Settlement of Outstanding Advances as on st Quarterly Review Meeting of Finance Controllers on 29 th May 2014 & 30 th May 2014, New Delhi

1.Registered societies are required to prepare financial statements. Income & Expenditure A/C Receipts & Payment A/C Balance Sheet And get the same audited by the statutory auditor annually. 2. Financial position of the society is indicated by its. Balance sheet, which depicts its assets and liabilities on a given date i.e. 31 st March 201X.

3.Balance sheet is a statement of assets & liabilities. Balance Sheet as on X: LiabilitiesAssetsScheduleCurrent year Previous year Fixed Assets (computers furniture etc.) Current Assets Advances for civil works (capital head) Advances General Head  SPO Level  DPO level  SMC/PTA level Cash in Bank Cash in Hand

4. Assets should include all current and fixed assets Outstanding advances must be correctly stated in Balance Sheet in order to depict true & fair view. 5. In FM&P manual following paragraphs deal with advances. Para 74.1 : All funds released to the districts and sub- district level units are initially classified as advances and the same indicated as such in the books of accounts. These advances shall be adjusted based on the expenditure Statements/Utilization Certificates received in State Implementation Society of having spent the funds. Advances, if not actually spent for which accounts have not been settled, should be shown as advances and not as expenditure. Similar procedure shall be followed for funds released at district and sub-district level.

Para 74.2 : The adjustment of advances should be included in the financial year to which the grant relates. Para 74.3: The advances released to VECs/SMCs for undertaking certain activities such as civil works/Teaching Learning Equipment (TLE) which remains unspent at the end of the year shall be carried over to next year as spillover activities based on the approval of the PAB.

Para 75.Norms for regulating advances : Para 75.1 : The following norms will be followed for regulating advances which will constitute expenditure only when supported by appropriate utilization certificates /expenditure statements. Sub-district level S. No. Activiti es Periodici ty of release Expenditur e spent by Certifyin g documen ts Time limit for submission of documentation 1.School Grant AnnualSchool Manageme nt Committee Utilizatio n Certificat es Within one month after the close of the financial year.

S. No. Activities Periodic ity of release Expenditur e spent by Certifying documents Time limit for submission of documentation 2. Teacher’s Grant AnnualTeachers Utilization Certificates Within one month after the close of the financial year. 3. TLE One time School Managemen t Committee Expenditure Statement Within one month after the close of the financial year. 4.Repair and Maintenan ce of school building AnnualSchool Managemen t Committee Utilization Certificates Within one month after the close of the financial year.

S. No. Activities Periodicity of release Expendit ure spent by Certifying document s Time limit for submission of documentation 5.Civil Works by community Two installments VEC/SM C Supervisin g Engineer’s Certificate (for second instalment and final payment) and Expenditu re Statement Within 3 months of the completion of the work.

S. No. Activities Periodicit y of release Expenditu re spent by Certifying document s Time limit for submission of documentation 6. Salary of locally appointed Teachers Quarterly VEC/SM C Expenditu re Statement Within one month after the close of each quarter. 7.EGS/AIE (a)Salary (b) Materials Quarterly Annual VEC/SM C/ NGOs Expenditu re Statement Within one month of the close of each quarter. With in one month after the close of the financial year.

S. No. Activities Periodicit y of release Expenditu re spent by Certifying document s Time limit for submission of documentation 8. Teacher’s Training Two installmen ts BRC/CRC Expenditu re Statement Within one month after the completion of the training. 9.Annual Grants to BRC/ CRC AnnualBRC/CRCExpenditu re Statement Within one month after the close of the financial year.

S. No Activities Periodici ty of release Expendi ture spent by Certifyin g documen ts T ime limit for submission of documentati on 1.Teacher’s salary QuarterlyDPOExpenditu re Statement Within one month after the close of each quarter. District level :

S. No Activiti es Periodic ity of release Expenditu re spent by Certifying documents Time limit for submission of documentation Teacher’ s salary Quarterl y SPOExpenditur e Statement Within one month after the close of each quarter. State level :

Para 75.2 : Advances paid to contractors/suppliers in terms of the agreement for works/ supplies shall be treated as expenditure. This should be subject to submission of detailed accounts indicating the work done/supplies made. However, advances paid to Government Department cannot be treated as expenditure until and unless the expenditure Statement is received.

