GUIDING
PRINCIPLES OF FINANCIAL MANAGEMENT
5.2 Any officer of a State Health Society or of a District Health
Society, who is authorized to incur expenditure or draws money out of the
RCH-II funds (Bank A/c) for disbursement, should treat himself as a trustee of
the funds of such society or District Unit and would therefore, manage all
types of financial affairs in the capacity of a sincere Executive trustee.
5.3 The officer, who is authorized to draw and incur expenditure out
of a State Health Society or a District Health Societyfund, is expected to
exercise same vigilance, which a man of ordinary prudence exercises while
incurring his own money. He should keep in mind that:-
i)
Funds
should not be drawn if they are not required for immediate disbursement.
ii)
Funds
should not be utilized directly or indirectly on himself or on any family
member or relative of the officers who operate the funds of the society or a
unit for the time being.
iii)
The
Mission Director at State Health Society and District Programme officer(s) at District Health Society level will ensure, with the help and assistance of State
Finance Manager, State Accounts Manager respectively, that an efficient system
of internal financial control is introduced, for which they should visit District
Health Society & Programme implementing Agencies frequently & make
instant inspections/examinations of Cash Book, Bank Pass Book, Ledgers &
some vouchers of more than Rs.5,000/- value and satisfy themselves that all of
these are being maintained properly. Similarly, District officials (including
DPMU staff) should make regular visits to the sub-district levels to ensure
that efficient and sound financial system is in place. During the visit, they
may verify the implementation status of various programmes as per the
checklist. RNTCP and IDSP already have a checklist for the verification purpose
on the field visits.
iv)
Officers
authorized to incur expenditure must ensure that financial order and strict
economy are enforced at every step and see that all-relevant financial rules,
orders, directions and instructions are observed.
v)
It
should be seen that not only the total expenditure is kept within the limits of
the budget provision but also that the funds allotted/transferred, are spent
strictly in the interest and service of the programme and upon the objects for
which provisions have been sanctioned.
vi)
He
will also see that items of expenditure are of obvious necessity and are at
fair and reasonable rates, sanction of the competent authority obtained and
calculations are correct.
vii)
In
order to exercise proper financial control, he should keep himself closely
acquainted with the progress of receipts, expenditure, commitments or
liabilities incurred but not paid.
CHECKS TO BE
EXERCISED BEFORE WITHDRAWAL & DISBURSEMENT OF FUNDS
5.4 Before authenticating a cheque for any
payment/disbursement, the cheque drawing officer, in this regard, shall ensure
that:
i)
There is a proper and formal statement of claim
(Bill) or invoice through which payments have been demanded by the concerned
person or party or firm.
ii)
Invoice must be marked “Passed for Payment” on its
face by competent authority. In case of advance adjustments, it should be
marked “Passed for Adjustments”.
iii)
That the purchases made or services received are
according to the approved plan and the claimant is entitled to get it.
iv)
That the particulars of the claim i.e. rates,
calculations, net payable amount etc. have been examined/checked by the
Accountant or by an authorized accounts person and have also been entered in
appropriate stock/store register wherever necessary and certification on this
account has been made on the bill/claim itself by an authorized officer.
v)
A competent sanction to incur expenditure is
attached with the claim.
vi)
ADVANCES:
§ In case of
advances payments, it must be ensured that all earlier advances to the same
person/party and for the same purpose have been settled/adjusted. No advances
should be made to a person/party if an advance is already pending for
settlement for the same purpose.
§ All the advances
should be settled within a maximum period of 90 days. All the advances should
be entered in Advance Register as per APPENDIX 10. Settlement of advances
should be tracked as per Advance Tracking Register as per Appendix 11). Age
wise analysis of unsettled advances should be prepared and periodically be
reviewed by Programme Officers.
§ For settlement of
long pending advances lying with various institutions/organizations, special
drive may be undertaken by forming special teams and deputing them to these
institutions.
vi) AUTHORIZATIONS &
PAYMENTS FOR CONTRACTS/AGREEMENTS:
§ Payments to be made
in accordance with the terms and conditions of the contract/agreement including
compliance with the conditions relating to performance guarantee and bank
guarantee.
§ Goods receiving
officers to certify the quality and quantity of the goods received.
