4 Expenditures
Table of
Contents
4.2 General Policies 4.7
4.2.1 Overview 4.7
4.2.2 Sanction of
expenditure 4.7
4.2.3 Budget availability
review function 4.8
4.2.4 Purchase order
function 4.8
4.2.5 Voucher preparation
for claims above the specified limit 4.8
4.2.6 Approval of
expenditure 4.8
4.2.7 Certification
(pre-audit) of expenditure 4.9
4.2.8 Authorisation of
payment 4.9
4.2.9 Issue of payment 4.10
4.2.10 Use of imprest
account - for expenditures below the specified limit 4.11
4.2.11 Payment from banks
and post office 4.11
4.2.12 Stop payment and
replacement cheque 4.12
4.2.13 Unclaimed and stale
cheques 4.12
4.2.14 Arrears claims 4.12
4.2.15 Payment for supplies
in advance 4.12
4.3 Accounting Policies 4.14
4.3.1 Mode of payment 4.14
4.3.2 Recognition of
expenditure 4.14
4.3.3 Commitment
accounting 4.14
4.3.4 Validity period for
issued cheques 4.16
4.3.5 Deductions against
payment 4.16
4.3.6 Currency 4.16
4.3.7 Setting-off of
expenditures and receipts 4.16
4.3.8 Refunds paid 4.16
4.3.9 Summary of
accounting policies 4.17
4.4 Accounting for
Expenditures 4.18
4.4.1 Budget and
commitment accounting records 4.18
4.4.2 Recording of
expenditure (Appropriation Control Register) 4.18
4.4.3 Summary of entries
to Appropriation Control Register 4.19
4.4.4 Manual accounting
records 4.20
4.4.5 Computerised
accounting records 4.21
4.4.6 Accounting entries
for expenditure (General Ledger) 4.21
4.5 Detailed Procedures 4.24
4.5.1 Introduction 4.24
4.5.2 Expenditure
processing flowchart 4.25
4.5.3 Voucher preparation
for claims above the specified limit 4.26
4.5.4 Approval of
expenditure 4.27
4.5.5 Registration of
purchase order/claim voucher 4.28
4.5.6 Certification
(pre-audit) of expenditure 4.29
4.5.7 Authorisation of
payment 4.31
4.5.8 Preparation and dispatch
of cheques 4.32
4.5.9 Expenditure payments
below the specified limit 4.32
4.5.10 Timing and priority
of the claim 4.33
4.5.11 Stop payment and
replacement cheque 4.33
4.5.12 Unclaimed and stale
cheques 4.34
4.5.13 Daily Advice Note to
bank 4.34
4.5.14 Recording,
consolidation and reporting of expenditure flowchart 4.35
4.5.15 Recording of
expenditures 4.36
4.5.16 Consolidation of
expenditures 4.36
4.5.17 Reporting of
expenditures 4.36
4.5.18 Reconciliation of
expenditures 4.37
4.6 Salaries and Wages 4.38
4.6.1 Introduction 4.38
4.6.2 Due date 4.38
4.6.3 Payment by direct
credit 4.38
4.6.4 Payment by cheque 4.39
4.6.5 Deductions from
salaries and wages 4.39
4.6.6 Transfers of
employees to other departments/entities 4.39
4.6.7 Deputation 4.40
4.6.8 Final payment 4.40
4.6.9 Payment of sums due
at death 4.40
4.6.10 Leave Payment 4.41
4.6.11 Payroll processing flowchart 4.42
4.6.12 Payroll processing 4.43
4.6.13 Payment in cash to
employee below grade V 4.45
4.6.14 Recording of payroll
expenditure 4.45
4.6.15 Consolidation of
payroll expenditure 4.46
4.6.16 Reporting of payroll
expenditure 4.46
4.6.17 Recording,
consolidation and reporting of payroll expenditure flowchart 4.47
4.6.18 Reconciliation of
payroll expenditure 4.47
4.7 Pension Payments 4.48
4.7.1 Introduction 4.48
4.7.2 Due date 4.48
4.7.3 Payment by direct
credit 4.48
4.7.4 Payment by cheque 4.48
4.7.5 Pension Payment
Order (Pension Book) 4.49
4.7.6 Personal appearance
of pensioner 4.49
4.7.7 Overseas pension
payment 4.50
4.7.8 Gratuities 4.50
4.7.9 Undrawn pensions and
arrears 4.50
4.7.10 Death of pensioner 4.51
4.7.11 Processing of pension
application flowchart 4.52
4.7.12 Processing of pension
application 4.53
4.7.13 Processing of pension
payment flowchart 4.55
4.7.14 Processing of pension
payment 4.56
4.7.15 Recording of pension
expenditure 4.57
4.7.16 Consolidation of
pension expenditure 4.57
4.7.17 Reporting of pension
expenditure 4.57
4.7.18 Recording,
consolidation and reporting of pension expenditure flowchart 4.57
4.7.19 Reconciliation of
pension expenditure 4.58
4.7.20 Reporting on pensions 4.58
4.8 General Provident Fund 4.59
4.8.1 Introduction 4.59
4.8.2 Advance from GP Fund 4.59
4.8.3 Payment by direct credit 4.60
4.8.4 GP Fund monthly
deductions from salary 4.60
4.8.5 Processing of GP
Fund payment flowchart 4.61
4.8.6 Processing of GP
Fund payment 4.62
4.8.7 Recording of GP Fund
expenditure 4.64
4.8.8 Consolidation of GP
Fund expenditure 4.64
4.8.9 Reporting of GP Fund
expenditure 4.64
4.8.10 Recording,
consolidation and reporting of GP Fund expenditure flowchart 4.65
4.8.11 Reconciliation of GP
Fund expenditure 4.65
4.9 Contractor/Work Payments 4.66
4.9.1 Introduction 4.66
4.9.2 Work done for other
departments 4.67
4.9.3 Processing of
payment to supplier and contractors flowchart 4.68
4.9.4 Processing of
payment to supplier and contractors 4.69
4.9.5 Payments for works
done through Local Bodies 4.72
4.9.6 Recording of
contractors expenditure 4.72
4.9.7 Consolidation of
contractors expenditure 4.72
4.9.8 Reporting of
contractors expenditure 4.73
4.9.9 Recording,
consolidation and reporting of contractors expenditure flowchart 4.73
4.9.10 Reconciliation of
contractors expenditure 4.73
4.10 Loans And Advances 4.75
4.10.1 Introduction 4.75
4.10.2 Loan and advances to
Provincial Governments 4.75
4.10.3 Loans and advances to
Government employees 4.75
4.10.4 Housing advances to
Government employees 4.76
4.10.5 Vehicle advances to
Government employees 4.78
4.10.6 Bicycle advances to
Government employees 4.79
4.10.7 Interest free
advances to Government employees 4.80
4.10.8 Permanent advances 4.80
4.10.9 Recording of loans
and advances 4.80
4.10.10 Consolidation of
loans and advances 4.80
4.10.11 Reporting of
loans and advances 4.81
4.11 Overseas Payments 4.82
4.11.1 Introduction 4.82
4.12 Grants-in-aid,
Contributions etc. 4.83
4.12.1 Introduction 4.83
4.12.2 Accounting Entries 4.84
4.13 Assignment Account
and Personal Ledger Account 4.85
4.14 Maintenance of
Permanent Accounting Records 4.86
4.14.1 Introduction 4.86
4.14.2 Establishment
Register 4.86
4.14.3 Payroll Register 4.87
4.14.4 Pension Register 4.88
4.14.5 GP Fund Ledger 4.89
4.14.6 Commitment accounting
records 4.91
4.14.7 Recording of
expenditure (General Ledger) 4.91
4.14.8 Budget/funds control
entries 4.93
4.1 Introduction
4.1.1.1 This chapter describes the policies, accounting treatment and procedures to be applied for expenditures, and all stages of expenditure processing. The chapter also includes procedures for specific types of expenditure.
4.1.1.2 The policies include both general policies and accounting policies which apply to all forms of expenditure and payment processes.
4.1.1.3 The accounting treatment details the records which need to be maintained for complete and accurate recording of expenditures and the appropriate double entries for recording the transactions in the general ledger.
4.1.1.4 Based on these policies, the Detailed Procedures for expenditure transactions are then set out.
4.1.1.5 More detailed policy and procedures for the following types of expenditure are then provided:
·
salaries and wages
·
pensions
·
GP fund
·
contractor/works payments
·
loans and advances
·
grants-in-aid and contributions.
4.1.1.6 The final section of the chapter addresses the maintenance of permanent accounting records, required to correctly make salary and other employee related payments.
4.1.1.7 This chapter cover expenditures relating to the Consolidated Fund only. Expenditures relating to fixed assets and Public Account are covered in chapters 13 and 14 of the APPM, respectively.
4.1.1.8 This chapter does not cover non-accounting procedures or regulations. Also, detailed personnel and financial procedures are not covered here, as they are currently provided under the relevant Rules and Standing Orders, ESTA Codes, Civil Establishment Code and Fundamental and Supplementary Rules, issued by the Establishment/Finance Division from time to time.
4.1.1.9 All source documents and accounting records prepared in DDO, DAO, AG/AGPR office and specified in this chapter are to be recorded (written) in English.
4.2 General Policies
4.2.1 Overview
4.2.1.1 ‘Expenditure’ is a term commonly used to describe the consumption of economic resources within an entity. As set out in the Manual of Accounting Principles, expenditure will be accounted for on a cash or as committed basis.
4.2.1.2 The following key steps are required to be followed in all expenditure transactions:
·
sanction of expenditure
·
preparation of claim voucher (bill) for payment
(except for salaries and wages)
·
approval of expenditure
·
registration of purchase order/claim voucher
·
certification (pre-audit) of claims
·
authorisation of payment
·
issue of payment
·
recording of expenditure in the accounting
records.
4.2.2 Sanction of expenditure
4.2.2.1 Every expenditure must be sanctioned by an officer of the Government who has the authority to approve proposals to incur expenditures (including enter into commitments) on behalf of the Government and who shall be deemed to be the Sanctioning Officer. The Sanctioning Officer’s authorities are set out in the “Delegation of Financial Power under the Financial Rules” issued by the Ministry of Finance/Finance Department.
4.2.2.2 Officers holding authority to approve expenditure proposals must be held responsible for the exercise of due care and diligence, and should not incur expenditure (or enter into commitment) in excess of the amount appropriated by the National or Provincial Assembly.
4.2.2.3 The sanction process comprises two functions; namely a Budget Availability Review and the raising of a Purchase Order. The Budget Availability Review will be performed for all expenditures, whereas Purchase Orders will be raised for contingent expenditures only.
4.2.3 Budget availability review function
4.2.3.1 The budget availability review function involves assessing whether the expenditure or commitment entered into:
·
is provided in the Schedule of Authorised
Expenditure
·
is provided for in a Supplementary Grant.
4.2.3.2 A budget availability review clearance form (form 4AA) will be prepared following this function and approved by an officer who has the authority to incur the expenditure.
4.2.4 Purchase order function
4.2.4.1 A sequentially numbered purchase order (form 4A) shall be raised for all contingent expenditures (excluding salaries and utilities etc.) by the department/entity.
4.2.4.2 Purchase orders shall be approved by the officer who has authority to incur expenditure.
4.2.4.3 The budget availability review clearance form and purchase order (where applicable) will represent the sanction for the expenditure and must be sent to the relevant DAO/AG/AGPR office.
4.2.5 Voucher preparation for claims above the specified limit
4.2.5.1 A prescribed claim voucher form (bill) (form 4B) must be prepared by the incurring officer for supplies, services rendered and work done under a contract or other arrangement over the specified limit.
4.2.5.2 A duplicate claim voucher must not be issued except where the original has been lost or destroyed. Also refer to FTR 145 (chapter I of Part V) for detailed instructions on this matter.
4.2.5.3 Travelling expense claims should be accompanied by all prescribed receipts. Travelling claims should be submitted within one month of the completion of journey.
4.2.6 Approval of expenditure
4.2.6.1 Every claim voucher (bill) must be approved by an officer (other than the sanctioning officer and who shall be different from the DDO) within the entity incurring the expenditure, in accordance with procedures set out in section 4.5.4. The approving officer will be held personally responsible for the correctness of all claim vouchers bearing his/her signature.
4.2.6.2 The approving officer must ensure that for the expenditure being claimed, an approved purchase order (where applicable) was previously raised and a copy is attached to the claim voucher.
4.2.7 Certification (pre-audit) of expenditure
4.2.7.1 Every claim voucher (bill) must be certified by an officer in the relevant District Account Office/Accountant General Office/Accountant General Pakistan Revenue Office and who shall be deemed to be the certifying officer.
4.2.7.2 The certification (pre-audit) process comprises two functions; namely a verification function and an audit function. For claims above a certain threshold, as set by the Ministry of Finance/Auditor-General, both functions of the certification process shall be carried out. Conversely for claims below the set threshold, only the verification function will need to be performed.
4.2.7.3 The verification function involves:
·
the certifying officer ensuring that the claim
voucher has been duly approved by a delegated approving officer in the entity
·
the certifying officer verifying the validity of
the claim voucher, in accordance with procedures set out in section 4.5.5, and ensure it correctly
identifies the account head to which payment will be charged
·
the certifying officer initially checking that
the funds are available to make the relevant payment.
4.2.7.4 The audit function involves:
·
scrutinising of the claim voucher to identify
possible fraud and irregularities that a reasonable person would be expected to
discover.
4.2.8 Authorisation of payment
4.2.8.1 Once certified (pre-audited), the claim voucher (bill) may then be authorised for payment, by an officer in the District Account office/Accountant General office/Accountant General Pakistan Revenue office and who shall be deemed to be the certifying officer.
4.2.8.2 The authorising officer must not authorise a claim unless it has been duly certified and sufficient funds are available in the concerned budget head to make the payment.
4.2.8.3 The authorising officer must not authorise those claim vouchers which do not relate to his/her district office or, for which a written direction has not been received from the Accountant General.
4.2.8.4 The functions of the certifying officer and the authorising officer can not be performed by the same person unless approved by the Auditor-General.
4.2.9 Issue of payment
4.2.9.1 Payment must only be made for those claims that have been duly approved, certified and authorised.
4.2.9.2 All expenditures must be classified in accordance with the Chart of Account, under the appropriate expenditure head.
4.2.9.3 No transaction exceeding the value of available funds can be passed for payment. However, if the claim is inevitably payable under legal contracts and insufficient funds exist, the demand for payment may be honoured. The authorising officer must report the matter to a delegated authority before approving the claim. In such circumstances the Principal Accounting Officer must take appropriate actions to find the extra funds for such payments.
4.2.9.4 Payment of approved claims must be made only to the claimant as indicated on the claim voucher.
4.2.9.5 Only Government cheque books should be used when making payments by cheque.
4.2.9.6 All cheques must be signed by two delegated officers. The cheque signing officers should be independent of officers involved in voucher certification, voucher authorisation and cheque preparation, unless in the exceptional circumstances where the relevant DAO office is small, as approved by the Accountant General. Where the cheque amount is below a threshold (as defined by the Auditor General), the Accountant General can relax the provision and authorise only one delegated officer to sign the cheque.
4.2.9.7 Every officer authorised to draw cheques or sign or countersign cheques, must send a specimen of his/her signature to the designated bank branch through the Accountant General (or his delegated officer) whose specimen signature is already with that bank branch. This officer must countersign the signature of the new officer. When such an officer gives his/her charge to another officer, he/she must likewise send a specimen of the signature of the relieving officer to the bank.
4.2.9.8 When an authorised cheque signatory vacates his/her position, the next higher officer must immediately advise the designated bank branch and the Accountant General.
