CHAPTER 8

The Working of a Treasury

108. Introductory. The Government of the Union and each State Govern- ment have their own rules to regulate the working of treasuries under their control. The procedure as described in this chapter will, however, give an idea how the treasury business is generally conducted.

109. Personnel. At places where the cash business of the treasury is not conducted by the Reserve Bank of India or its branches and agencies the personnel of a district treasury consists of

(1) the Collector or Deputy Commissioner of the District;

(2) the Treasury Officer, generally a Deputy Collector;

(3) the Treasurer; and

(4) the Accountant.

There are also clerks, money testers, messengers, etc.

110. The Collector is in general charge of the treasury and is personally responsible for its general administration, for the correctness of its returns and the punctuality of their submission, and for the safe custody of the valu- ables it contains; but he takes no part in the daily routine of treasury busi- ness.

The Treasury Officer is (under the Collector) in immediate executive charge of the treasury.

111. Under these two officers the treasury is divided into two departments, that of cash, stamps and opium under the charge of a Treasurer, who always has to give security, and that of accounts incharge of the Accountant.

112. Building. -The treasury building contains a counter at which money is received and paid, and a strong room, guarded by an armed police guard, in which the valuable are secured under double locks, the key of one lock being held by the Treasury Officer as the Collector’s representative and that of the other by the Treasurer.

113. Opening of the Treasury. The procedure of opening the treasury for the day is usually as follows.

Both the Treasury Officer, and the Treasurer being present, the locks and seals of the gates of the strong room are made over intact by the guard and the room is opened, each official using his own key, and sufficient cash and notes to meet the probable demands of the day are taken out, made over to the Treasurer, and entered in his accounts. The strong room is then again double locked. Issues from the strong room to meet further demands during the day are similarly made. Stamps and opium are issued to the Treasurer from the double lock as required, subject to the general rule that the value of cash, notes, stamps and opium in the hands of the Treasurer at any time shall not exceed his security.114. Receipts. The receipt and issue of money then begin. When any one has occasion to pay money into a treasury he first procures a printed form called “chalan”, which is usually bilingual and in duplicate, one copy to serve eventually as a receipt and the other for record in the treasury. In the chalan he enters the nature of the payment the person, or Government officer on whose account it is made, and all the information necessary for the preparation of the receipt to be given in exchange and for the proper account classification of the credit, and where necessary has the entries checked, passed and recorded by the revenue department concerned. He then takes the chalan to the Ac- countant, who, if it is in order, initials it and directs the presenter to take it with the money to the Treasurer, who, seeing the Accountant’s initials, tests and counts the money, enters the transaction in his account, and signs both copies of the chalan, in token that he has received the money. The presenter then takes the chalan back to the Accountant, who, on the strength of the Treasurer’s signature enters the transactions in his accounts, and completes his signature on one copy of the chalan which then forms a full acquittance. Generally in the case of sums of Rs. 500 and upwards the Treasury Officer also signs the receipt. When opium, stamps, etc., are sold, the total sales are entered by the Treasurer in his cash book before it is closed for the day and a memo- randum is prepared and forwarded to the Accountant so that the necessary entry may be made in his accounts.

115. Payments. Similarly, all payments are made by the Treasurer after examination by the Accountant, but only upon an order to pay signed by the Treasury Officer himself.

When a bill, giving full details as to the amount, nature, and period of the payment, and all other particulars necessary for its complete identifica- tion, is presented for payment, it is received and examined by the Accountant, who enters it in his accounts and lays it before the Treasury Officer, who, if it is in order, signs on it an order for payment. It is then passed on together with the payee, to the Treasurer’s department, and the Treasurer makes the payment and enters it in his accounts. The bill which then becomes a voucher is stamped “paid” and retained by the Treasurer for delivery to the Accountant’s department at the end of the day, when the books are compared in the manner explained in paragraph 119 below. Before, payment, the bill has to be receipt- ed by the payee.

116. When a payment has been made by cheque drawn on the treasury, similar formalities are observed in cashing it. The Accountant examines its validity and the Treasury Officer verifies it and, if he finds it to be in order, signs on it an order for payment, on the authority of which the Treasurer makes the payment and enters it in his account. The paid cheque, which then becomes a voucher, is handled in the same way as other vouchers.

117. Treasurer’s and Accountant’s Books. The Treasurer’s account con- sists of a cash book (without subsidiary registers), in which each receipt and payment is posted, at the time and on the date on which it actually occursand in the order of occurrence but the Accountant has, in addition to a cash book, subsidiary registers for receipts and payments of frequent occurrence, or of a special nature, or belonging to departments for which separate returns are prepared, and only the daily totals of these registers pass into his cash book. In a State treasury the cash book and subsidiary registers for State transactions are kept separate from those for Union transactions.

