GENERAL FINANCIAL RULES

RECEIPT OF MONEY

All transactions to which any officer of

Government is a party in his official capacity
must be brought to account without delay.
Money received as dues of Government or for
deposit in the custody of Government should be
credited into the Public Account in accordance
with the Treasury Rules.
(GFR 4-5)
 RECEIPT OF MONEY
If a Government officer receives in his official
capacity moneys which are not Government dues
or the deposit of which in the custody of
Government has not been authorised by
Government, he must open an account with a
bank for their deposit. Such accounts may be
opened without special sanction with a branch of
the State Bank of Pakistan or the National Bank
of Pakistan acting as an Agent of the S.B.P. or
with a Post Office Saving Bank. The prior
approval of the Government is required to their
deposit in any other bank.
 RECEIPT OF MONEY

The Government officer receiving such moneys

is personally responsible for seeing that they
are disbursed in strict conformity with the
rules, regulations or orders governing the fund
to which the money appertains, that a precise
record of all the transactions is kept in a form
complying with the regulations of the fund
concerned and that the accounts are subject to
proper audit checks. (GFR-6)
 ESSENTIAL CONDITIONS
GOVERNING EXPENDITURE
> ORDERS OF THE PRESIDENT
REQUIRED
> ORDERS OF THE AUTHORITY TO
WHOM POWER IS DELEGATED
> PROVISION OF FUNDS
(PARA-9 OF GFR VOL-I)
 STANDARDS OF FINANCIAL PROPRIETORY

> EXPENDITURE SHOULD BE INCURRED FROM

P.A LIKE A PERSON OF AN ORDINARY
PRUDENCE
> EXPENDITURE ACCORDING TO THE
DEMAND OF THE OCCASION
> NO ORDERS OF THE AUTHORITY DIRECTLY
OR INDIRECTLY FOR ITS OWN BENEFIT
> P.A MONEY SHOULD NOT BE
UTILIZED FOR A PARTICULAR
PERSON OR COMMUNITY UNLESS:
THE EXPENDITURE IS
INSIGNIFICANT, IT COULD BE
ENFRCED IN A COURT OF LAW OR
THE EXPENDITURE IS IN PURSUANCE
OF A RECONGNIZED POLICY OR
CUSTOM.
> THE AMOUNT OF ALLOWANCES TO
MEET EXPENDITURE OF A
PARTICUALR TYPES SHOULD NOT
BECOME SOURCE OF PROFIT TO THE
RECIEPIENT.
(PARA-10 OF GFR VOL-I)
CONTROL OF EXPENDITURE

> RESPONSIBILITY OF HEAD OF

DEPARTMENT FOR ENFORCING
FINANCIAL ORDER & STRICT
ECONOMY AT EVERY STEP
> ALSO RESPONSIBLE FOR
OBSERVANCE OF FINANCIAL RULES
& REGULATIONS BY HIS OFFICE OR
SUBORDINATE DISBURSING
OFFICERS.
 RESPONSIBILITY OF
CONTROLLING OFFICER
> EXPENDITURE IS WITHIN LIMITS OF
AUTHORISED APPROPRIARTIONS
> THE UTILIZATION OF FUNDS IS IN PUBLIC
INTEREST
> THE PURPOSE OF THE EXPENDITURE IS
SERVED
> HOW MUCH ACTUALLY SPENT AND HOW
MUCH IS THE LIABILITY TO BE PAID.
> CONTROLLING OFFICER IS
RESPONSIBLE BEFORE GOVT. AND
PAC FOR DEPARTMENTAL
EXPENDITURE AND TO JUSTIFY
EXCESS OR FINANCIAL
IRREGULARITY AS A RESULT OF
AUDIT SCRUTINY OR OTHERWISE
(PARA-11-12 OF GFR VOL-I)
 Defalcations, Losses
Report of Losses

Any loss of public money, departmental revenue or

receipts, stamps, stores or other property held by or on
behalf of Government, caused by defalcation or
otherwise, which is discovered in a treasury or other
office or department should be immediately reported by
the officer concerned to his immediate official superior
as well as to the Accountant General, even when the loss
has been made good by the party responsible for it.
 Defalcations, Losses