4.2.9.9 Cheque payments should be released to the payee or personally collected by the payee or his authorised agent. Cheque payments made by registered post should have cheque envelopes bearing a direction to return the unclaimed cheque (i.e. unclaimed post) to the issuing department.
4.2.10 Use of imprest account - for expenditures below the specified limit
4.2.10.1 All expenditures below the specified limit (as advised by the MoF) should be made through an imprest account (petty cash account). A petty cash book must be maintained by a delegated officer (Drawing and Disbursing Officer) in the entity responsible for the petty cash account.
4.2.10.2 Each entity should maintain an imprest account by drawing a cheque in the name of the respective DDO each month, of the amount required to re-establish the original imprest (in accordance with GFR 132).
4.2.10.3 Original vouchers above Rs. 200 must be produced to support the claim for reimbursement. The Ministry of Finance, in consultation with the Principal Accounting Officer (PAO) of the entity should set the limit of the imprest so that it requires reimbursement at least once a month, having due regard to the size of the department and the percentage of the imprest limit required to be spent before a reimbursement claim can be submitted.
4.2.10.4 During the month, petty cash payments will be made out of this imprest account, against valid petty cash vouchers submitted to the DDO.
4.2.10.5 This account must always balance at any point in time i.e. totals of all valid petty cash vouchers plus amount left in the imprest account should equal the value of the original imprest float.
4.2.11 Payment from banks and post office
4.2.11.1 Only the State Bank of Pakistan (SBP) and the National Bank of Pakistan (NBP) acting as its agent, will be the official bank from which payments will be made.
4.2.11.2 No payment should be paid through post offices (post-bank) except pension payment where authorised by the Federal/Provincial Government.
4.2.12 Stop payment and replacement cheque
4.2.12.1 A stop payment notice is a specific direction given by the cheque signatory officer to the bank on which that cheque was drawn requiring it to refuse to pay the cheque when presented. This mechanism may be used to protect the interests of both the Government and the payee; for example, where a cheque is not received by the payee, or is lost or stolen.
4.2.12.2 A replacement cheque will only be issued to the concerned payee if the original cheque has been stopped by the cheque signatory officer (by giving stop payment notice to the bank) and the bank’s written acknowledgement has been obtained.
4.2.13 Unclaimed and stale cheques
4.2.13.1 If a cheque has not been claimed or has not been presented and paid within the valid period (as advised by the MoF), it is stale and may not be negotiated.
4.2.13.2 A new cheque shall only be issued when the stale cheque is returned (deposited) by the payee of the cheque to the concerned DAO/AG/AGPR. The old cheque shall be marked ‘cancelled’ and a new cheque shall be issued in accordance with section 4.2.9.
4.2.13.3 After the validity period has expired, the amount must be transferred into an “unclaimed money account” within the Public Account. Such unclaimed amount will be cleared after three years and transferred to the Consolidated Fund.
4.2.14 Arrears claims
4.2.14.1 Only those claims against the government raised within six months of their becoming due can be presented without prior authority from the Accountant General. This rule does not apply to payments of claims on account of pensions (see Section 4.7.9), nor to payments of interest on government securities or any other type of payments which are governed by special rules or orders by the Government.
4.2.14.2 Claims of government employees to arrears of pay or allowances shall be dealt in accordance with rules given in the General Financial Rules (GFR).
4.2.15 Payment for supplies in advance
4.2.15.1 Payment must not be made in advance unless it is required by the agreement with the supplier and supported by a bank guarantee for the value of the advance. An agreement of that type must not be entered into merely to avoid the lapsing of an appropriation.
4.2.15.2 Officers should ensure that before agreeing to make an advance payment or enter into a interim payment arrangement, approval from an officer, as specified by the Delegation of Financial Powers, is obtained.
4.2.15.3 Where an advance payment is made, the entity should ensure that adequate steps are taken to protect the public money. The intended purpose of the advance payment should be stipulated clearly in the contract.
4.3 Accounting Policies
4.3.1 Mode of payment
4.3.1.1 All expenditures apart from the following and those met from imprest account will be paid through cheque:
·
inter-government transfers (see Chapter 12)
·
certain salaries payments (see Section 4.6)
·
certain pension payments (see Section 4.7)
·
GP Fund payments (see Section 4.8).
4.3.2 Recognition of expenditure
4.3.2.1 Where payment is made by cheque, expenditure will be recognised and recorded in accounts of the Government on the date the cheque is issued.
4.3.2.2 In the case of inter-government transfers, expenditure will be recognised on the date the transfer is made by the transferor.
4.3.2.3 For direct payments into a Government employee’s bank account, expenditure will be recognised on the date the payment advice is issued by the DAO/AG/AGPR office to the bank.
4.3.2.4 For repayment of loans and other direct payments by the SBP, expenditure will be recognised on the date advised by the SBP to the AG/AGPR office.
4.3.2.5 In the case of payments made from imprest monies, the expenditure will be recognised when the required claim vouchers are submitted and the imprest account reimbursed.
4.3.2.6 The financial year to which a payment should be charged is determined by the date on which a cheque or payment advice is issued.
4.3.3 Commitment accounting
4.3.3.1 To ensure the matching of expenditure against appropriations, the cash basis of accounting has been modified to recognise some items of expenditure on a commitment basis.
4.3.3.2 Commitments are used to control large and non-regular expenditures against appropriation, and need not be recorded for immaterial expenditure of a recurring nature. Commitments will be accounted for on a memorandum basis.
4.3.3.3 The following criteria shall be applied when determining and recognising a commitment:
·
a valid purchase order is raised and, where
applicable, a purchase contract (legal undertaking or legally binding) has been
entered with the supplier. The amount
involved should be clearly mentioned in the purchase order/contract
·
the officer in accordance with the Delegation of
Financial Powers (who shall deemed to be the approving officer) has authorised
the commitment
·
the amount involved (expenditure) is above Rs
10,000 or 10% of total budget head, whichever is higher
·
exclude the following types of payments:
- salaries and related deductions
- pension
- GP fund
- loans and advances to employees.
4.3.3.4 Once a commitment is entered into and approved by the delegated authority (approving officer), it must be recorded by the DDO.
4.3.3.5 Commitments shall only be raised for those expenditures expected to be paid for in the current financial year.
4.3.3.6 A commitment advice form (form 4C) must be completed by the DDO and after approval by the delegated authority (approving officer), the form shall be sent to the DAO/AG/AGPR office along with the relevant purchase order (which is in sequential order as set out in section 4.2.4). A copy of any contract/agreement shall also be sent with the commitment advice form.
4.3.3.7 Except as set out in direction 4.3.3.8, a commitment, once recorded, must not be reversed unless:
·
payment has been made, or
·
the purchase order or other legally binding
contract has been cancelled and the same delegated authority entering into the
commitment has approved the reversal.
4.3.3.8 At the close of the financial year all outstanding commitments made during that year are duly scrutinised by the AG/MoF and provision made in the next year’s appropriation (through supplementary budget process, as set out in chapter 3) to allow for the reinstatement of valid commitments in the next financial year.
4.3.3.9 Commitments which are not renewed are cancelled.
4.3.4 Validity period for issued cheques
4.3.4.1 Once a cheque is issued it will only be valid for encashment within such a period as directed by the MoF. The validity period for issued cheques shall be consistent throughout Pakistan.
4.3.5 Deductions against payment
4.3.5.1 Deductions made against claim (e.g. withholding tax, security, adjustment of advances, penalties etc.) shall be carried out at the time of making the payment in accordance with amount as identified on the claim voucher and as per relevant rules.
4.3.6 Currency
4.3.6.1 All expenditures must be measured in Pakistani Rupees.
4.3.7 Setting-off of expenditures and receipts
4.3.7.1 No expenditure should be paid from or against any Consolidated Fund receipts collected or received by a department/entity, except where provided under the law.
4.3.7.2 Except as set out in section 4.3.8, all expenditures must be recorded on gross basis and shall not be wholly or partly offset with receipts.
4.3.8 Refunds paid
4.3.8.1 All refunds as a result of policy decision shall be treated as expenditure and shall only be paid against approved budget head. Where a refund is unplanned i.e. due to error or omission, it will be recorded as a reduction to the relevant receipt head.
4.3.8.2 Refunds paid for a receipt previously recognised in the current financial year will be adjusted to reflect the correct level of revenue, that is, as reduction in revenue. The appropriate ‘refunds’ account in the revenue section of the chart of accounts shall be used. The payment of refunds shall be in accordance with the procedures laid down in this Chapter.
4.3.8.3 If a refund paid relates to a prior financial year, it shall be recognised as an expense in the current financial year.
4.3.9 Summary of accounting policies
4.3.9.1 The following is a summary of the accounting policies in respect of the major categories of expenditure:
4.4 Accounting for Expenditures
4.4.1 Budget and commitment accounting records
4.4.1.1 Appropriation Control Register - A section to record commitments will be maintained within the Appropriation Control Register (form 4D) by the authorising officer in the DAO/AGPR/AG office. On receiving the commitment advice form from the DDO, the authorising officer must record the commitment in this register.
4.4.1.2 When the claim voucher relating to a commitment previously entered into by the department/entity is received by the authorising officer, he/she must reverse the original commitment entry in the commitment section of the Appropriation Control Register upon authorising payment.
4.4.2 Recording of expenditure (Appropriation Control Register)
4.4.2.1 Appropriation control is defined here as ‘allocated budget less payments’. Whereas funds available is defined as ‘allocated budget less payments and commitments’.
4.4.2.2 The following shall be recorded in relation to expenditure transactions within the Appropriation Control Register.
4.4.2.3
Establishment of
appropriation - the following shall be carried out to record the
appropriation against the relevant appropriation control within the
Appropriation Control Register:
Update Funds
available ( )
Update Appropriation
control ( )
[to record the recognition of appropriation upon release by MoF]
[to record the recognition of appropriation upon release by MoF]
4.4.2.4 Expenditure with commitment - The following shall be recorded, where a commitment is established:
Update Funds
available ( ¯ )
Update Commitment (
)
[to
record the setting up of commitment]
Update Appropriation
control ( ¯ )
Update Commitment (
¯ )
[to
record the actual expenditure and reversing of commitment, upon issue of
payment]
4.4.2.5 Expenditure without commitment - the following shall be recorded, where a commitment has not been established:
Update Funds
available ( ¯ )
Update Appropriation
control ( ¯ )
[to record the actual
expenditure, upon issue of payment]
4.4.2.6 Cancellation of issued payment - where an issued payment has been stopped and cancelled, the following entry will be made in the Appropriation Control Register:
Update Funds
available ( )
Update Appropriation
control ( )
[to record re-establishment of
available funds where cheque has been issued and subsequently cancelled]. If the cancelled payment related to a prior
commitment, then the commitment should also be re-established as per the first
entry shown in Direction 4.4.2.4.
4.4.2.7 Cancellation of commitment at year end - where a commitment is cancelled at the end of the financial year, the following entry will be made in the Appropriation Control Register:
Update Funds
available ( )
Update Appropriation
control ( )
[to record re-establishment of
available funds where commitment has been cancelled].
4.4.3 Summary of entries to Appropriation Control Register
|
|
Appropriation
Control
|
Commitment
|
Funds Available
|
|
1)
Establish funds
|
|
|
|
|
2)
Enter commitment
|
|
|
¯
|
|
3)
Make payment (with commitment)
|
¯
|
¯
|
|
|
4)
Make payment (without commitment)
|
¯
|
|
¯
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4.4.4 Manual accounting records
4.4.4.1 The following primary books of account must be maintained by the account section of the District Account office, the Accountant General office and the Accountant General Pakistan Revenue office.
4.4.4.2 Sub Ledger - Once a payment or related adjustment is made, each transaction shall be recorded in the “Sub Ledger” against account heads prescribed in the Chart of Accounts. The delegated officer must enter the following details in this Sub Ledger:
·
date
·
payment reference (e.g. cheque number)
·
payment description
·
account (as per Chart of Accounts)
·
DDO reference
·
amount in Rupees.
The
delegated officer must total this Sub Ledger at the end of each day and post
the daily totals, by account code, to the “General Ledger”.
4.4.4.3 Abstract - In a manual accounting system, in order to obtain details from the Sub Ledger in an alternative order (e.g. expenditure by DDO, by account code) or to consolidate information for reporting purposes, it is necessary to prepare an abstract as a supplement to the Sub Ledger.
4.4.4.4 General Ledger - The General Ledger must record all expenditures and receipts on a daily totals basis. The daily totals of expenditure (by account code) from the Sub Ledger (in a manual accounting system via abstract) must be entered in this Ledger. Details must include:
·
date
·
account (as per Chart of Account)
·
account description
·
amount in Rupees.
4.4.5 Computerised accounting records
4.4.5.1 In the computerised system the delegated officer in the account section of the District Account office or the Accountant General office must enter the claim and payment details into the computer system against the appropriate expenditure head code (account code), as set out in the Chart of Accounts.
4.4.6 Accounting entries for expenditure (General Ledger)
4.4.6.1 The journal entries in this section will be made to record expenditure related transactions in the General Ledger (regardless of whether a commitment is established).
4.4.6.2 Expenditure - the following double entries will be made for expenditures:
Dr Expenditure head
account
Cr Cheque clearing
account
[to
record the amount charged to the relevant expenditure head. This entry shall be recorded in the General
Ledger on the date the cheque is issued]
Dr Cheque clearing
account
Cr Bank account
[to
record the amount cleared from the bank account. This will be the date as per the Bank Return]
4.4.6.3 Cancellation of expenditure - where an issued cheque has been stopped and cancelled by the cheque issuing authority, the following double entry shall be made:
Dr Cheque clearing
account
Cr Expenditure head
account
[to
record cancellation of expenditure]
4.4.6.4 Unclaimed monies - where cheques are not cleared from the bank account within the prescribed period and are unclaimed, the above double entry shall be:
Dr Cheque clearing
account
Cr Unclaimed money
account
[to
record unclaimed cheques transferred to unclaimed money account within the
Public Account]
Dr Unclaimed money
account
Cr Bank account
[to
record the amount paid from the bank account where the unclaimed money is
subsequently claimed]
Dr Unclaimed money
account
Cr Other income
account
[to
record transfer of amount from the unclaimed money account (Public Account) to
the other income account (Consolidated Fund) after three years]
4.4.6.5 Refund - where a refund has been paid, the following double entry shall be made:
Dr Refunds account
(revenue)
Cr Cheque clearing
account
[to record refunds paid against
a specified ‘refunds’ account (or as a debit to revenue]
Dr Cheque clearing
account
Cr Bank account
[to
record the amount cleared from the bank account. This will be the date as per the Bank Return]
4.4.6.6 Petty cash expenditure - The double entries shall be:
Dr Petty cash
account
Cr Cheque clearing
account
[to
establish the petty cash float]
Dr Cheque clearing
account
Cr Bank account
[to
record the amount cleared from the bank account. This will be the date as per the Bank Return]
Dr Expenditure
Cr Petty cash
account
[to
record expenditure on receipts of petty cash vouchers (made simultaneously with
next entry)]
Dr Petty cash
account
Cr Cheque clearing
account
[to reimburse the original petty cash float (made simultaneously with above entry)]
[to reimburse the original petty cash float (made simultaneously with above entry)]
4.5 Detailed Procedures
4.5.1 Introduction
4.5.1.1 This section describes the key controls and associated responsibilities for expenditure processing. The processing of expenditures must comply with the directions laid down in previous sections of this chapter.
4.5.1.2 This section sets out the procedures to be followed in relation to general expenditures of a department/entity. Procedures for specific types of expenditures are covered from Section 4.6 to 4.12.
