Session - 3 Internal Controls and Registers in Treasury Regional Training Institute, Ranchi Structured Training Courseware on Treasury Inspection

Session - 3Session - 3Internal Controls and Registers in Internal Controls and Registers in

TreasuryTreasury

Regional Training Institute, RanchiRegional Training Institute, RanchiStructured Training Courseware on Structured Training Courseware on

Treasury InspectionTreasury Inspection

January 2005January 2005 RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 3/2

Learning ObjectivesLearning Objectives

At the end of the session, the participants At the end of the session, the participants will be able towill be able to– Define internal controlsDefine internal controls– List and explain different types of controls, in List and explain different types of controls, in

particular controls relevant to a Treasuryparticular controls relevant to a Treasury– Describe the important registers and records Describe the important registers and records

maintained at the Treasury and their nature and maintained at the Treasury and their nature and purposepurpose


Internal Control – Institute of Internal Internal Control – Institute of Internal Auditors’ DefinitionAuditors’ Definition

Process within an organisation designed to Process within an organisation designed to provide reasonable assurance regarding provide reasonable assurance regarding achievement of the following primary objectivesachievement of the following primary objectives– Reliability and integrity of informationReliability and integrity of information– Compliance with policies, plans, procedures, laws and Compliance with policies, plans, procedures, laws and

regulationsregulations– Safeguarding of assetsSafeguarding of assets– Economical and efficient use of resourcesEconomical and efficient use of resources– Accomplishment of established objectives and goals for Accomplishment of established objectives and goals for

operations or programsoperations or programs


Types of Internal ControlsTypes of Internal Controls

PreventivePreventive DetectiveDetective DirectiveDirective


Types of Internal Controls – Another Types of Internal Controls – Another CategorisationCategorisation

Organisational controlsOrganisational controls Rules, Regulations and PoliciesRules, Regulations and Policies Procedures and InstructionsProcedures and Instructions PersonnelPersonnel Accounting and BudgetingAccounting and Budgeting Monitoring and ReportingMonitoring and Reporting


Main Internal and External Controls Main Internal and External Controls in Treasuries in Treasuries

Participants to suggest examples for each Participants to suggest examples for each CategoryCategory– Internal ControlsInternal Controls

Organisational ControlsOrganisational Controls Rules and RegulationsRules and Regulations Procedures and InstructionsProcedures and Instructions PersonnelPersonnel Reporting and MonitoringReporting and Monitoring

– External ControlsExternal Controls


Review of Internal ControlsReview of Internal Controls

AdequacyAdequacy– Appropriately designed to provide reasonable Appropriately designed to provide reasonable

assurance regarding achievement of assurance regarding achievement of organisational objectivesorganisational objectives

EffectivenessEffectiveness– Controls operating as intendedControls operating as intended


Treasury Registers and Records - Treasury Registers and Records - CategorisationCategorisation

Cash Book and related RegistersCash Book and related Registers Allotments and LOCsAllotments and LOCs Cheque-Drawing OfficersCheque-Drawing Officers Settlement with other GovernmentsSettlement with other Governments DepositsDeposits


Treasury Records – Categorisation Treasury Records – Categorisation (Contd.)(Contd.)

AC Bills and Ad-interim paymentsAC Bills and Ad-interim payments Valuables and sensitive paymentsValuables and sensitive payments Pay and Pension PaymentsPay and Pension Payments MiscellaneousMiscellaneous


Cash Book and Related RegistersCash Book and Related Registers

Complete account of cash transactions and book Complete account of cash transactions and book transferstransfers– ReceiptsReceipts– DisbursementsDisbursements

Non-banking TreasuriesNon-banking Treasuries– Immediate entries on authorisationImmediate entries on authorisation

Banking TreasuriesBanking Treasuries– Entered on the basis of bank’s daily accounts, after Entered on the basis of bank’s daily accounts, after

reconciliation withreconciliation with


Cash Book (Contd.)Cash Book (Contd.)

