Report on the Annual Review on the working of Treasuries, Pension Payment Offices and Pay And Accounts Office, Hyderabad in Andhra Pradesh for the year 2004-05





01.        Delay in adjustment of advances on A.C.Bills involving an amount of 
Rs.437.31 Crore                                                                                      ( Para 1.1)

02.        Outstanding Railway Pension claims of Rs. 9.84 Crore                               ( Para 1.3)

03.        1053 Reports with 4150 Paras detected in Treasury Inspection of last five years were outstanding       ( Para 2.1)

04.        During the course of Inspection of Treasuries/Sub-treasuries/Pension Payment Offices in the year 2004-05 excess payment of pension of Rs.59.56 lakh was noticed.  The excess payment was due to

i.                                       Payment of Enhanced Family pension beyond time limit (Rs.16.97 lakh)

ii.                                     Irregular consolidation of pension (Rs.17.88 lakh)

iii.                                    Excess payment of pension due to inadmissible relief (Rs. 11.36 lakh)

iv.                                   Excess payment of pension due to non-recovery or short recovery of commuted portion of pension (Rs.9.30 lakh)

v.                                     Excess payment of pension due to inadmissible weightage (0.94 lakh)

vi.                                  Excess payment of pension due to payment of full pension to each widow instead of half share of Family pension (Rs. 3.11 lakh)             ( Para 2.2.1)

05.        Non-deduction of Income Tax at source from pensioners  Rs.26.96 lakh for the year 2003-04    ( Para 2.5.1)

06.        Heavy stock of stamps amounting to Rs.177.88 crore                             ( Para 2.6.1)

07.        Irregular withdrawal of amounts from CSS Account by Zilla Grandhalaya Samsthas                     ( Para   2.7)

08.        Non-clearance of balances under CD Act 1974 (Rs.27.50 lakh)         ( Para 2.14)

09.        Incorrect Operation of Deposit Accounts

i.        Incorrect lapsing of Tenth / Eleventh Finance Commission Grants released by Government of India of Rs.730.19 lakh                                                                                       ( Para

ii.      Incorrect drawal of amounts on self-cheques from PD Accounts by Project Officer of ITDA/DRDA of Rs.38.07 Crore.                                                                                   ( Para

10.        Adverse Balances in PD Accounts of Rs.311.93 lakh                   ( Para 2.3.3)

11.        Delay in adjustment of AC Bills relating to  Mid day Meals Scheme involving an amount of Rs.9.54 Crore                                                                                                                ( Para 2.4.2)

12.        Deposits under Category “C” of G.O.Ms.No. 43  Fin.&Plg. (W&M) Dept., Govt. of A.P., Dt:22.04.00 were not lapsed to Government (Rs.171.42 lakh)                                          ( Para 2.3.5)

13.        Vouchers of Rs.9.54 Crore up to March 2005 were wanting from various treasuries.         ( Para 1.3)

14.        Certificates of payment in lieu of missing vouchers amounting to Rs.17.58 crore for the month of 11/89 from PAO, Hyderabad were yet to be received.                                              ( Para 3.2)

15.        Drawal of funds of Rs.79.17 lakh on fully vouched contingent bill on the strength of proforma invoice to avoid lapse of Fund by different DDOs                                                              ( Para 3.3 )

16.        Reimbursement of cost of inadmissible medicines amounting to Rs. 9.85 lakh        ( Para 3.8)


* * *



The Treasuries and Sub-treasuries function under the administrative control of the Director of Treasuries and Accounts, A.P. Hyderabad, which forms a separate Directorate under Finance and Planning Department of the State Government. Besides 23 District Treasuries, the following authorities also attend to  treasury functions and render accounts to this office.

q Pay and Accounts Officer (PAO), Hyderabad .

q Joint Director (J.D), Pension Payment Office (PPO), Exhibition Grounds, Hyderabad .

q Pay and Accounts Officer (Andhra Pradesh Bhavan), New Delhi .

The Pay and Accounts Officers are under the direct control of the Finance Department of the State Government whereas the J.D., Pension Payment Office is under the control of the Director of Treasuries and Accounts (D.T.A), A.P., Hyderabad .

 23 District Treasury Offices, 3 Non-banking Sub Treasuries, 294 Banking Sub-Treasuries and 9 Assistant Pension Payment Offices (APPO) were functioning in the State (Annexure – I).  Out of these, 245 offices {all the 23 District Treasuries, 213 Sub-Treasuries (170 Annual and 43 Biennial) and 9 Assistant Pension Payment offices} were inspected during 2004-2005 (Annexure – II.1).

The review report is compiled in the following three sections.

SECTION I      Defects noticed during compilation and verification of accounts.

SECTION II    Irregularities noticed in the inspection of treasuries.

SECTION III   Report on the working of Pay and Accounts Office, Hyderabad .

Section - I

Defects noticed during compilation and verification of accounts

   1.1.Defects noticed in preparation of accounts:

1.1 :   Delay in adjustment of advances on AC Bills : As per the instructions issued in G.O.Ms.No.391, Finance (TFR) Dept. dt:22-3-02, DTA.Memo.No.F3/ 5623/ 2002, dt:6-4-002, G.O.Ms.No.507, Finance (TFR) Dept. dt:10-4-2002, Govt.Fin (TFR) Dept.Memo.No.268/15154-A/TFR/2002, dt:18-5-2002 and DTA Cir.Memo.No. F3/6199/2002, dt:31-5-2002, advances are required to be adjusted with in one month from the drawal of funds on AC bills and in any case all the AC bills shall be settled within three months of their drawal.  Third AC bill shall not be admitted until and unless the first AC bill admitted is settled.

