Government Expenditure Recovery Rules

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Questions and Answers

How should repayments made by governments for expenditures incurred by one government be treated?

As revenue for the repaying government

As deduction from expenditure if accounts are open (correct)

As an asset for future financial reporting

As liabilities to be settled in the next financial year

What should happen to recoveries not made within the same financial year as the expenditure incurred?

They should be categorized as liabilities

They should be deducted from gross expenditure

They should be ignored in financial reporting

They should be treated as revenue (correct)

In what scenario can the entire recovery amount be treated as a reduction of expenditure?

When recovery is made in the same financial year

When the expenditure was incurred over two financial years

When the expenditure is over a predetermined threshold

When recovery is based on the calendar year (correct)

What is the treatment of recoveries by a commercial department?

Credited as receipts of that department Signup and view all the answers

Which type of recoveries are to be treated as deductions from expenditure?

Recoveries of the commuted value of pensions Signup and view all the answers

When should recoveries made by departments of the same government be treated differently?

When the recovery is from a commercial department Signup and view all the answers

What defines recoveries by a commercial department?

Recoveries in pursuit of the essential functions of the department Signup and view all the answers

What should be done if a commercial department acts as an agent for another department?

Accept the recoveries as reductions from gross expenditure Signup and view all the answers

What type of recoveries are considered revenue for the recovering government?

Recoveries after the financial year ends Signup and view all the answers

What is the treatment for recoveries made on expenditures incurred during the previous financial year?

They may be treated as reduction of expenditure if based on the calendar year Signup and view all the answers

What is defined as 'recovery' in the context of government accounts?

Repayment of expenditure initially borne by a Government department Signup and view all the answers

How should recoveries from private persons or bodies generally be treated?

As revenue Signup and view all the answers

Under what circumstance can recoveries be taken in reduction of expenditure?

When the Government covers the cost as an agent of a private body Signup and view all the answers

What type of recoveries falls under the category requiring treatment as reduction of gross expenditure?

Recoveries from stock and suspense accounts Signup and view all the answers

What should be done with recoveries representing debits to another Government for sanctioned expenditures?

They should be treated as deductions from expenditure Signup and view all the answers

Which of the following is NOT an exception for treating recoveries as deductions from expenditure?

Recoveries from private bodies beyond the control of the government Signup and view all the answers

If a service's entire cost is recovered from a private body, how is the net cost to the Government classified?

As nil Signup and view all the answers

What is the main intent behind regulating recoveries in government accounts?

To ensure transparency and accountability in financial reporting Signup and view all the answers

Which of these is a common misconception about recoveries in government accounts?

Recoveries are always considered revenue Signup and view all the answers

How should recoveries from another department be treated if not made within the same year the expenditure was incurred?

As revenue Signup and view all the answers

When are receipts and recoveries on Capital Accounts considered reductions of expenditure?

When they represent recoveries of previously debited expenditures Signup and view all the answers

Who decides the classification of a recovery in case of doubt or dispute?

The Comptroller and Auditor General Signup and view all the answers

Under what condition can recoveries be treated as deductions from expenditure?

If specifically authorized by budget provisions Signup and view all the answers

What is the implication of the notes regarding the Civil Accounts Code?

It implies that current provisions may change Signup and view all the answers

Recoveries made from which account should normally be treated as revenue?

Capital Accounts Signup and view all the answers

Which entity's approval is required for decisions made by the Comptroller and Auditor General?

The President Signup and view all the answers

What action should Railways take regarding doubts in classification?

Refer to the Railway Board Signup and view all the answers

What happens if recoveries on Capital Accounts do not follow applicable allocation rules?

They are treated as revenue only Signup and view all the answers

What is the primary focus of the guidelines provided in the Chapter?

Classifying recoveries and receipts Signup and view all the answers

What should recoveries made by a Commercial Department be treated as?

Receipts of that department Signup and view all the answers

Under what condition can recoveries made after the accounts of the expenditure year be treated as revenue?

If they are not effected within the year of incurred expenditure Signup and view all the answers

If a recovery is made based on a calendar year rather than the financial year, how should it be treated?

The entirety can be treated as a reduction of expenditure Signup and view all the answers

What is the treatment for recoveries on account of pensions from other governments?

Deductions from gross expenditure Signup and view all the answers

How should recoveries between different departments of the same government typically be treated?

As deductions from the gross expenditure Signup and view all the answers

What happens if a Commercial Department acts outside its essential purpose when recovering funds?