§ Evidence to show
the delivery of goods and services at the agreed time and place of delivery
should be obtained.
5.5 POST PAYMENTS INTERNAL CONTROLS:
§ Paid invoice and
supporting documents must be defaced with the seal of “Paid & Cancelled”.
The reference of cheque vide which the payment made is to be recorded on
invoice.
§ All the paid
vouchers must be serially numbered and maintained box file.
5.6 PROCEDURE
FOR UTILISATION OF FUNDS
i)
The Society funds shall be
drawn through cheques and/or bank drafts. All payments to the maximum
extent possible should be made by cheques only. Cash payment should be
discouraged at all levels.
ii)
Any payment above Rs 5000/-
must necessarily be made through crossed Account payee cheques only.
iii)
All cheques shall be signed by at least two
signatories as authorized by the Governing/Executive body of the Society in
line with defined guidelines . Similar
control mechanisms should be ensured in case of electronic transfer of funds.
5.7 PREPARATION
OF CHEQUES
i)
All
the cheques shall be entered in the Cheque issue register before they are
submitted for signatures, indicating its number, amount, name of the person or
party, purpose and date of issue, etc.
ii)
Cheque
books, new or used or under used shall be kept in the personal custody of one
of the officer who are authorized to put their signature on the cheques.
iii)
Acknowledgement
of a cheque shall be obtained from the payee (receiver) in the prescribed
format.
iv)
CASH
WITHDRWAL: Signatures with date shall be obtained in the cheque issue Register
from the Cashier/Accountant for each cheque, which is endorsed in his favour or
handed over to him for obtaining cash payment from the bank.
v)
All
persons handling cash and keeping valuable stores should be required to provide
Fidelity Insurance in favour of the State Health Society of not less than Rs.1,00,000/-
from a Nationalized Insurance Company or Bank against which monthly security
allowance will be paid on the basis of 1% of the ‘Fidelity Insurance’ value per
month.
5.8 WRITING
OF CASH BOOK
i)
All
payments which are received in the State Health Society or in a District Health
Society and at Block CHC/PHC, either in cash or through cheques/bank
drafts/money orders/bankers cheque etc. shall be first entered in the
prescribed register and then entries in the cash book shall be made, on the
same day. Likewise all payments/disbursements shall be entered in the cash book
on the day of the payment.
ii)
Receipts
shall be issued, for the cash/bank Drafts/Banker cheque and money orders on its
entry in the prescribed register, signed either by one of the fund operator or
by an authorized officer.
iii)
Cash
book shall be written on daily basis and closed on the same day and put up for
checking & authentication to one of the cheque signing officer as decided
by the chairperson of the Executive Committee of a State/District Health
Society.
iv)
Cash
book should be closed daily and if no transactions have taken place in a day/s
the entry "No Transaction"
has to be noted in the cash book on that day/s in red ink and balances are to
be carried over to next day.
v)
Cash
balance, more than Rs.10,000/-, should be avoided to be kept in office, as far
as possible.
vi)
Escort
should be provided to the cashier when he is required to carry the amount more
than Rs.10,000/- from the bank at a time. Cashier should be provided vehicle to
obtain heavy cash form the Bank.
vii)
The
Cash book is the principal record of all money transactions taken place every
day and all other registers are subsidiary. It should be maintained on the
basis of double entry system as per format appended with the manual.
viii)
Each
entry of receipt and expenditure should be descriptive but brief in nature.
Each voucher should be assigned a serial number and Ledger Folio number, which
should be noted against each entry in the cash book.
ix)
All
cash/cheques/Demand Drafts etc. received should be deposited into bank as far
as possible on the same day itself, otherwise on the next working day
positively. If any cash remains in office on any day it should be kept in the
cash chest/vault which should have double lock system. The cash kept in the
chest should be deposited in the bank account on the next day and the entry in
the cash book should be verified physically by the authorized officer.
x)
Over
writings should be avoided and corrections, if any, should be attested by the
authorized officer under his dated initials.
xi)
While
making payments through cheque, its number should invariably be noted in the
cash book for cross checking.
xii)
Format
of Cash Book to be maintained at State Health Society and District Health Societies
and Block Units .