4.5.1.3 The following key internal controls must be observed in expenditure processing:
·
a sequentially numbered purchase order shall be
raised by each DDO for all contingent expenditures to be incurred
·
all claim vouchers (bills) shall be approved by
a delegated officer within the department/entity
·
all claim vouchers (bills) shall be certified by
a certifying officer and authorised for payment by an authorised officer in the
District Accounts or the Accountant General office
·
the cheque signing officers shall be independent
of officers involved in voucher certification, voucher authorisation and cheque
preparation
·
all cheques shall be made out only to the
claimant as indicated on the claim voucher (bill)
·
all cheques shall be sent by registered post or
other secure means to the payee
·
the daily totals as per Daily Advice Note (DAN),
(prepared from the Cheque Register) must be reconciled with the daily
expenditures recorded in the Sub Ledger/Abstract
·
a regular bank reconciliation must be performed
(Chapter 6)
·
periodical financial reports must be produced
and monitored by a delegated authority (Chapter 7)
·
accounting records of expenditure in the
DAO/AG/AGPR must be reconciled with each DDO on a monthly basis.
4.5.2 Expenditure processing flowchart
4.5.3 Voucher preparation for claims above the specified limit
4.5.3.1 All officers making an expenditure claim above the specified limit shall complete the claim voucher form (bill) (form 4B). All sections of the claim voucher form shall be completed in full. The following details must be shown on the claim voucher:
·
details of the officer making the claim
·
the name of the supplier with National Tax
Number (NTN) and full postal address. In
case of partnership, companies, association, societies, etc., the registered
title
·
actual dates of supply or periods of service and
the location and nature of service or work in respect of which expenditure is
incurred. Each claim should be
accompanied by all necessary supporting documentation
·
an account number and the name of the expenditure
head to which payment will be charged
·
a reference number of the contract account, or
other registers as the case may be
·
for payments in respect of contracts for
buildings, works and services, the full amount of the contract and progress
payments supported by certificates given by the relevant engineer, architect or
other delegated officer as the value of work completed
·
deductions made (e.g. withholding tax, security,
adjustment of advances etc.)
·
a copy (2nd copy) of the sequential
purchase order attached to the claim voucher.
4.5.3.2 All claim vouchers shall be issued by the department/entity with a unique sequential voucher number. This shall incorporate a reference number for the particular department/entity (the DDO). The DDO must account for any ‘gaps’ in the sequential number series.
4.5.3.3
The officer making the claim shall provide a statement
that the supplies have been received in good order and condition and have been
entered in the assets/stock register, and/or the services have been
satisfactorily carried out, as provided for in the contract or purchase
order.
This shall not apply in circumstances when a deposit or payment in advance as a
condition of fulfilling a contract, is unavoidable. Unavoidable payments in
advance include travel tickets, subscriptions and various application fees and
deposits which are normally prepaid.
Prior
approval of such expenditure, by a delegated officer, is still required and
must be accompanied by a certification that payment in advance is necessary and
unavoidable because of the nature or terms or conditions of the contract for
the supply of goods/services. In these
cases, the following additional procedures must be followed:
·
the claim voucher must be prominently stamped
“PAID IN ADVANCE”
·
the delivery of outstanding goods and services
should be followed up at regular intervals by the department/entity.
4.5.3.4 Where a duplicate claim voucher is issued, it shall have the word “DUPLICATE” written or stamped prominently upon the face of the voucher. The duplicate claim voucher shall also have reference to the original claim voucher. Where a duplicate claim voucher is issued, the officer shall state the reasons for its issue.
4.5.3.5 Where payment relates to a commitment previously entered into by the entity, the claim voucher shall give reference details to the commitment advice form already sent by the DDO to the DAO/AG/AGPR office (also see Section 4.3.3).
4.5.3.6 Particulars entered on all claim vouchers shall be typed or written in ink, and be free from erasures. Where an alteration is found to be necessary, the word or figure shall be ruled through and the correction made. All such alterations shall be initialled by the officer making the claim. Where there are numerous alterations a fresh claim voucher shall be prepared and the original claim voucher shall be cancelled and filed by the officer.
4.5.3.7 The claim voucher shall then be presented to a delegated officer, within the same department/entity, for approval.
4.5.4 Approval of expenditure
4.5.4.1 The approving officer shall approve the claim voucher (bill) if satisfied that payment can be made under his/her delegated financial powers.
4.5.4.2 The approving officer shall review the claim voucher and all relevant supporting documents, including the authorised purchase order.
4.5.4.3 Every delegated officer who approves a claim shall have an “Official Stamp” for that department/entity. The delegated officer shall put the official stamp on the claim voucher once he/she approves the claim for payment.
4.5.4.4 The approving officer shall ensure that the account to which the voucher is to be charged is correct and is shown on the face of each voucher.
4.5.4.5 The approving officer shall ensure that the service or supply has been performed or received, or, where it is necessary to pay in advance, the payment is properly due.
4.5.4.6 If the approving officer is not satisfied with the claim he/she shall not approve the expenditure and return the claim voucher and any supporting documents to the officer who prepared the claim, with written reasons for refusal.
4.5.4.7 Once the officer who prepared the claim rectifies the reasons for refusal, he/she can re-present the claim to the approving officer for approval.
4.5.4.8 If the approving officer is satisfied with the claim, he/she shall sign the original claim voucher and initial all documents supporting the claim. This shall indicate the capacity in which the approving officer has signed and the date of signing.
4.5.4.9 The approving officer shall send the following documents along with the original claim voucher to the relevant DAO/AG/AGPR office.
·
original approved purchase order
·
attested copy of approved contract with the
supplier (where applicable)
·
original approved bills (invoices) from the
supplier.
4.5.5 Registration of purchase order/claim voucher
4.5.5.1 A “Claim Register” (Bill Register) in DDO-wise order (form 4H) shall be kept by a delegated officer in the office of the DAO/AG/AGPR.
4.5.5.2 When a sequential purchase order is submitted to the DAO/AG/AGPR, the delegated officer shall check the sequential number of the purchase order for the relevant DDO, by checking with the Claim Register.
4.5.5.3 Where the sequential number of the purchase order is incorrect, the delegated officer shall return the purchase order to the relevant DDO.
4.5.5.4 The DDO shall resubmit the correct sequential purchase order or the reason for the missing purchase order in writing.
4.5.5.5 Where the sequential number of the purchase order is correct, the delegated officer shall enter the sequential number in the Claim Register and shall forward the purchase order to the certifying officer.
4.5.5.6 When a claim is submitted (or re-submitted) in the office of the DAO/AG/AGPR, the delegated officer shall check the sequential number of the claim voucher for the relevant DDO, by checking with the Claim Register.
4.5.5.7 Where the sequential number of the claim voucher is incorrect, the delegated officer shall return the claim voucher to the relevant DDO.
4.5.5.8 Where the sequential number of the claim voucher is correct, the delegated officer shall enter the sequential number in the Claim Register.
4.5.5.9 The delegated officer shall then give its own (i.e. DAO’s) unique claim number, being the next sequential number on the claim register. The date the claim is received shall be recorded in the claim register. The delegated officer shall then pass on the claim to the certifying officer dealing with that department/entity (DDO).
4.5.5.10 If a claim is returned to the officer who submitted the claim for any reason, it shall be recorded in the claim register along with the date it is returned to the department/entity.
4.5.6 Certification (pre-audit) of expenditure
4.5.6.1 The certifying officer shall record details of the claim in the “Certification and Authorisation Register” (form 4I).
4.5.6.2 The certifying officer shall certify the claim as per policies laid down in Section 4.2.7.
4.5.6.3 The certifying officer shall ensure that:
·
the claims submitted to his/her office are valid
claims that have been duly approved and there is no reason to believe that the
claims should not be paid
·
the claim voucher (bill) is complete, duly
approved and signed by the delegated officer of the entity
·
the claim voucher (bill) has the proper official
stamp on it
·
supporting documents accompanying the claim are
valid, duly approved and signed by the delegated officer
·
the delegated officer who has approved and
signed the voucher and supporting documents, is an officer authorised to
approve such claims within that entity and has not exceeded his/her authority
·
the claim must not have been previously paid
(especially in respect of claims issued on a duplicate voucher)
·
the claim must identify the head of expenditure
to which the amount is chargeable.
4.5.6.4 The certifying officer shall check the 2nd copy of the purchase order, sent along with the claim voucher, to the purchase order previously sent. If the two copies of the purchase order do not agree, the officer shall reject the claim voucher.
4.5.6.5 If the certifying officer requires additional information or documents, he/she shall obtain them from the department/entity.
4.5.6.6 Where the certifying officer is not satisfied with the claim, the officer shall not approve it and refer the claim to his/her next higher authority along with his/her specific observations.
4.5.6.7 On rejection the officer shall return the claim voucher and all supporting documents to the concern DDO, with written reasons for refusal. The claim voucher shall be endorsed as rejected.
4.5.6.8 The certifying officer shall only entertain such rejected claims where the approving officer provides written explanation in support of the claim.
4.5.6.9 Once the certifying officer is satisfied with the claim, he/she shall sign and date the claim voucher, update the Certification and Authorisation Register and pass on the claim to the authorising officer.
4.5.6.10 When the certifying officer receives the purchase order, with or without a commitment advice form, the officer shall review the purchase order, in light with the commitment criteria as set out in section 4.3.3, to certify whether or not a commitment is properly raised by the DDO.
4.5.6.11 In cases where a commitment advice is sent with the purchase order and the certifying officer disagrees with the DDO in relation to commitment, the officer shall communicate with the DDO and resolve any disagreement.
4.5.6.12 In cases where a commitment advice is not sent with the purchase order and the certifying officer feels (in accordance with the commitment criteria) that a commitment needs to be set up, the officer shall communicate with the DDO and resolve any disagreement.
4.5.6.13 Where the purchase order meets the commitment criteria and the certifying officer is in agreement with the DDO, the officer shall sign the commitment advice form and shall pass it on to the authorising officer.
4.5.7 Authorisation of payment
4.5.7.1 The authorising officer shall authorise the claim for payment as per policies laid down in Section 4.2.8.
4.5.7.2 The authorising officer shall ensure that the claim voucher (bill) bears valid evidence that preparation, approval and certification have been properly carried out. This officer shall also ensure funds are available to make the payment, or enter the commitment, as the case may be.
4.5.7.3 If the authorising officer is not satisfied with the claim, he/she shall not authorise the payment and return the claim voucher and all supporting documents to the certifying officer who certified the claim, with written reasons for refusal. The claim voucher shall be endorsed as rejected.
4.5.7.4 If the certifying officer is able to rectify the reasons for refusal, the officer shall rectify it and resubmit to the authorised officer. If the certifying officer is not in the position to rectify the reasons for refusal, he/she shall return the claim voucher and all supporting documents to the officer who originally submitted the claim to the office, with written reasons for refusal.
4.5.7.5 Once the delegated officer in the department/entity rectifies the reasons for refusal, the officer shall re-submit the claim to the office of the DAO/AG/AGPR. The claim voucher shall be given a new claim number.
4.5.7.6 Where the authorising officer receives a commitment advice form signed by the certifying officer, the authorising officer shall enter the commitment in the “Appropriation Control Register” (form 4D) in accordance with section 4.4.2.
4.5.7.7 Where the authorising officer is satisfied with the claim voucher, he/she shall authorise the claim voucher for payment, sign and date the Certification and Authorisation Register and pass on the claim voucher to the relevant officer for the issue of a cheque. At the same time the authorising officer shall update the Appropriation Control Register and in doing so, reverse any commitments that may have been previously established.
4.5.8 Preparation and dispatch of cheques
4.5.8.1 A delegated officer within the AG/DAO/AGPR shall prepare and dispatch the cheque to the claimant as per policies laid down in Section 4.2.9, ‘Issue of payment’.
4.5.8.2 All cheques must be serially numbered and bear the identity of the issuer’s office.
4.5.8.3 Cheques shall be either typed or hand written. All cheques shall be drawn “to order” and shall be crossed and marked “Not Negotiable”, except cheques drawn in the name of the DDO for imprest and for salaries paid in cash.
4.5.8.4 The amount payable shall be expressed in both words and figures on all cheques.
4.5.8.5 Where hand written cheques are issued, the cheques shall not be prepared or signed using pencil or erasable ink type pens.
4.5.8.6 The delegated officer who prepares the cheque shall enter the cheque details in the “Cheque Register” (form 4J).
4.5.8.7 It is responsibility of the cheque signing officers to ensure that:
·
the cheque is not back-dated (i.e. given an
earlier date than the date on which it is prepared)
·
the amount and full name of payee of each cheque
agrees with the amount and name of payee as shown on the authorised voucher for
payment
·
payment shall be evidenced on the claim voucher
by stamping the claim voucher with the word “PAID” and the relevant details of
the payment, i.e. cheque number, date, amount paid as per cheque.
4.5.8.8 Before a cheque is released to the payee, or personally collected by the payee or his authorised agent, it shall be recorded as ‘PAID’ in the claim register along with the date it is posted to, or collected by, the payee.
4.5.9 Expenditure payments below the specified limit
4.5.9.1 All expenditures below the specified limit shall be paid by the DDO through the imprest account and shall follow directions as laid down in Section 4.2.10.
4.5.9.2 Where petty cash advances are given from the imprest account, the delegated officer responsible for imprest account, will make note of such petty cash advances in the petty cash (imprest account) register and ensure that valid petty cash voucher are supplied against such advances. The recipient of the advance shall sign the petty cash register.
4.5.9.3 The DDO shall submit an “imprest account claim” (form 4K) to the DAO/AG/AGPR, after approval by a delegated officer within the department/entity. This claim must be accompanied by all original petty cash vouchers for amounts in excess of Rs. 200.
4.5.9.4 The procedures for recording claims in the claim register, certification of claim, authorisation for payment and preparation and dispatch of cheques shall be same as indicated in previous sections.
4.5.9.5 For imprest accounts, the cheque for reimbursement is made out in the name of the DDO, being the claimant of the imprest account claim.
4.5.10 Timing and priority of the claim
4.5.10.1 A delegated officer in the office of the DAO/AG/AGPR shall monitor the timing of claims submitted to the office and ensure the following:
·
claims, if not rejected or returned back to the
department /entity, are paid within 7 working days of recording in the claim
register
·
priority is given to claims in view of their due
date of payment and the date on which claim is received by the DAO/AG/AGPR
office.
4.5.11 Stop payment and replacement cheque
4.5.11.1 When a cheque needs to be stopped, the delegated officer who prepared the cheque shall first determine whether the cheque has been presented and paid by the bank on which the cheque was drawn, i.e. can the stop be effective? If the cheque has not been paid, a stop payment notice shall be lodged promptly with the bank. The bank’s written acknowledgement must be obtained in such circumstances.
4.5.11.2 When payment of a cheque is stopped, the details shall be recorded in the cheque register.
4.5.11.3 If a cheque payment is stopped or cancelled, the delegated officer shall reverse the original expense entry in the Sub-ledger, and where required, re-establish the previously raised commitment. Where the stopped or cancelled cheque relates to prior year then the entry shall be reversed in accordance with policies laid down in section 7.3 - Year-end Accounting Policies of chapter 7 of this Manual.
4.5.11.4 Also refer to FTR rules 165 and 193 for relevant government instructions on this matter.
4.5.12 Unclaimed and stale cheques
4.5.12.1 If a cheque payment is unclaimed or stale, the delegated officer shall record the details in the cheque register, on the relevant claim voucher and make the required adjustment in the Sub Ledger as set out in Direction 4.4.6.4. This provides an audit trail that enables prompt payment if the money is subsequently claimed.
