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PERSONAL LEDGER ACCOUNTS
DAY – 1
SESSION – I
General:
Personal Ledger Accounts (also known as Personal Deposit Accounts) broadly
fall into two categories, viz., those operated within the consolidated fund of the State and
those in the Public Account. The opening of a Personal Ledger Account under the
consolidated fund of the State requires the approval of the State Government in
consultation with the Accountant General. According to the guidelines issued by the
Comptroller & Auditor General of India in his letter No. 443-10/65-61, dt 21.4.61
circulated vide 00A-3961, dt.2.8.61, P.L. Accounts under the consolidated fund can be
opened in special circumstances when normal procedure of drawal from the Treasury by
presentation of bills proves unworkable in respect of any special scheme under taken by
the Government. Further, such scheme should have gross working expenses of an amount
exceeding Rs. 5 lakhs in an year and should have considerable receipts.
The Personal Ledger Accounts under the Public Account are opened after the
sanction of the Government is issued in consultation with the Accountant General.
Preamble:
Personal Deposit Accounts have been in vogue since the inception of Government
accounts or it can be said to be synonymous with accounting system. The origin of
Personal Deposit Accounts can be traced in various accounting systems but for discussion
purposes in this article we will restrict it to our accounting system, which has been laid
down by the British but almost adopted in toto after independence. So, historically it can
be said that our accounting system definitely provides for P D Accounts and the Office of
the Comptroller & Auditor General of India especially dealt with the provisions of
Personal Ledger Account. Truly, PLA is one of the types of PDA. The creation of this
facility was aimed at giving more flexibility to Drawing & Disbursing Officers basically
to ensure implementation of government policies in a time bound manner. It was actually
intended to give support to the Head of Departments for speedier implementation of
policies/projects. But of late it has been seen that the purpose of extending this facility is
being vitiated so much so that it amounts to misuse. Though it may be said for the benefit
of DDO’s that an intention of misusing this facility may be inadvertent, having said so
this manner of funding requires a relook. The aim of this is therefore, to deal in totality
and present the reader with all the options to make a judgement. Procedure and processes
involved in operations of PLA are as below:
Definition:
The provision for Personal Deposit Accounts is made with the intention to
facilitate the administration thereof to credit receipts into and to effect withdrawals
directly from the account. This was coupled with pre condition that no withdrawal will
result into minus balances therein. PLA essentially refers to those deposit accounts,
which are operated by DDO as a banking account in a government treasury. Para 7.6 &
7.7 of Manual of Standing Orders, Accounts & Entitlement of Comptroller and Auditor
General of India has defined PLA in the following manner.
7.6 Ordinarily the opening of a banking deposit account or of a Personal Ledger Account
is sanctioned by Govt. after consultation with the Accountant General. It is generally
recognized that the Govt. should not agree to the opening of such an account unless it is
satisfied that the initial accounts of moneys in the Personal Ledger Accounts are properly
maintained and are subjected to audit.
7.7 Except where, by law or rules having the force of law, Personal Deposit Accounts
are created by transferring funds from consolidated fund for discharging liabilities of the
Govt. arising out of special enactments, Personal Deposit Accounts, created by debit to
consolidated Fund. This should be closed at the end of the financial year by minus debit
of the balances to the relevant service heads in the consolidated Fund, the Personal
deposit Account being opened next year again, if necessary, in the usual manner.
Looking to the definition, the restraints put for opening of such Personal Deposit
Accounts are quite clear and it also tends to discourage any deviation from the codal
provisions.
1) What is Personal Ledger Account?
Personal Ledger Account is an account, which is opened in the name of a
personal/Institution fund with prior permission of government and concurrence from
Accountant General, Pr. PAO. There should be an Administrator to operate the Personal
Ledger Account. Such Personal Ledger Account can be opened in the name of a private
personal/Institution. However, prior permission from government is necessary. This prior
permission cannot be given by government unless concurrence from AG/Pr.PAO/CCA is
obtained.
Types of PLAs
i) There are different categories of the Personal Ledger Account intended to meet other
requirements of the Govt’s functions, viz:
A. For administering moneys tendered by or on behalf of warrants and attached estates
under Govt. Management,
B. Civil & criminal court Deposits in respect of Chief Judicial Authority concerned,
C. In regulatory activities of Govt. the receipts are realized and credited to fund or
account to be utilized towards expenditure.
D. As per law or rules having the force of law for discharge of liabilities of Govt, out of
the special enactments. No lump sum amount should be kept under this as per para
192 of Receipt and Payment rules 1983.
E. For officers commanding units and others concerned in the administration of Public
fund or regimental fund.
(ii) The Personal Ledger Accounts being allowed to be opened broadly under ‘D’
category as mentioned above, on one pretext or the other are classified under two
further sub categories.
a. PLAs of non Govt. bodies, Public undertakings & Local bodies etc which are directly
transferred/created to them by debiting Major heads 3604 Compensation and
assignments to Local bodies etc and others likewise.
b. Expenses which are classified to other service heads.
The balances under PLAs falling under latter category must be surrendered to the
Govt. account or allowed to be lapsed to it in the end of the financial year. But the idea
of drawing money out of Govt. account to avoid the lapsing of it is absolutely contrary to
the principle of Legislative financial control in letter and spirit.