VERIFICATION OF CASH
BALANCE
5.9 The contents of the cash chest/cash box
should be verified by the SFM/SAM at State level, by DAM at District Level and
Block Accountant at Block level and Programme Officer at Health Society level
at least once in a month at the close of the month or on the first day
(immediately after opening of Office) of the next month and the amount will be
compared with the cash book balance shown in the Cash Book.
5.10 The result of verification should be recorded
in the cash book each time as under: “Certified that Cash Balance checked and
found correct”. In case the cash balance is found to be less or in excess then
the balance shown in the cash book, the fact should be recorded in the cash
book and a formal report should also be submitted to the next higher authority
for further necessary action.
5.11 A cash balance certificate shall be obtained
at the end of each year as per the format provided in appendix.
MAINTAINING BOOKS OF
ACCOUNT
5.12 Complete and correct accounts in respect of
each monetary transaction occurring at State Health Societys or at District RCH
Societies shall be maintained through prescribed Books of Account including
Registers as indicated below:
(a)
Cash
book with cash & Bank columns.
(b)
Petty
cash book
(c)
Cheque
issue register
(d)
Register
of Bank drafts and Cheques received
(e)
Bank Pass
(f)
Register
of Bank drafts/Cheques dispatched.
(g)
Ledger
(in line with the Chart of Accounts of various programmes)
(h)
Journal
(i)
Registers
for Temporary advances as below
·
Advance
to the staff (Control Account)
·
Advances
to the Contractors/suppliers/CHCs/PHCs. (Control Account)
·
TA/DA
advance (Control Account)
(j)
Salary
Register
(k) Fixed Asset Register:
§ Machinery &
Equipment's
§ Civil Works,
§ Mobile Medical Units,
ambulances etc.
(l)
Stock
Registers for: -
·
Furniture
& other non-consumable articles.
·
Register
for drugs & medicines.
·
Register
of consumable articles
(m)
Register
of advances to NGOs and other Voluntary Agencies implementing NRHM.
(n)
Dispatch
Register
N.B. Any other book of accounts and resisters,
which may be considered necessary for the day-to-day work of the State/District
Health Society, the same may be maintained.
5.13 The State Health Society and its District Health
Society shall maintain Dead Stock Registers, separately for machinery &
equipment's and other non-consumable articles and shall also arrange for physical verification
of stores articles of permanent or long duration nature, at least once a year
in the month of April. If any item of permanent nature is purchased at CHC/PHC
level, entry in the concerned Register of District RCH Society shall be made on
the basis of the voucher or bill etc.
5.14 All functionaries should ensure that only
actual expenditure incurred is treated as expenditure and not the normative
costs in accounting. Therefore, fund released by the State Health Society to
District Health Societies or to any other implementing agency by the District Health
Society such as CHC/PHC etc. shall, initially be classified as Advance and the same is indicated as such in
the books of accounts. The advances shall be adjusted based on the expenditure
statement/utilization certificate received from the Advancee. Advance, if not actually spent or if spent
but accounts not settled should be shown as advance and not as expenditure and
all such outstanding/unsettled advances should be shown in the SoEs separately.
5.15 The audit will verify the status of
settlement of all advances.
MIS-CLASSIFICATION
OF EXPENDITURE
5.16 If any item of receipt or payment (cheque),
belongs to one head of account has been wrongly classified under different
head, the error can be corrected by making an adjustment entry in the journal
and posting of the same in the related ledger account heads. It should be noted
that such corrections in the cash book or ledgers can be made before the
accounts of a financial year are closed to prepare annual accounts for audit
purposes.
JOURNAL
5.17 Journal is one of the important account book
but its use is restricted to recording adjustment entries only other than cash
transactions. Vouchers shall support each adjustment entry passed through a
Journal. Brief narration of each entry shall be given in the voucher and it
should be signed by the Cheque drawing officer. The Finance/Accounts Manager at
Health Society will check each such entry of the Journal with the Journal
voucher and other subsidiary vouchers and put dated initials against the
entries checked.
LEDGER
5.18 The ledger is also an important register in
which all transactions recorded in the cash book or journals are classified
under different heads of accounts.
5.19 The ledger should be kept in the standard
form. Separate pages are to be opened for each item of expenditure. The ledger
accounts shall be arranged and grouped in such a manner that the desired
information is promptly secured.
