic Affairs

New service/unforeseen expenditure

Parliament in session/Not in session/Recoupment

Responsibility for obtaining advances from the Contingency Fund, wherever

necessary, rests with the administrative authorities concerned
Charged Expenditure
Article 112 (3) (f)
No requirement of voting by Parliament
Arbitration awards – Executory (Ch.)/Declaratory
Private Arbitrator Ind. Dis. Act – Not charged
Subsequent award by court – Charged
Refund of Security/W. Men Comp. Act – Not charged
More than Security Deposit – Entire amount Charged
Payment of wages act – Charged
Payment made to Court is in the nature of security – Deposit
In the absence of any stay, payments – Charged
Cost of stamp paper when required to be paid in terms of decree/arbitration
award – Charged
Expenditure incurred prior to decree/award – No
Implementation sanction
Provision of funds
Regularization in subsequent years
Provisional Payments/Watching through Registers
Reports

Miscellaneous
1 crore for Chief of Army, 50 Lakhs to Navy, AF. Non Recurring payments by
Chiefs

Advance drawing 1/6th – PF Account - Audit by PCDA New Delhi, PCDA (AF),
PCDA (N)

MROs – Register to watch – Signed by Officers. Receipt of cash in Accounts

offices – MRO

PCDA (P) acts as Overseas Paying Agent for pensioners of UK, Myanmar and
Pakistan residing in India and claims reimbursement from concerned
Governments