4.5.13 Daily Advice Note to bank
4.5.13.1 The delegated officer who prepares and dispatches the cheques shall also prepare a “Daily Advice Note” (form 4L) from the cheque register, once the cheque is signed by the cheque signatory officers and before it is dispatched to the payee.
4.5.13.2 The Daily Advice Note is prepared on a daily basis and shall include all cheque payments dispatched on that day.
4.5.13.3 The Daily Advice Note shall be sent to the designated bank branch by the officer at the end of that day, to arrive at bank by 9 am next working day.
4.5.13.4 A copy of the Daily Advice Note shall be sent to the Account Section on a daily basis.
4.5.14 Recording, consolidation and reporting of expenditure flowchart
4.5.15 Recording of expenditures
4.5.15.1 Once a cheque is dispatched to the payee, the claim voucher shall be forwarded to the Account Section of the DAO/AG/AGPR office.
4.5.15.2 In the Account Section, the delegated accounts officer shall record details of expenditure, as stated on the claim voucher, in the Sub Ledger as per directions laid down in Section 4.4 “Accounting for Expenditures”.
4.5.15.3 Once an expenditure is recorded the claim voucher and all supporting documents shall be filed by the accounts officer.
4.5.16 Consolidation of expenditures
4.5.16.1 On the basis of the Sub Ledger, the accounts officer shall prepare an abstract (form 4GG) which gives daily totals of expenditure entered into the accounting system.
4.5.16.2 A delegated officer in the Account Section of the DAO/AG/AGPR office shall consolidate the expenditures, on a monthly basis, from the entries in the General Ledger and include them in the Monthly Accounts. Also refer to Section 4.4 “Accounting for Expenditures”.
4.5.17 Reporting of expenditures
4.5.17.1 The DAO/AG/AGPR office shall prepare a monthly report “Disbursement Confirmation Statement” (see section 4.2 of FRM) from the claim register for each DDO which gives detail of claims submitted by the DDO and payment made against the claims.
4.5.17.2 The DAO/AG/AGPR office shall prepare a weekly report of all outstanding claims and their status. Also refer to Chapter 7. ‘Financial Reporting Procedures’
4.5.17.3 All expenditures shall be reported to the Accountant General as part of the Monthly Accounts prepared by the District Accounts office/Self-accounting entities.
4.5.17.4 From the Monthly Accounts received from the District Accounts offices/Self-accounting entities, the Accountant General shall produce the Consolidated Monthly Accounts for the Provincial Government or the Federal Government, as the case may be.
4.5.18 Reconciliation of expenditures
4.5.18.1 The delegated officer in the Account Section shall agree the abstract’s daily totals with the daily totals as per DAN, on a daily basis.
4.5.18.2 The delegated officer in the Account Section of the DAO/AG/AGPR office shall reconcile expenditure with each DDO on a monthly basis, based on the cheque register.
4.5.18.3 The Bank will send the “Bank Return” (along with paid cheques) to the Account Section, where a delegated officer shall check the Bank Return (and paid cheque) with the copy of the Daily Advice Note. The officer shall investigate any item which is on Bank Return but not on Daily Advice Note and vice versa.
4.5.18.4 The officer in the Account Section shall ensure that the Bank Returns are received from the banks on daily basis. If not, the officer shall report to the District Account Officer/Accountant General.
4.5.18.5 Items which are on Daily Advice Note but not on Bank Return usually represent “unpresented cheques” and form part of monthly bank reconciliation. These payments should be presented within the validity period for issued cheques. If not, these payments are transferred to unclaimed money account as laid down in Sections 4.2.13 and 4.5.12.
4.5.18.6 The delegated officer in the Account Section of the DAO/AG/AGPR office shall prepare a bank reconciliation as laid down in Chapter 6. The bank reconciliation will enable the DAO/AG/AGPR to reconcile expenditure payments with the bank.
4.5.18.7 Once the delegated officer in the Account Section is finished with the Bank Returns, they should be sent to the officer who prepared the cheque. This officer shall enter the details from the Bank Returns into the Cheque Register and reconcile the cheques issued by the office and cleared by the bank. A report of this reconciliation shall be sent to the Account Section which should also indicate those cheques which are not yet cleared by the bank.
4.5.18.8 The delegated officer shall compare the Cheque Register with the Authorisation Register to verify that the amount of cheques issued was in accordance with the authorisation.
Procedures for Specific Types of Payments
4.6 Salaries and Wages
4.6.1 Introduction
4.6.1.1 The following key internal controls must be observed in processing of payroll.
·
employees shall be paid by direct credit into
their bank account regardless of their grade level and may apply to be paid
through the cheque system
·
employees below grade V may elect to be paid in
cash. In this case, payment shall be
made in cash through the relevant DDO.
See Section 4.6.13 “Payment in cash to employee below grade
V”
4.6.1.2 The powers in relation to creation and continuation of posts, payment against such posts, allowing increment or reduction in employee’s salaries and regulating their perquisites are prescribed in the relevant financial and administrative rules.
4.6.2 Due date
4.6.2.1 Monthly salaries and allowances of government employees shall be paid on the first working day of the following calendar month.
4.6.2.2 The exception to this rule is in relation to public and festival holidays (e.g. Eid holidays) for which reference shall be made to FTR (rules 217 and 219) and the relevant government notifications.
4.6.3 Payment by direct credit
4.6.3.1 The normal method of payment of monthly salaries of all government employees shall be by credit transfer direct to a bank account nominated by the employee. This is the most secure and economical method of payment, and it automatically ensures that recipients have access to their salary on the due date. Moreover, direct credit has tangible advantages, over payment by cheque or cash, against risks of theft or fraud.
4.6.3.2 To enable payroll payments to be made by direct credit, an employee shall make an application (form 4X) to the DAO/AG/AGPR nominating the account with a bank to which pays may be credited. The application shall specify the name and branch of the bank, the full title of the nominated account and the account number.
4.6.4 Payment by cheque
4.6.4.1 If payment is made by cheque, it should be handed over to the employee against proper acknowledgement on the due date.
4.6.5 Deductions from salaries and wages
4.6.5.1 No deduction shall be made from salaries or wages unless prescribed by an Act or Statute or by any order of a Court of Law. The deductions shall be on the basis of rules or standing orders of the Government.
4.6.5.2 Deductions shall be made from employee’s monthly pay in accordance with the rules and regulations of GP Fund. The monthly deduction is the same throughout a financial year. The GP Fund monthly deductions of a subscriber shall be reported to the GP Fund Section. Detailed procedures on GP Fund are covered in section 4.8 of this chapter.
4.6.5.3 Income tax deductions from the monthly pay shall be made strictly in accordance with the relevant provisions of the Income Tax Ordinance, 1979 as modified from time to time and the rules, orders and instructions issued from time to time by the Central Board of Revenue.
4.6.5.4 Other payroll deductions (e.g. house rent deductions, deductions for loan and advances) shall be made in accordance with the rules and regulations governing the deduction.
4.6.5.5 Any change in employees’ allowances and deductions shall be notified through the change statement to the DAO/AG/AGPR.
4.6.6 Transfers of employees to other departments/entities
4.6.6.1 Where practical, transfers of staff should be made on a day immediately following the due date of payment.
4.6.6.2 When an employee is transferred, payment shall be charged to the first department only to the date of transfer and payment from this date shall be charged to the department to which the employee is transferred. The pay shall be allocated on the basis of working days in the month. This allocation will be processed through separate journal entry.
4.6.6.3 The first department/entity from which the employee is transferred shall immediately inform the relevant DAO/AG/AGPR office the details of transfer, including the date of transfer and to which department/entity the employee is being transferred.
4.6.6.4 The DAO/AG/AGPR office shall issue a “Last Pay Certificate” (form 4Y) to the employee and the delegated officer shall ensure that the employee has been removed from the employee’s payroll system.
4.6.6.5 The delegated officer shall send a copy of the last pay certificate to the relevant office of DAO/AG/AGPR from which the employee will withdraw his/her pay. This office shall ensure that the employee is entered onto their payroll system from the date of transfer.
4.6.6.6 In cases where an employee’s Last Pay Certificate is delayed, the Accountant General may authorise a ‘provisional payment of salary’ to the employee.
4.6.7 Deputation
4.6.7.1 Except as set out in direction 4.6.7.2, staff on deputation should be charged to the department or entity to which the staff have been provided.
4.6.7.2 Where the deputation of staff is of a purely casual or temporary nature and for a strictly limited period of time the parent department shall continue to bear the cost of the staff member’s salary without recovery. But such cases should be regarded as exceptional and in any event should not be allowed to continue for more than 3 months.
4.6.8 Final payment
4.6.8.1 The last payment of salary and allowances shall not be paid to employee leaving the service of the Government due to resignation, dismissal, or otherwise, until both the DDO and the Accountant General are satisfied that there is no outstanding amount due from the employee.
4.6.8.2 Where an employee is leaving the service of the Government due to retirement, the last payment of salary and allowances shall not be held up merely to verify that no outstanding amount is due from the employee. The employee shall agree in writing that any valid outstanding amount coming to notice within a period of one year from the date of retirement may be recovered from the pension payments.
4.6.9 Payment of sums due at death
4.6.9.1 On a death of a person to whom any sum is due in respect of pay, allowances, annuity or gratuity, payment can only be made either to a valid nomination made by the deceased or to a personal representative of the deceased on production of proof of entitlement in the form of Letters of Administration or other legal authority.
4.6.9.2 If any payment due is not claimed by the valid nomination made by the deceased or to a personal representative of the deceased, the amount shall be transferred to unclaimed money account as laid down in Sections 4.2.13 and 4.5.12.
4.6.10 Leave Payment
4.6.10.1 Payments in relation to earned leave, casual leave, sick leave, long service leave or other kinds of leave shall be made in accordance with the relevant rules and regulations issued by the Government and provided under the Fundamental and Supplementary Rules.
4.6.11 Payroll processing flowchart
4.6.12 Payroll processing
4.6.12.1 Any change in staffing structure of a department/entity whether due to transfer, deputation, secondment, appointment, resignation, dismissal, retirement, or death shall be immediately notified by the DDO of that department/entity to the Payroll Section of the relevant office of the DAO/AG/AGPR.
4.6.12.2 Any change in employee’s pay scale shall be immediately notified by the concerned DDO or the Department/Division to the Payroll Section of the relevant office of the DAO/AG/AGPR and be applicable from the date indicated in the notification.
4.6.12.3 A delegated officer in the Payroll Section shall review the above notifications and authorise it for updating the “Establishment Register” (also see Section 4.14.2).
4.6.12.4 The payroll officer in the Payroll Section shall update the Establishment Register, as per the authorised notification, (manually or maintained on the computer system) and file the notification.
4.6.12.5 Any change in employee’s allowances or deductions shall be immediately notified by the DDO to the Payroll Section of the relevant office of the DAO/AG/AGPR and be applicable from the date indicated in the notification.
4.6.12.6 A delegated officer in the Payroll Section shall review the above notification and authorise it for updating the “Payroll Register” (also see Section 4.14.3).
4.6.12.7 The payroll officer in the Payroll Section shall update the Payroll Register, as per the authorised notification, (manually or maintained on the computer system) and file the notification.
4.6.12.8 A payslip (an authorisation of any changes) is produced for an employee every time an employee’s salary, allowances or deductions is changed. This payslip is sent by registered post (along with monthly salary cheque, where applicable) to the employee at the end of the month in which the change arises.
4.6.12.9 A Monthly Salary Statement will be produced by the computer section on a monthly basis for each employee on the payroll.
4.6.12.10 On the basis of the Payroll Register, the payroll officer shall prepare a monthly schedule of employees’ salaries by 26th of each month. Any change notification received in relation to employee’s salary or allowances after 25th of a month shall be adjusted in next month’s payroll.
4.6.12.11 Where a computerised system is used, the monthly schedule is automatically produced as part of the monthly payroll run. The computerised payroll system will also produce an exception report in relation to staff salaries (e.g. monthly salaries exceeding a set amount, variation between current month and last month).
4.6.12.12 The supervising payroll officer shall review and verify the monthly schedule of employees’ salaries and authorise it for payment once he/she is satisfied with the payroll schedule. At the same time the officer shall update the Payroll Register.
4.6.12.13 The supervising payroll officer shall:
·
Check that all amendments to payroll are
accurate and there are no unauthorised amendments
·
compare current month payroll to last month and
review any exceptions
·
compare manual payroll to computer payroll to
ensure that no employee is paid twice.
4.6.12.14 Once the monthly payroll schedule is authorised for payment, a delegated officer (independent of payroll officer and supervising payroll officer) shall prepare the “Payroll Credit Advice” (form 4M) for direct credit payments.
4.6.12.15 Where salary payment is paid by cheque, the delegated officer shall prepare salary cheques as per directions laid down in Sections 4.2.9 and 4.5.8.
4.6.12.16 Two delegated officers (signatories) shall sign the Direct Credit Advice and the cheques.
4.6.12.17 The Direct Credit Advice shall be sent to the banks by a delegated officer 3 working days before the end of the month for direct credit into the employee’s bank account on the 1st working day of the following month.
4.6.12.18 The relevant officer who prepares and dispatches the cheques shall also prepare the “Payroll Advice Note” (form 4L) once the cheque is signed by the cheque signatory officers and before it is dispatched to the payee. The Payroll Advice Note shall be sent to the bank on the last working day of the month.
4.6.12.19 The delegated officer who prepares the cheque shall enter the cheque details in the “Cheque Register” (form 4J).
4.6.12.20 A copy of the Direct Credit Advice and the Payroll Advice Note shall be sent to the Account Section.
4.6.12.21 Where an employee’s salary payment is paid incorrectly, the adjustment shall be made in next month’s salary payment.
4.6.13 Payment in cash to employee below grade V
4.6.13.1 Payroll payments in cash (i.e. through bearer cheque) shall only be allowed by the Accountant General in special circumstances and not for employees in grade V and above.
4.6.13.2 The PAO (through relevant DDO) responsible for the employees receiving cash pays shall give directions that provide for:
·
adequate safeguarding of cash
·
use of security for transportation and delivery
of salaries having regard to the amount of the payroll and the inherent risks
in conveying cash through public places
·
preparation of pay envelopes by a delegated
officer
·
proof of payments to employee and payments to
authorised representative
·
actions to be undertaken in the event of losses
and discrepancies.
4.6.13.3 It is the responsibility of the PAO (through relevant DDO) to ensure that arrangements for an employee’s pay to be collected by or directed to someone other than the employee are backed up by proper departmental controls to mitigate the risk of theft or fraud.
4.6.13.4 Through the monthly payroll procedures as set out in Section 4.6.12 “Payroll processing”, the Payroll Section shall issue the monthly salary cheque in the name of relevant DDO for those employees who exercise their option to be paid in cash and are below grade V.
4.6.13.5 Once the relevant DDO encashes the salary cheque, he/she shall disburse the pays to relevant employees as per departmental directions.
4.6.13.6 The DDO shall submit a monthly statement to the DAO/AG/AGPR office which certifies that either all relevant employees were paid in cash or state the name of employees not paid, the related amount and the reasons of non-payments.
4.6.14 Recording of payroll expenditure
4.6.14.1 In the Account Section the delegated officer shall record details of payroll, as stated on the authorised Payroll Advice Note and Payroll Credit Advice sent by the Payroll Section, in the Sub Ledger as per directions laid down in Section 4.4 “Accounting for Expenditures”.