118. Incorporation of Sub-treasury Accounts. Receipts and payments con- tinue throughout the day according to this method. At the same time a daily sheet (supported by vouchers) is received in the district treasury from each of its sub-treasuries reporting the receipts, payments and balance of the day before (in some cases the second or third day before, according to the distance by post), any transactions of the Union taking place at a State sub-treasury being reported in a separate daily sheet. After examination the daily sheets from sub-treasuries are posted into the Accountant’s books at the district treasury but not into the Treasurer’s accounts.

119. Daily Closing. The process of closing a State treasury for the day is as follows:-

(i) The Accountant transfers the totals of his subsidiary registers into the cash book for Union or State transactions, as the case may be, sums and closes the latter, and prepares a balance sheet in a prescribed form in the State cash book. The totals of receipts and disbursements in cash as worked out in the cash book for Union transactions are posted in lump in the cash book of receipts and disbursements of the State.

(ii) The Treasury Officer, checks both registers and cash books, compar- ing each payment entry with its voucher and the register totals with those entered in the cash books, and varifies a certain number of the totals, the rest being checked by a clerk other than the Accountant. The cash book totals are also checked by senior sub- ordinate other than the Accountant.

(iii) Meanwhile the Treasurer sums both sides of his cash book and draws up a balance memorandum which gives details in kind of the notes, coin, etc., comparing the balances in his hands.

If the results in the two balance sheets agree, the Treasury Officer signs both cash books and both balance sheets and the accounts for the day are closed.

NOTE 1. The Accountant’s balance includes the balances of the sub-treasuries (paragraph 118) and also remittances in transit between treasuries in the district, which have to be deducted before agreement can be effected with the Treasurer’s balance.

NOTE 2. The cash book for Union transactions will invariably close with a nil balance as the difference between total disbursements will be adjusted under the appropriate head concerned.(iv) The Treasury Officer then verifies the cash, etc., in the hands of the Treasurer as shows in his balance memorandum, and, together with the Treasurer, locks it up under double locks in the strong room which is then left for the night incharge of the guard.

The procedure described above is followed mutatis mutandis in a Union treasury also.

120. Receipt, issue and safe custody of Treasure. The actual process of dealing with the valuables in a treasury, which include gold, silver, nickle, bronze, copper, notes, stamps and opium, is as follows:-

(i) Payments into and from the treasury are made in notes and in coins of silver, nickel bronze, copper or other approved metals. Gold mohurs are received in treasuries in certain circumstances, but they are not issued as currency. Stamps and opium are also kept in stock and issued as required.

(ii) All coin, besides being counted, is tested in detail before receipt for verification that it is genuine, current, and up to weight according to certain rules laid down.

(iii) Notes are similarly examined for verification that they are genuine and not mis-matched or altered, etc.

(iv) Coin intended for reception into the strong room is made up into bags of uniform contents (Rs. 100, Rs. 500, Rs. 1,000 or Rs. 2,000, according to convenience of use), and before deposit the contents of each bag are poured into scales, weighed, and tied up again in bags, in the presence of both the Treasury Officer and the Treasurer.

(v) Notes are made up in bundles of not more than 100 notes each ac- cording to denominations and counted both by the Treasury Officer and by the Treasurer.

(vi) In the strong room itself the bags of coin are placed in iron boxes or safes or wooden chests, or occasionally, in built recesses or wells, each receptacle being under double locks like the strong room itself. Coin which has been longest in the treasury is given out first, two boxes or other receptacle being, for this purpose, brought into use simultaneously, one in which all receipts are placed, and the other from which money required is given out.

(vii) The bundles of notes are similarly kept in suitable boxes in order of receipt so that those longest in stock may be issued first, and stamps and opium are dealt with in the same way, all the separate boxes being under double locks.

(viii) Most treasury strong rooms also contain currency chests referred to in paragraph 105. These chests also are under double locks.121. Monthly Balance. The working of the treasury proceeds in this way from day to day, and the monthly process is completed by the cash (coin and notes) present in the district treasury on the last day of the month being verified by the Collector himself or, if he is absent from headquarters or is otherwise unable to perform the duty, by a responsible assistant, the cash in each sub- treasury being similarly verified by the local officer in charge. An actual cash balance report for the whole district is then drawn up with which the account balance is compared.

122. Monthly Accounts. The point has now been reached for the despatch of the monthly returns to the Account office. In the case of State treasuries, the returns are submitted to the Account Officer of the State, and in the case of Union treasuries the monthly accounts are rendered to the Accountant General who has been nominated for the purpose by the Comptroller and Auditor General.

