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CMA Final · Corporate Financial Reporting · Government Accounting in India

A Union Ministry receives a grant of Rs 500 crore under a demand but spends only Rs 460 crore by the end of the financial year. Under government accounting and budgetary control principles, what is the position of the Rs 40 crore?

The unspent Rs 40 crore is a saving. Parliamentary grants are valid only for the financial year, so the saving must be surrendered and lapses at year end. It is not carried forward automatically, moved to the Contingency Fund or placed in the Public Account.

  1. AIt is carried forward to the next year's grant automatically
  2. BIt is transferred to the Contingency Fund
  3. CIt is a saving that lapses and must be surrendered; it cannot be spent after the year endsCorrect
  4. DIt is credited to the Public Account as a deposit

Explanation

Grants are voted for a financial year. Unspent amounts are savings, which should be surrendered and lapse at year end. They do not carry forward automatically, so option 0 is wrong.

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