4.6.14.2 Once the payroll expenditure is recorded the Payroll Advice Note and Payroll Credit Advice shall be filed.
4.6.14.3 Where a salary cheque is not received by the employee or salary is not transferred to his/her bank account, the recovery action shall be carried out as per Section 4.2.12 “Stop payment and replacement cheque”.
4.6.14.4 The following double entry shall be made to record the payroll transactions in the Sub-ledger at the time of payment of salary:
Dr Salary account (gross pay)
Cr Bank account
(net pay)
Revenue
Head account (income tax)
GP
Fund account
Other
accounts
4.6.14.5 Also at the time of payment, the following double entry shall be made in the Appropriation Control Register to reduce the balance of available funds:
Update Appropriation
control (salaries) ( ¯
)
Update Funds
available (salaries) ( ¯
)
4.6.15 Consolidation of payroll expenditure
4.6.15.1 The delegated officer in the Account Section of the DAO/AG/AGPR office shall consolidate the expenditures, on a monthly basis, from the entries in the General Ledger and include them in the Monthly Accounts. Also refer to Section 4.4 “Accounting for Expenditures”.
4.6.16 Reporting of payroll expenditure
4.6.16.1 The DAO/AG/AGPR office shall prepare a monthly report for each DDO. It gives details of salaries and wages paid for employees working in their department/entity.
4.6.16.2 Payroll expenditure will form part of the Monthly Accounts prepared by the District Accounts office which will be reported to the Accountant General each month.
4.6.16.3 From the Monthly Accounts received from the District Accounts offices, the Accountant General shall produce the Consolidated Monthly Accounts for the Provincial Government or the Federal Government, as the case may be.
4.6.17 Recording, consolidation and reporting of payroll expenditure flowchart
4.6.17.1 The flowchart as shown in Section 4.5.14 “Recording, consolidation and reporting of expenditure flowchart” is also applicable in payroll expenditure. The main difference is that the Payroll Advice Note and Payroll Credit Advice replaces paid claim voucher as the source document for recording purpose.
4.6.18 Reconciliation of payroll expenditure
4.6.18.1 The Bank will send the “Bank Return” to the Account Section, where a delegated officer shall check the Bank Return with the copy of the Payroll Advice Note and Payroll Credit Advice. In respect of the Payroll Credit Advice the total will be reconciled with the total appearing on the Bank Return. The officer shall investigate any item which is on the Bank Return but not on Payroll Advice Note and Payroll Credit Advice, and vice versa.
4.6.18.2 Items which are on the Payroll Advice Note and the Payroll Credit Advice, but not on the Bank Return usually represent “unpresented cheques” due to timing differences and form part of monthly bank reconciliation. These payroll payments should normally be cleared during the next month.
4.6.18.3 Once the delegated officer in the Account Section is finished with the Bank Returns, these returns should be sent to the officer who prepare the cheque. This officer shall enter the details from the Bank Returns into the Cheque Register and reconcile the cheques issued by the office and cleared by the bank. A report/schedule of this reconciliation, that should also indicate those cheques that are not yet cleared by the bank, shall be sent to the Account Section.
4.7 Pension Payments
4.7.1 Introduction
4.7.1.1 Procedures described in the provisions of any rule contained in the Civil Service Regulations or of any departmental regulations issued by, or under the authority of, the President shall be applicable to pensions.
4.7.1.2 This Section covers the pension payments in relation to all ex-employees (past employees), who were in the civil service of the Federal and Provincial Government.
4.7.2 Due date
4.7.2.1 The monthly pension shall be paid on the first working day of the following calendar month, being the due date of payment. Where an employee is retired during a month, the pension payment for that month is allocated on a working day basis.
4.7.3 Payment by direct credit
4.7.3.1 The normal method of payment of pension shall be by credit transfer direct to a bank account nominated by the employee. This is the most secure and economical method of payment, and it automatically ensures that pensioners have access to their pension on the due date. Moreover, direct credit has tangible advantages, over payment by cheque, against risks of theft or fraud.
4.7.3.2 For the purpose of enabling pension payments to be made by direct credit, the pensioner shall furnish to DAO/AG/AGPR a payment authority nominating the account with a bank to which pension payment may be credited. The authority shall specify the name and branch of the bank, the full title of the nominated account and the account number.
4.7.3.3 Where a pension is paid through direct credit transfer, the pensioner shall personally visit the relevant DAO/AG/AGPR every three months and present his/her “Pension Book” and “National Identity Card”. The delegated officer in the DAO/AG/AGPR shall certify that the pensioner is alive, and shall sign, date and stamp the Pension Book for the last three months. At the same time the officer shall update the pension records.
4.7.4 Payment by cheque
4.7.4.1 If the pensioner elects to be paid by cheque instead of payment by direct credit transfer, the pension cheque shall be mailed to the pensioner by registered post.
4.7.4.2 Where a pensioner is paid by cheque, he/she shall furnish to the DAO/AG/AGPR a payment authority nominating the address to which cheques may be posted.
4.7.4.3 The pension cheque shall be in the name of the pensioner and shall be crossed and marked “Not Negotiable”.
4.7.4.4 Only official Government issued cheques shall be used for pension payments and shall be so marked. The pension cheque shall only be presented at the designated branch of the National Bank of Pakistan as agreed between the pensioner and the DAO/AG/AGPR office.
4.7.4.5 The pensioner shall personally present the pension cheque, along with his/her Pension Book and National Identity Card, at the designated branch of the National Bank of Pakistan. The bank officer shall cash the pension cheque after certifying the identity of the pensioner, and shall sign, date and stamp the Pension Book for the month.
4.7.5 Pension Payment Order (Pension Book)
4.7.5.1 The Pension Book shall be issued by the DAO (for non-gazetted staff) and by the Accountant General (for gazetted staff).
4.7.5.2 The Pension Book shall include:
·
a specimen signature of the pensioner. For illiterate pensioners, his/her thumb
impression from the left hand
·
the specimen signature and thumb impression
shall be duly attested by the head of the office concerned or by some other
delegated officer
·
a certified copy of the pensioner’s photograph
in passport size shall be laminated on the Pension Book.
4.7.5.3 The Pension Book shall state if pension payment is made by direct credit or by cheque (through a nominated bank).
4.7.5.4 On renewal of the Pension Book, the old Pension Book shall be retained by the Accountant General.
4.7.6 Personal appearance of pensioner
4.7.6.1 Where pension is paid through direct credit transfer, the pensioner shall personally visit the relevant DAO/AG/AGPR every three months. In the case of payment by cheque, he/she shall personally present the pension cheque at the designated bank branch.
4.7.6.2 The above rule can be relaxed by the Accountant General or his/her delegated authority where the pensioner is ill or disabled or for medical reason incapable of managing his/her own affairs. In such circumstances the pensioner shall receive his/her pension through a representative upon production of a life certificate signed by a delegated government officer.
4.7.6.3 A pensioner is exempted from personal appearance if he/she draws his/her pension through a representative agent who has executed a bond to refund overpayments and produce at least once a year a life certificate signed by a delegated government officer.
4.7.6.4 If a pensioner does not appear personally or produce a life certificate, as described in above Direction 4.7.6.1 to 4.7.6.3, his/her further pension payment shall be stopped by the DAO/AG/AGPR until such time the pensioner comply with the above Directions.
4.7.7 Overseas pension payment
4.7.7.1 Where a pensioner is resident in another country, the pension payment shall be made through the Foreign Mission concerned under such general or special orders as the Government may issue in this behalf.
4.7.7.2 A pensioner may also elect to draw his/her pension at designated bank branch of NBP through a duly authorised agent who must either produce a certificate signed by a delegated government officer on each occasion, that the pensioner was alive on the date to which his/her pension is claimed, or execute a bond to refund overpayments and produce such certificate at least once a year.
4.7.8 Gratuities
4.7.8.1 Gratuities shall only be paid on the authority received through the Accountant General, to whom the sanction is communicated in writing by the delegated authority.
4.7.8.2 Gratuities shall either be paid by direct credit or by cheque to the person on his/her personal appearance, as described in above Sections.
4.7.9 Undrawn pensions and arrears
4.7.9.1 Unless the Government by general or special orders directs otherwise, a pension remaining undrawn for more than one year shall cease to be payable. If the pensioner afterwards appears personally, with his/her Pension Book and National Identity Card, the DAO or the AG who authorised the pension payment in the first instance may make the payment after satisfying himself/herself that the pension is payable.
4.7.9.2 If a pension remains undrawn for three years, it cannot be paid without the authority of the Accountant General.
4.7.9.3 A gratuity payment order shall remain in force for one year only, from the date of its issue.
4.7.10 Death of pensioner
4.7.10.1 A pension can be drawn for the day of the pensioner’s death.
4.7.10.2 On the death of a pensioner, payment of any arrears actually due may be made to his/her heirs, provided that they apply within one year of his/her death. They cannot be paid thereafter without the sanction of a delegated authority, to be obtained through the Accountant General.
4.7.10.3 If the arrears do not exceed Rs 5,000 and the case presents no peculiar features, the Accountant General may approve the arrears on his/her own authority.
4.7.10.4 Any person claiming as the heir of a deceased pensioner shall be required to produce the pensioner’s Pension Book and the copy of the order in which the sanction to the pension was communicated to the heir.
4.7.11 Processing of pension application flowchart
4.7.12 Processing of pension application
4.7.12.1 The concerned employee shall prepare the pension application, in prescribed form, (form 4N) and submit it to the Pension Section of the DAO/AG/AGPR office.
4.7.12.2 In the Pension Section, the pension officer shall record the pension application in the “Pension Application Register”. The officer shall certify pension application and ensure that:
·
the person who’s pension application is
submitted is eligible for pension payments
·
the pension application has been sanctioned, is
complete and duly signed by both the relevant authority and the ex-employee
·
any supporting documents required with the
application are attached and duly signed by both the relevant authority and the ex-employee
·
calculation of pension payment is in accordance
with the Government rules and regulations.
4.7.12.3 If the pension officer is not satisfied with the pension application, the officer shall not approve the application and refer the application to his/her next higher authority along with his/her specific observations.
4.7.12.4 On rejection the officer shall return the application and all supporting documents to the ex-employee who submitted the application, with written reasons for refusal.
4.7.12.5 Once the pension officer is satisfied with the application, he/she shall sign and date the application, update the Pension Application Register and pass on the application to the pension supervisor officer.
4.7.12.6 The pension supervisor officer shall authorise the pension application and ensure that:
·
the previous phases of pension application
preparation and certification were properly carried out
·
the pension calculation satisfies government
rules and regulations.
4.7.12.7 If the pension supervisor officer is not satisfied with the pension application, the officer shall not authorise the application and return the application and all supporting documents to the pension officer who certified the application, with written reasons for refusal.
4.7.12.8 If the pension officer is able to rectify the reasons for refusal, the officer shall rectify it and resubmit to the pension supervisor officer. If the pension officer is not in the position to rectify the reasons for refusal, he/she shall return the application and all supporting documents to the ex-employee who originally submitted the application to the office, with written reasons for refusal.
4.7.12.9 Once the ex-employee rectifies the reasons for refusal, he/she shall re-submit the application to the office of the DAO/AG/AGPR.
4.7.12.10 Once the pension supervisor officer is satisfied with the application, he/she shall authorise the original application, sign and date the pension application and pass on the application to the relevant officer for preparation of “Pension Book”. At the same time the authorised officer shall update the Pension Application Register.
4.7.12.11 On the basis of an authorised pension application, the delegated officer in the Pension Section shall update the “Pension Register” and prepare the Pension Book.
4.7.12.12 A delegated officer (Pension Book signatory) shall review the Pension Book, along with the authorised pension application, and, once satisfied, shall sign and stamp the Pension Book. The officer shall then file the authorised pension application.
4.7.12.13 The pensioner shall be notified about the issue of the Pension Book, which shall be personally collected by the pensioner. A copy of the notification is also sent to the relevant DDO who submitted the original pension application.
4.7.13 Processing of pension payment flowchart
4.7.14 Processing of pension payment
4.7.14.1 On the basis of the Pension Register, the pension officer in the Pension Section of the DAO/AG/AGPR office shall prepare a monthly schedule of pensioner’s payments by the 26th of a month.
4.7.14.2 Where a computerised system is used, the monthly schedule is automatically produced as part of the monthly pension run. The computerised pension system will also produce an exception report in relation to the pensioner’s payment (e.g. monthly pension exceeding a set amount, variation between current month and last month).
4.7.14.3 The pension supervisor officer shall review and verify the monthly schedule of pensioner’s payment and authorise it for payment once he/she is satisfied with the pension schedule. At the same time the officer shall update the Pension Register.
4.7.14.4 Once the monthly pension schedule is authorised for payment, a delegated officer (independent of the pension officer and the pension supervisor officer) shall prepare the “Pension Credit Advice” (form 4M) for direct credit payments.
4.7.14.5 Where pension payment is paid by cheque, the delegated officer shall prepare pension cheques as per Directions laid down in Sections 4.2.9, 4.5.8 and 4.7.4.
4.7.14.6 Two delegated officers (signatories) shall sign the Pension Credit Advice and the pension cheques.
4.7.14.7 The Pension Credit Advice shall be sent to the bank, by a delegated officer, on the last working day of the month for direct credit into the pensioner’s bank account on the same day.
4.7.14.8 Where pension payment is made by cheque, it should either be despatched through registered post 2 working days before the due date or handed to the pensioner on the due date.
4.7.14.9 The relevant officer who prepares and dispatches the cheques shall also prepare the “Pension Advice Note” (form 4L) once the cheque is signed by the cheque signatory officers and before it is dispatched to the pensioner. The Pension Advice Note shall be sent to the bank on the last working day of the month.
4.7.14.10 The delegated officer who prepares the cheque shall enter the cheque details in the “Cheque Register” (form 4J).
4.7.14.11 A copy of the Pension Credit Advice and the Pension Advice Note shall be sent to the Account Section.
4.7.14.12 Where pension payment is paid incorrectly, the adjustment shall be made in next month’s pension payment or as agreed with the Accountant General.
4.7.15 Recording of pension expenditure
4.7.15.1 In the Account Section the delegated officer shall record details of pensions, as stated on the authorised Pension Advice Note and Pension Credit Advice sent by the Pension Section, in the Sub Ledger and Appropriation Control Register as per directions laid down in Section 4.4 “Accounting for Expenditures”.
4.7.15.2 Once the pension expenditure is recorded the Pension Advice Note and Pension Credit Advice shall be filed by the officer.
4.7.15.3 Where a pension cheque is not received by the pensioner or pension is not transferred to his/her bank account, the recovery action shall be carried out as per Section 4.2.12 “Stop payment and replacement cheque”.
4.7.16 Consolidation of pension expenditure
4.7.16.1 The delegated officer in the Account Section of the DAO/AG/AGPR office shall consolidate the expenditures, on monthly basis, from the entries in the General Ledger and include them in the Monthly Accounts. Also refer to Section 4.4 “Accounting for Expenditures”.
4.7.17 Reporting of pension expenditure
4.7.17.1 Pension expenditures shall be reported to the Accountant General as part of the Monthly Accounts prepared by the District Accounts office.
4.7.17.2 From the Monthly Accounts received from the District Accounts offices, the Accountant General shall produce the Consolidated Monthly Accounts for the Provincial Government or the Federal Government, as the case may be.
4.7.18 Recording, consolidation and reporting of pension expenditure flowchart
4.7.18.1 The flowchart as shown in Section 4.5.14 “Recording, consolidation and reporting of expenditure flowchart” is also applicable in pension expenditure. The main difference is that the Pension Advice Note and Pension Credit Advice replaces the paid claim voucher as the source document for recording purposes.