Register of Challans IssuedRegister of Challans Issued Register of Orders for PaymentRegister of Orders for Payment

Banking TreasuriesBanking Treasuries– Subsidiary RegistersSubsidiary Registers

Register of ReceiptsRegister of Receipts Register of PaymentsRegister of Payments

– Net Daily Receipt/ Payment posted into Net Daily Receipt/ Payment posted into Register of Reserve Bank DepositsRegister of Reserve Bank Deposits


Cash Book – Control IssuesCash Book – Control Issues

Erasures / Overwriting forbiddenErasures / Overwriting forbidden Accountant Accountant

– Personal responsibility for cash bookPersonal responsibility for cash book– Examines totalling of cash book and carry Examines totalling of cash book and carry

forward to subsidiary registers/ schedulesforward to subsidiary registers/ schedules

Totalling verified by another officer, Totalling verified by another officer, nominated by TOnominated by TO


Other Registers Related to Cash Other Registers Related to Cash BookBook

Register of Challans IssuedRegister of Challans Issued Register of Orders for PaymentRegister of Orders for Payment Register of ReceiptsRegister of Receipts Register of PaymentsRegister of Payments Register of Reserve Bank DepositsRegister of Reserve Bank Deposits

– Posted from Bank’s Daily ScrollsPosted from Bank’s Daily Scrolls– Verified with Bank Passbook on daily basisVerified with Bank Passbook on daily basis

Register of Adjustments by TransferRegister of Adjustments by Transfer– For items posted by TO through book transferFor items posted by TO through book transfer


Register of Allotment OrdersRegister of Allotment Orders

DDO-wise allotment order fileDDO-wise allotment order file– Allotment from Original GrantsAllotment from Original Grants– Allotment from Supplementary GrantsAllotment from Supplementary Grants– Re-appropriation OrdersRe-appropriation Orders

Critical to preventing excess drawal of funds Critical to preventing excess drawal of funds by DDOsby DDOs


Register of Letters of CreditRegister of Letters of Credit

Counterpart of Allotment Register for Counterpart of Allotment Register for Cheque-Drawing OfficersCheque-Drawing Officers– For preventing excess drawalsFor preventing excess drawals– Introducing greater financial control and Introducing greater financial control and

disciplinediscipline

Introduced in Bihar in 1983 for DDOs with Introduced in Bihar in 1983 for DDOs with cheque drawing powerscheque drawing powers


Register of LOC (Contd.)Register of LOC (Contd.)

Three Form RegisterThree Form Register– Form IForm I

Allotments received from HODAllotments received from HOD

– Form IIForm II LOCs issued to Sub-treasuryLOCs issued to Sub-treasury

– Form IIIForm III Progressive expenditure against allotmentProgressive expenditure against allotment

– For Banking Treasury / Sub-TreasuryFor Banking Treasury / Sub-Treasury Withdrawal against LOC watched by BankWithdrawal against LOC watched by Bank


Register of Consolidated Receipts-Register of Consolidated Receipts-cum-Schedules for Forest Cash cum-Schedules for Forest Cash

RemittancesRemittances Remittances by Forest Officers in the Remittances by Forest Officers in the

RegisterRegister– Also used for Consolidated Receipts sent to Also used for Consolidated Receipts sent to

DFOsDFOs

Register of Forest Cheques PaidRegister of Forest Cheques Paid– For recording funds supplied to Forest For recording funds supplied to Forest

Disbursing OfficersDisbursing Officers


Registers for Inter-Government Registers for Inter-Government SettlementsSettlements

Register of Adjustments between Central and Register of Adjustments between Central and State GovernmentState Government– For transactions under “Adjusting Account between For transactions under “Adjusting Account between

Central and State GovernmentCentral and State Government Register of Adjustments with other State Register of Adjustments with other State

TransactionsTransactions– For transactions under “Inter-State Settlement For transactions under “Inter-State Settlement