Such reports must be submitted as soon as a

suspicion arises that there has been a loss; they
must not be delayed while detailed enquiries
are made. When the matter has been fully
investigated, a further and complete report
should be submitted of the nature and extent of
the loss, showing errors or neglect of rules by
which such loss was rendered possible, and the
prospects of affecting a recovery.
 Defalcations, Losses
The officer receiving a report submitted to him
under para-20 must forward it forthwith to
Government through the usual channel with
such comments as may be considered
necessary. He should also submit a detailed
report, after completing such departmental
investigations as may be necessary or expedient
on the causes or circumstances which led to the
defalcation or loss, the steps taken to prevent
its recurrence and the disciplinary or any other
action proposed as regards the person
responsible. (GFR-21)
 Accidents
Any serious loss of immovable property, such as
buildings, communications, or other works, caused by
fire, flood, cyclone, earthquake or any other natural
cause, should be reported at once by the departmental
officer to the head of the department and by the latter
to Government. When a full enquiry as to the cause
and extent of the loss has been made, the detailed
report should be sent by the departmental officer
concerned to the head of the department, a copy of the
report on an abstract thereof being simultaneously
forwarded to the Accountant General.
 Responsibility For Losses

Every officer should realise fully that he will be

held personally responsible for any loss
sustained by Government through fraud or
negligence on his part and that he will also be
held personally responsible for any loss arising
from fraud or negligence on the part of any
other Government officer to the extent to which
it may be shown that he contributed to the loss
by his own action or negligence.
 Write Off of Losses

The powers have been delegated to different

authorities to write off the irrecoverable value
of public money or stores lost through fraud or
negligence of individuals or other causes.
ESSENTIALS OF SANCTION
> IT SHOULD BE FROM THE
COMPETENT AUTHORITY
> SIGNED BY THE AUTHORISED
OFFICER
> COMMUNICATED DIRECTLY TO A.G
(WITHIN OWN FINANCIAL POWERS)
> COMMUNICATED THROUGH
FINANCE/ENDORESED BY THE
FINANCE DIVISION(BEYOND
FINANCIAL POWER)
> WHERE CONCURRENCE OF
FINANCE/FA WING/AUDITOR
GENERAL OBTAINED, THIS FACT
SHOULD BE MENTIONED IN THE
SANCTION
> IT MUST BE FOR DEFINITE AMOUNT
OR UPTO SPECIFIED LIMIT
> AMOUNT SHOULD BE EXPRESSED
BOTH IN WORDS AND FIGURES
> INDICATE SOURCE OF
APPROPRIATION EITHER BY:
REGULAR BUDGET
RE-APPROPRIATION
SUPPLEMENTARY GRANT
> CLASSIFICATION OF EXPENDITURE
MUST BE GIVEN
> DATE OF EFFECT MENTIONED
> SANCTION FOR INCREASE IN PAY
AND COMPENSATORY ALLOWANCE
SHOULD BEAR REASONS.
> SANCTION FOR GRANT- IN- AID
SHOULD BE SUPPORTED BY THE
PURPOSE AND NATURE OF
CONDITIONS FOR GRANT
(PARA-51 TO 59 OF GFR VOL-I)
 Revenue & Receipts
• It is the duty of departmental controlling
officers to see that all sums due to
Government are regularly and promptly
assessed, realized and duly credited in the
public account.
 Audit of Receipts
• When the audit of receipts of any
department of Government is entrusted to
the Auditor General, it will be conducted in
accordance with the regulations reproduced
in Annexure-9.
1. It is the responsibility of the Departmental Authorities to see that all
revenue or other debts due to Government, which have to be brought
to account are correctly and promptly assessed, realized and credited
to public account.
2. During audit of receipts it should be observed that revenue is properly
assessed, collected and properly allocated.
3. In the audit of receipts it would be necessary in the case of a
department, which is a receiver of public money, to ascertain what checks
are imposed against the commission of irregularities at the various stages
of collection and accounting and to suggest an appropriate improvement
in the procedure. A test inspection may be carried out by comparing a
sample set of receipt counter foils with the receipts actually in the hands.
4. Audit will see that no amounts due to Government are left outstanding
on its books without sufficient reason. Audit will continue carefully to
watch such outstanding and suggest to departmental authorities any
feasible means for their recovery. Whenever any dues appear to be
irrecoverable, orders for their adjustment should be sought. But unless
permitted by any rule or order of a competent authority, no sums may be
credited to Government by debit to a suspense head.
 PERMANENT ADVANCES
> GRANTED TO MAKE PAYMENTS
BEFORE PLACING CLAIM
> AMOUNT IF FIXED BY THE
GOVERNMENT OR BY THE HEADS OF
LOCAL ADMINISTRATION AS THE
CASE MAY BE
> HEAD OF DEPARTMENTS MAY
SANCTION THE GRANT OF
PERMANENT ADVANCES FOR THEIR
SUBORDINATE OFFICES.
> SANCTION OF PERMANENT
ADVANCES FOR OFFICES OF HEAD
OF DEPARTMENTS BY NEXT
SUPERIOR ADMINISTRATIVE
AUTHORITY
> APPLICATION FOR PERMANENT
ADVANCE TO SANCTIONING
AUTHORITY THROUGH CONCERNED
A.G.
> IN CASE OF DIFFERENCE OF OPINION
BETWEEN SANCTIONING
AUTHORITY AND A.G., MATTER WILL
BE REFERRED TO THE GOVERNMENT
> APPLICATION ACCOMPANIED BY
PRECEDING 12 MONTHS STATEMENT
OF EXPENDITURE
> THE ADVANCE AMOUNT MUST NOT
BE LARGER THAN THE NEED.
> THE ADVANCES SHOULD NOT BE MULTIPLIED UNNECESSARILY.
> IT IS FOR EMERGENT PETTY ADVANCES FOR CONTINGENT
CHARGES.
> FARE CAN BE GRANTED TO CLASS-IV SERVANTIF FROM
PERMANENT ADVANCE IFHE IS REQUIRED TO TRAVELS BY RAIL.
> HOLDER OF ADVANCE IS RESPONSIBLE FOR SAFE CUSTODY OF
MONEY.
> ACCOUNT OF PERMANENT ADVANCE TO THE A.G ON 15TH JULY
FOR THE 30TH JUNE PRECEEDING.
> CAN BE UTILIZED FOR PURCHASE OF SERVICE BOOKS OF
EMPLOYEES.
> ADVANCE TO NON-GAZETTED POLICE OFFICERS FOR RAILWAY
FARE OR ROAD MILEAGE. RECOUPMENT THROUGH THEIR TA
BILLS. (PARA -132 OF GFR VOL-I)
 INTERNAL CHECK
> SYSTEMATIC INTERNAL CHECK IN THE DEPARTMENT.
> INSPECTION ATLEAST ONCE IN A FINANCIAL YEAR TO SEE
THE APPLICATION OF RULES FOR HANDLING OF CASH,
EFFECTIVE INTERNAL CHECK SYSTEM EXISTS,
SATISFACTORY ARRANGEMENT FOR MAINTENANCE OF
ACCOUNT RECORD.
> INSPECTION REPORT THEREON AND COPY TO THE AUDIT
WITH REMARKS OF THE HEAD OF DEPARTMENT.
> STATUS OF THE INSPECTION OFFICER.