4.7.19 Reconciliation of pension expenditure
4.7.19.1 The Bank will send the “Bank Return” to the Account Section, where a delegated officer shall check the Bank Return with the copy of the Pension Advice Note and Pension Credit Advice. In respect of the Pension Credit Advice the total will be reconciled with the total appearing on the Bank Return. The officer shall investigate any item which is on the Bank Return but not on the Pension Advice Note and the Pension Credit Advice, and vice versa.
4.7.19.2 Items that are on the Pension Advice Note and the Pension Credit Advice but not on the Bank Return usually represent “unpresented cheques” due to timing differences and form part of monthly bank reconciliation. These pension payments should normally be cleared during next month.
4.7.19.3 Once the delegated officer in the Account Section is finished with the Bank Returns, these returns should be sent to the officer who prepared the cheque. This officer shall enter the details from the Bank Returns into the Cheque Register and reconcile the cheques issued by the office and cleared by the bank. A report/schedule of this reconciliation shall be sent to the Account Section. It should also indicate those cheques which are not yet cleared by the bank.
4.7.20 Reporting on pensions
4.7.20.1 When a pension payment is made by cheque, the designated branch of the National Bank of Pakistan at which the cheque is personally presented by the pensioner, shall send a monthly statement, together with their Bank Return to certify that all pensioners paid during the month were alive, and that all pensioner’s Pension Books were stamped for the month.
4.7.20.2 A monthly report will be produced by the DAO/AG/AGPR which includes the following information:
·
number of pensioners added during the month
·
number of pensioners expired
·
total pension payable and actually paid.
4.8 General Provident Fund
4.8.1 Introduction
4.8.1.1 The procedures described in the following regulations shall be applicable to General Provident Fund (GP Fund).
·
Provident Funds Act (XIX of 1925)
·
General Provident Fund Rules (for Federal and
Provincial civil employees).
4.8.1.2 This Section covers GP Fund payments (both advances and final payment) in relation to all employees of the Federal and Provincial Government who are subscribers to the Fund.
4.8.1.3 An employee is compulsory subscribed to the GP Fund from the date of his/her appointment. Monthly subscription is by deduction from the monthly payroll. For employees on foreign service, the monthly subscription is by way of a voucher.
4.8.1.4 A uniform rate of subscription, as advised by the Government, is used for a financial year.
4.8.1.5 Interest and bonus payment shall be regulated in accordance with the General Provident Fund Rules.
4.8.2 Advance from GP Fund
4.8.2.1 A temporary advance from the GP Fund may be granted to a subscriber on certain conditions as laid down in the General Provident Fund Rules.
4.8.2.2 If the subscriber was given an advance from the GP Fund, any further advance may be allowed but only where the previous advance with interest has been repaid. This can be recovered from the amount of the second advance.
4.8.2.3 The advance is repayable in such equal monthly instalment as sanctioned by a delegated authority. The monthly instalment should not be less than 12 and more than 48.
4.8.2.4 A subscriber at his/her option may pay more than one instalment in a month.
4.8.2.5 Recovery may be postponed, on a subscriber’s written request, by the delegated authority.
4.8.2.6 A non refundable advance may be granted where the subscriber’s age is over a certain threshold, as laid down in the General Provident Fund Rules.
4.8.2.7 In all cases the amount of the advance shall not exceed 80% of the balance in the account of the subscriber on the date of application for the grant of advance.
4.8.3 Payment by direct credit
4.8.3.1 All GP Fund payments (advances and final payment) shall be made by credit transfer direct to a bank account nominated by the subscriber. This is the most secure and economical method of payment, and it automatically ensures that subscribers have access to their money promptly. Moreover, direct credit has tangible advantages, over payment by cheque or cash, against risks of theft or fraud.
4.8.3.2 For the purpose of enabling GP Fund payments to be made by direct credit, the subscriber shall furnish to the DAO/AG/AGPR a payment authority nominating the account with a bank to which payment may be credited. The authority shall specify the name and branch of the bank, the full title of the nominated account and the account number. In most cases this bank account would be the same which is used for employee’s salary payments.
4.8.4 GP Fund monthly deductions from salary
4.8.4.1 A compulsory deduction, at a fixed rate (amount) set by the Government, shall be made from the monthly salary of an employee.
4.8.4.2 The Payroll Section shall ascertain the monthly deductions to be made (which should normally be the same throughout a financial year) from salary.
4.8.4.3 The GP Fund supervisor officer in the GP Fund Section shall update the “GP Fund Ledger” on the basis of the monthly deduction made from the salary.
4.8.5 Processing of GP Fund payment flowchart
4.8.6 Processing of GP Fund payment
4.8.6.1 The relevant DDO shall check the available balance of the subscriber’s GP Fund from his/her Monthly Salary Statement.
4.8.6.2 The relevant DDO shall prepare the GP Fund application of the subscriber, in prescribed form, on an application form (form 4O) and submit it to the GP Fund Section of the DAO/AG/AGPR office.
4.8.6.3 The application form shall have the words “GP Fund Advance Payment” or “GP Fund Final Payment” written or stamped prominently upon the face of the application.
4.8.6.4 Where the application is in relation to final payment and no GP Fund advances are outstanding, a certificate shall be produced by the subscriber that no advances are outstanding. This certificate shall be approved by the DDO by checking with the Last Pay Certificate of the employee.
4.8.6.5 In the GP Fund Section, the GP Fund officer shall record the GP Fund application in the “GP Fund Application Register” (form 4P) and shall state whether the application is in relation to an advance or a final payment. The officer shall verify the GP Fund application and ensure that:
·
the subscriber whose GP Fund application is
submitted is eligible for GP Fund payments (both for advance and final payment)
·
for final payment, any advance already taken has
been adjusted in the application
·
the GP Fund application is complete and duly
signed by both the relevant DDO and the subscriber
·
any supporting documents required with the
application are attached and duly signed by both the relevant DDO and the
subscriber
·
for advance payment, it meets the criteria set
out in Section 4.8.2 “Advance from GP Fund”
·
the calculation of GP Fund payment is in
accordance with the Government rules and regulations.
4.8.6.6 If the GP Fund officer is not satisfied with the GP Fund application, the officer shall not approve the application and shall refer the application to his/her next higher authority along with his/her specific observations.
4.8.6.7 On rejection the officer shall return the application and all supporting documents to the DDO who submitted the application, with written reasons for refusal.
4.8.6.8 Once the GP Fund officer is satisfied with the application, he/she shall sign and date the application, update the GP Fund Application Register and pass on the application to the GP Fund supervisor officer.
4.8.6.9 The GP Fund supervisor officer shall authorise the GP Fund application and ensure that:
·
the amount (fund) is available in the
subscriber’s GP Fund account
·
the previous phases of GP Fund application
preparation and certification were properly carried out
·
the GP Fund calculation conforms to government
rules and regulations.
4.8.6.10 If the GP Fund supervisor officer is not satisfied with the GP Fund application, the officer shall not authorise the application and shall return the application and all supporting documents to the GP Fund officer who certified the application, with written reasons for refusal.
4.8.6.11 If the GP Fund officer is able to rectify the reasons for refusal, the officer shall rectify it and resubmit to the GP Fund supervisor officer. If the GP Fund officer is not in the position to rectify the reasons for refusal, he/she shall return the application and all supporting documents to the DDO who originally submitted the application to the office, with written reasons for refusal.
4.8.6.12 Once the DDO in the department/entity rectifies the reasons for refusal, he/she shall re-submit the application to the office of the DAO/AG/AGPR.
4.8.6.13 Once the GP Fund supervisor officer is satisfied with the application, he/she shall authorise the original application, sign and date the GP Fund application for payment. At the same time the GP Fund supervisor officer shall update the GP Fund Application Register and the “GP Fund Ledger”.
4.8.6.14 Where final payment is authorised, the GP Fund supervisor officer shall close the GP Fund account of the subscriber in the GP Fund Ledger.
4.8.6.15 On the basis of an authorised GP Fund application, a delegated officer (independent of the GP Fund officer and the GP Fund supervisor officer) shall prepare the “GP Fund Credit Advice” (form 4M) for direct credit payments.
4.8.6.16 Two delegated officers (signatories) shall sign the GP Fund Credit Advice.
4.8.6.17 The GP Fund Credit Advice shall be sent to the bank by a delegated officer for direct credit into the subscriber’s bank account.
4.8.6.18 A copy of the GP Fund Credit Advice shall be sent to the Account Section.
4.8.7 Recording of GP Fund expenditure
4.8.7.1 In the Account Section of the DAO/AG/AGPR office, the delegated officer shall record details of the GP Fund, as stated on the authorised GP Fund Credit Advice sent by the GP Fund Section, in the Sub Ledger as per the directions laid down in Section 4.4 “Accounting for Expenditures”.
4.8.7.2 Once the GP Fund expenditure is recorded the GP Fund Credit Advice shall be filed by the officer.
4.8.7.3 Where the GP Fund is not transferred to a subscriber’s bank account, the recovery action shall be carried out as per Section 4.2.12 “Stop payment and replacement cheque”.
4.8.8 Consolidation of GP Fund expenditure
4.8.8.1 The delegated officer in the Account Section of the DAO/AG/AGPR office shall consolidate the expenditures, on a monthly basis, from the entries in the General Ledger and include them in the Monthly Accounts. Also refer to Section 4.4 “Accounting for Expenditures”.
4.8.9 Reporting of GP Fund expenditure
4.8.9.1 GP Fund expenditure shall be reported to the Accountant General as part of the Monthly Accounts prepared by the District Accounts office.
4.8.9.2 From the Monthly Accounts received from the District Accounts offices, the Accountant General shall produce the Consolidated Monthly Accounts for the Provincial Government or the Federal Government, as the case may be.
4.8.9.3 The GP Fund Section shall produce an annual statement of GP Fund account of each subscriber. A copy of this annual statement shall be given to the subscriber by 31 August.
4.8.10 Recording, consolidation and reporting of GP Fund expenditure flowchart
4.8.10.1 The flowchart as shown in Section 4.5.14 “Recording, consolidation and reporting of expenditure flowchart” is also applicable to GP Fund expenditure. The main difference is that the GP Fund Credit Advice replaces the paid claim voucher as the source document for recording purposes.
4.8.11 Reconciliation of GP Fund expenditure
4.8.11.1 The Bank will send the “Bank Return” to the Account Section, where a delegated officer shall check the Bank Return with the copy of the GP Fund Credit Advice. The officer shall investigate any item which is on Bank Return but not on GP Fund Credit Advice, and vice versa.
4.8.11.2 Items that are on the GP Fund Credit Advice, but not on the Bank Return, usually represent “unpresented items” due to timing differences and form part of monthly bank reconciliation. These GP Fund payments should normally be cleared during next month.
4.9 Contractor/Work Payments
4.9.1 Introduction
4.9.1.1 This section deals with payments specific to Public Works Department only.
4.9.1.2 Payments to contractors will cover payments in relation to Civil Work and Irrigation, Navigation, Embankment and Drainage Works under the administrative control of the Public Works Department.
4.9.1.3 All works and repairs to government buildings and works and repairs in connection with sanitary, water supply and electric installations to government buildings, shall be carried out by the Works Department, except in special cases under the order of the Government.
4.9.1.4 No work should be commenced or liability incurred until:
·
administrative approval has been obtained from
the authority appropriate in each case
·
sanction, either special or general, of
delegated authority has been obtained authorising the expenditure
·
a detailed designed and estimate has been
sanctioned by a delegated authority
·
funds to cover the expenditure during the year
have been provided.
4.9.1.5 The powers delegated to various authorities to accord administrative approval and sanction expenditure in relation to works are regulated by the orders contained in the Book of Financial Powers and other special orders contained in the respective departmental regulations.
4.9.1.6 Where work is to be carried in cases of emergency, the officer may proceed to carry out the necessary work, subject to the condition that he/she immediately inform the Executive Engineer and the Accountant General that he is incurring an unauthorised expenditure. He/she shall also state the reasons for the emergency and give an approximate amount of the expenditure which he/she is likely to incur.
4.9.1.7 To facilitate the preparation of estimates and to serve as a guide in setting rates in connection with contract agreements, a schedule of rates for each kind of work commonly undertaken shall be maintained in each locality and kept up to date. These rates shall be approved by a delegated authority.
4.9.1.8 Preparation of estimates for work shall be in accordance with the rules and instructions contained in the Central Public Works Account Code and rules and instructions issued by the Department.
4.9.1.9 The following key internal controls must be observed in processing of contractor/work payments.
·
all bills shall be signed by the contractor
·
all cheques shall be signed by the Executive
Engineer and another delegated officer
·
all cheques to contractors and Daily Advice Note
to banks shall be sent by a delegated officer (on behalf of the Executive
Engineer)
·
bank returns from the banks shall be received by
the Divisional Account Officer (on behalf of the Executive Engineer)
4.9.1.10 Also refer to Central Public Works Account (CPWA) code for works expenditures.
4.9.2 Work done for other departments
4.9.2.1 Where the Works Department undertakes work on behalf of another administrative department, the employing department shall inform the Works Department the sanctioned grant within which the expenditure is to be incurred. This is in order to ensure that the Works Department does not exceed the sanctioned funds without the written authority of the employing department.
4.9.2.2 The Works Department shall be responsible not only for seeing that the funds placed at its disposal is not exceeded but also that any anticipated savings are notified and surrendered in time.
4.9.3 Processing of payment to supplier and contractors flowchart
4.9.4 Processing of payment to supplier and contractors
4.9.4.1 The Sub-Engineer shall measure all work done by the contractor and ensure that it is as per contract with the contractor and in accordance with the schedule of rates.
4.9.4.2 The Sub-Engineer shall also verify supplies received and ensure that it is as per contract with the supplier.
4.9.4.3 The Sub-Engineer shall submit the details of the supplies and the work done to the Sub-Divisional Officer on a weekly basis along with all supporting documents.
4.9.4.4 The Sub-Divisional Officer shall record the detail of all the work done into the “Measurement Book”.
4.9.4.5 The Sub-Divisional Officer shall check a sample of the work done. The sample is selected according to the rules and guidance issued by the Department.
4.9.4.6 All bills shall be prepared on a “Contractor/Supplier Bill” (form 4Q), signed by the contractor and submitted to the Sub-Divisional Officer with all supporting documents.
4.9.4.7 The Sub-Divisional Officer shall check the bill against the Measurement Book and approve the bill. The officer shall ensure that:
·
the supply or work has been received or
performed
·
the bill is prepared on an authorised form, is
correct, complete, signed by the contractor and supported by relevant documents
·
the budget against the relevant expenditure head
is not exceeded.
4.9.4.8 The Sub-Divisional Officer shall enter on the bill the account number and the name of the expenditure head to which the expenditure is to be charged.
4.9.4.9 A duplicate bill shall not be issued except where the original has been lost or destroyed. A duplicate bill shall have the word “DUPLICATE” written or stamped prominently upon the face of the bill. Where a duplicate bill is raised, the Sub-Divisional Officer shall state the reasons for its issue.
4.9.4.10 Payment for supplies in advance shall be made as per directions laid down in Section 4.2.15 “Payment for supplies in advance”. The bill must be prominently stamped “PAID IN ADVANCE” and the Sub-Divisional Officer shall state the nature or terms or conditions of the contract under which payment is to be made in advance.
4.9.4.11 The Sub-Divisional Officer shall sign and date the bill and all supporting documents. Once the bill is approved, it shall be submitted to the Divisional Account Officer with all supporting documents.