Suspense Account”Suspense Account” Separate Registers for Transactions with Separate Registers for Transactions with

Railways, P&T and DefenceRailways, P&T and Defence


DepositsDeposits

Revenue DepositsRevenue Deposits Civil Court DepositsCivil Court Deposits Criminal Court DepositsCriminal Court Deposits Personal Deposit Accounts / Personal Ledger Personal Deposit Accounts / Personal Ledger

AccountsAccounts– Under Consolidated Fund / Under Public AccountUnder Consolidated Fund / Under Public Account– Special Permission of Government & AGSpecial Permission of Government & AG– Should not be misused for transfer of money from Should not be misused for transfer of money from

Consolidated Fund to prevent lapse of fundsConsolidated Fund to prevent lapse of funds


Deposit RegistersDeposit Registers

Register of Deposit ReceiptsRegister of Deposit Receipts– Every item of receipt entered in this registerEvery item of receipt entered in this register– Daily Total carried to Cash BookDaily Total carried to Cash Book

Register of Repayment of DepositsRegister of Repayment of Deposits– Repayment of deposit recorded here, as also Repayment of deposit recorded here, as also

against original entry in Receipt Registeragainst original entry in Receipt Register– Daily Total carried to Cash BookDaily Total carried to Cash Book– Verification of identity, before repaymentVerification of identity, before repayment


Register of Personal DepositsRegister of Personal Deposits

Banking Accounts at TreasuryBanking Accounts at Treasury– Government OfficialsGovernment Officials– Autonomous /Quasi-Government BodiesAutonomous /Quasi-Government Bodies

Sanction of Govt. and AG’s ConcurrenceSanction of Govt. and AG’s Concurrence To be closed on 31To be closed on 31stst March, and balances March, and balances

transferred by –Debit to Expenditure Headtransferred by –Debit to Expenditure Head– Except for Accounts of Non-Governmental Except for Accounts of Non-Governmental

BodiesBodies


Maintenance of PDA RegisterMaintenance of PDA Register

Separate Ledger Page for each AccountSeparate Ledger Page for each Account– Daily Totals from each accountDaily Totals from each account

Carried to Register of Personal DepositsCarried to Register of Personal Deposits

– Daily Total carried to Cash BookDaily Total carried to Cash Book Account of Cash orders issued on Sub-Account of Cash orders issued on Sub-

treasuries maintained like a PDAtreasuries maintained like a PDA– Personal Ledger for each TreasuryPersonal Ledger for each Treasury– Payments at sub-treasury posted in PLA as Payments at sub-treasury posted in PLA as

repayment of depositsrepayment of deposits


Registers of Civil and Criminal Court Registers of Civil and Criminal Court DepositsDeposits

Receipts and Repayments based upon Receipts and Repayments based upon orders of Competent authorityorders of Competent authority

Details for each individual deposit to be Details for each individual deposit to be recorded in the Deposit Registersrecorded in the Deposit Registers


Register of Deposit of Local FundsRegister of Deposit of Local Funds

Administrator-wise Deposit RegisterAdministrator-wise Deposit Register– Separate Column for each fundSeparate Column for each fund

Accounts of Local Funds (including Accounts of Local Funds (including Municipal Funds) to be kept distinct from Municipal Funds) to be kept distinct from Personal Deposit AccountsPersonal Deposit Accounts


Plus-Minus Memoranda for Deposit Plus-Minus Memoranda for Deposit AccountsAccounts

At the end of each month, plus-minus At the end of each month, plus-minus memoranda formemoranda for– Revenue, Civil and Criminal Court DepositsRevenue, Civil and Criminal Court Deposits– Each Personal Deposit AccountEach Personal Deposit Account

To be rendered to AG, along with monthly To be rendered to AG, along with monthly accountsaccounts