(iii) Every PLA so authorized to be opened will form part of Govt. account and will be
placed in the Public Account portion thereof. General belief that PLA’s have something
to do with operation of Government money by any official in his personal capacity is not
true at all. It’s the government money and to be operated in accordance with Government
rules and with due care. Interpretation is that PLAs be allowed to be opened/operated
only with the annual approval of Accountant General
What are the types of Personal Ledger Accounts?
Personal Ledger Accounts are of two types:-
(i) Normal PLA/cs where Treasury Officer/PAO in banking account with
Administrator.
(ii) Where the consolidated fund is debited and amount is transferred to PLA/c by
means of drawal of a bill or by means of transfer entry.
(iii) PLA/cs opened by operation of Account passed by parliament/legislature.
These balances in general deposit account lapse to government after three full
accounting years if balance is more than Rs 25/- and after one complete accounting year
if it is less than Rs 25/-(vide rule 189 of R&P rules 1983 as Rule 506 of MTR 1968)
However, this rule is not applicable to the deposits concerned by (i) above viz. the
balances in PLA/s do not lapse. But if the PLA/c is not operated for more than three
years, it is required to be closed. For this purpose, the permission from A.G is not
required. The Treasury Officer/PAO may ask the PLA holder to surrender the cheque
book and close the Account. If the PLA holder do not turn upto Treasury the Treasury
Officer can give stop payment order to Bank with respect the cheques available in the
cheque book and credit the balance to government Accounts misc. receipt by sending a
correction memo to A.G. office.
In respect of the PLA concerned. by (ii) above, the drawing and disbursing officers
are allowed to draw bills for –nil-amount as a special case/types of cases by special order
of government. The major head in consolidated funds stands debited and contra credit is
official to PLA/c. Such accounts are required to be closed at Nil balance by debit to PLA
an debit to concern major head. This can be either done by putting condition while giving
concurrence for opening PLA or by means of transfer entry by asking Treasury
Officer/PLA holder to send the proposal in the suitable form before the account of the
year are finally closed.
However, if the PLA/c is opened and a lump sum amount is deposited to discharge the
liability of government, such amount can be allowed to be carried forward as specified in
the account.
SESSION – II
Accounting Procedure:-
P.L. Accounts under the Consolidated Fund:
A separate Personal Ledger Account is opened under the service head for each
scheme. Amount advanced by the Government for operation of the scheme. Amount
advanced by the Government for operation of the scheme is drawn and credited to P.L.
account as debit to the sub-head “Advances” by per contra credit to the sub-head
“Suspense” under the relevant minor head of account. All drawals by the Administrator
from the P.L. account are debited to “Suspense debit” under the account and all receipts
credited to “suspense credit”. Money is drawn by the administrator by presentation of
cheques on the treasury in which P.L. account is operated.
As the service heads under which the P.L. account is operated is closed to
Government account, balances carried forward proforma only.
P.L. Accounts under the Public Account:-
P.L. Account under the Public Account is opened by credit to the accounts
concerned, by the parties/officials nominated for operation of the same, moneys directly
to the Treasuries. They draw money by presenting cheques on the Treasury Officer.
Returns due to Accountant General’s office:-
From the Treasury:-
1) Plus and Minus Memoranda with the accounts received from the Treasuries as
required under Art. 120 of Account code, Volume-II.
2) An extract of the Register of receipts and payments maintained in Form TA-45 in
the Treasury/Sub Treasury should also be received monthly supported by the
original paid cheques.
3) All the Treasury officers are required to obtain from each Administrator an annual
certificate of balances and forward the same to the Accountant General explaining
the reasons in detail for difference if any between the balances as per their books
and that of the Administrators.
From the Administrators
Except those which are operated for private bodies, every Administrator should send
a detailed account monthly to the A.G. office showing the receipts and withdrawals
supported by vouchers by 10th of the following month as per instructions contained in
Government of Orissa, Finance Department Memo dt. 25.1.65, circulated in 00A-5048,
dt. 8.2.65. The documents to accompany the monthly accounts are enumerated below.
Different state governments may have different documents and monetary limits may also
change. (Different State governments may have different documents and monetary limits
may also change.)
a) Statements showing details of sale proceeds of stores and stock and other receipts
separately indicating the challan number and date (cash memo number and date
also in respect of cash collection) from whom received, brief particulars and
amount (total amounts to tally with the figures shown against 2 (a) and 2 (b)
above of the receipt side).
b) Statement showing detail of disbursements indicating the cheque number and
date, bill No. and date, to whom paid; brief particulars and amount paid duly
supported with all sub-vouchers above Rs. 100/ and a certificate signed by the
administrator to the effect that sub-vouchers for Rs100/- and below have been
retained by him (total amount to tally with the figure shown against item (1) of
the Expenditure side).
c) Statement of credit adjustment by Accountant General, giving details of A.G.’s
advice No. and date, particulars and amount against each (Total to tally with the
amount drawn against item 3 of the receipt side of the account).
d) Statement of debit adjustments by A.G., giving details of A. G.’s Advice No. and
date, particulars and amount adjusted against each (Total of statement to tally
with the amount shown against item 2 of the expenditure side of the account).
e) Treasury reconciliation statement closing balance as shown against item 3 of the
Expenditure side to be reconciled with the closing balance shown in the plus and
minus memo of the Treasury officer (Differences to be detailed under cheques
drawn not encashed, cash credited not accounted for by Treasury etc.
