Rule 235 of The General Financial Rules 2017 Accounts of Grantee Institutions
Original Rule Text
Visual Summary
Keep subsidiary accounts of government grants.
Provide audited statements to the Accounts Officer.
Submit after grant utilization or when requested.
Executive Summary
Rule 235 of The General Financial Rules, 2017 mandates that all institutions or organizations receiving government grants must maintain detailed subsidiary accounts for these funds. Furthermore, they are required to submit a set of audited statements of these accounts to the Accounts Officer. This submission is necessary either after the full utilization of the grants-in-aid or whenever specifically requested by the authorities, ensuring accountability and transparency in the use of public funds.
In-Depth Analysis of the Rule
Rule 235 outlines the fundamental accounting and reporting obligations for any entity that receives financial assistance in the form of grants from the government. This rule is crucial for maintaining fiscal discipline and ensuring that public funds are utilized for their intended purposes, with a clear audit trail.
Breakdown of the Rule:
- Maintenance of Subsidiary Accounts: The primary requirement is for grantee institutions to maintain separate, detailed accounts specifically for the government grants received. This ensures that grant funds are distinguishable from other institutional funds and their utilization can be tracked precisely.
- Furnishing Audited Statements: These subsidiary accounts must be audited, and the resulting audited statements are to be submitted to the Accounts Officer. This step provides an independent verification of the financial records and the proper use of funds.
- Timing of Submission: The audited statements must be furnished either upon the complete utilization of the grants-in-aid or whenever the Accounts Officer or competent authority demands them, ensuring flexibility while upholding accountability.
Practical Example:
A non-profit organization receives a grant of Rs. 50 lakhs from the Ministry of Health for a public health awareness campaign. According to Rule 235 of The General Financial Rules, 2017, the organization must open and maintain a separate bank account and ledger for this Rs. 50 lakh grant, recording all receipts and expenditures related to the campaign. Once the campaign is completed and the Rs. 50 lakhs are fully spent, or if the Ministry requests it mid-campaign, the organization must get these specific grant accounts audited by a Chartered Accountant. The resulting audited statement, along with a utilization certificate, must then be submitted to the Accounts Officer of the Ministry of Health, demonstrating how the public funds were used.
Related Provisions
Understanding Rule 235 is enhanced by examining other related provisions within the General Financial Rules, 2017:
- Rule 230 of The General Financial Rules 2017 Principles and Procedure for Award of Grants-in-aid: This rule details the general principles and procedures for sanctioning grants-in-aid, providing context for the receipt of funds mentioned in Rule 235.
- Rule 236 of The General Financial Rules 2017 Audit of Accounts: This rule specifies the audit requirements for grantee institutions, directly complementing Rule 235’s mandate for furnishing audited statements.
- Rule 238 of The General Financial Rules 2017 Utilization Certificates: This rule outlines the necessity and format of Utilization Certificates, which are often submitted alongside the audited statements required by Rule 235.
Learning Aids
Mnemonics:
- Accounts Always Audited Upon Utilization: Reminds that Accounts must be Audited and submitted Upon Utilization or Upon demand.
Process Flowchart:
Multiple Choice Questions (MCQs)
1. According to Rule 235 of The General Financial Rules, 2017, what type of accounts must institutions receiving government grants maintain?
- A) Only consolidated financial statements
- B) Subsidiary accounts specifically for the government grant
- C) Project-specific budget allocations only
- D) Income and expenditure statements for the entire organization
Show Answer
Correct Answer: B) Subsidiary accounts specifically for the government grant
2. When are institutions required to furnish audited statements of accounts for government grants as per Rule 235 of The General Financial Rules, 2017?
- A) Annually, regardless of grant utilization
- B) Only at the end of the financial year
- C) After utilization of the grants-in-aid or whenever called for
- D) Before receiving the next installment of the grant
Show Answer
Correct Answer: C) After utilization of the grants-in-aid or whenever called for
3. Who is the recipient of the audited statements of accounts for government grants under Rule 235 of The General Financial Rules, 2017?
- A) The Ministry of Finance
- B) The Comptroller and Auditor General
- C) The Accounts Officer
- D) The Head of the Grantee Institution
Show Answer
Correct Answer: C) The Accounts Officer
4. Rule 235 of The General Financial Rules, 2017 applies to institutions receiving grants, irrespective of:
- A) The size of the institution
- B) The amount of the grant involved
- C) The type of activities undertaken
- D) The geographical location of the institution
Show Answer
Correct Answer: B) The amount of the grant involved
5. What is the primary objective of Rule 235 of The General Financial Rules, 2017 regarding accounts of grantee institutions?
- A) To simplify financial reporting for small grants
- B) To ensure accountability and transparency in the use of public funds
- C) To reduce the administrative burden on grantee institutions
- D) To centralize all accounting functions within the government
Show Answer
Correct Answer: B) To ensure accountability and transparency in the use of public funds
Frequently Asked Questions
Q1: Does Rule 235 apply to all grants, regardless of their value?
Yes, Rule 235 of The General Financial Rules, 2017 explicitly states that institutions receiving grants must comply with its provisions “irrespective of the amount involved,” meaning it applies to all grants, big or small.
Q2: What is the purpose of maintaining “subsidiary accounts” for government grants?
Maintaining subsidiary accounts ensures that the funds received from government grants are kept separate and distinct from the institution’s other financial resources. This segregation facilitates clear tracking of how the grant money is spent and aids in accurate reporting and auditing, promoting transparency and accountability.
Q3: Who audits the statements of accounts for grants under Rule 235?
While Rule 235 requires furnishing “audited statement of accounts,” the specific auditor is often determined by other rules, such as Rule 236, which specifies audit by the Comptroller and Auditor General of India under certain conditions or by Chartered Accountants in other cases. The key is that the statements must be independently audited.
Key Takeaways
- Grantee institutions must maintain dedicated subsidiary accounts for all government grants received.
- Audited statements of these accounts are mandatory for submission to the Accounts Officer.
- Submission is required either upon full utilization of the grant or whenever specifically requested.
- The rule emphasizes transparency and accountability in the management of public funds, regardless of the grant amount.
Conclusion
Rule 235 of The General Financial Rules, 2017 serves as a cornerstone for financial governance, ensuring that public funds disbursed as grants are meticulously accounted for and transparently reported. By mandating subsidiary accounts and audited statements, it reinforces the government’s commitment to fiscal propriety and holds grantee institutions to high standards of financial management, ultimately safeguarding taxpayer money.