PAKISTAN MILITARY ACCOUNTS

DEPARTMENT

LAO’s HAND BOOK

PART - II (ARMY)
2006

INSTRUCTIONS FOR THE GUIDANCE OF

LOCAL AUDIT OFFICERS AND THEIR STAFF IN
THE LOCAL AUDIT/REVIEW/ INSPECTION OF
STORES AND CASH ACCOUNTS OF
ARMY UNITS AND FORMATIONS

Issued under the authority of the

MILITARY ACCOUNTANT GENERAL
 CONTENTS
LAO’s HAND BOOK (ARMY) PART - II

Instructions for inspection by Local Audit Officers of Public Fund

Accounts of Units and Formations, etc.

Page
Preface i
List of Abbreviations iii
Preamble v
SECTION-I General 1
SECTION-II Units 8
SECTION-III A.S.C. Offices (including S.T.Os) 12
SECTION-IV Transport Units---A.T. and M.T. 14
SECTION-V A Company of A.M.C. 15
SECTION-VI Military Dairy Farms 16
SECTION-VII Remount Depots 17
SECTION-VIII Arsenals and Ordnance Depots 19
SECTION-IX Supply Depots 24
SECTION-X Military Lands and Cantonments Revenue 26
Collections Offices
SECTION-XI Headquarters, Corps, Divisions, Log-Areas and 35
Brigade Offices, Military Hospitals, Veterinary
Hospitals, Detention Barracks, Fort Armaments,
Station Staff Offices, Staff College and other
special and miscellaneous units and formations.
SECTION-XII Ordnance and Clothing Factories. 39
 PREFACE

1. This revised edition of L.A.O’s Hand Book Part-II contains instructions to be

followed by the L.A.O’s in carrying out inspection of Cash Accounts of Army /ISO’s
and FWO Units/Formations. Nothing in this Hand Book will be held to supersede any
rule or order of the Government of Pakistan with which it may be at variance.

2. The instructions in the Hand Book are supplementary to those contained in

Financial and other Regulations of the Army in Pakistan, Government orders issued
from time to time, Military Audit Code and various Departmental Regulations and
standing Orders etc. These are not intended to cover Self-evident exceptions or
matters of detail with which an officer with some experience of Cash Accounts is
expected to be conversant. These are not to be quoted outside the Military Accounts
Department as authority in support of any action taken or demanded by the L.A.O’s.

3. Controller may, if necessary, vary the instructions in this Hand Book in

matters of detail, to suit local condition but any proposed change, which involves
substantial and permanent departure from the basic rules for inspection, should be
referred to the M.A.G. for prior approval.

4. All officers (i.e LAO/AAO), are expected to make themselves fully conversant
with the contents of this Hand Book and ignorance of its Provisions will not be
accepted as an excuse for any departure from rules or failure to comply with them.

5. All alterations in and additions to this Hand Book, which may be necessary
hereafter, will be notified periodically by the M.A.G. by means of correction slips.
CLA (DS) will submit necessary draft amendments to the M.A.G. in consultation with
other Controllers conducting local Audit of Units/Fmns as and when any decision
order is issued, necessitating amendments to this Hand Book.

Rawalpindi, March, 2006. ( SALAHUDDIN )

