PARLIAMENTARY CONTROL ON EXPENDITURE
Parliament and State Legislatures have constituted specialized Committees like the Public Accounts Committee (PAC) and the Committee on Public Undertakings (COPU), to whom CAG’s audit reports and annual accounts automatically stand referred. Further, the Estimates Committee examines the extent to which the budget estimates correspond to actual expenditure incurred in the year.
Public Accounts Committee (PAC)
The Public Accounts Committee satisfies itself that: the moneys (shown in the accounts) were used legally on the service or purpose to which they were applied; that the expenditure was authorized; and that re-appropriation (i.e. distribution of funds) was appropriate. The PAC also examines the statement of accounts of autonomous and semi-autonomous bodies, the audit of which is conducted by the CAG.
While PAC considers the regularity, propriety and legality of expenditure, the Estimates Committee looks at the accuracy of the budget estimates. (Incidentally, budget is a forecast of income and expenditure for the coming financial year.) In other words, its focus is on how accurate the forecasts of the budget proved to be. This aspect can be called ‘the targeting’ of budget. It is impossible for anyone to prepare a budget whose numbersturnout to be 100% accurate.The expenditureforecasts can be either optimistic or pessimistic; many unexpected factors (like floods or drought) may falsify the estimates; and things depend on how the general economy behaves. An old method of estimating expenditure on any item is to consider the average of the previous three years and add extras for new staff and inflation. This is a conservative method which cannot pick up newer trends and is of little use for estimating expenditure on new schemes. Be that as it may, budgetary estimates have to be close to actual expenditures.
The Committee also examines surrenders and reappropriations of funds. When a department is unable to utilizeitsbudget provision, it surrenderspart or whole of it.Thenthesurrenderedamounts are used for some other scheme. Normally, such adjustments are allowed within certain range. But excessive surrenders and reappropriations reflect bad budgeting. These are the types of questions which estimates committee examines.
Committee on Public Undertakings
The Committee on Public Undertakings exercises the same financial control on the public sector undertakings as the Public Accounts Committee exercises over the functioning of the Government Departments. The examination of public enterprises by the Committee takes the form of comprehensive appraisal or evaluation of performance of the undertaking. It involves a thorough examination, including evaluation of the policies, programmes and financial working of the undertaking.
The objective of the Financial Committees, in their scrutiny of audit reports, is not to focus only on the individual irregularity, but on the defects in the system which led to such irregularity, and the need for correction of such systems and procedures.
The Financial Committees present their Reports to the Parliament/ State Legislature with their observations and recommendations. The various Ministries / Departments are required to inform the Committees of the action taken by them on the recommendations of the Committees (which are generally accepted) and the Committees present Action Taken Reports to Parliament / Legislature.
Every officer incurring or authorizing expenditure from public moneys should be guided by high standards of financial propriety.Everyofficer should also enforce financial order and strict economy and see that all relevant financial rules and regulations are observed by his own office and by subordinate disbursing officers. Among the principles on which emphasis is generally laid are the following:
(i) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.
(ii) The expenditure should not be prima facie more than the occasion demands.
(iii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.
(iv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of the people, unless (a) a claim for the amount could be enforced in a Court of Law, or (b) the expenditure is in pursuance of a recognised policy or custom.
(v) The amount of allowances granted to meet expenditure of a particular type (e.g. travelling allowance or house rent allowance) should be so regulated that the allowances are not on the whole a source of profit to the recipients.