Financial Code

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The Government’s financial transactions, like those of every person or body, fall into the two broad classes of receipts and disbursements. The Government’s receipts comprise the ordinary revenues derived from taxes, duties, fees, fines, and similar items of current Government income and also receipts that are of a deposit or banking nature, including repayments of loans and advances. The Government’s disbursements comprise expenditure out of the ordinary revenues, capital expenditure and also payments that are of a banking nature, including loans, advances and repayments of deposits.


Every Government servant who is entrusted with the duty of collecting any revenues due to the Government should assess the demands carefully and collect the revenues promptly. He should remit the same into Government Account on the same day itself. He should maintain proper accounts of the collections, watch the progress of collections against the total demand and take prompt steps to collect all arrears, if, in spite of taking all possible steps, some arrears still remain uncollected and he is satisfied that any portion of them is quite irrecoverable, he should apply at once to the competent authority for sanction to write off their recoverable arrears, The principles apply equally to the recovery of loans and advances made by the Government. He should reconcile the receipts with Treasury every month.



No Government servant may incur any item of expenditure from public funds unless the following two conditions are both satisfied:

a) The expenditure must have been sanctioned by a general or special order of the authority competent to sanction such expenditure; and

b) sufficient funds must have been provided for the expenditure in the Appropriation Act(s) for the current financial year or by a re appropriation of funds sanctioned by the authority competent to sanction such a re appropriation.

The two conditions are independent, and it is not sufficient for only one of them to be satisfied. A Government servant must always be sure that both of the conditions are satisfied before he incurs any expenditure from public funds.

Further, every Government servant who incurs or authorises the incurring of any expenditure from public funds should see that it does not contravene the following principles, which are known as the standards of Financial propriety

1) The expenditure should not be prima facie more than the occasion demands. Every Government servant is expected to exercise the same diligence and care in respect of all expenditure from public moneys under his control as a person of ordinary prudence would exercise in respect of the expenditure of his own money.

2) No Government servant should exercise his powers of sanctioning expenditure so as to pass an order directly to his own advantage.

3) Public moneys should not be utilized for the benefit of a particular person or section of the community unless —

    i) The amount of the expenditure involved is insignificant, or
    ii) A claim for the amount would be enforced in a court of law, or
    iii) The expenditure is in pursuance of a recognized policy or custom.

(4) The amount of any allowance, such as a village allowance, granted to meet expenditure of a particular type, should be so regulated that it is not, on the whole, a source of profit to the recipient.

(5) On introduction of digitization of transactions all payment are being made to the direct beneficiary under DBT mode. No question of reimbursement when personal cash used by the employees for official purpose.


It is the duty of every Government servant not merely to observe complete integrity in financial matters, but also to be constantly watchful to see that the best possible value is obtained for all public funds spent by him or under his control and to guard scrupulously against every kind of wasteful expenditure from public funds.



Every Government servant should see that proper accounts are maintained for all Government financial transactions with which he is concerned and render accurately and promptly all such accounts and returns relating to them as may have been prescribed by the Government, the Accountant-General or the competent departmental authorities. He should check the accounts as frequently as possible in order to see that his subordinates do not commit fraud, misappropriation or any other irregularity. The Government will hold him personally responsible for any loss that may be found to be due to any neglect of the duties laid upon him by the provisions of this code and the other Financial Codes issued by the Government. The fact that a Government servant has been misled or deceived by a subordinate will in no way mitigate his personal responsibility, since every Government servant should be familiar with the financial rules laid down by the Government and exercise a specially strict and close control over his subordinates, in regard to the use of public funds and the maintenance of proper accounts.

Art 323 Erasures (Placed here)

A Government servant should be on no account erase or overwrite any entry in any cash book, account, register or schedule. If he finds it necessary to make a correction, he should cancel the incorrect entry neatly in red ink and insert a correction entry. Whenever a government servant makes any correction or interpolation in any such document, he should request the head of the office to authenticate it by writing his dated initials against it.


In this Code, unless the context requires otherwise, the following words and phrases have the meanings hereby assigned to them. Words and phrases used in the Code which have been defined in the Constitution of India, or in the Rules and Orders framed under the Constitution have the meanings assigned to them in those definitions.

Note-(1) Reference to an Act of Andhra Pradesh in any of the provisions of the Code, shall be deemed to include the corresponding law if any, in force in Andhra area.

Accountant-General means of the office and accountants subordinate to the Comptroller and Auditor-General of India, who keep the accounts of the State and exercise audit functions in relation to those accounts on behalf of the Comptroller and Auditor- General of India.