2) Annual certificate as required under S.R. 461 of O.T.C, Volume I (For March accounts
only).
PLA viz - a - viz budget
i) It is evident that the amounts of money transferred to deposit accounts under PLA
system go out of the purview of the consolidated fund and to obviate any misuse,
provision for lapsing the unspent balance was made compulsory.
ii) Once the budget has been allocated to some service unspent balances thereof can be
transferred to a Personal Deposit Account/PLAs for ensuring its uninterrupted
progress. But the idea of allocation of money with a view to transferring the same to
a Personal Deposit Account/PLAs without even conceiving a project does not
conform to the intention and spirit of the rules. The repetition of such practice will
result in accumulation under deposit accounts depriving the consolidated fund and
creating scarcity of fund for even the regular and routine functions of the Govt. This
leads to misuse of this facility. It is indeed an extra budgetary reform but for speedier
implementation but not a parking facility of funds to the discretion of DDO.
1) How is accounting done?
These PLAs form a part of Public Account of Government Accounts. As such no
sanction from legislature/parliament is necessary for making payment form PLA viz.
Budget provisions need not be made for making the payments since government acts as a
banker as far as the PLA transactions are concerned. The receipts are accommodated
under the Major Head 8443 – Civil Deposits – 106-PD-PLA on credit side. The payment
appear under the same head but on debit side. And in the statement no 16 of the Finance
Account these are shown as follows
Opening
Balance
Receipts Payments Closing
Balance8443-CD Cr Cr Dr Cr
106-PD PLA X Y Z (X+Y-Z)
Every Personal Ledger Account must show credit balance. If it shows debit
balance it is treated as adverse balance and it is necessary to investigate the reasons for
overdrawal.
The Treasury officer sends to the AG office the plus minus memo as prescribed
in Act 1109 Account code Vol.II/Rule 98 of Accounting Rules for trgs 1992. From this
the 1st memo Broad sheet of PLA is posting and the Broad sheet figure is worked out
which is further compared to the Ledger figure which is derive from Account document
is Detail book.
Generally the figures must be in agreement. If some difference occurs steps
should be taken to reconcile. General reason is misclassification. At the end of the year,
closing balance of PLA is worked out.
2) How is reconciliation conducted?
The Administrator is allowed to deposit authorised amounts in the Personal
Ledger Account during the course of the month. At the end of the month say by 10 th of
next month, it is necessary to reconcile the receipts which are appearing in the
Treasury/PAO Account with those appearing in the records of the Administrator. If this
reconciliation is scientifically conducted, there is no room for disagreement of the
balances. Generally the PLA holders are keeping the PLA in simple cash book form or in
the forms prescribed in the Departmental Registration.
At the end of the year, it is necessary for the Treasury officer to approach the AG
(A&E) and reconcile the balances appearing in their books with that of A Gs office. This
reconciliation is necessary as the Treasury rules provide that the balances of the
government are the balances which are appearing in the book of AG. As such, these
balances must be in agreement with those derived in Treasury Accounts. This will be an
essential condition for transparency in Accounts. The PLA holder will send the balance
certificate to AG only when the Treasury Reconciliation is completed.
This is an important part in maintaining the Personal Ledger Accounts. The plus
minus memo is the replica of the Register in form to be prescribed by each State
Government. This is an important record and can be said to be a bridge between AG
office and Treasury office.
The reconciliation ensures the correctness in balances in both Initial Accounts and
Final Accounts.
Session – III
PLA audit, Scope
1) What amounts can be deposited in Personal Ledger Account?
All receipts cannot be deposited in Personal Ledger Account. The revenue realized
should be credited to Revenue Receipt Account. Such receipts cannot be deposited in
PLA While giving permission, government has to lay down. The specific conditions
about this while giving concurrence. AG/Pr.PAO/CCA can also lay down certain
conditions about type of receipts which can be credited to PLA. Generally, there should
not be any objection to credit non government money to PLA e.g. Laboratory Deposits
for students hostel deposits from students staying in hostel. If some tax is imposed by
Law persons by legislature/parliament, the entire tax proceeding should go to Revenue
Receipts in revenue session of account. No refunds/pay &allowance/pension/promissory
notes can be credited to Personal Ledger Account.
2) How the withdrawals can be made?
Generally, when the Personal Ledger Account is opened, the Treasury Officer/PAO gives
the Personal Ledger Account holder a PLA code No & Cheque Book. The Administrator
is required to issue a cheque from the cheque Book provided to him by Treasury Officer.
It is a limit that the withdrawal should not exceed the receipts. For this purpose, the
specimen signature of the authority empowered to sign cheque should be sent to Treasury
Officer/PAO. The withdrawals should be for bonafied use as specified in general order.