(PARA-13 OF GFR-VOL-I)
 DEMAND FOR INFORMATION BY
AUDIT
> SUPPLY OF INFORMATION TO THE ACCOUNTANT
GENERAL
> SUPPLY OF INFORMATION TO THE AUDIT.
PARA-17 OF GFR VOL-I
 POWERS OF AUDITOR GENERAL IN
R/O AUDIT OF ACCOUNTS
> INSPECT ANY OFFICE OF ACCOUNTS, UNDER THE CONTROL OF THE
FEDERATION OR OF A PROVINCE OR OF A DISTRICT, INCLUDING
TREASURIES, AND SUCH OFFICES RESPONSIBLE FOR THE KEEPING OF
INITIAL OR SUBSIDIARY ACCOUNTS
> TO REQUIRE ACCOUNT RECORDS RELEVENT TO TRANSACTIONS TO
WHICH HIS DUTY IN RESPECT OF AUDIT EXTEND, SHALL BE SENT TO SUCH
PLACE AS HE MAY DIRECT FOR HIS INSPECTION
> TO ENQUIRE OR MAKE SUCH OBSERVATIONS AS HE AY CONSIDER
NECESSARY AND TO CALL FOR SUCH INFORMATION AS HE MAY REQUIRE
FOR THE PURPOSE OF AUDIT.
> SUPPLY OF ALL SUCH RECORD BY THE OFFICER INCHARGE TO THE AUDIT.
> ANY PERSON HINDERING THE AUDITORIAL FUNCTIONS OF THE AUDITOR
GENERAL IS SUBJECT TO DISCIPLINARY ACTION.
(ARTICLLE -14 OF ORDINANCE NO.XXIII OF 2001)
 PRINCIPLES FOR ENTERING INTO
CONTRACTS
> PRECISE & DEFINITE
> NO AMBIGUITY OR MISCONSTRUCTION
> LEGAL AND FINANCIAL ADVICE BEFORE ENTERING INTO CONTRACTS
> STANDARDS FORMS OF CONTRACTS SHOULD BE USED.
> NO MATERIAL CHANGE IN THE CONTRACT WITHOUT THE CONSENT OF
THE AUTHORITY
> NO PEYMENT AS COMPENSATION OR ABOVE THE RATES OF THE
CONTRACT WITHOUT THE APPROVAL OF THE MINISTRY OF FINANCE
> NO UNCERTAIN OR INDEFINITE LIABILITY OR CONDITION OF UNUSUAL
CHARACTER WITHOUT THE CONSENT OF THE MINISTRY OF FINANCE
> PLACEMENT OF CONTRACT AFTER INVITATION OF TENDERS
> REASONS FOR NOT ACCEPTING THE LOWEST TENDER MUST BE
RECORDED
> FINANCIAL STATUS OF THE FIRM BESIDES OTHER
REQUIREMENTS
> PROVISIONS FOR SAFEGUARD OF GOVT. PROPERTY
ENTRUSTED TO A CONTRACTOR
> WHERE A CONTRACT IS FOR MORE THAN 5 YEARS, IT
SHOULD INCLUDE A PROVISION FOR AN UNCONDITIONAL
POWER OF REVOCATION OR CANCELLATION BY GOVT. AT
ANY TIME ON THE EXPIRY OF SIX MONTHS’ NOTICE TO
THAT EFFECT.
(PARA-18 & 19 OF GFR VOL-I)
 STORES