123. These monthly returns, which in the case of State treasuries are separate for transactions of the State and for those of the Union, consist of (i) schedules of payments in two parts, the first relating to the payments made from the first to the 10th of the month and the second part to those made during the rest of the month; (ii) schedules of receipts; (iii) a List of Pay- ments; and (iv) a Cash Account. These are written up daily in the treasury from the Accountant’s cash book and the registers subsidiary thereto, and the vouchers are day by day numbered, arranged, and put away under lock and kev.

124. There are separate schedules of receipts and expenditure for each department and for each major head of account not relating to any particular department, and in them the transactions are entered in sufficient detail to enable the preliminary compilation in the Account office to be made therefrom and the vouchers to be identified according to the classification given in them. The List of Payments and the Cash Account show respectively the total pay- ments made, and the total receipts collected, during the month, detailed accord- ing to each schedule, or, in respect of the Debt Deposit and Remittance transac- tions, according to broad account classification. The Cash Account (and in the case of a State treasury, the State Cash Account) also works up to the actual cash balance in the treasury on the last day of the month, as personally counted by the Collector, after bringing into it the total payments as shown in the List of Payments.

125. The first batch of payment schedules, supported by the necessary vouchers is sent to the Account Office on the 10th or 11th of the month; and the remaining schedules, supported by the necessary vouchers, the List of Pay- ments and the Cash Account, which is accompanied by a certificate of agree- ment of the account balance with the balance reported in the cash balance report of the treasury for the last day of the month, are sent on the first day of the succeeding month.

NOTE. The procedure described above differs in certain details in respect of treasuries in Madras and those situated in areas administered by the Union Govern- ment.126. The schedules, List of Payments and Cash Account described above, as sent from each treasury monthly to the Account Officer, represent the first stage of compilation of the public accounts. They cover conjointly the whole of the public transactions including departmental accounts and debt, deposit and remittance transactions. They may be said to constitute the primary fabric of the public accounts in India.

127. Daily and Monthly Agreement. It will be noticed generally that the correctness of the daily accounts of a self-contained treasury is secured by making two independent officials (the Accountant and the Treasurer) separately deal with and record each item of receipt and payment as it occurs, and by effecting an agreement at the end of the day between the two sets of accounts thus prepared, and at the same time verifying the actual cash balance in the hands of the Treasurer. This daily check is reinfored by the actual count of the whole of the cash balance in the treasury on the last day of each month by the collector himself.

128. Similarly, the safe custody of the treasure is secured by placing it conjointly in the hands of two independent officials, the Treasury Officer, and the Treasurer (one of whom, the Treasurer, gives substantial security), under the system of double locks.

129. Transactions at the Bank. The following organisations of the Reserve Bank are directly concerned with the cash transactions of the Union and the

Part A States:-

(1) Offices and branches of the Reserve Bank.

(2) Branches of the State Bank serving as agents of the Reserve Bank.

Each office and branch of the Reserve Bank maintains two separate accounts of cash transactions undertaken by it on behalf of Governments, one for transactions of the Union and another for transactions of the State in which the office or branch is situated, including transactions relating to other States. Separate statements of transactions in their Union or State accounts together with all supporting vouchers etc., are transmitted by each office and branch daily to the Accountant General or the Treasury Officer, as the case may be. At the close of each month, the balances of the two accounts are transferred to the Central Accounts Section of the Reserve Bank at Calcutta.

Each branch of the State Bank of India transacting Government business as agent of the Reserve Bank classifies the daily receipts and disbursements on behalf of Governments in two groups-Union and State, the latter embracing transactions not only on behalf of the State in which the branch is situated but also on behalf of other States. Separate statements of transactions of the Union and of those of the State are forwarded daily by each branch with supporting vouchers to the local Treasury Officer or to the Accountant General as the case may be.

The transactions of Railways, Posts and Telegraphs and Defence Services at the offices and branches of the Reserve Bank of India and at branchesof the State Bank of India acting as agents of the Reserve Bank are distin- guished from other Union transactions and are taken against the Railway, Posts and Telegraphs, Defence Fund as the case may be, in the books of the Reserve Bank direct. Such transactions do not pass through the treasury accounts and the accounts of the Civil Accountants General.

130. The actual procedure whereby Government authorises the Bank to accept receipts or to make payments varies according to circumstances. Thus, at places where Account offices are located and there is no treasury, the Account Officer alone issues the necessary authority. At headquarter stations of State Governments where there are both Account Offices and treasuries, in some cases the Account Officer issues the necessary orders and in others the Collector. There are also branches or agencies of the Bank at many stations where there are treasuries but no Account Offices. At such stations the neces- sary orders are issued by the Collector. Wherever an Account Office intervenes, all payment exceeding Rs. 20 are, unless there is a special request for cash payment, made by cheques drawn on the Bank.