Recoveries are treated as deductions from expenditure Signup and view all the answers

What defines a recovery that should be credited as revenue for the recovering government?

All other recoveries not specified as deductions Signup and view all the answers

For recoveries made by different governments where expenditure is not initially shared, how should repayments made while accounts are open be treated?

As deductions from total spending Signup and view all the answers

How should recoveries made that represent debits to another government for sanctioned expenditures be classified?

As gross expenditure for reporting Signup and view all the answers

Which of the following represents a common misconception about recoveries in government accounting?

All recoveries should be considered revenue Signup and view all the answers

What should be the general treatment of recoveries from private bodies in government accounts?

They should be treated as revenue. Signup and view all the answers

Under which circumstance can recoveries from one government to another be treated as deductions from expenditure?

When they represent debits sanctioned at the time of expenditure. Signup and view all the answers

When recoveries from another department are not made within the same financial year as the expenditure incurred, how should they be classified?

As revenue received during the fiscal period Signup and view all the answers

In what scenario should recoveries be classified as reductions of gross expenditure?

In cases of stock and suspense accounts. Signup and view all the answers

What defines the term 'recovery' in the context of government accounts?

A repayment to the government department from another entity. Signup and view all the answers

What is the default treatment for receipts and recoveries on Capital Accounts that represent recoveries of expenditure previously debited to a Capital major head?

They should be taken as reductions of expenditure Signup and view all the answers

Which type of recovery may allow for the entire cost incurred by a government agency to be treated as a reduction of expenditure?

Recoveries where the government acts as an agent for a private body. Signup and view all the answers

In case of a classification dispute over a recovery, who has the authority to resolve the matter?

The Comptroller and Auditor General with the approval of the President Signup and view all the answers

Under what circumstance can recoveries on Capital Accounts be taken to revenue instead of being treated as reductions of expenditure?

If designated by the budgetary provision Signup and view all the answers

What is the implication of classifying recoveries as deductions from expenditure?

It reduces the net expenditure reported in government accounts. Signup and view all the answers

What should be done with recoveries defined as expenditures that are not directly debited to government accounts?

They should be classified as miscellaneous income. Signup and view all the answers

What should the Railways do in the event of a doubt regarding the classification of a recovery?

Consult the Railway Board for orders Signup and view all the answers

When are recoveries from private bodies or individuals treated differently in government accounts?

When the recovery is for services purely rendered for that body. Signup and view all the answers

What is stated about the provisions contained in the Appendix mentioned in the document?

They are subject to periodic review and potential revision Signup and view all the answers

What is a likely reason for recoveries being classified as revenue rather than deductions from expenditure?

The recovery is not derived from sanctioned expenditures. Signup and view all the answers

If receipts and recoveries on Capital Accounts are not allocated under applicable rules, what is the expected outcome?

They may not be taken to the revenue Signup and view all the answers

How should recoveries that represent debits to another government for sanctioned expenditures be treated?

As reductions of gross expenditure Signup and view all the answers

How should recoveries be categorized when they involve various government departments making claims against each other?

They should be classified based on the nature of the original expenditure. Signup and view all the answers

What happens if a recovery does not comply with the determined standards for classification?

It must be referred for further investigation Signup and view all the answers

What does the guideline stipulate regarding recoveries made by a commercial department?

They should be classified separately under revenue accounts Signup and view all the answers

What should recoveries made from another department be treated as if they are not effected within the year of expenditure?

Revenue Signup and view all the answers

What is the default treatment for receipts and recoveries on Capital Accounts regarding expenditures debited to a Capital major head?

Treated as deductions from expenditure Signup and view all the answers

Who decides whether a recovery is classifiable as revenue or deduction from expenditure in case of doubt?

Comptroller and Auditor General Signup and view all the answers

What specific action should be taken by the Railways regarding doubts in classification?

Refer to Railway Board Signup and view all the answers

What is the implication of the notes regarding the Civil Accounts Code present in the content?

Changes in provisions are likely Signup and view all the answers

Which of the following best describes recoveries that were previously debited to a Capital major head?

They reduce expenditure under the concerned major head. Signup and view all the answers

What must occur for an expenditure recovery to be classified as a deduction from expenditure?

It needs to be made within the same financial year. Signup and view all the answers

What is generally the treatment for recoveries from private persons or bodies in government accounts?

