Rule 93 of The General Financial Rules 2017 Methods and Principles for Commercial Subsidiary Accounts
Original Rule Text
Visual Summary
Specifies how commercial subsidiary accounts are to be maintained.
Applies to subsidiary and proforma accounts in commercial form.
Regulated by specific orders and instructions from the Government.
Executive Summary
Rule 93 of The General Financial Rules, 2017, mandates that the methods and principles for maintaining subsidiary and proforma accounts in a commercial format must be governed by specific orders and instructions issued by the Government for each individual case. This ensures standardized and regulated accounting practices for government departments undertaking commercial or quasi-commercial activities.
In-Depth Analysis of the Rule
Introduction: Rule 93 provides the foundational directive for how government departments engaged in commercial or quasi-commercial operations should manage their subsidiary accounts. It emphasizes a structured approach, ensuring that these accounts adhere to specific governmental guidelines rather than being left to individual discretion.
Breakdown of the Rule:
- Scope of Application: The rule specifically targets “subsidiary and proforma accounts in commercial form.” This indicates that while the primary government accounts are cash-based, certain departmental operations, particularly those with a commercial nature, require a different accounting approach to reflect their financial performance accurately.
- Methods and Principles: It covers both the “methods” (how the accounting is done, e.g., double-entry, accrual basis where applicable for commercial aspects) and “principles” (the underlying concepts and conventions, e.g., going concern, matching principle) for these commercial accounts.
- Regulatory Authority: Crucially, the rule states that these methods and principles “shall be regulated by orders and instructions issued by Government in each case.” This means that the specific procedures are not universally defined within the GFRs but are to be laid down by the Government on a case-by-case basis, allowing for flexibility and tailoring to the unique nature of different commercial activities undertaken by government departments.
Practical Example: Imagine a government-run printing press that operates on a commercial basis, charging other departments for its services. Rule 93 dictates that this printing press must maintain its subsidiary accounts (e.g., for inventory, production costs, sales revenue) using methods and principles specifically prescribed by the Government. This ensures that its financial performance can be assessed like a commercial entity, even though it’s part of the government, and prevents arbitrary accounting practices.
Related Provisions
Rule 93 is closely related to other provisions that govern financial management and accounting within the government:
- Rule 92 of The General Financial Rules 2017 Subsidiary Accounts of Government Departments Undertaking Commercial Activities: This rule sets the context for when government departments need to maintain subsidiary accounts in a commercial form.
- Rule 94 of The General Financial Rules 2017 Adequate Regulations for Accurate Cost Deduction: This rule emphasizes the need for accurate cost deduction in commercial accounts, building on the principles established by Rule 93.
- Rule 78 of The General Financial Rules 2017 Classification of Transactions in Government Accounts: Provides general principles for classifying transactions, which would inform the specific orders issued under Rule 93.
Learning Aids
Mnemonics
- MPCSGO: Many Principles Cover Subsidiary Government Operations.
Process Flowchart
Multiple Choice Questions
1. What type of accounts does Rule 93 of the General Financial Rules, 2017, primarily address?
- A) Consolidated Fund Accounts
- B) Contingency Fund Accounts
- C) Subsidiary and proforma accounts in commercial form
- D) Public Account transactions
Show Answer
Correct Answer: C) Subsidiary and proforma accounts in commercial form
2. According to Rule 93 of the General Financial Rules, 2017, who is responsible for regulating the methods and principles of commercial subsidiary accounts?
- A) The Comptroller and Auditor General of India
- B) The Ministry of Finance, Budget Division
- C) The Government, through specific orders and instructions
- D) The individual Head of Department
Show Answer
Correct Answer: C) The Government, through specific orders and instructions
3. Rule 93 of the General Financial Rules, 2017, applies to government departments engaged in which type of activities?
- A) Only administrative functions
- B) Commercial or quasi-commercial activities
- C) Only tax revenue collection
- D) Public works projects exclusively
Show Answer
Correct Answer: B) Commercial or quasi-commercial activities
4. What is the key characteristic of the regulation mechanism for commercial subsidiary accounts under Rule 93 of the General Financial Rules, 2017?
- A) A single, universal set of rules for all departments
- B) Regulation by orders and instructions issued by Government in each specific case
- C) Self-regulation by the concerned department
- D) Regulation by international accounting standards only
Show Answer
Correct Answer: B) Regulation by orders and instructions issued by Government in each specific case
5. Which of the following is NOT explicitly mentioned as being regulated by Rule 93 of the General Financial Rules, 2017?
- A) Methods of keeping accounts
- B) Principles of keeping accounts
- C) Cash-based accounting for primary government accounts
- D) Subsidiary accounts in commercial form
Show Answer
Correct Answer: C) Cash-based accounting for primary government accounts
Frequently Asked Questions
What kind of accounts does Rule 93 of the General Financial Rules, 2017, apply to?
Rule 93 applies to subsidiary and proforma accounts that are maintained in a commercial form by government departments undertaking commercial or quasi-commercial activities.
How are the accounting methods and principles determined under Rule 93 of the General Financial Rules, 2017?
The methods and principles for these commercial accounts are not universally prescribed but are regulated by specific orders and instructions issued by the Government on a case-by-case basis.
Why is Rule 93 of the General Financial Rules, 2017, important for government departments?
It ensures that government departments operating on a commercial or quasi-commercial basis maintain their accounts with appropriate methods and principles, allowing for proper financial assessment and accountability, distinct from the cash-based government accounting system.
Key Takeaways
- Rule 93 governs commercial subsidiary accounts for government departments.
- Specific methods and principles are regulated by government orders for each case.
- It ensures appropriate financial management for commercial activities within the government.
- This rule highlights the distinction between cash-based government accounting and commercial accounting needs.
Conclusion
Rule 93 of The General Financial Rules, 2017, is vital for maintaining financial integrity and transparency in government departments that engage in commercial or quasi-commercial operations. By mandating specific governmental regulation for commercial subsidiary accounts, it ensures that these entities operate with clear, consistent, and accountable financial practices, contributing to overall fiscal discipline.