Viz. the expenditure which pertains to Revenue/Capital of section of government account
cannot be incurred from PLA. (Pay salaries, Travel expenses, office expenses etc).
Scrutiny in Central Audit:-
The procedure laid down below may also be followed in addition to the
instructions laid down in 0.0.B.1538, dated 4.11.75
Proper watch should be kept over submission of the various returns due from the
Treasury Officer and the monthly accounts from the Administrators. The audit sections
should maintain the following registers for the purpose:-
1) Register to watch the receipt of Plus and Minus Memoranda from the Treasuries.
2) Register to watch the receipt of monthly accounts from the Administrators.
3) Register to watch the Annual Certificate of balances from the Treasuries.
Some pages may be set apart for each P.L. Account in the Registers mentioned above.
These registers should be submitted on 15th every month to the Branch officer. The
registers should be submitted for review quarterly to the Group officer.
It has been noticed that proper watch on the receipt of monthly accounts is not kept
and the delay in receipt or non- receipt is not properly pursued with the Administrator.
Non-submission of monthly accounts has become chronic. Further if with the accounts
receipts vouchers and other supporting documents are not received, they are not properly
registered in the objection book to ensure proper watch is kept. It should be borne in
mind that non-submission of supporting documents might hide a fraud or defalcation and
if the receipt of the documents is not ensured such irregularities might go undetected. The
following instructions should be followed strictly in Central Audit:-
(i) If vouchers and supporting documents are not received in the A.G.’s office with the
monthly P.L. accounts from the Administrator, the receipt of the same should be
watched through wanting voucher register under a separate heading.
(ii) The vouchers received should be subjected to audit in the TAD sections like the
contingent vouchers and a separate half-margin should be issued to communicate
the audit observations to the Administrators.
(iii) Discrepancies between the balances as shown in the monthly accounts sent by the
Administrator and the plus and minus memoranda sent by the Treasury Officer
should be got reconciled by a reference to the officers concerned.
(iv) Serious irregularities noticed in the returns submitted by these offices should be
specially brought to the notice of the controlling officers and the government.
(v) In their letter No.TRA-41/70-39915(28), dt.26.8.70, addressed to all departments
(copy attached) the Finance Department has stressed the necessity of timely
submission of monthly compiled accounts. The Treasury Officers have been
directed to stop payments on P.L. Accounts on receipt of information from the A.G.
that monthly accounts are not received. Action to enforce these orders should be
taken at once
(vi) As per 0.0A.3961, dated 2.8.1961, each TAD section is required to review all the
P.L. accounts within the service heads once every six months based on , the
observations made during the previous six months both in local as well as Central
audit. The results of such review are to be communicated to TM.2 section on 25 th
January and July for submission to the Accountant General. But such a review is
rarely conducted. These dates should be noted in the calendar of returns and
submitted regularly.
Local Audit:-
The audit sections should give details of the balances of the P.L. accounts
operated by the head of the office to O.A.D Hd. Qrs on receipt of intimation of local
audit. Any special points requiring closer scrutiny during local audit should also be sent
to the party.
During local audit a thorough examination of all the expenditure and receipts
under the scheme, in respect of the months selected for detailed check and the stores
accounts, if any maintained by the Administrators, Proforma accounts prepared by the
Administrators on the scheme during the previous financial year should be conducted and
results incorporated in the inspection report. A copy of the “Proforma Accounts” should
be sent along with the Inspection Report.
OAD Hd. Qrs should give copies of all the relevant paras to the Audit section
concerned for further action.
In respect of inoperative accounts, it should be seen during local audit as to how
the store and stock balance if any have been disposed off Sections should pursue with the
State Government and the Administrators concerned for closure of the inoperative. P.L.
accounts. The Branch Officers should review all such accounts and put up. D.O.
references to the Group Officer for taking up with appropriate authorities and pursuing
them up to their closure before the Appropriation Accounts for 1978-79 are furnished. A
time bound programme for their clearance will be drawn up by the Branch Officer of the
section concerned for approval of Sr. D.A.G and action taken against it will be reported
in the monthly report.
Types of Audit observation:
Since Personal Ledger Account operations are done by authorized authorities
without having much of the scrutiny at the Treasury Officers/Pay & Accounts officer
level, stringent audit scrutiny is necessary to ensure proper control. They also require
adequate checks just like regular transactions.
As Personal Ledger Account is operated by executives who are otherwise busy in
the execution, timely accounting poses difficulties. Therefore, there is likely delay in
accounting of the transactions. This will result in lot of unreconciled areas in the PLA
operations, which should be subjected to proper scrutiny to avoid likely hood of
misappropriation/fraud.
Normal Audit Observations:
Following are some illustrative cases of audit observations normally found in PLA:
• Non-closing of Personal Ledger Accounts.
• Funds remaining unutilized in PLAs without transfer to consolidated fund.
• Balances lying in bank accounts for more time.
• Non reconciliation of balances.
• Temporary withdrawal and crediting of the same fund into PLA after some time.
• Non transfer of funds to urban local bodies.
• Non utilization of central funds for the purpose for which they are granted.
• Opening of Personal Ledger Accounts to avoid lapse of budget grants.