Military Accountant General
 LIST OF ABBREVIATIONS

A.D.S.T. Asstt: Director Supply & Transport

A.S.C. Army Service Corps
A.T./M.T. Animal Transport/Mechanical Transport
A.T.G. Annual Training Grant
A.V.C. Army Veterinary Corp
C.L.A (DS) Controller Local Audit,(Defence Services).
C.L.A. Cantonments Land Authority
C.M.A. Controller Military Accounts
C.O.O. Chief Ordnance Officer
D.C.L.A. (DS) Deputy Controller Local Audit,(Defence Services)
D.M.L.C. Director Military Lands and Cantonments
D.O.S. Director Ordnance Service
D.R.O. Distt: Remount Officers
E.C.R. Emergency Cash Requisition
E.S.D. Engineering Store Depot
E.S.S.D. Engineering Store Sub Depot
E.T.G. Educational Training Grant
F.R. Financial Regulations
G.S.A General State of Accounts
I.A.R.I..R. Internal Audit, Review Inspection Report
L.A.O. Local Audit Officer
L.P.C. Last Pay Certificate
M.A.G. Military Accountant General
M.E.G. Misc. Expense Grant
M.E.O. Military Estate Office
M.E.S. Military Engineering Services
M.M.S. Medical Mobile Store
M.R.C. Military Railway Claim
M.V.L. Military Veterinary Labs
O.E.F. Ordnance Estate Fund
P.A.O. Pakistan Army Order
P.M.A.D. Pakistan Military Accounts Department
P.M.G. Packing Material Group
P.O.L. Petroleum, Oil and Lubricants
R.S.S.D. Returned Stores Sub Depot
S.S.O. Stations Staff Officer
T.R/R.O. Treasury Receipt/Receivable Order
U.A. Unit Accountant
V.C.R. Visual Chart Register
 LOCAL AUDIT OFFICER’S HAND BOOK PART - II

Instructions for inspection by Local Audit Officers of Public Fund Accounts

etc., of Army/ISOs and FWO Units and Formations.

PREAMBLE
1. Inspection of Cash Book

(i) The Cash and Public Accounts (for details see Annexure ‘A’) of Units,
Formations and other Military establishments will be inspected by the AAO and
countersigned by the LAO concerned after thorough check once every six months
(also see para 5 below). The main objects of the inspection are:-

(a) to ascertain that the accounts are being maintained in strict accordance
with the existing regulations and orders;

(b) to see that all transactions between individuals and the funds and other
accounts are easily traced and correctly tallied;

(c) all moneys relating to public funds have been duly accounted for and
expended only for the purpose for which they are intended.

(ii) The Local Audit Officer alongwith AAO will carry out the inspection and thus
keep themselves acquainted with the financial affairs of the units and formations
whose accounts they inspect. Cash account of the Units/Fmns be the starting point
for conducting Local Audit by the Audit Team instead of restricting it to be a review at
the end by the L.A.O.

(iii) Ordinarily, one month’s account at each half yearly visit will be selected for
detailed check. The accounts for other months will be subjected to a general review,
doubtful and abnormal items examined more closely keeping in view the following
factors:-

(a) The general state of the unit accounts and particular type of past
irregularities and the month’s accounts in which they were committed
as revealed by previous inspection report or reports;

(b) and a general scrutiny of the accounts since the date of last
inspections.

(iv) This will give the Local Audit Officer an indication of the month’s account
which requires particular attention.

(v) If circumstances warrant a detailed inspection of more than one month’s

account to complete his investigation the Local Audit Officer should adopt this
course. In making his selection of the accounts, he should ensure that important
months such as June, training Season etc., come more frequently under review than
others in which extraordinary changes do not occur.
(vi) Although the Local Audit Officer’s functions in the matter of Public Fund
Accounts are ordinarily limited to inspection of such accounts and to satisfying
himself that the object of the inspection as referred to in para 1 is met, he may
extend his scope for enquiries in other directions, e.g.:-

(a) by conducting a general and intelligent examination of the system

under which the account are maintained to see that it does not render
any frauds.

(b) by offering suggestions bearing on economies that can be effected and

bringing to notice any un-necessary or avoidable expenditure of Public
money; (irregular expenditure will be placed under objection);

(c) by bringing to notice instances of contracts for supplies, in giving out of

which not attempt was made by the executive authorities to invite
competition amongst contractors, or of the arrangement being so
defective as to suggest that the Government of Pakistan does not
obtain the full value for the money paid.

(vii) The Local Audit Officer will bear in mind that if, during his tour, anything
comes to his notice that might, if investigated, lead to the reduction of military
expenditure, he will at once inform the DCLA (DS) and, if necessary, ask for orders.
Most useful points might thus be brought to notice and the DCLA (DS), placed in
position to address the executive. In all such cases, personal discussions with the
executive officers if conducted in a friendly spirit and with real desire to assist, rather
than to criticise, may lead to practical suggestions which will be welcomed by the
administrative and executive authorities as likely to result in tangible benefits to the
finances of the State. For instructions regarding the assistance required of
L.A.Os/P.M.A.D. Officers in the Courts of Enquiry, see para 30 Section-I Chapter-I
L.A.Os Hand Book Part-I.

