Expenditure control is an important element of budget execution and financial resources management accountability system. Through effective expenditure control system, the agencies will not only be able to maintain high level of fiscal discipline but will also be able to implement planned activities within the approved appropriations. Expenditure control includes elements such as administrative and financial sanctions, ascertaining availability of budgets, recording and processing controls including delegation and segregation, proper recording and processing, verification and certification, and finally approving and disbursing the payments.
For the purpose of proper classification and recording, the expenditures are broadly classified under two categories namely, Current and Capital. Current expenditures are expenditures to finance the daily and routine activities like expenditures on pay and allowances, maintenance of buildings and properties, office supplies, utilities, etc. Capital expenditures are expenditures incurred either for a short or medium-term which entails long-term returns like, expenditures on acquisition of immoveable properties, trainings, structures, plant and equipment, vehicles, etc. In the government’s financial management system, current and capital expenditures are further categorized into different object codes as classified under FRR 2001. However, the classification and recording of expenditures for other audited agencies, which are not operative under the government budgetary system (LC and PLC operations) are done as per the relevant accounting and reporting standards.
The objective of assessment of expenditure control is to determine whether all expenditures have been approved and utilised for the intended purposes. The expenditures are classified and recorded correctly and that government agencies achieve value for money in the use of public resources.
The auditor verifies, observes, compares and ascertains the compliance of each main indicator and sub-indicator against specific criteria derived from FRR 2001 and other applicable laws, rules and regulations.
The main indicators and sub-indicators to assess and evaluate the expenditure control are given in Table – 4.
|Sl. No.||Main Indicators||Sub-Indicators|
|1||Authorization and Approval||i. Processing of claims
ii. Sanction of expenditure
iii. Availability of Budget
iv. Certificate of verification
v. Approval of expenditure (claims)
|2||Disbursement Control||i. Preparation of Disbursement Vouchers
|3||Delegation and Segregation of Duties||i. Segregation of duties
ii. Delegation of duties
|4||Classification and Recording||i. Proper Classification and recording
ii. Entry in Accounting System
iii. Monthly Reconciliation