Administrative approval means the formal acceptance by an administrative department of a proposal that the Works Department should incur a specified amount of expenditure on a specified work required by, or in connection with, that administrative department. It amounts to an instruction to the Department to execute a specified work or work at a specified cost to meet the administrative needs of the department which requires the work

Appropriation means the amount provided in the budget estimates for a unit of appropriation or the part of that amount placed at the disposal of Drawing and Disbursing officer.

Appropriation Bill means the Bill introduced in the Legislature to provide for the appropriation out of the Consolidated Fund of the State all moneys required to meet the grants made by the Assembly and the expenditure charged on the Consolidated Fund of the State.

Bank means the Reserve Bank of India, or any office, branch, or agency of the Reserve Bank of India in accordance with the provisions of the Reserve Bank of India Act, 1934 (India Act II of 1934).

Book adjustment (or book transfer) means the entries made in the government account in respect of a financial transaction which does not involve any actual receipt of disbursement of cash or stores by the Government, so that a disbursement entered under one head (or heads) is exactly counterbalanced by a receipt under another head (or heads). A book adjustment may represent a transaction between different departments of the Government or a correction in entries already made in the accounts.

Budget estimates are the detailed estimates of the receipts and disbursements of a financial year.

Cash Order means an order issued by a Treasury Officer on a sub- treasury within the district for a payment on the Government Account, or for any authorized purpose, of a specified amount to a specified person.

Centage charges means, in connection with a work which the Government execute on behalf of another Government, a local body or private party, the charge, calculated at a percentage rate on the value of the work done, which the Government recover from the party for whom the work is done, towards the cost of the establishment and the tools and plants employed on the work.

Central (Agency) subject (See Article 329)

Central (Agency) transaction (See Article 329)

Cheque means a written order (not expressed to be payable otherwise than on demand) addressed by a person called the “drawer” to a bank or a treasury to pay a specified sum of money to himself or a third party known as “payee” and includes a demand draft drawn on any specified bank or banker (including the Reserve Bank of India).

Collector means the Administrative officer for a district.

Completion (in relation to a work) means the finishing of abandonment of the work.

Consolidated Fund Account means the Account of the State into which the revenues received by the Government, loans or ways and means advances taken by the Government, moneys received by the Government in repayment of’ previous loans, and receipts by issue of treasury bill, are credited and from which the expenditure of the Government, when so authorized by the State Legislature, is met Contingencies

Contingency Fund Account means the account of the moneys placed at the disposal of the Governor to enable advances to be made by him for meeting unforeseen expenditure pending authorization of such expenditure by the State Legislature under appropriations made by law.

Contingent Charges

Contract means any kind of undertaking, written or verbal, expressed or implied, by a person other than a Government servant or by a syndicate or firm to construct, maintain or repair one or more works, to supply certain stores, or to perform any service in connection with the execution of a work or the supply of stores.

Contract documents means the documents required in connection with the giving out work on contract (see the Andhra Pradesh Public Works Department Code).

Contractor means a person, syndicate or firm that has entered into a contract with the Government.

Controlling officer means a head of a department or other departmental officer who is entrusted with the responsibility of controlling the incurring of expenditure and! or the collector of revenue by the subordinate authorities of a department.

Disbursing officer means a Government servant who draws money from the treasury on bills or cheques, but exclude a Government servant who is not the head of an office and draws only his own pay and allowances from the treasury.

Final payment means the last payment on a running account made to a contra or in full settlement of the account relating to his contract when the contract has been completed or determined.

Financial Property-Standards

Financial year means the year beginning with the 1st April and ending with the following 31st March.

First and final payment means a single payment made to a contractor in full settlement of the account relating to his contract when the contract has been completed or determined.

Government means the Government of Andhra Pradesh

Government Account means the total of the Consolidated Fund Account,

Contingency Fund Account and the Public Account of the State. Government Draft

Government servant means any person serving in connection with the affairs of the State, whether remunerated by salary or not, and includes every person who is authorized to receive, keep, carry, or spend moneys on behalf of the Government.

Governor means the Governor of Andhra Pradesh.

Head of a department means by authority specially declared by the Government to the head of a department.

Head of an Office means a Gazetted Government Servant specially declared by the Head of a Department/Government to be the Head of an Office.

Indian Audit Department means the officers and establishment, being in India and subordinate to the Comptroller and Auditor-General of India, those are employed upon the keeping and audit of the accounts of the Central Government and of the State, or upon one or other of these duties.

Inspecting Officer means a Government servant who is appointed solely or mainly for performing specified duties of inspection which involve touring ever more than one revenue district, and does not include a Government servant who performs inspection duties occasionally as part of his general supervision on his subordinate.