4.9.4.12 The Divisional Account Officer shall record the claim submitted in the “Contractor Claim Register”.
4.9.4.13 The Divisional Account Officer shall certify and authorise the bill and ensure that:
·
the payments which are claimed are for valid
expenditure that has been duly approved and that there is no reason to believe
that the bill should not be paid
·
administrative approval has been obtained (and
attached) from the delegated authority
·
the bill is complete, duly approved and signed
by the relevant Sub-Divisional Officer
·
supporting documents accompanying the bill are
valid, duly approved and signed by the relevant Sub-Divisional Officer
·
the relevant Sub-Divisional Officer who has
approved and signed the bill and supporting documents, is an officer authorised
to approve such claims and has not exceeded his/her authority
·
the claim must not have been previously paid
(specially in respect of claims issued on a duplicate bill) and must identify
the head of expenditure to which the amount is chargeable
·
the funds are lawfully available to pay the
bill.
4.9.4.14 If the Divisional Account Officer requires additional information or documents, he/she shall obtain them from the relevant Sub-Divisional Officer.
4.9.4.15 The Divisional Account Officer shall not authorise those claims which do not relate to his/her division or jurisdiction, or, for which a written direction has not been received from the Accountant General.
4.9.4.16 If the Divisional Account Officer is not satisfied with the claim, the officer shall not authorise the bill and shall return the bill and all supporting documents to the officer who submitted the claim, with written reasons for refusal.
4.9.4.17 Once the Divisional Account Officer is satisfied with the claim, he/she shall sign and date the original bill and pass on the bill to the Executive Engineer. At the same time he/she shall update the “Appropriation Control Register” and the “Contractor Claim Register”.
4.9.4.18 The Executive Engineer shall review the claim both from a technical and an administrative viewpoint and ensure that the bill bears valid evidence that all phases of checking, approving, certification and authorisation have been properly carried out.
4.9.4.19 If the Executive Engineer is not satisfied with the claim, he/she shall not endorse the bill and shall return the bill and all supporting documents to the Divisional Account Officer, with written reasons for refusal.
4.9.4.20 If the Divisional Account Officer is able to rectify the reasons for refusal, the officer shall rectify it and resubmit to the Executive Engineer. If the Divisional Account Officer is not in the position to rectify the reasons for refusal, he/she shall return the bill and all supporting documents to the Sub-Divisional Officer who originally submitted the bill, with written reasons for refusal.
4.9.4.21 Once the relevant Sub-Divisional Officer rectifies the reasons for refusal, the officer shall re-submit the bill to the Divisional Account Officer.
4.9.4.22 Once the Executive Engineer is satisfied with the claim, he/she shall endorse the original bill for payment, sign and date the bill and pass on the original bill to the Divisional Account Officer for issue of cheque.
4.9.4.23 At the same time the Executive Engineer shall file a copy of endorsed bill and shall send another copy of the endorsed bill to the relevant Sub-Divisional Officer.
4.9.4.24 The Divisional Account Officer shall update the “Contractor Claim Register” and prepare the cheque on the basis of original bill and as per directions laid down in Section 4.2.9, ‘Issue of payment’.
4.9.4.25 The cheque signatory officers (Executive Engineer being one of two officers) shall sign the cheque as per directions laid down in Sections 4.2.9 and 4.5.8.
4.9.4.26 The Divisional Account Officer shall sent the cheque to the relevant DAO/AG/AGPR. The DAO/AG/AGPR will maintain an appropriation register and will check and enter the cheque amount against the relevant budget grant. The DAO/AG/AGPR will not endorse the cheque which exceeds the budget grant.
4.9.4.27 Once the cheque is endorsed the DAO/AG/AGPR shall return the endorsed cheque to the Divisional Account Officer.
4.9.4.28 A delegated officer (independent of the Divisional Account Officer) shall mail the signed cheque to the payee by registered post. The officer shall also prepare the “Daily Advice Note” (form 4L) once the cheque is signed but before it is dispatched to the payee. The Daily Advice Note shall be sent to the bank.
4.9.4.29 The delegated officer who prepares the cheque shall enter the cheque details in the “Cheque Register” (form 4J).
4.9.4.30 A copy of the Daily Advice Note shall also be sent to the Divisional Account Officer.
4.9.5 Payments for works done through Local Bodies
4.9.5.1 When the maintenance of any Government buildings or roads is entrusted to the Local Body, the payment processes and procedures shall be the same as for work done by a contractor and described in previous Section.
4.9.5.2 If lump sum payments have been agreed with the Local Body, each payment must be supported by a certificate from the Sub-Divisional Officer that the work has been done in accordance with the rules and conditions agreed with the Local Body.
4.9.6 Recording of contractors expenditure
4.9.6.1 An account officer (where practicable, independent of the Divisional Account Officer) shall record details of expenditure, as per endorsed original bill, in the Sub Ledger in accordance with directions laid down in Section 4.4.6
4.9.6.2 The Divisional Accounts Officer shall perform the required entries in the Appropriation Control Register, including the reversal of any previously established commitments in accordance with the Directions laid down in Section 4.4.2.
4.9.6.3 Once an expenditure is recorded the original bill and all supporting documents shall be filed by account officer.
4.9.7 Consolidation of contractors expenditure
4.9.7.1 The Divisional Account Officer shall consolidate the expenditures, on a monthly basis, from the entries in the General Ledger and include them in the Monthly Accounts. Also refer to Section 4.4 “Accounting for Expenditures”.
4.9.8 Reporting of contractors expenditure
4.9.8.1 The Divisional Account Officer shall send the Monthly Accounts to the relevant DAO office or the AG office. A copy of the Monthly Accounts is also sent to the Director of Accounts (Works).
4.9.8.2 Where the DAO office receive the monthly accounts, the expenditures are incorporated in the Monthly Accounts prepared for the District Accounts office.
4.9.8.3 From the Monthly Accounts received from the District Accounts office/Divisional Account Officer, the Accountant General shall produce the Consolidated Monthly Accounts for the Provincial Government or the Federal Government, as the case may be.
4.9.9 Recording, consolidation and reporting of contractors expenditure flowchart
4.9.9.1 The flowchart as shown in Section 4.5.14 “Recording, consolidation and reporting of expenditure flowchart” is also applicable in contractors expenditure.
4.9.10 Reconciliation of contractors expenditure
4.9.10.1 The Divisional Account Officer shall prepare a bank reconciliation as laid down in Chapter 6. The bank reconciliation will enable to reconcile expenditure payments with the bank.
4.9.10.2 The Bank will send the “Bank Return” to the Divisional Account Officer who shall check the Bank Return with the copy of the Daily Advice Note. The officer shall investigate any item which is on the Bank Return but not on the Daily Advice Note, and vice versa.
4.9.10.3 Items that are on the Daily Advice Note but not on the Bank Return usually represent “unpresented cheques” due to timing differences and form part of a monthly bank reconciliation.
4.9.10.4 Once the Divisional Account Officer is finished with the Bank Returns, these returns should be sent to the officer who prepares the cheque. This officer shall enter the details from the Bank Returns into the Cheque Register and reconcile the cheques issued by the office and cleared by the bank. A report/schedule of this reconciliation, which should also indicate those cheques that are not yet cleared by the bank, shall be sent to the Divisional Account Officer.
4.10 Loans And Advances
4.10.1 Introduction
4.10.1.1 Loans and advances made by the Government are classified according to the items included under ‘Loans and Advances’ in the chart of accounts. These include both long-term loan and advances and short-term loan and advances.
4.10.1.2 Long term loans in the Federal Government include interest bearing loans to Provincial Governments, local bodies and other public sector organisations and individuals. These also include interest bearing and non-interest bearing loans and advances to government employees. Short term interest free advances are available to government employees on tour or transfer, or at times, treatment abroad. The provincial loans and advances are also divided in a similar manner.
4.10.1.3 The total budget grant of all interest bearing loans and advances requires the approval of the Government. The financial delegations in relation to loans and advances is set out in the ‘Delegation of Financial Powers’.
4.10.1.4 Where the conditions for repayment of loans and advances are set out by special Acts or rules of the Government, then those conditions shall apply (e.g. loans to Provincial Governments, advances to cultivators). Borrowers are required to adhere strictly to the terms settled for the loans and advances made to them.
4.10.1.5 Interest rates and the basis of interest calculation shall be determined by the Government for any particular loan or class of loans. Unless otherwise specified, simple interest shall be used. Loans shall bear interest from (and including) the date of advance, up to (but not including) the date of repayment.
4.10.2 Loan and advances to Provincial Governments
4.10.2.1 Recoveries of loans granted to Provincial Governments are governed by special orders of the Government which must specify the terms and conditions under which loans are to be granted and repaid.
4.10.3 Loans and advances to Government employees
4.10.3.1 Unless otherwise specified, loans and advances may be granted to Government employees who are permanent, and in special cases, to temporary Government employees as prescribed in GFR.
4.10.3.2 The approval of a loans and advances to a Government employee shall only be given by a delegated authority, independent to the applicant.
4.10.3.3 Simple interest, at a rate determined by the Government, shall apply to all loans and advances made to Government employees, unless specific exemption is provided by the Government. Interest shall be calculated on the outstanding balance of the loan or advance on the last day of each month. If an advance is drawn in more than one instalment then the interest rate used will be the rate prevailing on the date of the first instalment.
4.10.3.4 If a Government employee transfers into the jurisdiction of another DAO/AG/AGPR then the loans and advances and monthly instalments specified in the employee’s last pay certificate shall be communicated by the DAO/AG/AGPR office to the DAO/AG/AGPR office to which the employee has transferred.
4.10.3.5 Advances made out of a Government employee’s General Provident Fund are referred to in Section 4.8.2 of this Chapter.
4.10.3.6 If a Government employee elects not to claim interest on the GP fund he/she is entitled to interest free advances for the purchase of a house or a motor vehicle.
4.10.4 Housing advances to Government employees
4.10.4.1 This section applies to advances given to Government employees for the construction of new houses, purchase of a house or apartment or renovation of a house or apartment already owned by the Government employee.
4.10.4.2 Applications for housing advances by Government employees may be approved by delegated authorities established within each of the ministries, subject to the delegations set out in the “Delegation of Financial Powers” and after obtaining the Fund Availability Certificate. The Government employee must satisfy the delegated authority that he/she has legal title to the land upon which the house is, or will be, built.
4.10.4.3 A delegated authority may grant housing advances to Government employees subject to the following conditions:
·
a certificate is produced by the Principal
Accounting Officer or delegate to the effect that a disciplinary inquiry is not
underway for that applicant
·
in the case of temporary officers, at least 10
years of continuous service has been attained and security is provided by two
permanent Government employees, released when the house has been constructed
and mortgaged to the Government
·
where the land has already been acquired by the
Government employee, that the land be mortgaged to the Government with the
house
·
that the applicant proves, by way of certificate
from an appropriate authority (e.g. house building society, CDA) that the land
has been allotted to him/her
·
that the Government employee is not likely to
retire before full recovery of the amount can be made.
4.10.4.4 For advances given for the purchase of houses or apartments, the Government employee shall execute and register the mortgage deed/lease in the prescribed form, within 3 months of purchase, as security for repayment of the advance.
4.10.4.5 In the case of purchase of an apartment, the Government employee shall obtain surety or other legally binding proof of ownership, from the concerned construction agency.
4.10.4.6 Repayments of housing advances shall commence from 4th month of pay after the payment of the final instalment by the Government. Repayments shall be of such amount to ensure recovery of the advance is made before retirement age. Unless otherwise specified in the loan agreement, repayments shall be made over the following periods:
·
10 years (120 instalments) for gazetted
Government employees
·
20 years (240 instalments) for non-gazetted
Government employees
4.10.4.7 The amount advanced to a Government employee shall not exceed the equivalent of 36 months of his/her substantive pay.
4.10.4.8 Housing advances shall be recovered by deduction in monthly instalments from the Government employees salary. Where the Government employee would reach retirement before the standard 10 or 20 year interval, monthly repayments must be of such an amount as to ensure full recovery is affected by the date of retirement.
4.10.4.9 Monthly repayments shall cover both the principal and interest amounts due. Interest will not be recovered separately at the end of the repayment period.
4.10.4.10 No Government employee shall receive a housing advance in addition to any housing advances that already been given to that employee and are not fully repaid.
4.10.5 Vehicle advances to Government employees
4.10.5.1 This section applies to advances given to Government employees for the purchase of motor vehicles, including cars and motorcycles.
4.10.5.2 Applications for vehicle advances by Government employees may be approved by delegated authorities established within each of the ministries, subject to the financial delegations set out in the “Book of Financial Powers” and after obtaining the Fund Availability Certificate.
4.10.5.3 The delegated authority may approve a motor car advance of up to the prescribed limit, provided:
·
the Government employee draws pay up to the
prescribed limit or above
·
they are satisfied that it is in the interest of
the Government and the employee’s capacity to work that a vehicle be obtained.
4.10.5.4 The delegated authority may approve a motorcycle advance of up to the prescribed limit, provided:
·
the Government employee draws pay up to the
prescribed limit
·
they are satisfied that it is in the interest of
the Government and the employee’s capacity to work that a motorcycle be
obtained.
4.10.5.5 At the time of drawing the vehicle advance, the Government employee shall execute a mortgage/sales bond (form 4S), providing security for the advance. A copy of this form, signed by the employee, shall be passed on to the Accountant General by the delegated authority. The delegated approving authority, shall keep the mortgage/sales bond in safe custody.
4.10.5.6 The Government employee receiving advance shall complete the acquisition and payment of the vehicle within one month after drawing the advance. If this does not take place, the full amount of the advance, with interest, shall be repaid to the Government.
4.10.5.7 The motor vehicle must be insured against accident, fire and theft.
4.10.5.8 Recovery of the vehicle advance will be made by equal monthly deductions from the employee’s salary, and will commence on the first monthly pay after the advance is drawn. The amount shall be recovered within 60 months or, if nominated by the applicant, a shorter period.
4.10.5.9 Monthly repayments shall cover both the principal and interest amounts due. Interest will not be recovered separately at the end of the repayment period.
4.10.5.10 Where the Government employee wishes to sell the motor vehicle, under which advance was given, the approval of the delegated authority who originally approved the advance must first be obtained. Sale proceeds obtained must be used to pay off the balance of the principal owing on the vehicle advance. This direction also applies to cases where the employee is instructed to sell the vehicle (e.g. employee is on long-term leave, retires from service or transfers to a position where possession of a vehicle is not considered necessary).
4.10.5.11 If the Government employee wishes to sell the vehicle and use the sale proceeds to purchase a replacement vehicle, it may be approved by the delegated authority provided:
·
the amount outstanding on the advance does not
exceed the cost of the replacement vehicle
·
the amount outstanding on the advance will be
continued to be repaid at the rate previously fixed
·
the replacement vehicle will be mortgaged and
insured to the Government.
4.10.6 Bicycle advances to Government employees
4.10.6.1 Advances for bicycles may be granted by a delegated authority within the department/entity of up to Rs 2,000 for Government employees who are either permanent or temporary, provided:
·
the employee draws pay not exceeding Rs 1,950
·
if the applicant is a temporary employee surety
is provided by a permanent employee
·
the delegated authority is satisfied the
employee will remain in service until recovery of the advance is obtained and
the advance will be utilised in the purchase of a bicycle
·
a second advance will not be drawn until three
years after the expiry of the previous advance.
4.10.7 Interest free advances to Government employees
4.10.7.1 Interest-free advances may be given to Government employees, upon approval of a delegated authority, in respect of the following:
·
upon transfer of the employee, and amount not
exceeding one months pay plus travelling allowance
·
upon return to Pakistan from an overseas
deputation, an amount not exceeding two months pay
·
to Government employees travelling on official
duties, an amount sufficient to cover their personal travelling expenses, as
provided under the Supplementary Rules and departmental personnel regulations
·
other advances to Government employees for
departmental purposes, as regulated by special orders of the Government.