5.20 Every ledger account is divided into two
sides, the left-hand side being the "debit side" and the right hand
side the "credit side". All items of debits and credits of the cash
book and journal shall, invariably be posted on the same day in respective
ledger accounts. Daily totals should be made, shown in the inner column and the
progressive totals shown, wherever necessary in the outer (balance) column.
5.21 All the ledger accounts shall be closed at
the end of the month. Totals would also be made in the classified abstract.
Monthly totals of various ledger accounts shall then be tallied with the totals
of classified abstract and discrepancy, if any, will be rectified and reconciled.
5.22 Bank account shall be posted from the daily
totals of cheques issued and challans/remittances (deposited) made into the
Bank.
RECEIPT
AND PAYMENT STATEMENT
5.23 Monthly account of receipts and payments
shall be prepared immediately after closing of the accounts for the month but
not later then 5th of the next month.
BANK
RECONCILIATION STATEMENT
5.24 Bank
reconciliation statement will be prepared on monthly basis by reconciling the
cash book and Bank Pass Book/Bank Statement by 10th day of the following
month. Bank Pass Book will be sent to
the bank on weekly basis for making up-to-date entries of credits and debits in
the month. Any discrepancy will be
rectified and difference explained in the bank reconciliation statement as per
the format provided .
ADVANCE
REGISTER
5.25 All
advances sanctioned to an officer of State Health Society or to the District
Programme Management Unit or to the In-charge Medical Officer of a CHC or PHC
or to any other official of the above institutions and also to any
non-government organization, shall be entered in the Advance Register (format
given in immediately after the advance amount/ cheque is given to the advancee. Any
advance remaining unadjusted at the year end may be adjusted in the SoE for the
last quarter of the year. However, the procedure for
adjustment/settlement/refund of advances and their depiction in the Advance
Register may continue as prescribed. The audit by Chartered Accountant would
ensure the compliance and also highlight the advances pending adjustment for
long period. For the purpose of
facilitating proper tracking of advances and their settlement, an Advance
Tracking Register should be maintained, at all the levels from where the
advances are given, in the Format given.
REGISTER
OF FIXED ASSETS
5.26 Each
State/District Society shall maintain Stock Registers for the articles or item
of permanent or of non-consumable nature indicating the details of such assets
e.g. furniture, fixtures, equipment's, machinery, instruments, vehicles,
computer systems etc. purchased during the programme period. Such register is
also called as Register of permanent (nature) articles or Dead Stock register.
Annual physical verification shall be carried out in the month of April every
year. This register shall be maintained in the format given.
5.27 Only those articles, as mentioned in the
above para, will be treated as assets of the society which are procured, used
and installed in the Office of the Society and will form part of the core asset
of the society. Formal tracking as per the requirements of the Asset Register
for the entire life of the asset will be done by the society.
5.28 All other assets which are purchased by the
society and subsequently handed over to the Office of Health & Family
Welfare/Family Welfare Stores/CMOs/PHCs/CHCs, etc. will be shown as transferred
to such entities in the Asset Register and no further tracking about the life
of the asset will be required. However, a certificate from the receiving entity
will be required to be kept in the asset register with contra- entry in the
‘Location/Under custody’ column of the Asset Register .
RE-APPROPRIATION
OF FUNDS
5.29 Any changes in the approved PIP/AWP may be
discussed during the quarterly and annual reviews and implemented by mutual
consent. The States/UTs may amend their approved AWP within 10% of any of the
sub item(s) so as to have flexibility in inter-component use of funds without
affecting the overall outlay approved for the State/UT for the year.
Activity-wise performance evaluation will then be synchronized with the revised
work plan. In all such cases FMG, GOI will necessarily be informed of this
revision.
COMPUTERISATION OF
ACCOUNTS
5.30 It is desirable that maintenance of accounts at the
State/UT Health Societies as well as at District Health Societies is computerized
so that the account statements can be prepared accurately and promptly with
least efforts and time. State should maintain accounts in Tally software as the
trained personnel in this software are widely available.
5.31 Even
if the accounts are maintained in computerized form in Tally, at least the Cash
Book should be maintained manually as well. The print out of daily, weekly or monthly
statements may also be serially kept in file.
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