Session - 5 Planning a Treasury Inspection and Areas of Focus Regional Training Institute, Ranchi Structured Training Courseware on Treasury Inspection

Session - 5Session - 5Planning a Treasury Inspection Planning a Treasury Inspection

and Areas of Focusand Areas of Focus

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

Treasury InspectionTreasury Inspection

RTI Ranchi – Structured Courseware on Treasury Inspection – Slide 5/2

Learning ObjectivesLearning Objectives

At the end of this session, the participants At the end of this session, the participants will be able towill be able to– Plan for a Treasury InspectionPlan for a Treasury Inspection– Identify major areas of audit focusIdentify major areas of audit focus– Draw up check lists for detailed examinationDraw up check lists for detailed examination


Objectives of Treasury InspectionObjectives of Treasury Inspection

Check/ Ensure that Check/ Ensure that – Procedures for preparation of initial accounts Procedures for preparation of initial accounts

are complied withare complied with– Accounts and records are completeAccounts and records are complete– Prescribed procedures for passing of bills are Prescribed procedures for passing of bills are

observedobserved


Objectives (Contd.)Objectives (Contd.)

– There are no fraudulent payments or depositsThere are no fraudulent payments or deposits– Proper system for reconciliationProper system for reconciliation– of balancesof balances– Proper Arrangements for custody/handling of Proper Arrangements for custody/handling of

valuablesvaluables

Treasury Inspection is not a substitute for Treasury Inspection is not a substitute for executive inspectionexecutive inspection


TI Party CompositionTI Party Composition

One Sr. AO/AOOne Sr. AO/AO Two AAOs/ SOsTwo AAOs/ SOs

– Senior shall be the party in-chargeSenior shall be the party in-charge

One Sr. Accountant/ AccountantOne Sr. Accountant/ Accountant


Periodicity and DurationPeriodicity and Duration

Bihar/ JharkhandBihar/ Jharkhand– Annual inspection of all Treasuries / Sub-Annual inspection of all Treasuries / Sub-

TreasuriesTreasuries Biennial for Non-Banking Sub-TreasuryBiennial for Non-Banking Sub-Treasury

– 7 working days for District Treasury7 working days for District Treasury– 3 working days for Sub-Treasury3 working days for Sub-Treasury


Periodicity & Duration (Contd.)Periodicity & Duration (Contd.)

OrissaOrissa– District Treasuries & Sub-Treasuries District Treasuries & Sub-Treasuries

categorised into ‘A’,’B’ and ‘C’categorised into ‘A’,’B’ and ‘C’– Annual inspection of all Treasuries/ Sub-Annual inspection of all Treasuries/ Sub-

treasuriestreasuries Biennial for ‘C’ category sub-treasuriesBiennial for ‘C’ category sub-treasuries

– Varying duration, depending on categoryVarying duration, depending on category 5 to 12 working days for Treasury5 to 12 working days for Treasury 3 to 4 working days for Sub-Treasury3 to 4 working days for Sub-Treasury


Scope of inspection – Focus AreasScope of inspection – Focus Areas

Accounts to AGAccounts to AG– Timely rendition Timely rendition – Missing vouchersMissing vouchers– MisclassificationMisclassification

Records/ RegistersRecords/ Registers– Daily posting of accountsDaily posting of accounts– Accountant’s Cash BookAccountant’s Cash Book– Treasurer’s Cash BookTreasurer’s Cash Book– Subsidiary RegistersSubsidiary Registers


Focus Areas (Contd.)Focus Areas (Contd.)

Custody-related & Valuables etc.Custody-related & Valuables etc.– Security of strong roomSecurity of strong room– Padlocks and keysPadlocks and keys– Treasury BalanceTreasury Balance– Custody of ValuablesCustody of Valuables– Stamps and Stamp papersStamps and Stamp papers– Receipt Books, Cheque Books, Books of DrawalReceipt Books, Cheque Books, Books of Drawal– Currency Chest and CoinageCurrency Chest and Coinage– Govt. SecuritiesGovt. Securities


Focus Areas (Contd.)Focus Areas (Contd.)

