Rule 282 of The General Financial Rules 2017 Accounting for Guarantees

Rule 282 of The General Financial Rules 2017 Accounting for Guarantees

Visual Summary

Executive Summary

Rule 282 of the General Financial Rules, 2017 mandates transparent accounting for government guarantees. It requires Ministries and Departments to compile and publish detailed disclosure statements on all guarantees given, including their class, number, amounts, outstanding balances, and invocations. These statements must be submitted to the Controller General of Accounts and the Budget Division, and certified to align with the total figures in the Detailed Demands for Grants and comply with Indian Government Accounting Standard-1 (IGAS-1) for Government Guarantees. This rule aims to enhance fiscal transparency and public accountability.

In-Depth Analysis of the Rule

Rule 282 is a cornerstone of fiscal transparency, building upon the requirements of Rule 6 of the FRBM Rules, 2004. It establishes a clear framework for how government guarantees are to be accounted for and publicly disclosed. This ensures that the public and Parliament are fully informed about the contingent liabilities undertaken by the government.

Breakdown of the Rule:

• Mandatory Disclosure: The rule requires the government to publish a disclosure statement on guarantees given, as part of the annual financial statement and demands for grants. This statement must include comprehensive details such as the class, number, amounts guaranteed, outstanding balances, invocations, and guarantee fees.
• Compilation and Submission: Administrative Ministries and Departments are responsible for compiling these statements. They must submit them to the Controller General of Accounts, who then forwards them to the Budget Division. These inputs are crucial for depicting the overall statement of guarantees in the Receipt Budget.
• Certification and Compliance: Ministries and Departments must certify that the amounts in their guarantee statements align with the total figures in the Detailed Demands for Grants. Furthermore, they must ensure that the information provided complies with Indian Government Accounting Standard-1 (IGAS-1) related to Government Guarantees, and tallies with the material furnished for the Finance Accounts.

Practical Example:

Imagine the Ministry of Infrastructure provides a guarantee for a loan taken by a Public Sector Undertaking (PSU) to build a new highway. Under Rule 282 of the General Financial Rules, 2017, this Ministry must include details of this guarantee (e.g., amount, purpose, outstanding liability) in its annual disclosure statement. This statement is then submitted to the Controller General of Accounts and the Budget Division. The Ministry must also certify that these figures are consistent with its budget documents and adhere to IGAS-1, ensuring that Parliament and the public can clearly see the government’s contingent liability for the highway project.

Related Provisions

Understanding Rule 282 is enhanced by considering these related provisions:

• Rule 275 of The General Financial Rules 2017 Power to Give and Limits on Government Guarantees: This rule outlines the power and limits on the Union Government to give guarantees, providing context for the guarantees that Rule 282 requires accounting for.
• Rule 277 of The General Financial Rules 2017 Guidelines for Grant of Government of India Guarantee: This rule details the guidelines for granting government guarantees, which are the subject of accounting and disclosure under Rule 282.
• Rule 281 of The General Financial Rules 2017 Review of Guarantees: This rule mandates the annual review of guarantees, complementing Rule 282’s disclosure requirements by ensuring ongoing oversight.

Learning Aids

Mnemonics:

• Accounting Guarantees Transparently: Administrative Ministries Compile Statements, Certify Compliance.

Process Flowchart:

1. What is the primary purpose of Rule 282 of the General Financial Rules, 2017?

• A) To regulate the sanctioning of new government guarantees.
• B) To ensure greater transparency in the accounting of government guarantees.
• C) To define the types of financial instruments eligible for government guarantees.
• D) To establish limits on the total amount of guarantees the government can issue.

2. According to Rule 282 of the General Financial Rules, 2017, which entity is responsible for compiling the disclosure statement on guarantees?

• A) The Ministry of Finance.
• B) The Controller General of Accounts.
• C) Administrative Ministries / Departments.
• D) The Reserve Bank of India.

3. What specific accounting standard must the information in the summary statements comply with, as per Rule 282 of the General Financial Rules, 2017?

• A) Indian Accounting Standard (Ind AS) 109.
• B) International Financial Reporting Standard (IFRS) 9.
• C) Indian Government Accounting Standard-1 (IGAS-1).
• D) Generally Accepted Accounting Principles (GAAP).

4. The disclosure statement on guarantees, as required by Rule 282 of the General Financial Rules, 2017, is published at the time of presenting which document?

• A) The annual audit report.
• B) The quarterly financial review.
• C) The annual financial statement and demands for grants.
• D) The mid-year economic survey.

5. What details are NOT explicitly mentioned as being covered by the disclosure statement on guarantees in Rule 282 of the General Financial Rules, 2017?

• A) Class and number of guarantees.
• B) Amounts guaranteed and outstanding.
• C) Names of individual beneficiaries of guarantees.
• D) Guarantee fee payable and invocations.