An amount of Rs. 437.31 Crore is outstanding towards settlement of 120537 A.C. Bills from 1985-86 to 2004-2005.  Out of this, Rs. 250.09 Crore is pending towards settlement of 88127 AC bills upto 2002-03.   District-wise pendency of settlement of 32410 AC Bills from 01.04.2003 to 31.03.2005 amounting to Rs.187.22 Crore.

1.2       Misclassification of Accounts in Education Department

1.2.1   Payments made by treasuries to the DDOs of Ashram Schools under MH” 2202 – General Education” instead of MH” 2225- Welfare of SC,STs and BCs”

As per the instructions contained in Memo No. 3172-1/42/BE.III/2003 Dated 18.03.03 Finance (BE.III) Department, expenditure Head of Account for Ashram Schools under the control of the Commissioner of Social Welfare has been changed from MH”2202- General Education, 01-Elementary Education, 101- Government Primary Schools, SH(05)-Ashram Schools to MH”2225- Welfare of SCs,STs, BCs, 01-Welfare of SCs, 277- Education, SH(07)- Government Hostels”.  As a result, the DDOs of Ashram schools should not operate MH 2202- General Education.  Despite this, Treasuries still continue to make payments to the DDOs of Ashram Schools under MH 2202-General Education.  This issue was brought to the notice of the Dy.Directors/ District Treasury Officers during the Treasury officers workshop held in Accountant General’s office in November, 2004 and copies of the said proceedings were also given to all the Deputy Directors/ DTOs.  However, as verified from the List of Payments under SA-45, MH 2202- General Education, it is observed that payments still continue to be made by the Treasury Officers to the DDOs of the Ashram Schools under MH 2202- General Education while also operating  MH 2225- Welfare of SCs, STs, BCs.  This may even lead to double drawal of allowance and other expenditure.

1.2.2   Drawals by Mandal Revenue Officer, Mangnoor, Medak District under MH 2202-General Education in 02/2005

After submission of bills by the Drawing and Disbursing Officers, the Treasury Officer concerned should apply stipulated  checks to ensure that the claim is correct in all respects.  However, no check appears to have been exercised by the Treasury Officer in respect of payment of Rs.1,88,568/- made to the Mandal Revenue Officer, Mangnoor, Medak District in 02/2005 under MH 2202-General Education, 01-Elementary Education, 101-Government Primary Schools, SH(05) – Primary Schools as the Mandal Revenue Officers are not the regular Drawing Officers of the Education Department operating MH 2202-General Education.  M.R.Os are not the drawing officers for the Education Department Funds. Neither specific orders of Government are received in this office nor any copy of the authority for such drawal of funds by the MRO received along with vouchers.  No other M.R.O except M.R.O Manganor Medak is operating the education head of A/c MH.2201-01-101- SH  (General education).  Concerned STO should have brought this omission to the notice of concerned MRO and also  to DTO instead of passing bills.


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Fly leaf Disbur- sements page No.

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1.2.3  Payment made by the Treasury under Head of Account not existing in the Budget Estimates for the year 2004-05


Before admitting a bill submitted by DDO, the Treasury officer should check the admissibility of bills presented with reference to classification of Head of account in the Budget Estimates for the year concerned.  However, as seen from the monthly account for 2/2005 of DTO, Visakhapatnam, a bill presented by DDO, Ashram School for Rs.362812/- under MH 2202-General Education, 01-Elementary Education, 101-Government Primary Schools, SH(05)-Ashram Schools was admitted even though the classification did not exist in the Budget Estimates for the year 2004-05.   Above misclassification has to be rectified.

1.2.4       Adverse Balances in P.D.Account of A.P.State Co-operative Fisheries Federation Limited, Hyderabad to the tune of 2.50 Crore


During the review of Adverse Balances under Deposit Accounts, it was noticed that there is an adverse balance of Rs.2.50 Crore in P.D.Account No.09/338 of A.P.State Co-operative Fisheries Federation Limited, Hyderabad maintained in Hyderabad District Treasury (Urban).

On an analysis of adverse balances, it was noticed that an amount of Rs.2.50 Crore released by Government and credited to P.D.Account No.9/338/Federation to the end of 31.03.99 but remained unspent as on 31.03.2000 was debited twice to the Deposit Account of the Federation once by the Institute through cheque drawn in April, 2000, October 2000 and February 2001 and subsequently by the Hyderabad Urban Treasury in July, 2001 by way of adjustment of lapsed Deposit amount to the credit of Departmental receipt Head resulting in Minus Balances under Deposit Account.  Secretary to Government of A.P, Finance Department and Director of Treasuries & Hyderabad (U) were addressed vide DEP.Cell/ 2005-06/46-51, dt:2-6-2005 and reminded in Lr.No.DEP.Cell/ 2005-06/146-151 dt:22-11-2005 for necessary action in this matter.

1.3             Outstanding Railway pension claims:

Pension payments to Railway pensioners are made by treasuries in the first instance and amount is then reimbursed by the Railways.  The Treasury debit the expenditure under suspense account with Railways and prefer claim for reimbursement of the pension amount duly enclosing the pension vouchers.  FA & CAO of the concerned Railways make payment to the Accountant General.  On receipt of the amount from the Railways the amount held under suspense account with Railways is cleared in this office records.  However, due to non-submission/incomplete submission of vouchers by treasuries to Railway authorities, the amount of pension claimed is not reimbursed in full, and the suspense balance continued to the extent of the amount not reimbursed.  The pension claims remaining undisbursed and the resultant accumulated suspense balance worked out to Rs. 9.84 crore as on 31.03.05.  Of this, outstanding claims relating to South Central Railway alone were Rs.8.13 crore and the current year outstanding amount is 1.75 Crore more than the previous year amount.  This matter has been referred to all the DTOs through correspondence and also brought to the notice of the DTOs during the annual DTO’s Work Shop held from time to time.  The suspense balances have been outstanding since 1979-80 and pertains mostly to 1996-97 to 2004-05.