131. It is unnecessary to detail the classes of receipts and expenditure which can be accepted or paid by the Bank without authority, or on the autho- rity of the Account Officer or the Collector. It may be said generally that the Bank deals direct with the receipts and expenditure of those departments which draw money by presenting cheques or simple receipts without specifying the nature of the payment while in other cases it requires the authority either of the Account Officer or of the Collector in respect of both receipts and pay- ments.

132. It will be understood, therefore, that where the treasury business is conducted by the Bank it performs practically the whole of the cash duties which, in a self-contained treasury, are conducted by the Treasurer. The daily reconciliation is, in consequence, effected between the treasury Accountant’s books and the Bank’s daily returns, instead of between the Accountant’s and the Treasurer’s books.

133. Check at the Treasury. In paragraph 115 it is stated that the Treasury Officer passes a payment order in writing on each bill presented for payment at the treasury provided it is in order. The words in Italics connote the check applied at the treasury to all bills before they are paid. The Treasury Officer has to satisfy not only himself but also the Account Officer that the claim is valid, and has further to prove that the payee has actually received the sum charged. He has, therefore, to see that the claim is covered by general or special orders, that the voucher is in the proper form and properly drawn up, that it is signed (and if necessary, countersigned) by the proper officer, that it is stamped if necessary, that the arithmeticalcalculations are correct, that the amount claimed is entered in words as well as figures, that there are no

*NOTE. The term “Collector” as used in this and the next paragraph includes the officer in charge of the treasury by whatever designation he may be called.erasures, and that all corrections and alterations are attested by the drawing officer. This general check is applied to all vouchers before they are paid at a treasury.

134. The most important features of this check are that it is applied before payment, and that it secures that no claims not generally and prima facie admissible shall be paid at a treasury; and that all bills shall be drawn and receipted by the responsible officers, and shall be in the proper forms and arithmetically correct. While this check is an indispensable element of the general arrangements for preventing irregular payments from the public funds, it must not be confounded with the audit scrutiny conducted by the Indian Audit and Accounts Department, which is generally audited after payment, that is, post audit, and includes a re-application of the checks applied at the treasury as well as a detailed examination of every item of expenditure with the sanc- tions, orders, and codes of the different departments.

135. Classification in the Treasury Accounts. As has already been stated in paragraph 80, the bills and vouchers before presentation at the treasury are required to be enfaced by the department concerned with the proper account classification; and from these enfacements the transactions are broadly classified in the schedules in the case of revenue receipts and service payments, and in the List of Payments and the Cash Account in the case of Debt, Deposit and Remittance transactions. For this purpose these documents have the broad account classification printed on them, and in the majority of cases the totals of the monthly receipts and payments are entered against these printed heads from the subsidiary registers maintained at the treasury. But a few items occur every month which do not clearly fall under any of the printed heads, or in respect of which the full account classification is wanting, and these the treasury describes in detail in the body of the schedule or the Cash Account or the List of Payments and leaves to the Account office to classify. The Account office does this and also checks the classification already made by the depart- mental officers in the bills and vouchers and by the Treasury Officer in the account submitted by him.

136. Treasury Inspection. In most States each treasury is inspected periodically by a gazetted officer deputed by the Accountant General. The Inspection Report is sent to the Collector in two parts, one relating to Cur- rency, Resource and Public Debt matters which are administered by the Re serve Bank and the other dealing with all other points. The Accountant Gene- ral also sends a copy of the first part of the Report to the Currency Officer in whose jurisdiction the treasury is situated. The Collector reports the action taken by him on Report to the Accountant General and sends a copy of the orders on the first part to the Currency Officer who informs the Accountant General whether the action taken on that part is adequate or whether any further action is required. The Accountant General brings to the notice of the Commissioner of the Division all matters in which he thinks that the action taken by the Collector is inadequate or which he considers should receive the attention of the Commissioner. The Accountant General reports to the StateGovernment all important points or irregularities which are not settled by re- ference to the Commissioner. Any point of importance affecting the Union Government is also brought to the notice of that Government through the Comptroller and Auditor General.

137. In matters of accounts and check at the treasury the Collector with the Treasury Officer under him, is responsible to the Account Officer, whose instructions he is bound to carry out. The Account Officer does not, however, ordinarily interfere with the Collector’s responsibility for the practical working of the treasury further than by constant correspondence with him for the removal of irregularities detected in the accounts and returns submitted. The Currency Officer concerned controls the “Resource” of the treasury, that is to say, he keeps it supplied with sufficient coins and notes, and, when necessary, removes surplus funds elsewhere. In all matters relating to Resource, the Collector is bound to carry out the instructions of the Currency Officer.