• Opening of Personal Ledger Accounts without specific concurrence of AG.
• Opening of Personal Ledger Accounts without the approval of competent
authority.
• Opening of Personal Ledger Accounts under wrong Account heads.
• Opening of unauthorized accounts.
SESSION – IV
Following case studies are extracted from published Audit Reports of CAG.
Audit Report – Civil 2002-2003 (Government of Madhya Pradesh)
Transfer of funds to Personal Deposit Account:
Five hundred and thirty one Personal Deposit Accounts (PDAs) of Government
and semi Government institutions as on 31 March 2003 were found opened in the
treasuries. Following irregularities were noticed in maintenance of PDAs:
a) Non-closing of PDAs
As per provisions of Rule 543 of Madhya Pradesh Treasury code 531 PDAs with balance
of Rs. 1142.38 crore were required to be closed at the end of financial year by minus
debit to the relevant service head. Of these 128 PDAs with balances of Rs. 94.64 crore
remained un-operative during 2002-03, and none of the above accounts were found
closed.
b) Funds remaining unutilized in PDAs
P.D. Accounts are generally opened by debit to the consolidated fund and the amount
debited is shown as expenditure in the respective heads.
Financial rules provide that no money shall be drawn from Treasury unless it is
required for immediate disbursement. It was, however, noticed that 115 new P.D.
Accounts with balances of Rs.419.66 crore as on 31 March 2003 were opened during
2002-2003. This was obviously done with a view to avoid lapse of grants. The
expenditure to this extent was inflated and did not depict the factual position of accounts
of the State. Non-utilisation of funds by keeping in PDAs not only delayed the
implementation of schemes for which funds were released but also defeated the purpose
for which budget were provided in financial year.
c) A test check of 59 PDAs (Rs 650.28 crore) conducted (August/September 2003)
further revealed the following irregularities.
(i) According to instructions issued by Finance Department (January 1998) all amounts
pertaining to land acquisition and development schemes excluding funds received from
Government of India deposited in Commercial bank accounts were required to be
withdrawn and deposited in PDA. Records of Land Acquisition offices shahdol and Joint
Director Panchayat and Social Welfare Rewa revealed that an amount Rs 0.85 core
(Shahdol: Rs. 0.56 crore and Rewa: Rs. 0.29 crore) was lying in bank accounts in
contravention of aforesaid instructions issued by the Finance Department.
The concerned officers (August 2003) confirmed the position. Report on further
action taken by them was awaited in audit (November 2003).
(ii) In another case LAO sehore had credited receipt of Rs. 0.13 crore meant for land
acquisition inpost office Sehore instead in PDA to achieve the targets under small saving
scheme.
(iii) It was noticed that departments did not reconcile the balances in PDAs with
treasuries. Resultantly, in 19 PDAs the balance shown by department was less by Rs.
18.48 crore while in other 9 cases it was more by Rs 20.92 crore as shown I Appendix L.
The matter was referred to Government in November in November 2003; reply had not
been received (December 2003).
Audit Report 2000-2001 – Government of Madhya Pradesh
Transfer of funds to Personal Deposit Account:
There were 320 Personal Deposit Accounts (PDAs) having balance of Rs. 240.13
crore in respect of Government and semi Government Institutions as on 31 March 2001.
A test check of 22 PDAs (Rs. 180.54 crore) conducted (October 2001)/ supplemented by
the information furnished by Accountant General (A&E) M.P. Gwalior revelaed the
following irregularities.
(a) Non closing of PDAs
All the 320 PDAs having balance of Rs. 240.13 crore were required to be closed
at the end of the financial year by minus debit to the relevant service head as per
provisions of Rule 543 of Madhya Pradesh Treasury Code. The closing in these accounts
indicates that rules regarding closing of PDAs at the end of the financial year were not
observed. Out of these 70 PDAs having balance of Rs. 72.85 crore remained un-operative
during 2000-01.
(b) Funds remaining unutilized in PDAs:
(i) Government of India released Rs. 1.30 crore as Central Assistance for the construction
of 1300 houses under housing scheme for Hamals @ Rs. 10,000 per beneficiary. As per
instructions of Government of India, houses were to be constructed within the period of
two years (including extended period of six months). Test check of records of Labour
Commissioner Mahdya Pradesh, Indore (October 2001) revealed that rs. 1.22 crore was
deposited (March 1998) in PDA after advancing Rs. 0.08 crore to the Madhya Pradesh
Housing Board. Out of the 1300 houses only 58 houses could be constructed (October
2001). The amount of Rs. 1.22 crore was still lying in the PDA in contravention of rules.
On being pointed out Department stated that funds could not be utilized as Hamals had
not shown any interest in the housing scheme.
(ii) Commissioner, Panchayat and Social Welfare Department credited Rs. 144.34 crore
in the PDA (March 2000) provided on the recommendation of 10th Finance Commission
for construction works. During 2000-01 Rs. 77.29 crore was released to District
Panchayats, form whom utilization certificates for Rs. 21.33 crore were still awaited
(October 2001). An amount of Rs. 19.89 crore was transferred to newly created
Chattisgarh State (November 2000). The balance amount of Rs, 47.16 crore was still
lying in the PDA (October 2001).