1.4:     Vouchers wanting from Treasuries:



 Vouchers for Rs.      9.54 Crore are wanting upto March, 2005.  In spite of repeated reminders to DTOs, the copies of Wanting Vouchers with the certificate of payments have not been received from the treasuries.  As it is possible that the vouchers might relate to fraudulent payments,  it would be necessary to get the vouchers and verify their accuracy.  Wanting vouchers involving huge payments of above Rs. 50 lakh related to Guntur , Adilabad, Nellore , Ranga Reddy  and Prakasham districts.



1.5       Delay in receipt of Monthly Accounts



There has been significant improvement in receipt of Monthly Accounts in this office.  However, delay in receipt of monthly accounts particularly for the month of 3/2005 ranging from 1 to 11 days were noticed in respect of all District Treasuries.


1.6. Transactions on behalf of the Reserve Bank


Transactions connected with charges for remittance of treasury which are payable by the Reserve Bank of India are collected together and an account is rendered therefor every month with supporting vouchers.  The entire amount under this head is eventually recovered from the RBI.  For this, it has to be ensured that the debits are supported by vouchers in the prescribed form.


Due to incomplete submission of vouchers by the Treasuries along with the monthly account, claims could not be sent for the full amount for realization from Reserve Bank of India .  Even in respect of vouchers submitted, some vouchers were not properly documented as prescribed by Reserve Bank of India such as  i) copy of invoice of remittances issued by bank authority
ii) copy of remittance order / Diversion order issued by the D.T.O
iii) Certificate to the extent that bill has not been claimed / drawn before
iv) Original money receipt with revenue stamp should be enclosed. Due to non submission of above documents by the DTOs, RBI rejecting the claims and suspense head remain uncleared.  Due to non-observance of the correct procedure by the Treasuries, the amount outstanding under suspense head is increasing gradually.


Defects and other irregularities noticed during inspection of the District Treasury Offices and Sub-Treasury Offices during the year 2004-2005




During the year 2004-2005 all the 23 District Treasuries, 213 Sub-Treasuries (170 Annual and 43 Biennial) and 9 Assistant Pension Payment offices were inspected by the Treasury Inspection Wing of Accountant General (A&E) Office. 


2.1       Outstanding Inspection Reports and Paras:


245 inspection reports with 1546 paras have been issued during the year. 1053 reports with 4150 paras of the last five years are outstanding to the end of 31.03.2005.  The paras included in these reports relate mainly to


1)        Excess Payment of pensionary benefits under six categories as indicated below:

(a)         Payment of EFP beyond time limit

(b)        Excess payment due to wrong consolidation from time to time

(c)        Excess payment of pension due to inadmissible relief

(d)        Excess payment on account of allowing incorrect weightage 

(e)        Excess payment due to non-recovery / less recovery of Commuted Portion of Pension

(f)         Excess payment due to payment of Full pension instead of half share of Family pension to each of two widows of deceased Government Servant.


2)           Incorrect lapsing of Funds/ Deposits under Tenth Finance Commission / Eleventh Finance Commission

3)           Non- lapsing of Deposits under G.O.Ms.No.43 Fin/Plg (W&M) Dt:16.09.99 read with Art. 271(iii) of APFC Vol.I

4)           Heavy stock of stamps for which there is no demand, spoiled stamps and their destruction etc.

5)           Non deduction of Income Tax at source from pensioners

6)           Incorrect operation / irregular operation of PD Accounts.

7)           Incorrect maintenance of GPF A/c.s of Class-IV employees in District Treasuries.

8)           Irregular withdrawal of amounts from CSS account by Zilla Grandhalaya Samstha

9)           Non-clearance of balances under C.D.Act, 1974.

10)      Non-adjustment of deposits under User Charges to the Departmental Revenue Head

11)      Delay in adjustment of AC bills with special reference to Mid-day Meals Scheme

12)      Adverse Balances in P.D.Accounts

13)      Non-withdrawal of Safe Custody Articles lying for more than 3 years and recovery of penal rent thereon.

14)      Non-receipt of Certificates of Acceptance of Balances from the Administrators and

15) Non-compliance of instructions issued under G.O.Ms.No.315 Fin/ Plg (TFR) dt:03-05-2003 and G.O.Ms.No.507 Finance Department (TFR) dt:10-4-2002.


As seen from Treasury wise details of outstanding paras during last 5 years the District Treasuries including Sub-treasuries of Kurnool, Krishna & Chittoor districts have  the maximum outstanding Inspection Reports  with 300, 272 & 259 paras outstanding respectively.

Even though the replies to the Inspection Reports have to be furnished within a month from the date of receipt of report, it is noticed that replies are not received in most of the cases in time.

During inspection of the offices, pending paras are reviewed. Based on the replies given by the Head of the office, some paras are recommended for deletion after due verification of replies. Where replies are inadequate or incomplete, the paras are continued in the inspection reports.

Audit Committee constituted by the Accountant General (A&E), AP, Hyderabad in 11/04 has cleared 331 (Krishna 106 paras & Guntur 225 paras) outstanding paras during the year 2004-05.

Early rectification of irregularities pointed out by the inspection parties and rectification of omissions in the records contribute to the efficient working of the system and a quantitative improvement in accounts. Hence, there is need on the part of Treasury Officers and Sub-Treasury Officers to promptly respond to the inspection reports.