Deposits & Personal Ledger AccountsDeposits & Personal Ledger Accounts Register of RB DepositsRegister of RB Deposits Accounts of RBI RemittancesAccounts of RBI Remittances Withdrawal through LOCWithdrawal through LOC Payment of PensionPayment of Pension Establishment AuditEstablishment Audit Miscellaneous InstructionsMiscellaneous Instructions


Timely rendition of accounts to AGTimely rendition of accounts to AG

Submission of 1Submission of 1stst / 2 / 2ndnd LOP on due date LOP on due date Delay in rendering accounts to AG, because ofDelay in rendering accounts to AG, because of

– Delay in closing daily accounts of TreasuryDelay in closing daily accounts of Treasury– Late receipt of Sub-Treasury accountsLate receipt of Sub-Treasury accounts– Delay in receipt of bank scrollsDelay in receipt of bank scrolls

Resulting in non-inclusion in monthly accountsResulting in non-inclusion in monthly accounts– Incomplete picture of current accountsIncomplete picture of current accounts– Distorts next month’s accountsDistorts next month’s accounts


Rendition of accounts (Contd.)Rendition of accounts (Contd.)

TI party to conductTI party to conduct– In-depth analysis of reasons for delayIn-depth analysis of reasons for delay– Suggest remedial measuresSuggest remedial measures– Review measures taken by TO to avoid such Review measures taken by TO to avoid such

situationssituations


Missing VouchersMissing Vouchers

– Non-submission of vouchers/ schedulesNon-submission of vouchers/ schedules Amounts placed under SuspenseAmounts placed under Suspense

– TI Team toTI Team to Examine system followedExamine system followed Ensure no case of deliberate non-submission of Ensure no case of deliberate non-submission of

vouchers/ schedulesvouchers/ schedules In case of significant amounts, examine original In case of significant amounts, examine original

records in Treasuryrecords in Treasury


MisclassificationMisclassification

6-Tier Accounting Classification from 1/4/876-Tier Accounting Classification from 1/4/87– Major HeadMajor Head– Sub-Major HeadSub-Major Head– Minor HeadMinor Head– Sub-HeadSub-Head– Detailed HeadDetailed Head– Object Head of ExpenditureObject Head of Expenditure

TI team to see that Treasury accounts TI team to see that Treasury accounts reflect proper classificationreflect proper classification


Daily posting of accounts – TI Daily posting of accounts – TI ChecksChecks

Dates of bank discharge noted inDates of bank discharge noted in– Register of Orders for PaymentRegister of Orders for Payment– Register of Challans IssuedRegister of Challans Issued

Posting of receipts from bank scroll intoPosting of receipts from bank scroll into– Cash book directly orCash book directly or– Through subsidiary registersThrough subsidiary registers

Posting of net daily payment/ receipt toPosting of net daily payment/ receipt to– Register of Reserve Bank DepositsRegister of Reserve Bank Deposits


Daily Posting (Contd.)Daily Posting (Contd.)

Daily posting into RBD Register tallies with Daily posting into RBD Register tallies with bank’s pass bookbank’s pass book

Daily sheets from sub-treasuries posted on Daily sheets from sub-treasuries posted on the date of receipt into Treasury accountsthe date of receipt into Treasury accounts

At least 20% of sub-treasury’s vouchers At least 20% of sub-treasury’s vouchers checked by TOchecked by TO


Accountant’s Cash Book – TI Accountant’s Cash Book – TI ChecksChecks

Cash book contains complete details of Cash book contains complete details of cash transactions and book transferscash transactions and book transfers– For Treasury and all Sub-TreasuriesFor Treasury and all Sub-Treasuries

Cash totals checked by independent officialCash totals checked by independent official Cash book entries tally with daily totals of Cash book entries tally with daily totals of

subsidiary registerssubsidiary registers


Accountant’s Cash Book (Contd.)Accountant’s Cash Book (Contd.)