On being pointed out, the commissioner stated (October 2001) that balance amount could
not be released to District Panchayats as the utilization certificates of earlier amounts
were awaited.
(iii) Director Urban Administration Bhopal withdrew Rs. 55.76 crore on account of
Octroi Compensation Grant for the months of February and March 2000 which was to be
paid to Urban Local Bodies, but deposited the same in PDA (March 2000). Out of this an
amount of Rs 9.27 crore was transferred to the newly created Chattisgarh State
(November 2000). The balance amount of Rs. 46.49 crore remained untilised for the year
2000-01.
On being pointed out Director stated (October 2001) that balance amount would be
released to Urban Local Bodies during 2001-02.
(iv) An amount of Rs 3.75 crore pertaining to ICMR Project (Central Share) for gas
affected persons was credited in the PDA of the Director, Centre for Rehabilitation
Studies (CRS) Bhopal in August 1995. Another amount of Rs 1.25 crore (State share)
was sanctioned by Government of Madhya Pradesh for the said purpose which was also
credited in the PDA (Feburary 1996). The PDA (Rs.5 crore) remained uncooperative for
last five years. No action was taken by the Department/Treasury for closure of PDA as
provided under the rules.
On being pointed out Director. CRS state (October 2001) that in lieu of interest on the
amount kept in PDA Government released grants to the centre from which research work
was being conducted.
The action of the Government was not in order as PDA being non-interest bearing
account, no interest was payable on such account.
(v) According to instructions issued by Finance Department (January 1998) all amounts
lying in the bank accounts were to be withdrawn and kept in PDA.
(vi)Scrutiny of records of Land Acquisition and Rehabilitation Officers. Sardar Sarowar
Project (LARO). Khargone and Badwani revealed that in contravention of above
instructions of Finance Department LARO Khargone withdrew Rs. 0.10 crore from
PDA (Rs. 1.51 crore) and deposited it in the bank account.
On this being pointed out LARO stated (October 2001) that amount was drawn for
distribution among ----------- of the project who did not present themselves for the
collection of relief payment. The reply of Department was not tenable as money should
not have been drawn in anticipation of demand.
c) PDAs opened to avoid lapse of budget grants/surrender of funds
Financial rules provide that no money shall be drawn from treasury unless it is
required for immediate disbursement. The closing balance under PDA as on 31 March
2001 indicate that money was drawn to avoid the lapse of budget grants. During 2000-01
an amount of Rs. 60.73 crore was transferred to 17 PDAs which includes Rs. 1.20 crore
(Assistant Commissioner. Tribal Welfare Khargone Rs. 1.16 crore and Mandla Rs. 0.04
crore) pertaining to centrally sponsored/assisted schemes to avoid the lapse of funds.
Since the amount shown under PDA had already been shown as expenditure in
the respective heads, the expenditure to this extent was inflated and did not depict the
factual position of accounts of the State. In addition, non-utilisation of funds not only
delayed the implementation of schemes for which funds were released and also defeated
the purpose of providing budget in the respective financial years.
d) Opening of PDAs without specific concurrence of Accountant General
Rule 623 of the Central Treasury Rules provide that PDA should not be opened
without the specific authority of Accountant General. Similar instructions were also
issued by Finance Department in February 1962, but these instructions were superseded
by Government notification dated 22 November 1994 according to which all
administrative departments were authorised to open PDA without specific sanction of
Accountant General.
With a view to ensure better financial discipline, the matter regarding review of
said notification was taken up (October 1997) by Principal Accountant General (A&E).
The reply of the State Government was however awaited.
During 2000-01, 49 PDAs having balance of Rs. 8.22 crore (March 2001) were opened
without specific authority of Principal Accountant General (A&E) Madhya Pradesh. In
addition 4 PDAs having balance of Rs. 0.27 crore (October 2000) were opened in the
treasuries during the period April 2000 to October 2000 which now come under
Chattisgarh State.
PLA operations - Uttar Pradesh Experience:
Under Chapter 16 of Financial Hand book of UP Government Volume V Part I
there is a provision for government servants, in their official capacity to obtain a special
sanction of government accorded in consultation with Accountant General for opening of
a banking account with treasury. These types of banking accounts have been treated as
PLAs in the Government of UP. It should be used within the same financial year and if
not, it should be back with consolidated fund of UP by a minus debit. Further, in UP there
is a handbook of instructions called ‘niyamavali’ on deposits. This booklet has been
issued in consultation with the AG, U. P. Further, on scrutiny of PLAs of different
departments by O/o AG it was revealed that:
I. DDOs are operating banking account in treasuries without the approval of competent
authority. Funds were not used in a financial year and not deposited back resulting in
unnecessary strain to consolidated fund.
II. Arrangement has been made under PLA Manual or ‘niyamavali’– 1998 (come in force
wef 4.5.98) to open PLA A/c as per provisions of FHB Vol. V Part I but original
provision of 340-B regarding closing of the PLA A/c and lapsing the balances to the
consolidated fund is not there. This has not been incorporated in the said Manual. UP
Government has been making promises for inserting the same. Despite lapse of 5 years
the same has not been done though Government had refused once.