2.2             Pensions


2.2.1:  During the course of inspection of 8 District Treasuries 98 Sub-Treasuries and 6 Pension Payment Offices, excess payment of Rs.59.56 lakh made to pensioners was noticed.  Excess payment of pension occurred under the following SIX categories.

i)                  Payment of enhanced Family Pension beyond time limit - Rs.16.97 lakh.


ii)                Irregular consolidation of pension from time to time-Rs.17.88 lakh

iii)            Excess payment of Pension due to inadmissible relief - Rs.11.36 lakh

iv)              Excess payment of pension due to non-recovery or short recovery of CPP - Rs.9.30 lakh.


v)                 Excess payment of pension due to inadmissible weightage – 0.94 lakh.


vi)              Excess payment of pension due to payment of full pension to each of the widows instead of Half share of Family Pension – Rs. 3.11 lakh.

Similar observations were mentioned in previous reports also and details of  such observations are given below.



2001-2002                   63-05

2002-2003                   27-34

2003-2004                   38-21

2004-2005                   59-56



Above observation were also figured in Audit Reports of C & A.G for years 2001-2002, 2002-03 & 2003-04.


2.2.2   Pensions Undrawn for more than 3 years.


   As per SR.87(a) of Treasury Rule 16 of A.P.T.C. Vol-I, pension not drawn for over three years ceases to be payable. The Treasury Officer should examine the Disbursers Halves (DHs) once in half year and all such Disbursers Halves should be detached and sent to the Accountant General or Local Fund Authorities as the case may be with a statement.  523 Cases of pensions undrawn for more than 3 years noticed during the inspection of 18 STOs & 6 APPOs and   Action as prescribed had not been taken on these.


2.2.3   Irregular Payment of pensions


I.                    In APPO, Malakpet, pension is being paid to 92 pensioners without Disburser’s Half of Pension Payment Orders. 

II.(A) In APPO, Chandrayanagutta, two pensions are being paid to Smt. Venkatamma, vide SP Pension PPO No. 06-SGC-048081 and FP on HQRS/SP-V23922/FP.  In the above case DA should be regulated on only one pension.

II (B) Drawal of two pensions by a minor from two different banks under two  different guardians was noticed in APPO, Chandrayanagutta. Two  pensions are being paid to a single minor person by two different banks

2.3       Deposits


2.3.1   Non-Lapsing of Deposits unclaimed for more than three years


As per the provisions of Art. 271(iii) of A.P.F.C. Vol-I, certain classes of Civil Deposits (Revenue Deposits, Election Deposits etc.,) unclaimed for a period of more than 3 complete financial years should lapse and be credited to Government Account. 

The deposits pending unclaimed for more than three years due for lapsing work out to Rs. 3.31 crore. This is being pointed out regularly in Inspection Reports of every year.  Action is however yet to be taken by Treasuries.

Necessary action should be taken to credit the same to the appropriate Government Account immediately.

2.3.2       Personal Deposit (P.D) Accounts


1.     Incorrect operation of P.D.Accounts:


(a) Incorrect lapsing of Tenth Finance Commission Grants and Eleventh Finance Commission Grants released by Government of India to the extent of  Rs. 730.19  lakh (Vide Annexure-2.11)


In terms of para 5.2 of the guidelines for utilization of Local Bodies grants recommended by the Eleventh Finance Commission, issued by Government of India in July 2000, any unutilized amount of the grants released by the Central Government on the recommendation of Tenth Finance Commission would be adjusted from the grants to be released on the recommendation of the Eleventh Finance Commission.  Similarly the Eleventh Finance Commission grants released by Government of India should not be lapsed and credited to the State Government Account.  The Tenth Finance Commission grants released by Government of Andhra Pradesh in favour of various State local bodies were credited to the Deposit Head of Account 8448-109-01 by the treasuries.  During verification of the Deposit registers and other relevant records maintained in 16 districts, it was noticed that unutilized Tenth Finance Commission Local Bodies grants/ Eleventh Finance Commission Grants to the extent of Rs.730.19 lakh were lapsed and credited to Miscellaneous Revenue Account of Government of Andhra Pradesh under 0515-800-79 during the years 2000-01 to 2004-05, instead of adjusting these amounts against the grants released on the recommendations of the Eleventh Finance Commission as per the guidelines issued by Government of India.


Thus, the grants released by the Government of India were incorrectly lapsed and credited to A.P State Govt. Revenue Account.


2.      Incorrect drawal of Rs. 38.07 Crore on selfcheques from PD Account by Project Officers of ITDA/DRDA


In terms of Article 3 of AP Financial Code, no amount shall be withdrawn from PD Account unless the amount is immediately required to be paid for goods and services received / works done. Further, in accordance with the orders issued by Government of AP in G.O.Ms.No.43, Finance & Planning (W&M) Department, dated 22.04.2000, no self-cheque from Deposit Account shall be permitted except for salaries and petty office expenses.

During inspection of 3 DTO s and 3 STOs, it was noticed that Project Officers of ITDA/DRDA have withdrawn Rs. 38.07 Crore through self-cheques and deposited  the amounts outside Government Accounts in contravention of the Codal provisions and Government orders.


2.3.3       Adverse balance to the tune of Rs 311.93  lakh



Cases where adverse balance occurred in PD Accounts of Administrators amounting to Rs. 311.93 lakh at different points of time are given in Annexure-2.13.  The adverse balances are required to be cleared and interest as well as penal interest collected as per rules.