4.10.8 Permanent advances
4.10.8.1 These are advances granted to officers who are required to make payments before funds are made available to them. Permanent advances are intended to provide to the officer responsible for the advance, sums required for minor contingent expenditures. Refer to Section 4.4 on the procedures applicable to contingent forms of expenditure.
4.10.8.2 The Principal Accounting Officer or delegated authority may approve the granting of permanent advances to officers within the ministry or department, up to an amount advised by the Accountant General.
4.10.9 Recording of loans and advances
4.10.9.1 Detailed accounts of all loans and advances granted by the Government shall be maintained by the Accountant General, who will monitor their balances and identify any breaches in the terms and conditions of these loans.
4.10.9.2 The delegated officer in Accountant General’s office shall record payments and recoveries of loans and advances in the relevant account heads under “Loans and Advances” in the Sub Ledger in accordance with directions laid down in Section 4.4 “Accounting for Expenditures”. Also these loans and advances shall be recorded in the Financial Register.
4.10.10 Consolidation of loans and advances
4.10.10.1 A delegated officer in the Account Section of the DAO/AG/AGPR office shall consolidate the expenditures and recoveries in respect of loans and advances, on a monthly basis, from the entries in the General Ledger and include them in the Monthly Accounts. Also refer to Section 4.4 “Accounting for Expenditures”.
4.10.11 Reporting of loans and advances
4.10.11.1 An annual statement showing details of all loan balances, and amounts paid and received under the head “Loans and Advances” shall be prepared by the Accountant General, in accordance with the timetable set down in Chapter 7, “Financial Reporting Procedures”.
4.10.11.2 Any default in repayment (either in principal or interest) shall be promptly reported by the Accountant General to the delegated authority who shall then take steps to recover the amount in default.
4.11 Overseas Payments
4.11.1 Introduction
4.11.1.1 The Ministry of Foreign Affairs is a self-accounting entity (also refer to chapter 9) operating an assignment account (also refer to chapter 17) with the National Bank of Pakistan. It is responsible for handling all payments made from foreign missions abroad, including overseas payments incurred by other ministries and departments of the Government.
4.11.1.2 The Financial Advisors of the concerned ministries and departments shall make budgetary provision within the circle of the Ministry of Foreign Affairs for those expenditures their ministry or department will expect to incur in the forthcoming year, including pay, and contingent purchases. These funds (including the relevant foreign exchange component) will then be released by AGPR into the assignment account of the Ministry of Foreign Affairs.
4.11.1.3 At times various ministries/divisions make special overseas payments (other than regular expenditures) which are made through the Ministry of Foreign Affairs.
4.11.1.4 Payments made by missions abroad will be adjusted against the assignment account of the Ministry of Foreign Affairs, and expenditures recorded in ledgers maintained by the Ministry of Foreign Affairs. A monthly set of accounts will be forwarded by the Ministry of Foreign Affairs to the AGPR. Relevant expenditure relating to the various ministries would also be communicated to those ministries.
4.11.1.5 Unless otherwise specified the accounting policies set out in this chapter shall also apply to payments made overseas. Detailed procedures for processing overseas payments and maintaining accounts in relation to overseas payments are regulated by the Ministry of Foreign Affairs.
4.12 Grants-in-aid, Contributions etc.
4.12.1 Introduction
4.12.1.1 Grants-in-aid and contributions refer to monies given by the Government to various public bodies and institutions for which no exchange of goods and services is required. These bodies typically include educational institutions, charities, welfare bodies and health institutions. Unless specifically exempted by the Government all grants-in-aid and contributions are provided to fulfil a defined objective or purpose.
4.12.1.2 The delegations required for payment of grants-in-aid or contributions to public bodies and other institutions is regulated under the “Delegation of Financial Powers”, GFR and detailed rules as set out by ministries, departments and local administrations under the powers vested in them. The following guidelines shall apply in the approval of grants-in-aid.
4.12.1.3 The delegated authority shall only approve grants in relation to those payments to be made in the current financial year. In addition, grant monies shall not be drawn unless expenditure is about to be incurred or reimbursement is required for expenditures previously incurred by the recipient. Grants in aid may be provided on a recurring (e.g. payment in monthly instalments over a fixed time period) or non-recurring basis (e.g. one-off payment).
4.12.1.4 Before approval of a grant, the delegated authority must obtain an audited financial statement from the recipient body, to justify the requirement for the grant and to ensure any previous grants have been spent for the purpose intended. When approving the grant, the delegated authority must indicate that an audited financial statement was received and the criteria for providing the grant was met (or, for any reason, was exempted from providing an audited financial statement). The purpose of the grant, and any conditions attached to it, must clearly be indicated by the delegating authority in any grant agreements as well as to the Accountant General.
4.12.1.5 Once approved by the delegated authority, a claim for payment, accompanied by the relevant documentation (e.g. grant agreement, financial clearance) shall be submitted to the DAO/AG/AGPR office for certification, authorisation and payment.
4.12.1.6 Where conditions have been attached to the utilisation of grant money, the delegated authority who approved the grant is responsible for ensuring the conditions have been met. This may require, where necessary, the provision of regular reports by the grant recipient or audited financial statements by an independent auditor to the delegated authority. Where grant monies are provided on a reimbursement basis, signed copies of the relevant bills and vouchers of the recipient should also be obtained. The timing and regularity of such reports and disclosures shall be set out in the grant agreement between the delegated authority and the grant recipient.
4.12.1.7 Where the grant is to be provided by a series of recurring payments a separate claim shall be approved and submitted by the delegated authority, for each payment, along with the necessary documentation to show the conditions of grant have been met. The delegated authority who approved the grant shall maintain a schedule of payments made for each grant made under his/her authority.
4.12.1.8 Unless specifically exempted by the Government, the conditions of all grant agreements shall provide for:
·
the time limit in which the utilisation of the
grant applies
·
the surrender of grant monies not spent at the
end of the financial year
·
the financial and other disclosures required of
the grant recipient
·
the cancellation or postponement of further
grant payments by the paying authority, should the conditions attached to the
grant be breached (e.g. if the required reports are not furnished).
4.12.2 Accounting Entries
4.12.2.1 The following double entry shall be made to record the transaction relating to grants-in-aid and contributions.
Dr Grants and subsidies account
Cr Cheque clearing
account
[to record the amount charged to
the relevant detailed expenditure head under grants and subsidies. This entry shall be recorded in the General Ledger
on the date the cheque is issued.]
Dr Cheque clearing
account
Cr Bank account
[to
record the amount cleared from the bank account. This will be the date as per the Bank
Return.]
4.13 Assignment Account and Personal Ledger Account
4.13.1.1 Refer to Chapter 17 “Assignment Accounts and Personal Ledger Accounts” for procedures on assignment account and personal ledger account.
4.14 Maintenance of Permanent Accounting Records
4.14.1 Introduction
4.14.1.1 Proper controls shall be followed in the maintenance of permanent accounting records associated with the payroll, GP fund and pension payment processes described in this chapter. These permanent accounting records shall be updated on an as required basis. The following key controls shall apply to permanent accounting records:
·
all amendments must be approved by a delegated
authority before they are processed
·
checks must be in place to ensure all amendments
to permanent accounting records entered into the system or manual registers are
complete and accurate
·
proper physical/system controls shall be in
place to ensure only those authorised to make amendments have access to these
records
·
permanent accounting records shall be monitored
on a regular basis to identify irregularities and report them to the concerned
authority.
4.14.1.2 Permanent accounting records consist of the following registers. In the case of a computerised system, these records will be represented in a database:
·
Establishment Register(form 4T)
·
Payroll Register(form 4U)
·
Pension Register(form 4V)
·
GP fund Ledger(form 4W).
4.14.1.3 All permanent accounting records maintained on a manual basis will be entered in a date-wise order. As new records are required to be added, the next available page number will be used. Permanent records maintained on a computerised basis will be available in a variety of views, including alphabetically, employee ID-wise and date-wise. The key record (element) in all payroll, establishment and GP fund records shall be the employee identifier, which will be unique within all of Pakistan.
4.14.2 Establishment Register
4.14.2.1 This register is a control device which shall maintain all details of sanctioned posts within each unit of establishment. This includes records of both permanent and temporary posts, and filled and unfilled posts. This register shall be used for budgeting and managing the strength of the particular unit of establishment (e.g. office, school, hospital). This register shall be maintained by each DAO/AG/AGPR.
4.14.2.2 The following permanent records shall be maintained for each unit of establishment:
·
Establishment unit ID (DDO reference)
·
Responsible ministry, division or department
·
Number of posts (permanent and temporary) in
total and by grade
·
Number of posts filled
·
History (e.g. posts filled last year)
·
All position numbers with the unit of
establishment, classified by grade and post type (permanent or temporary)
·
Unit type (federal, provincial etc.).
4.14.3 Payroll Register
4.14.3.1 The register shall be maintained to record payroll records of each employee, for the purposes of payroll processing.
4.14.3.2 The Payroll Register shall be maintained by the Payroll Sections of each DAO/AG/AGPR office and must be updated prior to the preparation of the monthly pay bills.
4.14.3.3 The information contained in the Payroll Register shall contain:
·
Employee ID (unique across all of Pakistan)
·
Employee name
·
Employee’s fathers name (or employee’s husband
name)
·
Address (temporary and permanent address)
·
Contact phone number
·
Marital status
·
Date of birth
·
Bank account details (for security reasons this
may be controlled and accessed by a separate officer)
·
Status (e.g. on leave, on deputation etc.)
·
Current position number
·
Current establishment id (DDO reference) *
·
Current grade *
·
Date of appointment to most current grade
·
Date of appointment into service
·
Current basis salary *
·
Current allowances, classified by allowance type
·
Current deductions, classified by deduction type
·
Service history (e.g. previous positions and
grades held, with dates of appointment)
·
Leave history.
4.14.3.4 It should be noted that in a computerised system those fields marked (*) above, would be linked to other sources (such as the Establishment Register), and therefore would not require separate data entry.
4.14.3.5 Also in the Payroll Register, the following information should be maintained for each month and on a year-to-date basis for each employee:
·
Base salary paid
·
Each allowance paid, and in total
·
Each deduction, including income tax, advances
and GP fund deductions, and in total.
4.14.3.6 Once the financial year is complete, the monthly and annual payroll information shall be maintained for 10 years.
4.14.4 Pension Register
4.14.4.1 The Pension Register is a record of pension payments made as well as details of pensioners drawing payment.
4.14.4.2 The Pension Register is maintained by the Pension Sections of each DAO/AG/AGPR office and shall be updated whenever pensioners are added, amended or removed from the system.
4.14.4.3 The following information shall be maintained for each person receiving pension payment:
·
Pensioners name
·
Pensioners father’s name (or husbands name)
·
Identification number (i.e. National Identity
Card number)
·
Pensioner’s address
·
Contact phone number
·
Date of birth
·
Date of retirement
·
Grade at retirement
·
Monthly pension amount
·
Mode of payment
·
Bank account details (for security reasons this
may be controlled and accessed by a separate officer)
·
Pensioner type (federal, provincial)
·
Record of each pension payment made, date,
amount and accumulated balance
·
Last date of pensioner status verification.
4.14.5 GP Fund Ledger
4.14.5.1 The GP Fund Ledger is used to maintain records relating to each employee’s GP Fund contributions, advances drawn from the GP Fund and final payment from the GP Fund.
4.14.5.2 The GP Fund Ledger shall be maintained by the GP Fund Sections of each DAO/AG/AGPR office, and updated each month.
4.14.5.3 The following information shall be maintained for each employee within the GP Fund:
·
Employee ID
·
Employee name *
·
Current position number *
·
Current grade *
·
GP Fund type (e.g. Federal, provincial)
·
Date of entry into GP Fund
·
Monthly contribution to GP Fund from salary *
·
Net accumulated GP Fund balance
·
Accumulated interest earned
·
Accumulated bonus earned
·
Advances drawn against GP Fund (individual
amounts and dates drawn, and in total).
4.14.5.4 Upon an employee’s retirement, the following information shall be added to the GP Fund Ledger before closure of the account:
·
Date of retirement
·
Final payment amount, cheque (or direct credit)
number and date of payment.
4.14.5.5 It should be noted that in a computerised system those fields marked (*) above, would be linked to other sources (such as the Payroll Register), and therefore would not require separate data entry.
4.14.5.6 The GP Fund nomination form and records of any other significant events relating to an employees GP Fund shall be filed.
4.14.5.7 After retirement of the employee, GP Fund Ledger records shall be maintained for 10 years.
Appendix to
Chapter 4
Commitment Accounting
Alternative Treatment
This approach to recording commitments is an alternative to
that provided in Section 4.4.3 of this Chapter.
Whilst the end result is the same in terms of reporting, the accounting
and other entries are different. It
would only be practical to establish this alternative model in a computerised
environment. It should be noted that the
specific details of commitment accounting processes will be determined by the
chosen accounting system.
4.14.6 Commitment accounting records
4.14.6.1 General Ledger - Commitments will be maintained within the General Ledger, by a delegated officer in the DAO/AGPR/AG office. On receiving the commitment advice form from the DDO, this officer must record the commitment in the General Ledger.
4.14.6.2 When the claim voucher relating to a commitment previously entered into by the department/entity is received by the authorising officer, he/she must reverse the original commitment entry in the General Ledger upon authorising payment.
4.14.6.3 The fundamental difference with this approach to that shown in the text of the manual is that it records expenditures in the GL when commitments are entered into. This has two implications:
·
adjusting entries are required in the GL for any
variation that occurs after a commitment is established until it gets finally
paid
·
commitment accounts must be established in the
GL for each budget head to be monitored
4.14.6.4 The balance of the commitment account represents those commitments still outstanding against the budget head.
4.14.7 Recording of expenditure (General Ledger)
4.14.7.1 Expenditure with commitment - The following shall be recorded, where a commitment is established:
Dr Expenditure head
Cr Commitment account
[to
record the setting up of commitment]
Dr Commitment account
Cr Cheque clearing account
[to
record the actual expenditure and reversing of commitment, upon issue of
payment]
Dr Cheque clearing account
Cr Bank account
[to
record clearance of the payment]
4.14.7.2 Expenditure without commitment - the following entries shall be recorded, where a commitment has not been established:
Dr Detailed expenditure head
Cr Cheque clearing account
[to record the actual
expenditure, upon issue of payment]
Dr Cheque clearing account
Cr Bank account
[to record clearance of the
payment]
4.14.7.3 Cancellation of issued payment (no commitment)- where a issued payment has been stopped and cancelled, the following entry will be made:
Dr Cheque clearing account
Cr Detailed expenditure head
account
[to record re-establishment of
available funds where cheque has been issued and subsequently cancelled].
4.14.7.4 Cancellation of issued payment (with commitment) - If the cancelled payment related to a prior commitment, then the entry shall be:
Dr Cheque clearing account
Cr Commitment account
[to
re-establish the commitment]
4.14.8 Budget/funds control entries
4.14.8.1 The following entries shall be made to reflect the correct level of funds available in the Appropriation Control Register (manual system) or funds control module (computer system) whenever budgets are released, commitments established and payments made against a given budget head:
|
Budget head
entries
|
Appropriation
Control (cash available)
|
Funds
Available
|
|
1)
Establish funds
|
|
|
|
2)
Enter commitment
|
|
¯
|
|
3)
Make payment (with
prior commitment)
|
¯
|
|
|
4)
Make payment
(without prior commitment)
|
¯
|
¯
|
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