III. Under the G.O. of UP Govt DRDA/Vidhayak Nidhi has been classified under the Head
“8448-Deposit of local funds 120-other funds”. But on examination it was seen that it
should be opened under Minor Head 8443-106, civil deposits – personal deposits. State
Government is yet to respond.
IV. U.P. Govt. intimated their opinion that 8229-Development and Welfare fund and 8223-
Famine Relief Fund are Deposit heads but as per List of Major and Minor heads these
are classified in (J) Reserve funds and sub classification thereof (b) Non-bearing
interest category. It was pointed out by the AG, U. P that the head 8229 was meant
otherwise. The request of the state government for operation of PLAs for agriculture
development fund under the head 8229 is not tenable and the Govt was not willing to
change AG U. P. said that Reserves and Reserve funds might be constituted under the
provision 4.15.1 of M.S.O. (A&E)-Vol.1 with the approval of State Legislature. The
response of State Government was awaited.
V. In spite of established provisions under F H B Vol.V Part I and PLA ‘niyamavali’
consent of A.G. for operating (Opening) of PLA a/cs (Banking a/c) are not being taken
in most of the cases by State Treasuries. The following unauthorized PLAs were
operated by UP Government.
Details of PLA a/cs during 2003-2004
Heads As per list of
Director of Statistics
U.P.
As per AG office Unauthorized A/cs
8443-106 378 30 3488443-123 42 05 378443-800 56 06 50
8448 1822 255 1567vi) Further, it revealed that more than Rs.135 crores were out standing at the end of the
year 2003-2004 making it clear that provision of lapsing these funds to the consolidated
fund at the end of the financial year was not being adhered to by most of the treasuries.
vii) Yet another discrepancy revealed in some cases was that sanctions for utilization for
the next year were being issued by the Govt without adopting the said procedure.
viii) Generally after drawing money as per financial sanction, it is considered to be utilized,
while these money (amounts) is neither spent nor any financial or physical target
achieved. Amounts are being kept for spending next year by debiting expenditure
heads and crediting to the PLA/Deposit heads. By doing so, heavy amounts are kept
out of budget cycle.
ix) The huge accumulations in the PLAs may lead a parallel economy being run within the
Govt. as stated earlier. With such a situation there will be heavy strain on budget as the
funds kept in PLAs will not be fruitfully utilized for productive purposes.
x) The people being deprived of their rights as their genuine basic needs being ignored
due to delays in execution of works due to idling of scarce fund/finance in PLA.
xi) The statutory provision of opening of such PLAs with the proper authorization of the
Accountant General was also overlooked and quite a sizeable number of such deposit
accounts are performing with out any authorization by the States A.G. As many as 255
out of total of 1822 PLAs opened under Major Head 8448 of U.P were not authorized
by A.G by the end of March 2004. The total accumulation under PLAs during 2003-04
amounted to Rs 2165 Crores which is alarming.
xii)For the period ending March 2004 AG further reviewed the situation and found it
alarming. The picture thus emerged would be 5-6 times more grace if other major heads
are taken besides 8443-106. Infact the plan schemes are being ignored, Money lying in
the PLA/deposits for long outside the budgetary cycle defeats the purpose of planning
being the efficient tool of legislative control.
xiii) Over the years it has been observed that more and more money is being channelised
through PLA/deposits route. The facility of carrying the balance over to next year
gives liberty to the executing agencies to delay the implementation of schemes which
lead to cost over-run, inefficiency and chances of misutilisation, although this (PLA
deposits) envisaged on the contrary. Due to irregular transfer to this method of funding
the unproductive use or depiction there of is glaring as :
the appropriation accounts gave a misleading picture of the actual expenditure
during the year.
Civil works were delayed through non-payment of bills of contractors.
The intention of achieving the physical aims quickly through PLA route by the
Govt, was not achieved.
The amounts kept under the PLAs were deemed to have been spent without the
approval of the Accountant General.
Position of Law/Rules/Codes:
The following guidelines principles about PLA are required to be considered:-
i) Article 284of Constitution of India
ii) Rules 180 to 196 of Receipt & Payment Rules, 2007 and similar such rules in
State Treasury Rules.
iii) Rule 50 to Rule 63 of Accounting Rules for Treasuries 1992.
iv) Other special orders issued by Government –for specific purposes.
Case – I:
The Education Department has been provided with the facility of PLA. The
government sanctions grants for payment of salaries to non government secondary school
teaching and non-teaching staff. As soon as the Administrative Department communicate
grants to concerned DDO he drawn the bill for – nil—amount. The expenditure is
deposited to concerned major head in appropriate books grant and credit is shown in the
bill itself to PLA/c some department officers are drawing bill for full gross amount and
credit the amount by means of challan.
These accounts are not closed for –nil-balance. The previous balance is allowed to
be carried forward to the next year. There is no proper check at Treasury level. This
practice shows that the grant made by legislature in the previous year are utilized in the
next year. Secondly, the transfer credit system is not applicable for such credits unless
AG’s concurrence is obtained. The Administrator put fourth the plan that alongwith all
other sums which would go to PLA are included in this PLA and therefore they are
unable to segregate such sums.