2.3.4   Non Receipt of Certificate of Acceptance of Balances from the Administrators of P.D. Accounts


As per provisions contained in Art.126 of A.P.A.C. Vol-II read with G.O.Ms.No.293, Finance Department Dt: 20.11.78, Administrators operating Personal Deposit Accounts are required to verify balances in their accounts annually and to certify the same by 30th September every year. The Treasury Officer in turn has to record the certificate in his office duly reconciling the differences if any between the balances furnished by the administrators and the balances appearing in the Treasury Account of March every year.  


About 12.64 % of total Certificates of Acceptance of Balances are due from Administrators operating deposit accounts in various district treasuries / Sub-treasuries.


2.3.5: Non Lapsing of  Category ‘C’ deposits  under G.O.Ms.No.43 Fin. & Plg. Dept. Dt: 22.04.2000.


In case of deposits falling under category ‘C’ lapsable deposits, all funds received during a financial year and remaining unspent shall lapse by 31st March of the next financial year.


Accordingly all funds released on or before 31.03.2003 and credited to Category ‘C’ lapsable deposit Heads of account and remaining unspent as on 31.03.2003 shall lapse on 31.03.2004 in terms of Govt. Memo No. 709-A/406/A2/W & M/2002 Dt: 02.05.2002 of Finance ( W & M ) Department, Govt.of A.P.


2.3.6:  Irregular operation of PD Account in treasuries by Executive Engineers  (Panchayat Raj) and Executive Engineers (Rural Water Supply)


In terms of G.O.Ms.No.60 Fin.&Plg (FW BG) Dept. Dt: 30.03.2001 and further instructions issued by Government, all  funds released by Government for Panchayat Raj & R W S Engineering works have to be operated by PAO (Works).  Thus the funds released by the Government for works shall cease to be credited to PD Account and the balance held in PD Accounts has to be remitted/credited to Government Account.


In the DTOs/STOs listed in Annexure –2.16, an amount of Rs.4.17 Crore held under PD Accounts by Executive Engineers (Panchayat Raj) and Executive Engineers (Rural Water Supply) were not surrendered to PAO (W) after 01.04.2001 despite  specific instructions issued.








2.4:      AC bills drawn under Mid-day meals scheme



            In terms of G.O.Ms.No.48 Edn. (Prg-I) department, Govt. of AP, dt:19-4-2003, the implementing Agency has to provide the bill/invoice indicating the cost of serving mid-day-meals by multiplying the number of children fed with cost prescribed for each school working day.  At the end of the month, the implementing Agency will submit a detailed voucher indicating the total amount to be paid to the Agency based on the number of Children actually availing the facility and the same shall be countersigned by the Chair person of the executive committee at school level and Head Master of the concerned school by 3rd of the succeeding month to the MRO who is the drawing and disbursing officer.


            The Commissioner and Director of School Education, Hyderabad   shall distribute the budget to the District Collectors after obtaining authorisation from the Director of Treasuries and Accounts, Hyderabad .  The District Collector, shall distribute the funds to the MRO, concerned as per requirement to enable them to prefer claims at Sub Treasury concerned for making payment to the implementing Agency.


             However review of AC Bills Watch Register maintained by DTOs,  revealed that MROs have drawn huge amounts on A.C.Bills for implementing mid-day meals programme which was in contravention to the prescribed norms under G.O.Ms.No.48 Edcuation (PRG-I) dt:19-4-2003.



2.5. Non deduction of Income Tax at source from pensioners



Under section 192 of Income Tax Act 1961 any person responsible for paying any income chargeable under the head “salaries (including pension)” shall at the time of payment deduct Income Tax on the amount payable at the average rate of Income Tax computed on the basis of the rates in force for the financial year in which the payment is made on the estimated income of the assessees under this head for that financial year.  Being the pension disbursing authorities, the STOs/ APPOs have to deduct Income Tax at source from the pensioners whose pensions are paid through the concerned Treasury/APPO.


During inspection of 73 Sub Treasuries and 1 DTO consisting of 16 Districts during 2004-05, it was noticed that Income Tax of Rs.  26.96 lakh was not deducted at source from 808 pensioners whose income from pension for the year 2003-04 (Assessment year 2004-05) was chargeable to Income Tax after admissible Standard Deduction and tax rebate for women-assesses and Senior Citizens


2.6:     Stamps


2.6.1:  Retention of huge stock of Stamps far in excess of requirement



Retention of huge stock of stamps in the Treasuries in excess of the requirement is contrary to the provisions of Instructions 7 and 14 under Treasury Rules 4 and 5 respectively of APTC Vol-I.  Heavy stock of stamps is likely to cause pressure on the limited space available in the strong room and other administrative problems like difficulty in counting during physical verification, stamps being damaged in stock in strong room. In 9 DTOs and 32 STOs inspected during 2004-05, it was noticed that stamps worth Rs.177.88 crore were held in stock without demand.


Even though existence of huge stocks and in some cases lack of demand for more than three years are being pointed out in the inspection reports from time to time, effective action is yet to be taken by the department.  Further, Government of Andhra Pradesh instructions issued under G.O.R.T.No.899  Revenue (Registration-I) Department, dt:9-11-2004 for destruction of stamps worth Rs. 500/- and above have to be implemented by the department.


2.6.2:  Huge variation in receipt under sale of stamps and actual sales



It is observed that there is a huge variation in sale of stamps shown under SA 23 and actual sales as per +/- memoranda in District Treasuries Nizamabad, Ananthapur, Prakasham and Visakhapatnam to the extent of Rs.8.41 Crore.


In this connection DRO/SRO s may be instructed to properly  exhibit the details of stamp account indicating the split figures for both i.e., sale out of direct receipt and sale out of the treasury supplies and  to also indicate closing stock on hand in respect of stamps in all the above treasuries.


