Rule 212 of The General Financial Rules 2017 Hiring out of Fixed Assets
Original Rule Text
Visual Summary
Governs hiring of fixed assets to external entities.
Mandates proper records for assets and charges.
Charges based on historical cost of assets.
Executive Summary
Rule 212 of The General Financial Rules, 2017, outlines the mandatory procedures for government entities when hiring out fixed assets to external parties such as local bodies or contractors. It emphasizes the critical need for maintaining accurate records of these assets and ensuring the regular recovery of all associated hire and other charges. Crucially, the rule stipulates that the calculation of these recoverable charges must be based on the historical cost of the assets, ensuring a standardized and transparent approach to asset utilization and revenue generation.
In-Depth Analysis of the Rule
Rule 212 provides clear directives for government departments engaged in the practice of hiring out fixed assets. This ensures accountability, proper financial management, and consistent application of recovery principles. The rule aims to prevent arbitrary pricing and ensure that public assets are managed efficiently, contributing to government revenue.
Breakdown of the Rule:
- Scope of Application: The rule applies when fixed assets are hired out to various external entities, including local bodies and contractors. This broad scope ensures comprehensive coverage for different types of engagements.
- Mandatory Record Keeping: A fundamental requirement is the maintenance of proper records for both the assets themselves and all associated hire and other charges. This ensures transparency and facilitates auditing.
- Regular Recovery of Charges: The rule mandates that all determined charges must be recovered regularly, preventing accumulation of arrears and ensuring consistent revenue flow.
- Basis of Charge Calculation: A key directive is that the calculation of charges must be based on the ‘historical cost’ of the asset. This provides a clear, objective, and non-negotiable basis for pricing, avoiding subjective valuations.
Practical Example:
Imagine the Public Works Department (PWD) hires out a road roller to a local contractor for a specific project. According to Rule 212, the PWD must maintain detailed records of this road roller, including its original purchase price (historical cost), the duration of hire, and the agreed-upon charges. The rental charges levied on the contractor must be calculated based on this historical cost, as determined by the competent authority’s rules. The PWD is then responsible for regularly collecting these charges from the contractor, ensuring no outstanding dues accumulate.
Related Provisions
Rule 212 is part of a broader framework for financial management. Other related rules include:
- Rule 211 of The General Financial Rules, 2017: Lists and Accounts – Details the maintenance of item-wise lists and accounts for goods and materials, including fixed assets.
- Rule 213 of The General Financial Rules, 2017: Physical Verification of Fixed Assets – Outlines the process for annual physical verification of fixed assets and investigation of discrepancies.
- Rule 33 of The General Financial Rules, 2017: Report of Losses – Provides procedures for reporting losses or shortages of public property, which could include fixed assets.
Learning Aids
Mnemonics:
- H.A.R.C.H.: Hiring Assets Records Charges Historical Cost.
Process Flowchart:
Multiple Choice Questions (MCQs)
1. What is the primary requirement of Rule 212 of the General Financial Rules, 2017, when a fixed asset is hired out?
- A) To ensure the asset is insured at market value.
- B) To maintain proper records of the assets and charges.
- C) To obtain prior approval from the Ministry of Finance.
- D) To base charges on current market rates.
Show Answer
Correct Answer: B) To maintain proper records of the assets and charges.
2. According to Rule 212 of the General Financial Rules, 2017, how should charges for hiring out fixed assets be calculated?
- A) Based on the depreciated value of the asset.
- B) Based on the current market value.
- C) Based on the historical cost.
- D) Based on a mutually agreed-upon rate with the hirer.
Show Answer
Correct Answer: C) Based on the historical cost.
3. Who is responsible for ensuring the regular recovery of hire and other charges for fixed assets as per Rule 212 of the General Financial Rules, 2017?
- A) The local bodies or contractors.
- B) The competent authority that prescribed the rules.
- C) The government entity hiring out the asset.
- D) The Accounts Officer.
Show Answer
Correct Answer: C) The government entity hiring out the asset.
4. Rule 212 of the General Financial Rules, 2017, applies to fixed assets hired out to which of the following?
- A) Only local bodies.
- B) Only contractors.
- C) Local bodies, contractors, or others.
- D) Only other government departments.
Show Answer
Correct Answer: C) Local bodies, contractors, or others.
5. What kind of record is specifically mentioned in Rule 212 of the General Financial Rules, 2017, that should be kept for hired fixed assets?
- A) Only records of the assets’ maintenance history.
- B) Only records of the hire charges.
- C) Proper records of the assets and the hire and other charges.
- D) Records of the asset’s future utility.
Show Answer
Correct Answer: C) Proper records of the assets and the hire and other charges.
Frequently Asked Questions
What is the main purpose of Rule 212 of The General Financial Rules, 2017?
Rule 212 primarily ensures proper financial management and accountability when government fixed assets are hired out to external parties. It mandates accurate record-keeping and the recovery of charges based on historical cost.
Why is historical cost used for calculating charges under Rule 212 of The General Financial Rules, 2017?
Using historical cost provides a consistent, objective, and transparent basis for calculating charges, preventing arbitrary pricing and ensuring that the government recovers costs based on the original investment in the asset.
Does Rule 212 of The General Financial Rules, 2017, apply to all types of government property?
Rule 212 specifically applies to “fixed assets” that are hired out. It does not cover all types of government property or all forms of their disposal or use.
Key Takeaways
- Mandatory record-keeping for hired fixed assets and associated charges.
- Regular recovery of all hire and other charges is essential.
- Charges must be calculated based on the historical cost of the asset.
- Ensures transparency, accountability, and efficient management of public assets.
Conclusion
Rule 212 of The General Financial Rules, 2017, serves as a cornerstone for the responsible management of government fixed assets when they are utilized by external entities. By strictly enforcing proper record-keeping, regular charge recovery, and the use of historical cost as the basis for calculation, the rule upholds principles of financial propriety, transparency, and accountability in public administration. Adherence to this rule is vital for safeguarding public funds and ensuring optimal utilization of government resources.