Rule 110 of The General Financial Rules 2017 When Adjustment Necessary
Original Rule Text
Visual Summary
Adjustments are always required unless explicitly agreed otherwise.
Applies to commercial departments, undertakings, or store sections.
Follows rules for transactions between Central Government departments.
Executive Summary
Rule 110 of The General Financial Rules, 2017 mandates that financial adjustments must always be made unless there is a specific agreement to the contrary. This rule is particularly applicable to commercial departments, undertakings, or store sections. Furthermore, it stipulates that transactions with State Governments should be adjusted as if they were transactions between two departments of the Central Government, adhering to existing rules and orders. This ensures consistency and proper financial accountability across various governmental and quasi-governmental entities.
In-Depth Analysis of the Rule
Introduction: Rule 110 establishes a fundamental principle of financial management within the government framework, emphasizing the mandatory nature of adjustments in financial transactions. This rule aims to ensure clarity, accountability, and consistency in how various entities handle their financial dealings, especially when commercial operations or inter-governmental transactions are involved.
Breakdown of the Rule:
- General Principle of Adjustment: The rule begins by stating that “Adjustment shall always be made unless otherwise agreed upon.” This sets a default expectation that all financial transactions requiring adjustment must undergo the process, unless a specific, documented agreement overrides this requirement. This ensures that financial records accurately reflect the true state of affairs.
- Applicability to Commercial Entities: Clause (a) specifies that this mandatory adjustment applies “If a commercial department or undertaking or a regularly organised store department or store section of a department is concerned.” This highlights the importance of commercial principles and accurate accounting within government entities that operate on a commercial or quasi-commercial basis.
- Inter-Governmental Transactions: Clause (b) extends the principle to transactions with State Governments. It mandates that “an adjustment would have been made if the particular transaction with State Government were a transaction between two departments of the Central Government.” This ensures that financial dealings between the Central Government and State Governments are treated with the same rigor and adherence to rules as internal Central Government transactions, promoting uniformity and preventing discrepancies.
Practical Example: Consider a Central Government commercial undertaking that supplies goods to a State Government department. According to Rule 110, the financial transaction for this supply must be formally adjusted in the accounts. Even if there’s a specific agreement for payment terms, the underlying principle of adjustment remains. If the same transaction were between two Central Government departments, an adjustment would be made to reflect the transfer of goods and corresponding financial liability. Rule 110 ensures that the transaction with the State Government is handled with the same accounting formality, preventing outstanding balances from being overlooked and ensuring proper financial reconciliation.
Related Provisions
Rule 110 is part of a broader framework governing financial adjustments and inter-governmental transactions. Other relevant rules include:
- Rule 108 of The General Financial Rules 2017 Adjustments with State Governments: This rule sets out the general principles for financial adjustments with State Governments, which Rule 110 further elaborates upon regarding the necessity of such adjustments.
- Rule 109 of The General Financial Rules 2017 Re-audit: This rule discusses the re-audit of past transactions involving classification errors, which is relevant to ensuring the correctness of adjustments made under Rule 110.
- Rule 111 of The General Financial Rules 2017 Petty and Isolated Claims for Services Rendered Not to be Preferred: This rule provides exceptions for petty claims, which implicitly reinforces the general requirement for adjustments in other, more significant cases as per Rule 110.
Learning Aids
Mnemonics
- Always Adjust: Commercial Entities Inter-governmental Transactions. (AA: CEIT)
Process Flowchart
Multiple Choice Questions (MCQs)
1. According to Rule 110 of the General Financial Rules, 2017, when is adjustment always necessary?
- A) Only when explicitly agreed upon.
- B) Only for non-commercial departments.
- C) Always, unless otherwise agreed upon.
- D) Never, unless a loss is incurred.
Show Answer
Correct Answer: C) Always, unless otherwise agreed upon.
2. Rule 110 (a) of the General Financial Rules, 2017, specifically applies to which type of entity?
- A) Educational institutions only.
- B) Commercial departments or undertakings.
- C) Non-profit organizations.
- D) Individual government employees.
Show Answer
Correct Answer: B) Commercial departments or undertakings.
3. How should a transaction with a State Government be treated for adjustment purposes under Rule 110 (b) of the General Financial Rules, 2017?
- A) As a transaction with a foreign government.
- B) As a transaction between two private entities.
- C) As if it were a transaction between two departments of the Central Government.
- D) It is exempt from adjustment.
Show Answer
Correct Answer: C) As if it were a transaction between two departments of the Central Government.
4. What is the primary condition under Rule 110 of the General Financial Rules, 2017, that allows for an exception to mandatory adjustment?
- A) If the amount is very small.
- B) If there is an explicit agreement otherwise.
- C) If it is a recurring expenditure.
- D) If the transaction is with a Union Territory.
Show Answer
Correct Answer: B) If there is an explicit agreement otherwise.
5. Which of the following is NOT a condition for mandatory adjustment under Rule 110 of the General Financial Rules, 2017?
- A) A commercial department is concerned.
- B) A regularly organised store department is concerned.
- C) The transaction with State Government operates under a specific rule or order.
- D) The transaction involves a non-commercial service department.
Show Answer
Correct Answer: D) The transaction involves a non-commercial service department.
Frequently Asked Questions
What is the core principle of Rule 110 of the General Financial Rules, 2017?
The core principle is that financial adjustments are always mandatory unless there is a specific, prior agreement to waive them.
Does Rule 110 of the General Financial Rules, 2017, apply to transactions between the Central Government and State Governments?
Yes, Rule 110 (b) explicitly states that transactions with State Governments should be adjusted as if they were between two departments of the Central Government, ensuring consistent financial treatment.
What types of entities are primarily affected by Rule 110 (a) of the General Financial Rules, 2017?
Rule 110 (a) primarily affects commercial departments, undertakings, or regularly organized store departments or sections within the government framework.
Key Takeaways
- Rule 110 mandates financial adjustments in all cases unless a specific agreement dictates otherwise.
- It specifically applies to commercial departments, undertakings, and store sections within the government.
- Transactions with State Governments must be treated as if they were between two Central Government departments for adjustment purposes.
- The rule ensures uniformity, accountability, and proper financial reconciliation across various government and quasi-government entities.
Conclusion
Rule 110 of The General Financial Rules, 2017, serves as a cornerstone for maintaining financial discipline and transparency within the government. By clearly defining when adjustments are necessary, especially for commercial entities and inter-governmental transactions, it reinforces the principles of sound financial management and accountability, ensuring that public funds are meticulously tracked and reconciled.