Settlement of Advances under SSA

1. Settlement of Advances under SSA Para–74.1 of the Manual on Financial Management & Procurement under SSA provides that all funds releases to districts and sub-district level units are to be classified as advances and the same shown in the books of accounts as advances. These advances are to be adjusted as expenditure based on the expenditure statements / Utilization Certificates received from the implementing units of having spent the funds. Advances if not actually spent for which accounts have not been settled are to be shown as advances and NOT AS EXPENDITURE.

2. Para-74.2 of the Manual further provides that advances are to be adjusted in the financial year to which the grant relates. For this purpose Expenditure Statements / Utilization Certificates are required to be submitted by the units incurring the expenditure against the advances as soon as the event for which advance is given is over. However in Para -75.1 of the Manual it is provided that all the Utilization Certificates / Expenditure Statements against the advances should be submitted within One month of the close of the financial year This is the maximum time limit. It does not mean that expenditure Statements/ Utilization Certificates have to be submitted by the spending units only after the close of the financial year.

3. Para-106.10 of the Manual provides that accounts for financial year are to be finalized by 30th June each year. Therefore, there should be no differently in the adjustment of advances UCs / Expenditure Statements for which are received by the Society within One month of the close of financial year in the same year. The adjustment of advances being a non cash transaction has to be done through Journal Ledger and not cash Book which is closed on the last working day of the fiscal year. However, review of the annual audited accounts submitted by the SIS indicate that huge amount of advances remain unadjusted with SIS each fiscal year as would be seen from the following details of Statewise outstanding advances at the end of 31.3.2010 as per the audited accounts.

4. (Rs. in lakhs)

5. * Includes Rs.168991.38 lakhs booked under works-in-progress and treated as expenditure in earlier years.

8. Para-47 of the Manual provides that if in a particular year an outlay approved is not spent fully, the same becomes outlay saved. Normally outlay saved under non recurring activity heads is taken as spillover activities for the forth coming year. Spillover allows a district to continue activities of non-recurring nature such as Civil Works, one time grant of TLE, furniture grant for BRC, CRC etc. which could not be completed during the year. Each district needs to prepare a spillover plan every year alongwith AWP&B for approval by the PAB.

9. It, therefore, follows that the advances relating to spillover activity only can be carried forward to the forth coming year only if approval of PAB is taken for the spillover of incomplete activities as provided in Para -74.3 of the Manual. The advances will thus become advances for the current year and there will be no difficulty in their adjustment in the current year as the AWP&B approved for the current year will also include the unspent allocation for spillover activities. It is, however, observed from the PABs approvals of AWP&B for the year 2010-11 that the following States having huge amount of un-adjusted advances have not drawn up their spillover Plans properly as the amount of spillover approved by PAB for the year 2009-2010 does not compare with the outstanding advances at the end of 31.3.2010.

10. (Rs. in lakhs)

11. * Includes Rs.168998.31 lakhs booked under works-in-progress & treated as expenditure in earlier years.

12. The advances given for recurring activities remaining unspent are required to be refunded by the units before the close of the financial year and are to be adjusted in accounts before finalization of annual accounts. In case any such advances have been incurred as expenditure before the close of the financial year but due to certain reasons bills/expenditure statements could not be obtained may be included in the accounts as liabilities by debiting the expenditure to the relevant activity head and crediting bills payable account. On receipt of vouchers/ bills expenditure statements necessary adjustment entries by debiting Bills payable account & crediting advances account shall be made in the accounts.

13. All the Finance Controllers are requested to ensure that the advances are adjusted in accounts as soon the event for which the advance was granted is over for non recurring or recurring expenses by obtaining bills / vouchers Utilization Certificates / Expenditure Statements as the case may be. In case the grantee of the advance fails to submit the accounts relating to recurring expenses action to recover the advance has to be taken. In respect of non recurring expenditures it is to be ensured that a proper spillover Plan in respect of all unspent / partly spent advances is prepared alongwith the AWP&B for obtaining PAB’s approval each year.

14. Attention of the Finance Controllers is also drawn to the clarifications obtained from the Chief Controller of Accounts (CCA) MHRD obtained in the above context and conveyed to them in the MHRD letter No.15/5/2003-SSA(PR) dated 1st July 2010, which are reproduced below: • Specific reasons to book the expenditure of earlier years in current year have not been specified. In terms of Para-75.1 of FM&P Manual, advances are to be adjusted as expenditure on receipt of expenditure statements/ Utilization Certificates. This para provides time limit of submission of these certifying documents for expenditure. The documents may be obtained before closing of account of the financial year so that advances are adjusted in the relevant financial year.

15. The reason that “due to late receipt of UCs” is not sustainable. The expenditure Statements/ Utilization Certificates need to be obtained as per time prescribed in Para-75.1 of the Manual. Timely receipt of UCs has been emphasized in Para-75.3 also. • The amount of advance remained unspent due to receipt of grant at the fag end of the previous year may be treated as follows.

16. In Case there is prior period liability of earlier years, the unspent balance may be included in the grant of the current year with the approval of PAB and in the accounts it should be shown as prior period adjustment to explain the excess expenditure over and above the PAB approved outlay. • In case there is no liability of earlier years, the unspent balance may be adjusted / reduced from the grant of current year. It may be ensured that all prior period expenditures are regulated in accordance with the above clarifications.