General Financial Rules of the Federal Government — Volume I (Updated Edition 2019)

The General Financial Rules of the Federal Government, Volume I set out the executive financial rules and procedures governing the receipt, custody, control and expenditure of public money, together with budgeting, accounts, procurement and stores, works, loans and advances, and other financial obligations. The supplied booklet is the Finance Division’s Updated Edition 2019, with its Preface dated 25 June 2019. It consolidates important orders and clarifications issued since the previous compilation prepared in January 1979 and removes provisions identified as obsolete in preparing the revised volume.

Authority, Edition and Scope of General Financial Rules Volume I

The booklet is issued by the Finance Division and is titled Compilation of the General Financial Rules of the Federal Government — Volume I, Updated Edition 2019. Its Preface explains that the compilation brings together important orders relating to the system of financial management and control, including budgeting, sanctioning expenditure, custody and handling of stores, and loans and advances. The Preface also asks that errors or omissions found in the compilation be brought to the notice of the Ministry of Finance.

Paragraph 1 explains that the rules in the volume are essentially executive orders of the President. They describe the financial powers of authorities subordinate to the Federal Government and the procedures to be followed when securing and spending funds for government functions. Departmental authorities are to follow the rules together with any special rules, instructions or orders contained in their departmental regulations.

The volume therefore provides a general Federal financial framework; it is not a substitute for the detailed regulations of a particular department or for a later special order that applies to a particular transaction. The defined terms in paragraphs 2–3 include Accountant General, Appropriation, Auditor General, Competent Authority, Controlling Officer, Federal Consolidated Fund, Public Account, Financial Year, Government, Head of Department and Re-appropriation. The financial year is defined as the period from 1 July to 30 June.

At a Glance: The 15 Chapters

General System of Financial Management and Control — Chapter 2

Paragraphs 4–8 require official transactions to be brought to account without delay and government dues or money authorized for deposit in government custody to be credited to the Public Account in accordance with the Treasury Rules. Where an officer receives money in an official capacity that is not a government due and is not authorized to be held by Government, the rules prescribe separate banking, record-keeping and audit safeguards.

Paragraphs 9–14 set out essential conditions for expenditure. As a general rule, an authority must not incur expenditure or a liability involving public funds until it has been sanctioned by the President or an authority with delegated power and has been provided for in the authorized grants and appropriations for the year. Paragraph 10 requires high standards of financial propriety, including prudence, economy, avoidance of self-benefiting sanctions and use of public money only for a proper public purpose. Controlling officers must monitor both actual expenditure and commitments and liabilities, and departments must maintain internal checks to prevent errors, irregularities, waste, fraud and loss.

Paragraphs 15–17 place responsibility on officers who prepare accounts, returns or certificates to ensure completeness and accuracy and to provide information required by Audit. Paragraphs 18–19 state that contracts may be entered into only by properly empowered authorities and set out principles for clear contract terms, scrutiny, tendering where practicable, financial and legal advice, and protection of government property. Paragraphs 20–24 address reporting and investigation of losses, personal responsibility, and the authority required to write off irrecoverable losses. Paragraph 25 requires departmental regulations with financial implications to be made by, or with the approval of, the Finance Division.

Revenue and Receipts — Chapter 3

Paragraphs 26–30 make departmental controlling officers responsible for ensuring that government revenue is correctly and promptly assessed, collected and credited to the Public Account. They are expected to compare departmental returns with treasury credits and follow up discrepancies. The rules also address outstanding dues, accounting classifications, collection procedures and the reporting of important variations in receipts against budget estimates.

Paragraphs 31–35 contain special rules for particular classes of receipts, including rents of government buildings and land, fines and miscellaneous demands. Paragraphs 36–37 deal with remissions of revenue and abandonment of claims, requiring the sanction of the competent authority and prescribed reporting of such decisions. Paragraph 38 and its annexure describe the audit of receipts, with emphasis on adequate procedures for assessment, collection and proper allocation of revenue.

Powers of Sanction — Chapter 4

Paragraphs 39–44-A address the powers of various authorities to sanction expenditure. The volume explains that the financial powers not delegated to another Ministry, department or authority vest in the Finance Division. It refers readers to the Book of Financial Powers, departmental regulations and other applicable orders for the detailed limits and delegations that apply to a particular authority.

Paragraphs 45–50 cover special matters such as grants of land, assignments of revenue, concessions and the writing off of losses or overpayments. Paragraphs 51–54 prescribe how financial sanctions and orders are communicated to the Accountant General and the information that should accompany them. Paragraphs 55–56 require the source of appropriation to be identified when expenditure is submitted for sanction. The remaining provisions in this chapter deal with the date on which a sanction takes effect, retrospective sanctions, lapse of sanctions and special rules for works expenditure.

The practical point is that an officer should distinguish between the power to incur or draw expenditure and the authority to sanction it. The relevant delegation, budget provision and any special departmental restriction must be checked before a commitment is made.