Para No : The utilization certificate/expenditure Statement should be obtained within the time limit prescribed above. The format of the utilization certificate/expenditure statement for each type of advances indicating the funds released, expenditure incurred activity-wise and physical progress made shall be prescribed by the State Implementation Society and the same incorporated in the Financial Rules and Regulations of the Society. In case the same is not received within the prescribed time limit, further advances shall not be made.

Para No : The above advances shall be treated as expenditure for reporting and their utilization certificates will be kept at levels prescribed by the Financial Regulations of the State Implementing Society. (Annex X refers). Para No. 76. Advance Register Para No.76.1: All advances are to be entered in the advance register to be maintained as per specimen given in Annex VI. Para No :The adjustment of the advances is also to be entered promptly in this register. It should be ensured that no personal advance is outstanding for more than one month. In case, adjustment claims for personal advances are not submitted in time, penal action including charging of interest should be taken.

Para No : All other advances mentioned in Para 75.1 above should be adjusted on receipt of utilization certificate/expenditure Statement. It should be ensured that utilization certificates/expenditure statements on these advances are obtained immediately after the expiry of the prescribed period. Para No. 77 : Monitoring of Advances Para No : The next higher authority above the authority who released the advances will strictly monitor the progress of adjustment of advances and take remedial measures required for the speedy adjustment of advances within the time limit prescribed above. Para No.77.2 : All functionaries should ensure that only actual be treated as expenditure and not the normative costs in accounting.

6. Para 75.1 is important, as it lays down time limit for submission of UCs and prompt settlement of advances.  Problem arise only if outstanding advances are allowed to remain unsettled / unadjusted over period of time. 7. If outstanding advances are not adjusted promptly in same year, in which grant was received.  Expenditure incurred is depressed  Current assets i.e., advances-unnecessary kept at inflated value. 8. One of prime reason for high outstanding advances is non- preparation of advance registers.

9. Maintenance of Advance registers  Break up- districtwise / blockwise / yearwise / Intervention wise 10. If advance registers are maintained properly  Detailed break up yearwise / unit wise / intervention wise of unsettled advances would be available.  Make it easier to locate/settle the advances and monitor receipt of Utilization Certificates. 11. Balance sheet data and consolidated utilization certificate data- Must reconcile.  Many times-there is difference  Balance sheet should have attached schedules. In schedules details regarding outstanding advances agewise must be enclosed.

1 2. Total Outstanding advances =Outstanding advances (capital head) + Outstanding advances (General Head) 13. Total unspent amount = Total outstanding advances (Capital head + General head) + Cash in Bank + Cash on hand 14. Expenditure incurred during the year as reflected in expenditure & income A/C, Utilization Certificates, FMRs must reconcile. 15. Expenditure under head – Misc/ other etc. is not approved Head under AWP&B. Further there is no such intervention listed out in FMR-III

16. Steps which may result in reduction 1.Follow Para-75.1 of FM&P collect max number of UCs within time limit and adjust advances within the year to which grant relate. 2.Maintain and update advance registers in SPO/DPO/BRCs level. Yearwise / districtwise intervention wise 3.Drive to settle all outstanding advances given to employees / NGOs/ DIETs/Govt. Deptt/PSU in Feb/March/April every year. So that all Utilization Certificates are received and accounted for.

17. Outstanding advances for civil works /VECs/SMCs, Maintain better liaison with Civil Engg. Organization in District/Blocks. All civil works which has been completed, CC issued, UC/ Statement of Expenditure be obtained and advances adjusted. 18. Preparation of spillover plan and obtaining PAB approval  Non recurring expenditure  Recurring expenditure / committed liability

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