5.6 All Heads of Departments are responsible for enforcing financial order and strict economy at every step. They should ensure that all financial rules are strictly adhered to.
5.7 (i) The duty of controlling officer is not only to sec that the total expenditure is kept within the limits of the appropriation, but he has also to see that the funds are expended in the public interest and for those objects only for which the money was provided. In order to exercise proper control he should keep himself informed of what has actually been spent against an appropriation and that what commitments and liabilities have been and will be incurred against it. In the discharge of these duties he has to assume full responsibility before the Government and the Public Accounts Committee. He has to justify the excesses or explain financial irregularities that may be pointed out by the audit or otherwise.
(ii) Internal check against irregularities, waste and fraud.—In the discharge of his ultimate responsibilities for the administration of an appropriation or part of an appropriation placed at his disposal, every Controlling Officer must satisfy himself not only that adequate provisions exist within the departmental organisation for systematic internal checks calculated to prevent and detect errors and irregularities in the financial proceedings of its subordinate officers and to guard against waste and loss of public money and stores, but also that the prescribed checks are effectively applied. For this purpose each Head of the Department will get the accounts of his office and those of the subordinate disbursing officers, if any, inspected at least once in every financial year by a Senior Officer not connected with the account matters to see whether:—
(a) Rules on handling and custody of cash are properly understood and applied;
(b) Effective system of internal check exists for securing regularity and propriety in the various transactions including receipt and issue of stores, etc., if any; and
(c) Satisfactory, arrangement exists for systematic and proper maintenance of Account Books and other ancillary records concerned with the Initial Accounts.
(iii) The results of these inspections should be incorporated in the form of an inspection report, copy of which should be endorsed to Audit. The Head of the Department should, after his scrutiny of the report, communicate to the Audit a copy of his remarks thereon and any orders issued in that connection.
Note.—The term "Senior Officer" should be taken to mean that the officer who inspects the accounts should be higher in status than the officer who maintains or prepares the accounts. It has necessarily to be left to the discretion of the competent authority to appoint such an officer for the inspection of the accounts as could give him an independent report on the state of accounts, records etc., proposed to be subjected to review. In exercising his discretion in the matter, the competent authority would no doubt, ensure that the contemplated inspection is entrusted to a senior B.P.S. 17 Officer or above who has had sufficient background of the Financial Rules and Orders and could carry out the check satisfactorily.
5.8 There should be no delay in the payment of money indisputably due by Government as it is contrary to all rules and budgetary principles.
5.9 (i) Every controlling officer is personally responsible for the accuracy and completeness of the accounts in respect of public money.
(ii) An Officer who signs or countersigns a certificate is personally responsible for the facts certified to, so far as it is his duty to know or to the extent to which he may reasonably be expected to be aware of them. The fact that a certificate is printed is no justification for his signing it unless it represents the facts of the case. If in its printed form it does not represent the facts, it is his duty to make any necessary amendment which will call attention to the deviation and so to give the authority concerned the opportunity of deciding whether the amendment covers the requirements.
5.10 It is the duty of every Department/Controlling Officer to afford all reasonable facilities to the Accountant General in the discharge of his functions. He should be furnished the fullest possible information which he may ask for in connection which the preparation of an account or report which it is his duty to prepare. No information or book should be withheld which is within the statutory rights of the Auditor-General to see.
CONTRACTS — GENERAL PRINCIPLES (RULES 18 & 19):
5.11 Contracts can be entered into only by those officers who have been empowered by or under the orders of the President. The following general principles should be followed by all authorities who have to enter into contract or agreements involving expenditure from the public account:—
(a) The terms of contract should be precise and definite leaving no room for ambiguity or mis-construction;
(b) Before the contracts are finally drawn legal and financial advice should be obtained, where possible;
(c) Standard forms of contract should be adopted, wherever possible and the terms should be subjected to adequate prior scrutiny;
(d) The terms of contract, once entered into, should not be materially varied except with the prior consent of the competent authority. No payments to contractors by way of compensation, or otherwise, outside the strict terms of the contract or in excess of the contract rates may be authorised without the previous approval of the Ministry of Finance:
(e) Any uncertain or indefinite liability or any condition of unusual character should not be included in a contract without the prior approval of the Ministry of Finance;
(f) Whenever practicable and advantageous contracts, should be placed only after inviting tenders, if the lowest tender is not accepted reasons therefor should be recorded;
(g) While selecting tenders for acceptance, the financial status of the bidders should be taken into consideration;
(h) Even if in certain cases a formal contract is not deemed necessary, there should be a written agreement as to the price, while placing an order;
(i) In cases where Government property is entrusted to a contractor, there should be a provision in the contract for safe-guarding it; and
(j) When & contract is likely to run for a period of more than 5 years it should include a provision for an unconditional power of revocation and cancellation by Government at any time on the expiry of 6 months notice to that effect.
DEFALCATIONS AND LOSSES ETC. (RULES 20 & 23):
5.I2 (i) The losses of public money, departmental receipts, stamps and stores etc., caused by defalcation or otherwise should be reported immediately by the officer concerned to his superiors and to the Accountant General, even if the loss has been made good by the party responsible for it. This report should not be held up while detailed enquiries are being made. After full investigations a detailed report should follow on the nature and extent of loss, errors or neglect of rules which caused the loss and prospects, if any, of-effecting a recovery should be fully brought out. The departmental officer who receives the above report should himself submit a detailed report to the higher authorities/Government, which should incorporate the causes or circumstances which led to the loss, the steps taken to prevent its recurrence and disciplinary action taken against the delinquents.
(ii) Every Government officer should realise fully that he will be held responsible for any loss sustained by the Government through fraud or negligence on his part or on the part of any other officer to the extent to which it may be proved that he contributed through his own negligence or action.
5.13(i) The following instructions shall be observed by the Ministries/ Divisions and their Attached Departments and subordinate offices in dealing with cases of loss to Government:—
1. The first and the foremost duty of those concerned, in the event of any loss to Government coming to notice, is to initiate timely and prompt action for fixing the responsibility for such losses.
2. Thereafter, prompt suitable action must be initiated against those found responsible. Disciplinary cases, if initiated and/or court cases filed, must be pursued vigorously for securing the earliest possible decisions on them.
3. If anyone dealing with these cases, at any stage is found to have glossed over the defaults or deliberately or negligently delayed to initiate action at (1) & (2) above or slackened in the vigorous pursuit of action so initiated, in order to secure the final decision at the earliest possible, he should be subjected to due disciplinary action.
(ii) Attention is also drawn to the instructions contained in Appendix 2 to the Compilation of the General Financial Rules, Vol. I in which it has, inter-alia, been stressed that it is of the greatest importance to avoid delay in the investigation of any loss due to fraud, negligence, financial irregularity, etc. Should the administrative authority require the assistance of the Accountant General in pursuing the investigation, he may call on that officer for* all vouchers and other documents that may be relevant to the investigation; and if the investigation is complex and he needs the assistance of an expert audit officer to unravel it, he should apply forthwith _ for that assistance to Government which will then negotiate with the Accountant General for the services of an investigation staff. Thereafter, the administrative authority and the audit authority will be personally responsible, within their respective spheres for the expeditious conduct of the enquiry.
(Finance Division O.M No F. 3 (1)-R. 12/81, dated 14th April, 1981)
5.14 Any serious loss of Government immovable property through flood, fire or earthquake, etc., should be reported immediately to the higher authorities. The causes and extent of loss should be fully brought out in the report and copy thereof sent to the Accountant General.