What can be solution on this problem?
Case-II:
While regrestering the documents a charge of Rs 20/- per page was allowed to be
made to Registration Department as the registered documents were to be given
immediately to the concerned person. Previously, this was taking 4-5 years to receive the
original documents. This work was given to a company on contract basis with no cost to
government. While giving concurrence it was stipulated that the excess amount should be
credited to government on quarterly basis.
This amount was not at all credited to government. After five years an amount of
Rs 19 crores was given to private company as grant-in-aid for building the bridges.
Since this is the breach of the conditions stipulated in concurrence UOR, can this
permission be withdrawn by AG?
Case-III:
A proposal was received from government to credit Rs 100/ to PLA in Transport
commissioner’s name and Rs 100/- to Motor vehicle Taxes when law passed by
parliament provides a fee Rs 200/- to be charged for smart card to be issued to vehicle
driver.
What should be the action in A.G Office?
Case-IV
Tendu leaves are extracted from Forest area and then are sold to the contractors
on auction basis. Contractor credits the requisite amount in Govt. Treasury.
It was proposed by Forest Deptt that the money so received may be deposited in P
L Account to be opened in the name of Divisional Forest Officer and utilize these sums
for welfare of Labour engaged in extracting the Tendu leaves.
Should the proposal made by Govt. be agreed to by A G?
Case-V
While leaving the hospital, many patients put some donation in Donation Box at
their discretion. The P L Account was allowed to be opened where in only such amounts
were allowed to be credited & this money was to be utilized for carrying out minor
repairs in the hospital with proper sanction.
Public Health Department issued an order allowing the hospitals to credit 50% of
the O P D charges, X Ray fees and Blood examination charges to above P L Account.
Further, it was ordered that all water supply bills, electricity bills, telephone bills should
be paid from the P L Account.
What are the effects of this order? What action is required to be taken in A G office?
Solution
Case – I
♦ The Personal Ledger Accounts which are credited by debit to consolidated Fund,
are required to be closed for – nil – balance by affording minus debit to the Major
Head/grant in the consolidated Fund. The Treasury Rules/CGA (R&P) 1983
provide this type of adjustment.
If the detailed accounts are kept by the administrator, he should be asked to work
out the unspent balance and asked to issue a cheque for the unspent balance to be
credited to the Receipt head of Account of the Department and to be accounted as
reduction in expenditure/grant which was initially debited. Alternatively a
proposal may be sent PAO/AG to make necessary adjustment in accounts by
means of Transfer Entry.
♦ In order to keep watch on this, rules/subsidiary instructions should provide that
the first cheque in the next year will be returned through Treasury/PAO who will
not pass that cheque unless the above requirements are fulfilled on the evidence
produced by PLA holder.
Solution
Case – II
♦ If Accountant General has got power to withdraw the concurrence once given to
Administrative department of government, the concurrence may be withdrawn at
any time if there is breach of the conditions imposed.
♦ Secondly, the Treasury Officers can be asked not to pass the first cheque in the
quarter for payment unless the excess receipts are credited to government account.
♦ This can be reported through the Audit Report and discussed in PAC meeting.
♦ The expenditure which is in the nature of Revenue expenditure is incurred without
the knowledge of Legislature/Parliament and remains unbudgeted.
Solution
Case – III
♦ This is the Tax Revenue of Government. As per Art 284 of the Constitution, the
entire amount of Rs 200/-is required to be credited to government account as
Revenue Receipts since the Act is passed by parliament.
♦ As such, the proposal to credit Rs 100/- to Personal Ledger Account cannot be
accepted.
♦ This proposal violates the provisions of Constitution.
♦ Any payment to be made to the party can be made after making Budget provision
in the Consolidated Fund of the State/Central.
♦ No Personal Ledger Account should be allowed to be opened for such
transactions. Accountant General may not give concurrence to open the Personal
Ledger Account.
Solution
Case-IV
The amount received from auction of Tendu leaves form part of Revenue Receipt
of Govt. As such, it should be credited as Revenue Receipt under the head 0406 – Forest
& wild life vide Rule 50 of A R T, 1992.
For welfare of the labourers the Budget provision may be made & expenditure
incurred, as it is Revenue Expenditure of Govt. This can not be made from the P L
Account for the very reason that this is not brought to the notice of legislature.
P L Account may be disagreed.
Solution
Case-V
P L Account was allowed to be opened for money in Donation Boxes which is not Govt. money
Revenue Receipts are to be credited to Revenue Receipt head in full under the
head 0210 Medical & Public Health. Crediting these receipts to PLA violates the
provisions of Treasury Rules & it is in contravention of Rule 50 of A R T.
Telephone bills, Electricity bills, water charges bills are revenue expenditure and
this expenditure can be incurred by making budget provisions only. Incurring it from P L
Account violates the provisions of Constitution in the sense that the expenditure which
pertains to Consolidated Fund is incurred without the sanction and knowledge of
legislature.
Further more, due to implementation of such orders, Revenue receipts are shown
to the extent of 50% in accounts and the entire expenditure on such items will be
excluded from Revenue expenditure.