Rule 79 of The General Financial Rules 2017 Authority to Open New Head of Account

Rule 79 of The General Financial Rules 2017 Authority to Open New Head of Account

Visual Summary

Executive Summary

Rule 79 of The General Financial Rules, 2017, delineates the authority responsible for establishing new Heads of Account within the Union and State accounting framework. This power primarily rests with the Ministry of Finance (Department of Expenditure – Controller General of Accounts), acting on the advice of the Comptroller and Auditor General of India, as mandated by Article 150 of the Constitution. The rule also specifies that Ministries and Departments, in consultation with the Budget Division, can open Sub-Heads and Detailed Heads, while the power to modify or open new Object Heads lies with the Department of Expenditure, again with the C&AG’s advice. This ensures a structured and controlled approach to government accounting classification.

In-Depth Analysis of the Rule

Rule 79 is a foundational provision governing the classification and structure of government accounts. It establishes a clear hierarchy of authority for creating and modifying accounting heads, ensuring consistency and accountability across various government entities. This rule is crucial for maintaining the integrity and transparency of financial reporting, aligning with the constitutional mandate for proper accounting practices.

Breakdown of the Rule

• Primary Authority for New Heads: The Ministry of Finance (Department of Expenditure – Controller General of Accounts) is the designated authority for opening new Major and Minor Heads of Accounts for both the Union and States. This power is exercised based on the advice of the Comptroller and Auditor General of India, as per Article 150 of the Constitution.
• General Directions and Lists: The Ministry of Finance (CGA) maintains a comprehensive list of all authorized Sectors, Major, Sub-Major, and Minor Heads, along with general directions for their opening.
• Sub-Head and Detailed Head Creation: Ministries and Departments have the flexibility to open Sub-Heads and Detailed Heads as needed, but this must be done in consultation with the Budget Division of the Ministry of Finance.
• Principal Accounts Offices: These offices can open Sub/Detailed Heads under Minor Heads within the Public Account of India, adhering to the same stipulations.
• Object Heads: These are prescribed under Government of India’s Orders below Rule 8 of the Delegation of Financial Power Rules. The power to amend, modify, or open new Object Heads rests with the Department of Expenditure of the Ministry of Finance, again on the advice of the Comptroller and Auditor General of India.

Practical Example

Imagine a new government initiative focused on “Digital Infrastructure Development.” To properly track the financial transactions related to this initiative, a new Major Head of Account might be required. Under Rule 79 of The General Financial Rules, 2017, the Ministry of Finance (CGA), upon receiving advice from the C&AG, would formally authorize the creation of this new Major Head. Subsequently, the administrative Ministry responsible for the initiative, in consultation with the Budget Division, could then establish specific Sub-Heads and Detailed Heads, such as “Fiber Optic Network Expansion” or “Data Center Modernization,” to categorize expenditure more granularly. This structured approach ensures that all financial flows for the new initiative are accurately recorded and reported within the government’s accounting system.

Related Provisions

Understanding Rule 79 is enhanced by considering these related provisions:

• Rule 78 of The General Financial Rules 2017 Classification of Transactions in Government Accounts: This rule emphasizes that account classification should primarily reflect government functions, programs, and the object of revenue or expenditure, rather than the department.
• Rule 80 of The General Financial Rules 2017 Conformity of Budget Heads with Rules of Classification: This rule mandates that budget heads in estimates and appropriation orders must conform to the prescribed rules of classification, directly supporting the structured accounting framework established by Rule 79.
• Rule 72 of The General Financial Rules 2017 Form of Accounts: This rule details that the form of Union Government accounts is prescribed by the President on the advice of the C&AG, with the Controller General of Accounts being responsible for framing or revising related rules and manuals.

Learning Aids

Mnemonics

• Authority: Accounts (CGA) & Auditor General (C&AG)
• Heads: Hierarchy of Major, Minor, Sub, Detailed, Object
• Opening: Only MoF (CGA) for Major/Minor, Ministries for Sub/Detailed

Process Flowchart

Multiple Choice Questions

Frequently Asked Questions

Key Takeaways

• Centralized Authority: The Ministry of Finance (CGA), advised by the C&AG, holds the primary authority for opening new Major and Minor Heads of Accounts.
• Decentralized Flexibility: Ministries and Departments can open Sub-Heads and Detailed Heads in consultation with the Budget Division, allowing for granular classification.
• Constitutional Mandate: The authority for account head creation is rooted in Article 150 of the Constitution, ensuring legal and procedural soundness.
• Structured Financial Management: Rule 79 underpins a systematic approach to government accounting, vital for transparency and effective financial oversight.

Conclusion

Rule 79 of The General Financial Rules, 2017, is a cornerstone of India’s government accounting system. By clearly defining the authorities and procedures for establishing and modifying account heads, it ensures that financial transactions are systematically categorized, enabling robust financial management, accountability, and parliamentary oversight. Its adherence is critical for maintaining the structural integrity of public finance records.