> THE TERM STORES APPLIES GENERALLY TO ALL ARTICLES

AND MATERIALS PURCHSED OR OTHERWISE ACQUIRED
FOR THE USE OF GOVERNMENT, INCLUDING NOT ONLY
EXPENDABLE AND ISSUABLE ARTICLES IN USE OR
ACCUMULATED FOR SPECIFIC PURPOSES BUT ALSO
ARTICLES OF DEAD STOCK OF THE NATURE OF PLNAT,
MACHINERY, FURNITURE, EQUIPMENT, FIXTURES ETC.
NOTE TO PARA-141 OF GFR
VOLUME-I
 RULES & INSTRUCTIONS FOR THE
PURCHASE OF STORES
> PURCHASE OF STORES ACCORDING TO PURCHASE RULES.
> PURCHASE MUST BE IN MOST EFFICIENT AND ECONOMICAL MANNER.
> SHOULD NOT BE PURCHASED IN SMALL QUANTITIES.
> PURCHASE ACCORDING TO PERIODICAL INDENTS.
> PURCHASE MUST NOT BE MUCH IN ADVANCE OF ACTUAL REQUIREMENT
IF UNPROFITABLE TO GOVERNMENT.
> NO SPLIT UP OF PURCHASE ORDER.
> BEST SATISFACTORY QUALITY OF STORE.
> CORRECT QUANTITY IN TIMELY FASHION.
> TRANSPARENCY IN OPERATION OF PROCEDURE.
> SANCTION OF THE COMPETENT AUTHORITY AND PROVISION OF FUNDS.
 RECEIPTS OF STORES
> INSPECTION OF STORES ON RECEIPT AND APPLICATION OF
TESTS ACCORDING TO TERMS AND CONDITIONS.
> ENTRY OF REFERENCE IN LEDGER/REGISTER SHOULD BE
NOTED ON INVOICES.
> CALCULATION OF UP-TO- DATE BALANCE AFTER EVERY
ENTRY.
> LINKAGE OF ALL RECEIPT RECORDS WITH CASH
ACCOUNTS I.e. VOUCHERS/INVOICES.
> STOCK TAKING ATLEAST ONCE IN A YEAR
 ISSUE OF STORES

> ISSUE OF STORES AGAINST APPROVED INDENTS

ON PRINTED PRE-NUMBERED FORM WITH
SIGNATURES OF THE AUTHORISED OFFICER.
> RECORDING OF REFERENCE OF INDENTS ON
STOCK REGISTER.
> CLOSING BALANCE AFTER EACH ENTRY.
> FIFO METHOD FOR ISSUANCE OF STORE IS
APPROPRIATE SO THAT ITEMS DON’T EXPIRE.
 CUSTODY/ACCOUNTS OF STORES

> ARRANGE SAFE CUSTODY OF STORES.

