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ACCTS AND AUDIT

INTRO

1. The sys and method of keeping accts in a unit has been standardised
throughout the Army and is based on the pamphlet “Regimental Accts Units”. It is
essential to manage the available financial resources efficiently so that funds are
built up and they are utilised in the proper manner. The sys is so designed that the
resp for different accts is distr and all accts are not placed in the ch of one person. It
also ensures strict safeguards in place against losses by theft, fraud or neglect.

AIM

2. To acquaint students with accts & audit.

SCOPE

3. This subject will encompass the fwg:-

(a) Part I. Accts.

(b) Part II. Audit.

PART I – ACCTS

Types of Funds

4. Every unit normally maint the fwg two types of funds:-

(a) Public Funds. Funds which are financed entirely by govt and the
unexpended bal of which are returnable to govt in the event of their not being
devoted to the object for which they are gtd. Trg grants and the imprest form
part of public funds and the procedure for the maint of these acct is laid down
in “Fd Imprest Payment Instr” which is slightly different from other public
funds. Public money will not be drawn from a treasury or bank before it is
actually reqd for disbursement.

(b) Pvt Funds. All funds which are not financed in any way from public
money. These incl funds, commonly known as Regt funds.

5. Public funds are always kept separate from the Pvt funds. They consist of the
fwg:-
(a) Annual Trg Grant (ATG).

(b) Amenity Grant.

(c) Education Trg Grant (ETG).

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(d) Library Grant.

(e) Annual Contingent Grant (ACG).

(f) Imprest Acct.

(g) Condiment expenditure.

(h) Band allce.

6. Peculiarities. The peculiarities of the public fund are as follows:-

(a) It is fully financed by the govt.

(b) It will be expended only on the heads for which it is allotted.

(c) The unexpended money will be deposited with the govt treasury at the
end of the financial yr.

(d) No loan can be given from this fund.

(e) The fund will be audited by the auditor and also during the qtrly audit
bd.
(f) The money can be spent under the heads in accordance with the
orders/rules and regs prescribed by the govt for the purpose.
(g) Surprise check of the fund should be carried out qtrly.

7. Pvt Funds consists of the funds financed by pvt source/indl subs. They are as
follows:-

(a) Regt fund.

(b) Canteen fund.

(c) Garden fund.

(d) JCOs Mess fund.

(e) Offrs’ Mess fund.

(f) Mandir/Gurdwara fund.

(g) Sports fund.

(h) Cinema fund.

(j) Soda Water Factory funds.

(k) Bk Damage fund.

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8. Peculiarities. The peculiarities of pvt funds are as under:-

(a) It is partially financed by public money and also by pvt/indl

subscriptions.

(b) It can be spent in two ways :-

(i) Purpose for which money is allotted.
(ii) As per the direction of the CO.

(c) At the end of the financial yr, the bal amount is not reqd to be
deposited in the govt treasury and can be carried fwd to the next financial yr.
(d) Loans can be given to JCOs/OR.
(e) It is liable for audit; by a Bd of Offrs, detl by the Stn Cdr/Fmn cdr. The
fund is not auditable by the Local Audit Office (LAO).
(f) The money can be tfr from pvt/regt fund to other funds.
(g) The pvt/regt fund acct is maint in columnar cash book (IAFA-811).
(h) The amt must be deposited in Nationalised Banks and in places where
these do not exist; the amt should be deposited in banks auth by the Stn/Fmn
Cdr.
(j) The funds can be invested in Unit Trust of India, Govt securities, Post
Office, National Saving Certificates and with Public Sector Undertaking as
fixed deposits.

Bank Acct.

9. For public funds, bank acct are opened only with the local br of the State Bank
of India or the Treasury. For pvt/regt funds, it is permissible also to open acct with
the local post office or with any recog commercial bank after obtaining the approval
of the regional CDA.