2.7:     Irregular withdrawal of amount from CSS Accounts by the Zilla Grandhalaya Samstha



            As per  existing procedure,  arrears of DA and GPF subscription in respect of employees who do not hold GPF account or whose allotment of account number is under process are being accounted for by treasuries under MH (03) CSS, NH 8009- SPF, for eventual transfer to their regular GPF Account on ascertaining allotment of account number.


In this connection, following observations were made in two District Treasuries on non-maintenance of CSS Account of remittances and withdrawals also in respect of Zilla Grandhalaya Samstha resulting in excess drawal / double drawal of amounts from the CSS Account.


DTO, Nalgonda:  Zilla Grandhala Samstha of Nalgonda District has withdrawn an amount of Rs.1416704/- as against its remittances balances of Rs.857017/-resulting in excess withdrawal of Rs.559687/- from CSS Account.


The scrutiny of bill for Rs.634272/- claimed in 11/2004 by the Secretary, Zilla Grandhalaya Samstha, Nalgonda revealed that the amount was withdrawn by contra credit by transfer to 8448- Library Fund.  It was observed that necessary noting of payment of above amounts in the original receipts records such as sub account etc was not made.


DTO, Karimnagar: Zilla Grandhalaya Samstha Karimnagar has withdrawn an amount of Rs.702785/- from CSS account towards DA arrears / GPF subscriptions in addition to already withdrawn amount of Rs.967741/-(amount as per remittance account) from the account.  Further, an amount of Rs.370006/- was also withdrawn in December, 2003 towards interest accrued  on the remittances madeby the samstha from time to time for the period 1994 to 2003 by debit to “2004-interest” and credit to “8448-120-03 Grandhalaya Samstha” local funds.  The adjustment was made without the approval of Govt. of Andhra Pradesh and concurrence from the Accountant General, A.P.

Thus, the inaccuracy in maintenance of CSS account resulted in drawal of Rs.702785/- in addition to Rs.967741/- (remittance amount) and of Rs. 370006/- towards irregular drawal of interest on accounts maintained under CSS account.

2.8:     Non-clearance of CSS balances items and improper maintenance of Account


            Arrears of DA admissible should be credited to CSS Account if GPF account Numbers are not allotted and in all such cases separate register should be maintained.  The DA arrears have to be credited to MH “8001-State Provident Fund – MH 101-General Provident Fund S12-007-Compulsory Saving Schemes”  Public Account to be transferred to the “General Provident Fund Account” whenever GPF subscriber’s number is allotted and Account opened.


In this connection following observations were made.


1.         DDO wise CSS credits were not found on record.

2        As and when CSS clearances were made, necessary adjustment entries were not made in the record.

3.         Sub-treasury wise CSS adjustments and its clearance (Month wise) were not found on record


In this connection, verification of CSS records of DTO, Kadapa from 4/1996 revealed that an amount of Rs.180.15 lakh was adjusted under 8001-101-03 out of which an amount of Rs.67.98 lakh is stated to have been cleared leaving a balance of Rs.112.17 lakh still pending for clearance.


In DTO, Medak, from 04/2003 to 03/2004, it is observed that an amount of 3.31 lakh is still pending  clearance from CSS Account.


2.9       Security


2.9.1       Non obtaining of Strong Room Fitness Certificates on due date


In terms of Instruction 4(c) under Treasury Rule 11 of A.P.T.C. Vol. I every strong room attached to the treasury / sub-treasury should be inspected annually by the Executive Engineer(R&B) or his subordinate deputed for the purpose and the Treasury Officer should obtain a certificate of Safety of Strong Room from the Inspecting Officer after each annual inspection.


A list of 66 Offices where strong room fitness certificates for the year 2004-2005 were not obtained by the due date i.e. on 15/4/2004 and also till the date of Inspection conducted by this office,


2.9.2       Safe custody articles not withdrawn after 3 years and non-collection of penal rent



In terms of Instructions 21 and 22 under TR.11 of A.P.T.C. Vol-I read with G.O.Ms.No.282, Fin. & Plg. Dept. Dt: 21.11.91 and further read with D.T.A.'s Memo No. M3/15409/89 Dt: 02.12.91, authorities depositing articles for safe custody in the Treasury should withdraw the articles before completion of 3 years for verification and if necessary re-deposit the same duly affixing new seals. In cases of default penal rent @ Rs. 25/- per annum per article in case of Government Departments and @ Rs. 30/- in case of local bodies should be remitted into Government account by the authorities concerned if such articles are not withdrawn even after a lapse of 3 years.


A list of Treasuries where    1287 articles have not been withdrawn for more than 3 years,


2.10:   Irregularities noticed in maintenance of GPF Accounts of Class-IV employees


(i)        G.P.F. credits of Class-IV employees amounting to Rs.168.95 lakh were not posted and accounted for       properly in 7 District Treasuries. 


(ii)      GPF Debits of Class-IV employees such as Temporary Advance and Part Final Withdrawal were not posted in their accounts in 5 District Treasuries amounting to Rs.24.80 lakh. 


(iii)     Minus balances exist in GPF Accounts due to over drawal of amounts in excess of available balances observed in Medak, Prakasham, Vizianagaram, Kurnool, Karimnagar and Chittoor Districts and penal interest is to be recovered from the subscribers from all these cases.  


(iv)      GPF Accounts not in operation


In the following DTOs GPF Accounts were not in operation for more than 12 months and no transactions were noticed.


            DTO, Medak                            14 accounts


            DTO, Vizianagaram     40 accounts


            DTO, Chittoor                       26 accounts


            DTO, Prakasham                    15  accounts



The accounts have to be reviewed and action taken for closure of the accounts.