Budget, Grants and Appropriations — Chapter 5

Paragraphs 62–66 introduce the budget framework. Paragraphs 67–82 cover preparation and submission of detailed estimates, including the treatment of established expenditure and proposals for new or additional items. Paragraph 83 deals with consolidation of estimates and demands for grants, while paragraphs 84–86 cover communication and distribution of grants and appropriations to controlling and disbursing officers.

Paragraphs 87–92 address expenditure incurred in anticipation of funds and the control of expenditure during the financial year. The controlling authority is responsible for watching expenditure against the grant and for keeping it within the appropriation. The rules require attention not only to amounts already spent but also to commitments and liabilities that may affect the final position.

Paragraphs 93–96 deal with funds for works executed by another authority and the surrender of anticipated savings. The rules caution against hurried or ill-considered spending simply to avoid a grant lapsing. Savings should be identified and surrendered under the prescribed procedure rather than used to introduce fresh expenditure without proper authority.

Paragraphs 97–106 govern expenditure not provided for in the budget, re-appropriations and supplementary grants. They establish the need for proper authority when an existing provision is insufficient or a new requirement arises. Paragraph 107 addresses Appropriation Accounts and stresses that explanations for variations between appropriations and actual expenditure should be prompt, concise, accurate and informative. These explanations are important to departmental accountability and scrutiny by the Public Accounts Committee.

Establishment — Chapter 6

Paragraphs 108–112 address alterations of establishment, and paragraph 113 deals with variations in the sanctioned pay of a post. Paragraphs 114–115 cover transfer of an office. Paragraphs 116–117 set out requirements concerning the date of birth of a newly appointed Government servant and its recording in the service record. The rules state that once recorded, the date of birth is not to be changed except for a clerical error and with the required prior orders.

Paragraph 118 provides for leave applications to be submitted to the sanctioning authority on Form G.F.R. 13, subject to special rules or orders of the competent authority. Paragraphs 120–122 address service books and service rolls, including annual verification of service by the head of office. Paragraphs 123–126 concern arrear claims and the procedure for claims presented after the prescribed period. In particular, paragraph 123 states that, subject to the Treasury Rules exception, pay and allowance claims not preferred within six months of becoming due require authority from the Accountant General.

Contingencies and Permanent Advances — Chapter 7

Paragraphs 127–129 explain that the contingency provisions supplement the Treasury Rules and departmental instructions. Paragraphs 130–131 deal with the financial powers of subordinate authorities to sanction contingent expenditure. Such expenditure must remain within the appropriation and comply with any prescribed scale, limit or special restriction. Unusual expenditure or a departure from a government rule generally requires prior sanction.

Paragraph 132 governs permanent advances, sometimes referred to as imprests. These may be granted to officers who need to make payments before they can draw funds from the treasury. The amount should not exceed what is essential, applications for a grant or revision are routed through the Accountant General for advice, and unnecessary multiplication of advances is discouraged. The chapter also addresses control and recording of contingent expenditure, special rules for particular kinds of contingencies and expenditure incurred for other officers.

Stores: Purchase, Custody, Accounts and Audit — Chapter 8

Paragraphs 141–142 explain the scope of the stores rules and their relationship with departmental regulations. “Stores” is used broadly for articles and materials acquired for public service, including consumable items and dead stock such as plant, machinery, furniture, equipment and fixtures.

Paragraphs 143–150 deal with authorities competent to purchase stores, rules governing purchases, economical procurement, receipt and issue of stores, and transfer of charge. The rules require purchases to be made in the most economical manner consistent with public-service requirements. Purchase orders must not be split to avoid the sanction of a higher authority. On receipt, stores should be examined, counted, measured or weighed as appropriate, and a responsible officer should certify the quantity and quality received. Issues should be supported by an authorized indent and written acknowledgement.

Paragraphs 151–169 concern custody and accounts. Officers responsible for stores must provide safe custody, maintain appropriate accounts and inventories, and keep records that allow actual balances to be checked against book balances. Separate accounts are to be maintained for dead stock and other stores. The chapter covers stock records, custody, verification and the treatment of losses, depreciation, obsolete or unserviceable items. Paragraphs 166–168 address competent approval and recording of write-offs and disposal of stores. Paragraph 170 concerns audit of stores and stock accounts, while paragraphs 171–175 contain miscellaneous rules.

Works — Chapter 9

Paragraphs 176–177 classify Federal buildings and works for administrative and control purposes, including military works, public works and works under the administrative control of the departments that use or require them. The chapter recognizes that detailed procedures are also set out in the relevant departmental regulations and special orders.

Paragraph 178 states the general preconditions for commencing a work or incurring a liability in connection with it. Unless a special rule or order applies, administrative approval must have been obtained, the expenditure must have the sanction of the competent authority, a properly detailed design and estimate must have been sanctioned, and funds to cover the charge during the year must have been provided. The rest of the chapter covers general rules, works under the administrative control of the Public Works Department, works under other civil departments, special rules for sanitary, water-supply and electrical installations, and miscellaneous works provisions.