One month’s transactions of Cash Book to One month’s transactions of Cash Book to be checked by TI Team with reference tobe checked by TI Team with reference to– Subsidiary RegistersSubsidiary Registers– Daily bank scrolls (Banking Treasury)Daily bank scrolls (Banking Treasury)– Treasurer’s Cash Book (Non-Banking Treasury)Treasurer’s Cash Book (Non-Banking Treasury)


Treasurer’s Cash Book and Daily Treasurer’s Cash Book and Daily Balance Sheet – TI ChecksBalance Sheet – TI Checks

All transactions are All transactions are – Entered immediately in the Treasurer’s Cash Entered immediately in the Treasurer’s Cash

Book, andBook, and– Signed by TOSigned by TO

Sale of stamps entered before closing cash Sale of stamps entered before closing cash bookbook

Cheques received for service stampsCheques received for service stamps– Entered on both sides of the cash bookEntered on both sides of the cash book


Treasurer’s Cash Book (Contd.)Treasurer’s Cash Book (Contd.)

Other payments made by transfer entered Other payments made by transfer entered into the cash bookinto the cash book

Treasurer’s Daily Balance SheetTreasurer’s Daily Balance Sheet– Tallies with Accountant, andTallies with Accountant, and– Signed by TOSigned by TO


Subsidiary RegistersSubsidiary Registers

TI team to check at least 10% of TI team to check at least 10% of transactions in subsidiary registerstransactions in subsidiary registers– Selection of subsidiary registers to be made Selection of subsidiary registers to be made

intelligently to coverintelligently to cover Large no. of vouchers in DepartmentLarge no. of vouchers in Department Cases of certain DDR Heads etc.Cases of certain DDR Heads etc.

– Cases of non-submission of vouchers can be Cases of non-submission of vouchers can be examined while checking subsidiary registersexamined while checking subsidiary registers


Security of Strong Room – TI Security of Strong Room – TI ChecksChecks

Annual inspection of strong room by Annual inspection of strong room by XEN/AE and certificate of safety obtainedXEN/AE and certificate of safety obtained

Places of posting of sentries approved by Places of posting of sentries approved by SPSP

Fire extinguishers, including refillingFire extinguishers, including refilling Inspection of Treasury annually by District Inspection of Treasury annually by District

Collector for compliance with rulesCollector for compliance with rules


Padlocks and Keys – TI ChecksPadlocks and Keys – TI Checks

Register of padlocks in Treasury & Sub-Register of padlocks in Treasury & Sub-Treasuries Treasuries – Maintained properly andMaintained properly and– Kept in the strong roomKept in the strong room

Spare padlocks kept without permissionSpare padlocks kept without permission Duplicate keys are sealed and kept Duplicate keys are sealed and kept

elsewhere securelyelsewhere securely


Padlocks and Keys (Contd.)Padlocks and Keys (Contd.)

Security Bond from TreasurerSecurity Bond from Treasurer– Obtained, andObtained, and– In safe custodyIn safe custody

Book balance of padlocks agrees with Book balance of padlocks agrees with physical balancephysical balance


Treasury BalanceTreasury Balance

TI team to examine Treasurer’s daily balance TI team to examine Treasurer’s daily balance sheetsheet– Total value of stamps, opium etc. does not exceed limitTotal value of stamps, opium etc. does not exceed limit– Daily balance sheet signed by TO every eveningDaily balance sheet signed by TO every evening– Daily balance sheet agrees with Accountant’s daily Daily balance sheet agrees with Accountant’s daily

balance sheetbalance sheet

TI’s responsibility does NOT extend to physical TI’s responsibility does NOT extend to physical verification of cash, stamps etc.verification of cash, stamps etc.