2.11:   Non-renewal of F.G.bonds for further period



As per Articles 276 to 293 of APFC Vol.I read with G.O.Ms.No. 176, Fin & Plg Dt: 22.10.92 and G.O.Ms.No. 262 Fin. & Plg. Dept. Dt: 26.10.92 the treasury shall obtain personal security Bond for the amounts mentioned below to safeguard the interest of Government against loss or misappropriation etc., that may be caused due to negligence and fraud on their part.


S.No.               Designation                Security Amount



01                    ATO                                        25,000


02                    STO                                         15,000


03                    DLO(SA)                                10,000


04                    Shroff                                       6,000



A review of FG Bond Register maintained in the DTOs / STOs revealed that the validity period of FG Bonds of the officials had expired and the same were not renewed.


2.12:   Miscellaneous  Defects / Omissions noticed during Treasury Inspection:




1)        As per para 19.6 of A.P. Budget manual read with Govt. Memo.No. 22442/A/121/TFR/97, F & P Dept., Dt: 04.09.97, the departmental expenditure/ receipt figures are to be reconciled with those of Sub-Treasury/Treasury every month. It has been observed in general that the reconciliation of receipts/expenditure in respect of many D.D.O.s is in arrears ranging from 3 months to 12 months.

                        D.T.O must take necessary action to reconcile the figures with DDOs every month so as to ensure that there are no misclassifications and to check the fraudulent cases, if any, occurred therein.


(2)       During the inspection of various District treasuries / Sub Treasuries it has been observed in general that bi-weekly certificates (as per instruction 33  under TR-16 of APTC Vol-I read with G.O.Ms.No.172 of Fin & Plg Dept. Govt. of A.P. dt:6-6-1979) are not being appended in the Treasury Bills Registers  by the Drawing and Disbursing Officers.  It is essential that Drawing and Disbursing Officers are required to review the Treasury Bill  Register bi - weekly and issue certificates as result of review thereon to prevent presentation of fraudulent bills at treasury.   Treasury Bill  Registers pages should be reviewed and certificate recorded duly indicating  the number of pages.   DDOs ensure that bill are presented through this register which is in use for presenting the bills.  DDOs also  certify that all the bills entered in the register are encashed or returned and completely accounted for.  Hence the review and issue of bi-weekly certificates by DDOs is very essential to be recorded in Treasury  Bill Register.


(3)       Non observation of instructions stipulated in G.O.Ms.No.315   Finance (TFR) Department,  Dt:03.05.2003



The Government of Andhra Pradesh, issued instructions vide G.O.Ms.No.315  Finance (TFR) Department Dt: 03.05.2003 to implement the recommendations of the working group drawn from the office the Comptroller and Auditor General  of India, Office of the Controlller General of Accounts, Finance Department of four state Governments and Accountants General Office besides officials from Reserve Bank of India and State Bank of India on
03-05-2003 which are as follows:


1.         P.D.Account cheques/ Bills passed along with list of cheques issued/ bills passed by the Treasury shall be sent to bank by Treasuries in a locked box, a key of which is available with the bank.


2.         The Government bank renders daily receipts and expenditure scrolls to Treasury through a pass book which shall be sent in a locked box.  There should be two sets of pass books to be maintained for use on alternate day.  Revised format is prescribed for this passbook now (Annexure – I) “A” side of the pass book will be filled in by bank, “B” side of the pass book has to be filled up by the Treasury Officer and Bank Manager initials in the last column.


In case of any discrepancy in any of the voucher or vouchers, the Treasury officer has to record only the number of vouchers and amount that tallied.  For the vouchers not tallied mentioned as “Memorandum of Errors(MOE) (Annexure- II) issued for – number of vouchers for amount in the remarks column


Three copies of the ‘MOE’ has to be prepared, two copies of the same along with relevant instrument (Cheque/Bill/ Challan) and the scroll and pass book may be sent back to the bank by the Treasury Officer duly taking acknowledgement of the Manager on the 3rd copy of ‘MOE’ which shall be preserved for 3 years by the Treasury Officer.  This shall be done immediately.  If the total scroll is acknowledged, issue of ‘MOE’ at a later date will not serve any purpose.


It was observed that the procedure laid down in  G.O.Ms.No.315 Finance (TFR) Department, Dt: 03.05.2003 is not being followed in the following Treasuries and action may be taken to scrupulously follow the procedure in the future to ensure that number of vouchers & amount tallied and essentially, memorandum of errors has to be checked for reconciliation or to detect any fraudulent vouchers contained therein.




Vijayawada (W)








(4)       Non-compliance  of instructions issued in G.O.Ms.No.507 Finance (TFR) Department, dt:10-4-2002 for      authorizing further release of amounts to DDOs/PD Account      Administrators


The Government of A.P in their G.O.Ms.No. 507 Finance (TFR) Department Dt: 10.04.02 ordered that every DDO shall furnish the list of Bank Accounts operated by him and cash balances available therein pertaining to the specific scheme for which further funds are proposed to be drawn from the Treasury.  The concerned Treasury shall not authorize any further releases till the certificate in Annexure IV has been given and 75% of the amount drawn is already spent or credited back to the Treasury.


Similarly, the Treasury Officer is required to obtain the information in  Annexure IV & V before any further amounts are credited to the deposit account or before any drawals are made from the PD Account in case endorsements of Treasury Officer are required to be made on the PD Account cheques.  The instructions given above regarding furnishing of information of balances in Bank deposit shall equally apply to the PD Account administrators.