Local body means a Zilla Parishad, Municipal Corporations, Municipalities, Mandal Praza Parishad, Gram Panchayat, Agriculture Market Committees etc

Local funds means:-

(1) The moneys received and administered by a body which, though not part of the Government’s departmental organization, has been placed under the control of the Government by a law, or a rule having the force of law, whether in regard to its proceedings generally or to specific matters, e.g., its budget, creation of particular posts in its service and appointments to such posts, and the leave, pension and other rules applicable to its servants;

(2) The moneys received and administered by any other specified body when the Government have published a special notification to the effect that they constitute a “local fund”,

(3) The moneys recovered from Zilla Parishads or any other local body specified above, for any specific purpose and constituted into a separate fund under any law or rule having the force of law, provided that the fund is specially notified by the Government as a “local fund”.


Major head means a main head of account for the purpose of recording and classifying receipts and disbursements of moneys that enter into the Government Account of the State.

Market rate, Market value means, in respect of an article borne on the stock accounts, the cost per unit at which a stock of that article or a suitable substitute for could be obtained at the time in question at the stores godown from the public market from which it could be obtained most advantageously.

Measurement book :— See Article 174.

Miscellaneous expenditure means all expenditure other than that falling under pay and allowances, contingencies and works.

Muster roll :- See Article 171.

Piece-work contract :— See Article 163.

Public Account means the Account into which all moneys other than those mentioned in the Consolidated Fund Account and the Contingency Fund Account, received by or on behalf of the Government. are credited and from which disbursements are made in accordance with the prescribed rules.

Quantity means, in connection with works, the extent of work done, supplies furnished or services performed, as measured, weighed or counted.

Rate means, in estimates of cost, contracts, contractor’s bills and vouchers generally, the amount payable for each unit of work, supply or other service.

Re-appropriation means the transfer of savings in the appropriation for a unit of appropriation to meet excess anticipated under another unit.

Revenues of the State mean it includes all money received by a Government servant on behalf of the Government; not only the proceeds of taxation and the yield of ordinary revenue but also capital receipts such as the proceeds of sales of land; the proceeds of borrowing operations; unfounded debt and such receipts of a banking or deposit nature as, by virtue of any statutory provisions or of any general or special executive order of the Government, have to be held in the custody of the Government.

Running account means an account with a contractor on which payment for work or supplies is made to him at convenient intervals subject to final settlement of the account on the completion or termination of his contract.

Scheduled Areas means agency areas of the Visakhapatnam, Srikakulam, East Godavari and West Godavari districts — See Part C of the Fifth Schedule to the Constitution of India.

State means the State of Andhra Pradesh.

Stores means all articles and materials including live-stock (other than cash and documents) which come into the possession of a Government servant for use in the public service.

Sub-head means, in connection with estimates and account of works, one of the sub-divisions according to items of work, e.g., excavation, brickwork, concrete, woodwork etc., into which the expenditure on a work or a sub-work, of a large work is divided in order to facilitate accounting and financial control.

Sub-work means distinct unit of a large work which comprises several buildings, smaller works or groups of smaller works. For example, the outer wall, the solitary cells, the cook-houses, the jailors’ quarters, etc., would form separate sub-works when a large central jail is built. The sub- works of a large irrigation canal may include the head works, the main line, each branch of a canal, each group of distributaries relating to each branch separately, the drainage and protective works, etc.

Technical Sanction means the order of a competent authority sanctioning a property detailed estimate of the cost of work of construction or repair to be carried out by the Works Department

Treasury means any treasury of the State and includes a sub-treasury

Treasury Officer means the officer in immediate executive charge of a Treasury.

Treasury Rule means one of the “Andhra Pradesh Treasury Rules”, framed by the Governor under Article 238(2) of the Constitution of India (See Part I of the Andhra Pradesh Treasury Code, Volume I).

Unit of appropriation means the lowest account head under which the Government place a specific appropriation at the disposal of the spending authority concerned, Work :- See Article 147.


The items of Government revenue with which department authorities deal include the land revenue, the proceeds of State taxes and duties, the charges made for supplying water from Government sources for irrigation, Excise, Sales Tax, Transport, Stamps and Registration, mines, land revenue, water charges etc., and other fees for services rendered, fines and penalties, the revenue from the Government such as forests, and other miscellaneous items.


Every Government servant who is responsible for the collections of any moneys due to the Government should see that demands are made at once as payments become due, that effective steps are taken to ensure the prompt realization of all amounts due and that proper records are kept to be shown in respect of all items of revenue, whether recurring or non-recurring, the assessments and demands are made, the progress of recovery and the outstanding amounts due to the Government. Every departmental controlling officer should watch closely the progress of the realization of the revenues under his control and check the recoveries made against the demands.