Custody of Valuables – TI ChecksCustody of Valuables – TI Checks

Register of valuables maintained properlyRegister of valuables maintained properly Packets containing valuables properly Packets containing valuables properly

sealed, and under double lockssealed, and under double locks Valuables verified by depositors and TO Valuables verified by depositors and TO

annuallyannually TI team to verify valuables with the book TI team to verify valuables with the book

balancebalance


Stamps and Stamp Papers – TI Stamps and Stamp Papers – TI ChecksChecks

Rules for supply, custody, sale and Rules for supply, custody, sale and distribution of stamps are followeddistribution of stamps are followed

Stamp papers kept in parcels of prescribed Stamp papers kept in parcels of prescribed quantities quantities – Unopened parcels are intactUnopened parcels are intact

Receipt of consignments & issues entered in Receipt of consignments & issues entered in stock register of stamps and daily balances stock register of stamps and daily balances attested by TOattested by TO


Stamps (Contd.)Stamps (Contd.)

Sale register maintained properlySale register maintained properly– Assigning names of stamp vendorsAssigning names of stamp vendors

Discount at prescribed ratesDiscount at prescribed rates– Only to authorised vendorsOnly to authorised vendors

Vendor’s license revalidatedVendor’s license revalidated Appropriate action in r/o damaged stampsAppropriate action in r/o damaged stamps


Stamps (Contd.)Stamps (Contd.)

Monthly Plus-Minus Memos and Bimonthly Monthly Plus-Minus Memos and Bimonthly Report on TimeReport on Time

Security Bond from stamp clerkSecurity Bond from stamp clerk Mode of present preservation of stamps is Mode of present preservation of stamps is

satisfactorysatisfactory


Receipt Books, Cheque Books, Receipt Books, Cheque Books, Books of Drawal – TI ChecksBooks of Drawal – TI Checks

Receipts and Issues accounted properlyReceipts and Issues accounted properly Count of Cheque / Receipt Books on Count of Cheque / Receipt Books on

receipt, certified by TOreceipt, certified by TO Books of Drawal are page numbered, and Books of Drawal are page numbered, and

certified as such by TOcertified as such by TO Proper arrangements for acknowledgement Proper arrangements for acknowledgement

of books issuedof books issued


Currency Chest and Coinage – TI Currency Chest and Coinage – TI ChecksChecks

Maintenance of currency chest (CC) book Maintenance of currency chest (CC) book On date of inspection, CC book is inside the On date of inspection, CC book is inside the

currency chestcurrency chest Sl. No. of Currency chest slips sent to Sl. No. of Currency chest slips sent to

Currency Officer are noted in the CC BookCurrency Officer are noted in the CC Book Detailed cash balance report, after Detailed cash balance report, after

Collector’s verificationCollector’s verification– Sent to AG on 1Sent to AG on 1stst working day of month working day of month


Currency Chest (Contd.)Currency Chest (Contd.)

All amounts passing in/out of double locks All amounts passing in/out of double locks are registered immediately in Treasurer’s are registered immediately in Treasurer’s balance sheetbalance sheet– By TOBy TO

TransfersTransfers– From/to Treasury balanceFrom/to Treasury balance– to/from Currency Chestto/from Currency Chest

Are intimated telegraphically to Currency Are intimated telegraphically to Currency OfficerOfficer



Cash balance limits set by Govt. adhered toCash balance limits set by Govt. adhered to Procedure for remittances receivedProcedure for remittances received Certificate on cypher code sent on 1Certificate on cypher code sent on 1stst April April Daily balance sheet of Treasurer and Daily balance sheet of Treasurer and

Accountant agreed on the same dayAccountant agreed on the same day



Treasurer’s simple cash bookTreasurer’s simple cash book Verification of Sub-treasury cash balanceVerification of Sub-treasury cash balance

– By TO monthly and by Collector annuallyBy TO monthly and by Collector annually

Security from Shroff for cash handlingSecurity from Shroff for cash handling


Government Securities – TI ChecksGovernment Securities – TI Checks

Application Forms and Interest Receipt Application Forms and Interest Receipt Forms are in stockForms are in stock

Receipt of interest warrants and intimation Receipt of interest warrants and intimation to payeeto payee

Register for recording enfacement of Register for recording enfacement of Promissory NotesPromissory Notes

Instructions for payment at a sub-treasury ofInstructions for payment at a sub-treasury of– Interest on a GP Note enfaced at the TreasuryInterest on a GP Note enfaced at the Treasury


Govt. Securities (Contd.)Govt. Securities (Contd.)