AC Bill RegisterAC Bill Register

Register of Abstract Contingent Bills Register of Abstract Contingent Bills maintained to maintained to – Prevent drawal of future AC bills, without Prevent drawal of future AC bills, without

settlement of earlier billssettlement of earlier bills– Ensure submission of Detailed Contingent Bills Ensure submission of Detailed Contingent Bills

within 2 months, and in any case, before the within 2 months, and in any case, before the year-endyear-end


Register of Ad-interim PaymentsRegister of Ad-interim Payments

Separate register of ad-interim payments for Separate register of ad-interim payments for bills presented and encashed at the bills presented and encashed at the TreasuryTreasury

To be verified once a week by the CollectorTo be verified once a week by the Collector


Register of ValuablesRegister of Valuables

Receipt and return of chests, packets etc. Receipt and return of chests, packets etc. – Received for safe custody from other Received for safe custody from other

DepartmentsDepartments

Contents to be verified annually by the Contents to be verified annually by the Department and the TODepartment and the TO– Certificate of verification on the registerCertificate of verification on the register


Stamp RegistersStamp Registers

Stamp Register for keeping account of Stamp Register for keeping account of receipts, issues, and balance of stampsreceipts, issues, and balance of stamps

Sale Register, with names of Stamp VendorSale Register, with names of Stamp Vendor Register for receipt and disposal of unused/ Register for receipt and disposal of unused/

damaged stampsdamaged stamps Monthly check of stamp balances at Sub-Monthly check of stamp balances at Sub-

Treasuries by TOTreasuries by TO


Other Registers of Sensitive ItemsOther Registers of Sensitive Items

Register of Cheque BooksRegister of Cheque Books Register of Issue of Book of DrawalsRegister of Issue of Book of Drawals

– Bill Transit Register, used by DDO for sending Bill Transit Register, used by DDO for sending bills to Treasurybills to Treasury

Register of Padlocks and KeysRegister of Padlocks and Keys


Gazetted Salary Register and Guard Gazetted Salary Register and Guard FilesFiles

Pay slips of gazetted officers entered in Pay slips of gazetted officers entered in Salary RegisterSalary Register– To prevent overpaymentTo prevent overpayment

Separate Guard Files forSeparate Guard Files for– Payslips issued by AGPayslips issued by AG– LPCs of Gazetted OfficersLPCs of Gazetted Officers

To be cancelled, when they are transferredTo be cancelled, when they are transferred


Register of Pension Payment Orders Register of Pension Payment Orders (PPOs)(PPOs)

Maintenance of PPOsMaintenance of PPOs– Guard Files for PPOs in loose sheetsGuard Files for PPOs in loose sheets– In proper manner for book-form PPOsIn proper manner for book-form PPOs

PPO with full details to be entered in PPO PPO with full details to be entered in PPO RegisterRegister


PPOs - Control issuesPPOs - Control issues

Details of pension payment to be entered in Details of pension payment to be entered in Disburser Portion of PPOsDisburser Portion of PPOs

Proper identification of pensioner at the time Proper identification of pensioner at the time of paymentof payment– Pensioners not drawing pension for 6 monthsPensioners not drawing pension for 6 months


PPOs – Control Issues (Contd.)PPOs – Control Issues (Contd.)

Closing of cases for dead pensionersClosing of cases for dead pensioners– Return PPO to AGReturn PPO to AG

Correct classification of pension paymentCorrect classification of pension payment– Up to Sub-Head LevelUp to Sub-Head Level


Miscellaneous RegistersMiscellaneous Registers

Guard File of Specimen Signatures of DDOsGuard File of Specimen Signatures of DDOs– To be used for verification of signatures of To be used for verification of signatures of

DDOs on BillsDDOs on Bills

Register of Misclassification by the BankRegister of Misclassification by the Bank Token RegisterToken Register Register of Treasury Voucher SlipsRegister of Treasury Voucher Slips Register of Zamindari Compensation BondsRegister of Zamindari Compensation Bonds

Documents

Session - 3 Internal Controls and Registers in Treasury Regional Training Institute, Ranchi Structured Training Courseware on Treasury Inspection