10. Bank accts are opened by the COs in their official capacity and not in their
personal names. Separate bank acct are necessary for public and pvt/regt funds.
Imprest acct, though forming a part of Public funds, has separate acct.

11. Cheques. To transact business from a fund, each fund holder is issued
with a set of Red, Black and Yellow Cheque Books. In addn, the Presiding Officer of
the Treasure Chest Committee also maints separate Red, Black and Yellow Cheque
books for his transaction. Types of Cheques are as follows:-

(a) Red Cheque. A Red cheque is the equivalent of a bank “paying in”
slip by which money is credited in any acct. This cheque is used for depositing
money in the RTC. It is also prepared but crossed when money is received in
the commercial bank in favour of any particular fund.

(b) Black Cheque. A Black cheque is equivalent to a bank cheque by

which money is paid out from any acct. This cheque is used for withdrawal of

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money from the RTC. It is also prep, but crossed when money is paid through
the commercial bank from any particular fund.

(c) Yellow Cheque. A Yellow cheque is used when amts are reqd to be
tfr from one fund to another. It is used purely for book transaction amongst
different fund holders, that is, it supports a debit entry in one fund and credit
entry in another w/o the actual exch of cash.

12. Fresh ser no of Red, Black and Yellow cheques are started every financial yr
by every fund holder.

13. Regimental Treasure Chest (RTC). Under the sys all maj units are reqd
to have their own bank called the “Regimental Treasure Chest”. All unit transactions
are carried out with and through the RTC by a sys of cheques. This sys absolves the
fund holders other than the RTC Chest
Committee from retaining cash or maint current acct with a commercial bank.

14. RTC Committee. RTC Committee consists of the fwg:-

(a) The presiding offr, who is normally the second-in-command of a unit

and is resp for the overall supervision.
(b) An offr is selected to act as unit accts offr who is made resp for maint
all auditable docus centrally.
(c) The cashier, who is normally the Subedar Major or a selected JCO of
the unit.

Resp of Committee

15. The main resp of the various offrs connected with the maint of acct in a unit
are discussed in the succeeding paras.

16. Presiding Officer- RTC Committee. He is resp for:-

(a) Ensuring that expdr is being incurred for legitimate purposes in

accordance with the dirns of the CO and that the income/expenditure in
various funds are judiciously regulated so that they are self sp.
(b) Signing the bank cheque and the Red, Black and Yellow cheques for
transactions
(c) Recording transactions with the commercial bank and the RTC in the
cash book (IAFA-125).
(d) Conducting surprise checks of cash in the RTC.
(e) Supervising and insp all unit acct books.

17. Manager- RTC. He is resp for:-

(a) The maint of Columnar Cash Book (IAFA-811) separately for public
and pvt/regt funds.

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(b) The prep of statement of bal Form ‘A’ (IAFA-120).

(c) The maint of the auditable docus connected with cash books.

(d) Arng cash for the RTC.

(e) Checking of Treasure Chest Daily Cash Book (IAFA-118) maint by the
cashier.

(f) Passing of Red and Black cheques for payment into and withdrawal
from the RTC and yellow cheques for tfr from one fund to another.

18. Cashier- RTC. He is resp for:-

(a) The safe custody of the cash in the RTC.

(b) Maint separate Treasure Chest Daily Cash Books (IAFA-118) for public
and pvt/regt funds.
(c) Issue receipts (IAFA-121) for cash received.
(d) Receiving cash on Red cheques and making payment on Black
cheques on behalf of the treasure chest.

19 Officer- in-Ch of Funds (Fund holder). He is resp for:-

(a) The maint of cash acct books (IAFA-125) for the fund.

(b) The maint of Red, Black and Yellow cheque books.

(c) Maint stk ledgers, where necessary.

(d) The prep of bal sheets at the end of each month.