Register for recording documents relating to Register for recording documents relating to payment of interestpayment of interest

Receipt, custody and return of notes Receipt, custody and return of notes deposited by the public with TO, and interest deposited by the public with TO, and interest thereonthereon

List of securities, with undrawn interest for List of securities, with undrawn interest for more than 10 years is sent to the Public more than 10 years is sent to the Public Debt OfficeDebt Office


Deposits – TI ChecksDeposits – TI Checks

Separate registers for each class of Separate registers for each class of depositsdeposits

Items, which should not be treated as Items, which should not be treated as deposits, have not been taken to Depositsdeposits, have not been taken to Deposits

Rules on refund/ repayment of DepositsRules on refund/ repayment of Deposits Lapsed Deposit statement to AG on 1Lapsed Deposit statement to AG on 1stst April April


Deposits (Contd.)Deposits (Contd.)

Authority of AG for making repayment of Authority of AG for making repayment of lapsed depositslapsed deposits

Plus-Minus Memos sent to AG every monthPlus-Minus Memos sent to AG every month Balances as per Civil and Criminal Court Balances as per Civil and Criminal Court

Deposit registersDeposit registers– Verified with Court Extract RegistersVerified with Court Extract Registers


Personal Ledger Accounts – TI Personal Ledger Accounts – TI ChecksChecks

Proper sanction for opening PL AccountProper sanction for opening PL Account– Particulars of scheme and head of account Particulars of scheme and head of account

recording in PLA Registerrecording in PLA Register

Balances of PLA under Consolidated Fund Balances of PLA under Consolidated Fund brought to Nil as on 31brought to Nil as on 31stst March March– By refund to Consolidated FundBy refund to Consolidated Fund

Lapsed deposit statement in r/o inoperative Lapsed deposit statement in r/o inoperative PL Accounts sent to AGPL Accounts sent to AG


PLA (Contd.)PLA (Contd.)

Administrator-wise plus-minus memoranda Administrator-wise plus-minus memoranda sent monthly to AGsent monthly to AG

Annual balance certificates received from Annual balance certificates received from Administrators verified and sent to AGAdministrators verified and sent to AG

Balances in PL A/cs struck up to dateBalances in PL A/cs struck up to date Past defects pointed out by TI correctedPast defects pointed out by TI corrected


Register of RB Deposits – TI ChecksRegister of RB Deposits – TI Checks

2 months entries to be checked with 2 months entries to be checked with reference toreference to– Daily bank scrollsDaily bank scrolls– With monthly bank statementWith monthly bank statement


Accounts of RBI Remittances – TI Accounts of RBI Remittances – TI ChecksChecks

Check of 2 months entries of daily drawals/ Check of 2 months entries of daily drawals/ encashments with entries under RBI encashments with entries under RBI remittances in cash bookremittances in cash book

General check of corresponding draft General check of corresponding draft application forms for drawalsapplication forms for drawals


Withdrawal through LOC – TI Withdrawal through LOC – TI ChecksChecks

Issue of LOC by competent authorityIssue of LOC by competent authority Maintenance of proper registers at TreasuryMaintenance of proper registers at Treasury LOC ceiling strictly watchedLOC ceiling strictly watched

– Excess drawal cases to be checked carefullyExcess drawal cases to be checked carefully

In the case of banking treasuriesIn the case of banking treasuries– Excess drawals are immediately intimated to Excess drawals are immediately intimated to

Bank by TOBank by TO


Payment of Pension – TI ChecksPayment of Pension – TI Checks

Signature on PPO tallies with specimen signatureSignature on PPO tallies with specimen signature PPO recorded in PPO registerPPO recorded in PPO register Before 1Before 1stst payment payment

– Identification of pensioner, and signature obtained on Identification of pensioner, and signature obtained on PPOPPO

– Certificate regarding drawal/ non-drawal of provisional Certificate regarding drawal/ non-drawal of provisional pensionary benefitspensionary benefits

– Recovery of Govt. dues madeRecovery of Govt. dues made– 11stst Pension Payment to be listed in Bank Advice List Pension Payment to be listed in Bank Advice List


Payment of Pension (Contd.)Payment of Pension (Contd.)