Every departmental controlling officer should obtain regular accounts and returns from his subordinates for the amounts realized by them and paid into the treasury and consolidate the figures in a register so as to show the total receipts for each month classified according to the head of account in the Budget Estimates.

The controlling officer should compare the figures compiled in this register with the accounts received from the Accountant-General and reconcile any differences as early as possible in communication with the Treasury Officer concerned, and, if necessary, with the Accountant-General also. The reconciliation of the figures for March is especially important and should be completed as soon as possible, since any corrections that may be required in the Accountant- General’s books have to be made before the accounts of the year are closed. When a wrong credit is discovered, the controlling officer should inform the Accountant-General at once in order that the accounts may be corrected. When a subordinate Government servant’s return includes a credit for which there is no corresponding credit in the accounts received from the Accountant-General, the controlling officer should in the first instance call for full information from the subordinate Government servant.

The reconciliation work of receipts and expenditure for every month should be done by every DDO with that of the Treasury Accounts and obtain the Certificate of correctness of the amounts from the Treasury Officer concerned.


Revenue collected in one district on account of another should be credited in the treasury account through online. On digitalization of receipts for a particulars DDO shall be remitted in anywhere in the State and the receipts are being accounted for in the particular DDO. The Particular DDO shall verify the Demand, Collection, Balance statement duly taking the receipts into consideration.


The detailed rules governing the demand and collection of revenue under the control of the various departments are contained in the respective departmental manuals.


When the Government agrees to render a service to, or incur a charge on account of a local body, any other public body not forming part of the Government’s departmental organization or a private body or person, the estimated amount of the charge or cost of the service should ordinarily be recovered in advance

ARTICLE 13 to 22. 

1)      For the Government Buildings newly constructed or if any additions or deletions to that particular Govt Buildings carried out which are used as residential purpose or for office purpose, the competent authority for fixation of rents is the Executive Engineer of R&B concerned for such Buildings. (Rent fixation order)

2)      The Head of Department concerned shall issue administrative sanction basing on the rent fixation given by the concerned EE of R&B Department.

3)      10% of the basic pay or standard rent fixed according to the age of the Buildings has to be recovered from the salary of the Tenant as confirmed by the departmental authorities.

4)      The EE, R&B concerned has to send Demand, Collection, Balance statement every month before 15th to the DDO/Head of the Office for effecting recovery of rent from the employees who occupied the Government Quarters

5)      Every head of office /DDO has to recover the rents from the Pay Bill of the concerned employee who are on rent in the Govt Buildings.

6)      The Head of Office/DDO shall furnish a statement showing the rents recovered in the preceding month not later than 20th to the concerned EE R&B with full particulars of the bill in which the rent recovered.

7)      The DDO as well as Executive Engineer has reconcile the figures initially and confirm with the Treasury regarding recovery of rent every month.

8)    Unless EE informs about the vacation of that building by the employee due to Transfer or Retirement, the DDO has to recover the rents as usual.


When any Government property or right is sold by public auction the Government servant conducting the auction shall give adequate time before knocking down the bid in favour of the highest bidder and shall also obtain the signatures of the successful bidder and two other bidders lower to the highest bid in the sale register or relevant record with the amount of the bids written in words and figures and duly dated.


(a) The Irrigation Department is responsible for the assessment of revenue on account of water supplied from any irrigation work in its charge to a town, mill or plantation, etc., while the Revenue Department is responsible for its collection. The Irrigation Department should advise the Revenue Department of the particulars of each case together with the amount to be collected in order to enable the latter to make the collection. The revenue from the sale of canal produce will be realized by the Irrigation Department. The department is also responsible for realizing the revenue from miscellaneous properties, e.g., by sale of rights to enjoy the usufruct of trees, grass and fisheries, for the assessment and recovery of rents of buildings, lands, staff boats, other floating plant, and for the collection of license fees and other dues liveable under the Navigation Rules.


When a hostel is provided for a government educational institution the departmental authority in charge of the institution should, immediately after taking charge of the hostel building, request the head of the department to obtain the Government’s orders for the fixation and recovery of rent. After fixation of rent by the EE, administrative approval from the HOD, obtain budget and make book adjustment to the receipt head of the concerned department.


The fines are deposited under Civil (or) Criminal Court Deposits. The deposit accounts are reconciled with the Treasury by the Judicial Officers and payments /re-payments are being made through the above deposit accounts.

Remaining articles will be publihed soon.....

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