Imp Rules Regarding Accts

20. The imp aspects need to be kept in mind while handling unit accts.

(a) Acct books and cheque books of all kinds are kept under lock and key.
(b) All govt “dues in” and “dues out” must pass through the public acct.
(c) Public money is not drawn until it is actually reqd for disbursement.
(d) All cash payments are made in the presence of an offr.
(e) Unless specifically auth, JCOs, NCOs and Non Gazetted Civ are not
placed in ch of public, Regt or Pvt acct of money.
(f) Offrs in ch of funds sign both the cash acct and its bal sheet, and
designation of the offr is entered and the date of sign recorded.
(g) The No of regt and pvt funds should be kept to the min.

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(h) The aim of each regt and pvt fund should clearly be defined on the
inside of the cover page of its acct books. A brief statement of normal income
and expdr of the fund is also inserted.
(j) No fund may lend money to another fund. All funds and sub funds, if
any must be self sp.
(k) Loans from regt and pvt fund are permissible to JCOs and OR only.
Offrs are not permitted to obtain loans from the funds, except when Offrs Loan
Fund exists.
(l) Whenever acct is handed over by one offr to another, the last monthly
bal and all subsequent entries should be verified with the Columnar Cash
Books. The acct is then bal, dated and signed by both offrs.

Sundry Debtors (Sy Drs) and Sundry Creditors (Sy Crs)

28. Sy Drs. These are those pers/heads which need to make payment to the
fund. These are therefore reflected in assets of the fund.

29. Sy Crs. These are those pers/heads who need to be paid by the fund.
These are therefore reflected in liabilities of the fund.

Advantages of Sy Drs/Sy Crs List

30. These are as follows:-

(a) It helps in early liquidation of sy drs and sy crs.

(b) It also ensures that sy drs do not run into bad debts which results in
avoidable losses to the fund.
(c) Limits laid down by the SOP of the fund is also taken care of to check
rulings laid down on the sy drs/sy crs.

PART II – AUDIT

Audit

31. Audit is an exam of acct books and records with view to ascertaining that they
are correctly maint reflect completely all relevant transactions and the transactions
themselves are sp by proper authority.

32. The public funds are audited by the Local Audit Offr. Regt funds are audited
by a Bd of Offrs under unit or stn. In case of any maj discrepancies in the regt funds,
the Sub Area or Bde Cdr may ask the Def Service Acct Dept to audit regt acct.

Audit Bd.

33. The audit of regt funds is normally carried out every qtr. For units which are
commanded by offrs of the rank of Lt Col or above the OC unit convenes the audit

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bd consisting of three sr offrs present with the unit. For other units, the OC stn
assembles bd consisting of three sr offrs of different units.

34. The fwg records are reqd to be placed before the audit bd:-

(a) A statement showing the bal of all public and pvt/regt funds at the end
of the qtr under audit, giving reasons for incr or decr as compared to the last
qtr.
(b) Columnar Cash Book.
(c) All sp docu incl vrs, receipts, cheque books and bank bal.
(d) Stk Books.

Procedure for Audit

35. Audit should be conducted on the lines indicated below:-

(a) Ensure that bal from the previous qtr have been brought fwd correctly
into the acct under audit, and the acct have been posted up to date.
(b) Check that the tfr from one acct to another are properly carried out.
(c) Scrutinise the bank statements and their reconciliation with the bank
bal.
(d) Verify the oral statement of the person in ch of the acct with sp docu.
(e) Ensure that large cash bal have not been kept in hand w/o justification.
(f) Obtain a cert from the Commanding Officer that all acct maint in the
Unit either Public or Pvt/Regt have been produced before the audit bd.
(g) For latest details one must refer current AOs.

Audit Objection

36. Audit objn are raised by the bd carrying out audit of the unit. It is the resp of
the unit to get all the objn cleared within the laid down pd.

CONCLUSION

37. Maint of accts is an imp aspect of financial mgt. One has to read the
references, AOs to know about acct thoroughly, so that you can fulfil your resp in a
correct manner.

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