Miscellaneous Expenditure — Chapter 10

Paragraphs 201–202 provide general rules for miscellaneous expenditure. Paragraphs 203–205 deal with refunds of revenue. Paragraphs 206–211 cover grants-in-aid, contributions and other grants, including the responsibility to verify that conditions attached to a grant are fulfilled and that unspent funds are dealt with according to the sanction. Paragraph 212 covers proposals for compensation to civil officers for accidental loss of personal property and explains that compensation is not ordinarily granted for common risks or events merely because the officer was technically on duty. Paragraph 213 contains rules for special political expenditure.

Debt and Miscellaneous Obligations of Government — Chapter 11

Paragraphs 214–216 concern rupee debt. Paragraphs 217–218 address provident funds, while paragraphs 219–222 cover service and other funds. This chapter brings together rules for government liabilities and funds that are distinct from ordinary departmental expenditure. The detailed provisions should be read with the specific rules governing the relevant debt or fund.

Local Funds — Chapter 12

Paragraphs 223–224 introduce local funds. Paragraphs 225–228 deal with grants and loans to local bodies and charges recoverable from them. Paragraphs 229–230 cover revenue collected by Government on behalf of local bodies, including the requirement to pass receipts through the appropriate government accounts unless a law expressly authorizes otherwise. Paragraph 231 addresses use of service postage stamps in local-fund business, and paragraphs 232–234 concern audit of local-fund accounts.

Loans and Advances — Chapter 13

Paragraphs 235–248 classify loans and advances, set out general rules for sanction, budgeting, repayment and accounting, and address the reporting of outstanding balances. The volume distinguishes interest-bearing loans and advances from interest-free advances and permanent advances. It requires foreseeable loans and advances to be included in budget estimates and repayment terms to be specified in accordance with the applicable rules.

Paragraphs 249–272 deal specifically with loans and advances to Government servants. They cover general eligibility and restrictions, interest on specified advances, adjustment and recovery, house-building loans and advances, purchase of houses, advances for conveyances, and other special advances. The rules state that advances should not ordinarily be made to employees who are not in permanent Government employment unless the required security and sanction conditions are met. They also require advances to be used and adjusted in accordance with the rule applicable to each category.

For a Government servant, the exact availability, amount, interest, security, repayment period and competent sanctioning authority depend on the particular advance and the current orders. The figures and provisions in this 2019 compilation should therefore be checked against later Finance Division instructions and the rules currently governing the specific advance.

Miscellaneous Subjects — Chapter 14

Paragraphs 273–285 cover security deposits. Paragraphs 286–287 deal with transfer of Government land and buildings. Paragraph 288 addresses insurance of Government property, and paragraph 289 concerns charitable endowments and other trusts. Paragraphs 290–298 are shown as omitted in the contents, while paragraphs 299–303 contain miscellaneous provisions.

Government Accounts — Chapter 15

Paragraphs 304–309 set out general provisions relating to Government accounts. Paragraphs 310–315 cover capital and revenue accounts. Paragraphs 316–323 concern adjustments with other Governments and departments, while paragraphs 324–325 cover proforma accounts. Paragraphs 326–327 deal with the annual account. This chapter completes the volume by addressing how government financial transactions are classified, adjusted and brought together in the accounts.

Practical Points for Departmental Officers and DDOs

Across the volume, several responsibilities recur. Before incurring expenditure, the officer should confirm that the transaction is within the officer’s delegated authority, has the required sanction and is covered by an authorized appropriation. Receipts should be recorded promptly and credited to the correct government account. Accounts, returns, certificates and supporting records should be accurate, complete and submitted within the prescribed time.

• Before spending: check sanction, delegated financial powers, budget availability and any departmental or special restrictions.
• When receiving public money: account for it without delay, use the proper classification and ensure that it is credited to the correct account.
• When signing bills or certificates: verify the facts and supporting records; the officer signing or countersigning is responsible for the facts certified to the extent required by the rules.
• When controlling expenditure: monitor actual spending as well as commitments and liabilities, explain variations and surrender savings under the prescribed procedure.
• When purchasing or holding stores: use authorized procurement procedures, verify quantity and quality on receipt, maintain stock records and obtain acknowledgements for issues.
• When undertaking works: obtain administrative approval, competent sanction, an approved design and estimate, and provision of funds before commencing, unless a specific exception applies.
• When facing a loss or irregularity: report it promptly through the prescribed channels, investigate the circumstances and obtain competent approval for any write-off.

Important Note on the Updated Edition 2019

This article summarizes the Updated Edition 2019 supplied for this resource. The Preface says that the compilation incorporated clarifications and amendments issued since the 1979 version and removed obsolete orders. It does not, by itself, establish that no later amendment, delegation, procurement instruction, departmental regulation or special order has been issued after 25 June 2019. Some subjects in the volume expressly depend on separate departmental regulations, the Book of Financial Powers, the Treasury Rules or later orders.

Before using a paragraph to approve expenditure, procure stores, authorize a work, sanction an advance or write off a loss, confirm the current rule, the employee or department’s applicable service framework, and the latest delegated powers and instructions. The rules are for the Federal Government framework and should not automatically be treated as the rules of every Provincial Government or autonomous body.

The complete General Financial Rules Volume I PDF is available for reference. For related EmployeesDesk resources, see the DDO Code Handbook, the General Provident Fund Rules and the Revised Leave Rules, 1980.