> KEEP IN EFFICIENT AND GOOD CONDITION.
> PROTECT THEM FROM LOSS (THEFT, ACCIDENT,
FRAUD), DAMAGE, DETERIORATION
> PROPER ACCOUNTS, LIST OF INVENTORY MAY BE
MAINTAINED BY THE RESPONSIBLE PERSON.
> CHECK ACTUAL BALANCE AUTHENTICATING
RECORD OF PAYMENT FOR SUPPLY THROUGH
PERIODICAL INSPECTION AT LEAST ONCE IN A
YEAR.
 PHYSICAL VERIFICATION, STOCK
TAKING AND INSPECTION
> PHYSICAL VERIFICATION OF ALL STORES SHOULD BE MADE AT LEAST
ONCE A YEAR BY A PERSON DEPUTED BY THE COMPETENT AUTHORITY.
> CALCULATE ACTUAL ARTICLES LOCATION-WISE i.e. GROUND BALANCE.
> CHECK THE COMPUTATION OF ACCOUNTS RECORD TO SEE IF THERE ARE
ANY ERRORS IN THE BOOK BALANCE IN THE LIGHT OF INVOICES AND
INDENTS.
> COMPARE BOOK BALANCE AND ACTUAL BALANCE IN STOCK.
> TO BE CONDUCTED BY A PERSON OTHER THAN INCHAGE, ACCOUNTANT
OR LEDGER KEEPER AND CUSTODIAN, AND IT SHOULD NEVER BE LEFT TO
LOW PAID SUBORDINATE.
> THE PERSON CONDUCTING PHYSICAL VERIFICATION MUST BE WELL
CONVERSANT WITH CLASSIFICATION, NOMENCLATURE AND TECHNIQUES
OF STORES.
> TO BE CONDUCTED IN PRESENCE OF STORE KEEPER OF HIS
REPRESENTATIVE.
> BROKEN ITEMS/OBSOLETE ITEMS/ITEMS NEARING EXPIRY MAY BE
POINTED OUT.
> EXCESS THAN ACTUAL REQUIREMENT/ NOT ISSUED SINCE LONG/
SURPLUS MATERIAL MAY BE POINTED OUT.
> EXCESS/SHORTAGE AND DAMAGE/OBSOLETE TO BE BROUGHT ON
ACCOUNTS. ALL DISCREPENCIES SHOULD BE BROUGHT TO THE ACCOUNT
IMMEDIATELY AND REPORTED TO THE AUTHORITY TO WRITE OFF OF
LOSS ETC. IF ARTICLES ARE FOUND DAMAGED, DETERMINE CAUSES AND
REPORT TO THE COMPETENT AUTHORITY.
> UNSERVICEABLE ARTICLES TO BE TAKEN OUT AND SURVEYED OFF
AFTER SANCTION OF THE COMPETENT AUTHORITY.
> A CERTIFICATE OF VERIFICATION SHOULD BE RECORDED ON THE STOCK
ACCOUNTS AND AN INDEPENDENT REPORT GIVING RECOMMENDATIONS
MAY BE SUBMITTED TO THE COMPETENT AUTHORITY.
> EXCESS THAN REQUIREMENT MAY BE SHIFTED TO NEEDY UNIT.
> IT WOULD HELP REPAIRING DAMAGED UNITS.
> STOCK TAKING SHOULD BE CONDUCTED BY STORE KEEPER HIMSELF
DURING A YEAR WITH A PURPOSE TO FIND OUT ANY DISCREPENCY IF
ANY IN GROUNG BALANCE AND BOOK BALANCE
> THE COMPETENT AUTHORITY SHOULD INSPECT THE STORES AND
ACCOUNTS DURING A YEAR AS A MORAL CHECK.
 DISPOSAL OF STORES
> PREVIOUS SANCTION OF THE COMPETENT AUTHORITY TO
WRITE OFF THE LOSS, DEFECIENCIES SHOULD BE
OBTAINED. STORE MAY BE DISPOSED OFF BY SALE OR
OTHERWISE UNDER THE ORDERS OF THE COMPETENT
AUTHORITY. EACH ORDER DECLARING STORES AS
UNSERVICEABLE SHOULD RECORD THE FULL REASONS
FOR CONDEMNING THEM AND HOW THE CONDEMNED
STORES ARE TO BE DISPOSED OFF WHETHER BY SALE,
PUBLIC AUCTION, OR OTHERSISE. PROPER LIST SHOWING
FULL PARTICULARS OF CONDEMNED STORES MAY BE
MAINTAINED TO WATCH THE DISPOSAL.
PRESENTED BY:
Aqeel Ahmed
Faculty Member
Audit & Accounts Training Institute
Islamabad.
Phone: 051-9252398 (Office)
03085550052 (Mobile)
email: [email protected]