On scrutiny of relevant records in DTOs/STOs it was observed that list of bank accounts operated by DDOs / PD Account Administrators were not available with the Treasury and the balances available in the accounts duly certified by the bank pertaining to specific scheme were not obtained before authorizing the further release of amounts on the scheme in the following DTOs / STOs which may lead to improper utilization of amount and diversion of amounts already drawn and credited to P.D.Account.



Name of the DTO                              DDO/ PD A/c.Administrator


DTO, Ongole                         DRDA, Ongole

DTO, Warangal                       ITDA/ Decentralisation of planning in District Stabilization Fund

DTO, Guntur                          Chief Planning Officer, DRDA

STO, Polavaram                     ITDA/ KR Puram

DTO, Kadapa              DMO, District Population Stabilization Fund



2.13:   Amount of User Charges held under Deposit Account without transferring the same to the relevant receipt Head of Account



            In terms of orders issued by Government of AP in G.O.Ms.No. 170 F&P (FWBG) Dept Dt: 23.04.01 user charges levied and collected by various departments were remitted to Government by credit to “8443-Civil Deposits – 800 – Other Deposits” under Sub-heads and detailed heads allocated to the departments.  Later Govt.of A.P.revised the accounting system of user charges in G.O.Ms.No. 601  (FWBG) Department Dt: 22.05.02  stating that the amounts collected as user charges shall be credited to the relevant Receipt Head of the department and expenditure out of the user charges should be made out of the Budget provision against the relevant expenditure head based on the above Government Orders.  The DTA has issued procedural instructions to be followed by the Treasuries for accounting the user charges.  In circular Memo No. M2/6171/2001 Dt: 27.06.02, the instructions, interalia, indicated that the user charges collected and remitted to deposit head of account shall be credited to the respective departmental head of account under Consolidated Fund indicated in the Annexure – II of the G.O.Ms.No.601 (FW BL) Department, Dt: 22.05.02.  The User Charges remitted under deposit head of Account from 01.04.02 onwards have to be transferred to relevant Receipt Head of account by preferring necessary transfer entries / alteration memos in the accounts for June, 2002.

            During the review of the Deposits accounts relating to User charges maintained at six District treasuries, it was observed that an amount of Rs.4.08 Crore pertaining to User charges held under Deposit account was not transferred to the relevant receipt head of account, which may lead to mis-utilisation  of amount as It is outside Consolidated Fund of State and not under financial control.


2.14:   Non-clearance of outstanding balances under C.D.Act 1974


During the inspection of Treasuries, it was observed that amounts collected under CD Act 1974 , (1) ADADA Deposit (Old) 2) ADADA Deposit (New)) were still pending and the amounts  are to be lapsed to the Government of A.P.  The Director of Treasuries was requested to take up the matter and seek permission from Government of A.P for lapsing of CD Funds outstanding for long time.         




FROM 01.04.2004 TO 31.03.2005



            The PAO, Hyderabad , has been functioning from 01.10.71. The current review covers the period 2004-05.  The following deficiencies were noticed during check of the accounts of PAO.


3.1.      Wanting vouchers


            There are no wanting vouchers during the year 2004-05.  However, Vouchers wanting upto 1991-92 (detailed in the Annexure –3.1 ) to the extent of Rs.32.11 crore as called for in previous reports are still awaited.



3.2.      Theft of  vouchers in the PAO's office



            It is stated that due to theft in PAO's office in 11/89, vouchers for Rs.17.58 crore were lost.  In this connection Government of Andhra Pradesh (Finance and Planning Department) have been requested persistently to issue instructions to PAO, Hyderabad , to furnish certificate of payment in respect of the vouchers lost in theft.  The same are still awaited.


3.3.      Drawal of funds on proforma invoice / estimate



            In 3 (three) instances funds of Rs. 79.17 lakh were drawn on Proforma Invoice by different DDOs to avoid lapse of funds at the fag end of the Financial Year 2004-05 as detailed in Annexure- 3.2


3.4.      Drawal of amounts to avoid lapse of grant



            In 5 cases, transfer of funds to PD account to avoid lapse of Grant to the tune of Rs.181.60 lakh were noticed at the fag end of the financial year 2004-05


3.5       Making payment for work done without recording measurements.



An amount of Rs. 43,100/- vide voucher No.137 & 138 Dt: 18.06.03 was drawn by RTA, Hyderabad (MH 2041).  The claim was admitted though there was no recording of measurements for the work done.  This matter was brought to the notice of PAO vide Lr.No. PAG(CA)/RAO/RA3/I   Dt: 30.07.04.


3.6.      Excess payment of Sales tax



            In five instances excess payment of sales tax by different DDOs to the tune of Rs.1.57 lakh was noticed details of which were



3.7.      Non-recovery of Profession Tax



            Non-recovery of profession tax was noticed in 172 cases.


3.8.      Reimbursement of Cost of Inadmissible medicines



            In 159 cases Medical Reimbursement of inadmissible medicines amounting to Rs.  9.85 lakh was noticed and the same was communicated to the Pay and Accounts Officer.


3.9.      Foreign Travel claims-excess DA claimed



            An amount of Rs. 6.51 lakh was paid in excess towards DA and other charges in 26 Foreign Travel claims.  The same was communicated to PAO for recovery.


3.10.   Travelling Allowance claims:



            Irregularities like reimbursement of agency charges, payment of excess DA amounting to Rs 1.13 lakh were noticed in 52 TA claims and the same was  communicated to PAO.


3.11.   Irregular LTC Claims:



Irregularities in 15 LTC claims of Rs. 0.94 lakh were noticed and the same were communicated to the PAO

Principal Accountant General (A&E), Andhra Pradesh, Hyderabad

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