– No undue delay in making paymentNo undue delay in making payment

6 monthly declaration of marital status, 6 monthly declaration of marital status, where appropriatewhere appropriate

Certificate of non-employmentCertificate of non-employment Conditions for continuance of family pensionConditions for continuance of family pension Payments recorded systematically on PPOPayments recorded systematically on PPO Pension revision in accordance with orders, Pension revision in accordance with orders,

and recorded on PPOand recorded on PPO



Payment of arrear pensions, after sanction Payment of arrear pensions, after sanction of appropriate authority and AG’s authorityof appropriate authority and AG’s authority

Return of GPO to AG, if not paid in 1 yearReturn of GPO to AG, if not paid in 1 year Commutation of pension, and restorationCommutation of pension, and restoration Pension payments recorded in Pension Pension payments recorded in Pension

Enfacement Register, and verified with bank Enfacement Register, and verified with bank scrollscroll– Life certificate, if payment by Money OrderLife certificate, if payment by Money Order



Money Order receipts and verification of recipient Money Order receipts and verification of recipient signaturessignatures

Annual identification of pensioners by DDOs, Annual identification of pensioners by DDOs, recorded on PPOrecorded on PPO– Life certificate for exempted pensionersLife certificate for exempted pensioners

Payment of life-time arrears of pension on deathPayment of life-time arrears of pension on death Return of PPO to AGReturn of PPO to AG Half-yearly report on undrawn pensionHalf-yearly report on undrawn pension


Establishment Audit – TI ChecksEstablishment Audit – TI Checks

Compliance with GFR, DFP, Medical Compliance with GFR, DFP, Medical Attendance Rules, Service CodeAttendance Rules, Service Code

Expenditure within budgetExpenditure within budget Payment of personal claims as per rules and Payment of personal claims as per rules and

on timeon time Short-term advance registerShort-term advance register


Establishment Audit (Contd.)Establishment Audit (Contd.)

Service Book maintenanceService Book maintenance Establishment cash book maintenanceEstablishment cash book maintenance Pay acquittance rolls, bill register, Pay acquittance rolls, bill register,

contingent register, stock store register etc. contingent register, stock store register etc. maintained properlymaintained properly


Miscellaneous InstructionsMiscellaneous Instructions

Cheque-Drawing OfficersCheque-Drawing Officers– Monthly CTR (Consolidated Treasury Issues) for each Monthly CTR (Consolidated Treasury Issues) for each

division, with chequesdivision, with cheques– Monthly CTD (Consolidated Treasury Remittances) for Monthly CTD (Consolidated Treasury Remittances) for

each division, with challan detailseach division, with challan details

Specimen signatues of DDOsSpecimen signatues of DDOs Presentation of bills with Book of DrawalsPresentation of bills with Book of Drawals Payment of dated pay orders without revalidationPayment of dated pay orders without revalidation Advice lists to bank in locked boxAdvice lists to bank in locked box


Miscellaneous Instructions (Contd.)Miscellaneous Instructions (Contd.)

Guard files for circulars of AG, Finance Guard files for circulars of AG, Finance Department, DTI etc.Department, DTI etc.

Up-to-date reference booksUp-to-date reference books Maintenance of Register of RegistersMaintenance of Register of Registers Register of LIC SchedulesRegister of LIC Schedules Register of Periodical ReturnsRegister of Periodical Returns Notification of defalcation or lossNotification of defalcation or loss Half-yearly review of objection slipsHalf-yearly review of objection slips

Documents

Session - 5 Planning a Treasury Inspection and Areas of Focus Regional Training Institute, Ranchi Structured Training Courseware on Treasury Inspection