They are treated as revenue. Signup and view all the answers

In which scenario can recoveries be taken as a reduction of expenditure?

When the government acts as an agent for a private body. Signup and view all the answers

What is the classification of recoveries that represent debits to another government for sanctioned expenditures?

They are treated as deductions from expenditure. Signup and view all the answers

What generally happens with recoveries of expenditures on works in progress?

They should be treated as reductions of gross expenditure. Signup and view all the answers

Which of the following is an example of a recovery exception?

Recoveries for which the government initially bore no cost. Signup and view all the answers

What is the implication of treating recoveries from private bodies as revenue?

It generates surplus against government accounts. Signup and view all the answers

What treatment is generally applied to recoveries made from different government bodies for expenditures incurred?

They are treated according to the expenditure classification. Signup and view all the answers

When a government department receives recoveries classified as reductions of gross expenditure, which statement is true?

They reduce the total expenditure reported. Signup and view all the answers

Under what circumstance can recoveries from one government department to another be retained as revenue?

If the recovery is made for services not directly charged. Signup and view all the answers

What is generally the default treatment for recoveries made on Capital Accounts in government accounting?

They are treated as reductions of expenditure. Signup and view all the answers

How are repayments from other governments treated when made while accounts of the year are still open?

As a deduction from expenditure Signup and view all the answers

What classification applies to recoveries made on behalf of other governments when the recovery functions as revenue?

Revenue of the recovering government Signup and view all the answers

Which type of recovery should be treated as revenue when it is made by a commercial department?

Recoveries on services rendered to other departments Signup and view all the answers

What happens if recoveries are not made in the same financial year as the expenditure incurred?

They should be identified as revenue Signup and view all the answers

In what case might recoveries on behalf of another government not be classified solely as deductions from expenditure?

If the amount corresponds to services rendered during the calendar year Signup and view all the answers

How should recoveries from departments of the same government generally be treated?

As reductions from gross expenditure Signup and view all the answers

If a commercial department acts as an agent to perform non-essential functions, how are recoveries treated?

As deductions from gross expenditure Signup and view all the answers

Which option describes how recoveries made related to services should be accounted for?

As reductions in the expenditure of the department rendered the service Signup and view all the answers

When recoveries are made as a result of services rendered to another department, what should be done?

They should be registered as receipts of the commercial department Signup and view all the answers

Study Notes

Rules Regulating Recoveries of Expenditure

Recoveries are repayments of expenditure initially borne by one government entity and subsequently repaid by another, or an external party.
Recoveries from private entities (including local bodies) and governments outside India are generally treated as revenue, not as deductions from expenditure.
Exceptions exist: If a government acts as an agent for a private body and recovers the full service cost, the recovery reduces expenditure. Recoveries from works in progress and transactions from stock and suspense accounts are also deducted from gross expenditure.
In cases where the recovery is based on a calendar year instead of a financial year, the entire amount can be treated as a reduction from expenditure, even if part of it relates to a previous financial year.

Recoveries Between Governments

If a recovery represents a debit to another government for expenditure already sanctioned, it's considered a deduction from expenditure.
In joint ventures, if expenditure isn't initially shared by multiple governments, repayments made while accounts are still open are deducted from expenditure.

Recoveries by One Department from Another

Recoveries between departments of the same government are typically deductions from expenditure, excluding those from commercial departments.
Commercial departments' recoveries are treated as receipts of the department, specifically in cases involving Postal, Telegraph, or Telephone services rendered to other departments. If a commercial department acts as an agent for another department without its core function, the recovery reduces expenditure.
Recoveries not completed within the same fiscal year are treated as revenue.
Recoveries from other governments, relating to commuted pension values should be deducted from expenditure.
All other recoveries are treated as revenue.

Receipts and Recoveries on Capital Account

Capital account receipts/recoveries of expenditure previously debited to a capital account should reduce expenditure. Exceptions exist when rules of allocation dictate otherwise.

Disputes and Settlements

Disputes regarding revenue classification are decided by the Comptroller and Auditor General of India, with approval from the President.
Specific guidelines are in place for railway disputes. The Civil Accounts Code is currently under revision, which may affect these rules, potentially altering provisions in the appendix.

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Description

This quiz explores the rules and regulations governing the recovery of expenditures between government entities. It covers key concepts such as the treatment of recoveries from private entities and how they impact government accounting. Test your knowledge on the intricacies of expenditure recoveries in government operations.