(viii) For the purpose of “inspection” units and formations are divided into two
broad categories, viz:-

(a) Those in which “inspection” may be limited to one occasion per half
year normally one month’s cash accounts, etc., being audited in full,
and

(b) those in which “inspection” should normally be carried out once per
annum.

(ix) Units and formations in a typical Army audit area normally falling under
category (A) or category (B) above are indicated below:-

Category (A)- Infantry, Cavalry/Artillery/Armoured Corps, Signal,

Engineers, A.T. and M.T. Coys. Division, Log areas and
Brigade Headquarters, Military Hospitals, Veterinary
Hospitals, Military Colleges, Station Staff Officers,
Schools of Instruction, Supply Depots, A.V.C. Records,
 Schools and Medical Mobile Stores, Assistant Director of
Farm Office, ADS and T Officers, GHQ (Inventories of
Stores), Dental Centres, Malaria Medical Officers Offices,
Military Veterinary Laboratories, Distt Remount Officers,
Fort Armaments, Transports Officers, X.Ray Plants,
Military Food Laboratories, Convalescent Depots,
Research Institutions, A.S.C. Record Offices, Military
Detention Barracks, Summer Hill Camps and
Dispensaries, Arsenals.

Category (B)- Recruiting Officers, M.E.Os and their outstation

representatives, Depots and smaller units with less then 3
mandays per quarter authorised for audit.

(x) Neither list is exhaustive, and Controller should use their discretion in
allocating any particular unit or formation which does not appear specifically on
either list, into one list or the other. The decision should in general depend upon the
relative importance of the public fund cash accounts of the unit or formation
concerned both in the magnitude and in the nature of the non-preaudited
transactions recorded therein.

(xi) Controllers may with prior approval of MAG, transfer any particular unit from
category ‘A’ to category ‘B’.

Note:- As the Cash Accounts of Military Farms are subjected to 100%

check by the L.A. Staff and are reviewed by the L.A.O. their
further inspection by the L.A.O. is not necessary.

(xii) In the case of smaller units or formations, the L.A.O. should, as far as
possible, chalk out his programme in a way which would enable him to inspect the
accounts of those units or formations at the time of his visit thereto for the purpose of
reviewing the Local audit work. Special visits for the purpose of half-yearly inspection
to such smaller units should as far as possible be avoided. Irregular formation which
have no settled organisation, e.g., Equitation School, etc., will however, be an
exception to the above rule.

2. Inspection of Units moving within Pakistan Limits. In all cases, the cash
account, etc of a unit will be inspected immediately before it leaves the audit area of
a DCLA (DS). On arrival of a unit in the audit area of another DCLA (DS), the cash
accounts will be inspected within three months of its arrival but the month’s accounts
to be inspected will not be the same as that inspected in the old audit area. All
inspection Reports will, as far possible, be settled before a unit leaves the audit area
of one DCLA (DS) for that of another. A special report showing the date on which the
accounts have last been inspected, the month’s account selected for detailed check
and whether or not the accounts were maintained in a satisfactory state together with
an extract of unsettled items and a list of accounts and registers etc. inspected will
be sent by the L.A.O. to DCLA (DS) for communication by the latter to the DCLA
(DS) to whose audit area the unit has been transferred. In case of a unit, the
accounts of which are not found to be in a satisfactory state, the particulars will be
stated clearly.

In the case of units transferred from audit area of one L.A.O. to that of another
under the same DCLA (DS), the special report, etc., will be sent to the L.A.O.
concerned direct.

Note.1 The general instructions laid down in para 16, Section-I, Part-I,
of this Hand Book will also be observed.

Note.2 Proforma to be used for the preparation of “Special reports” on

cash and store accounts has been published as Appendix ‘G’ to
Section-I, Part-I of this Hand Book.

3. Inspection of Units in Pakistan which are ordered to be mobilized.

Instructions with regard to the final closing of accounts and inspection thereof
by the L.A.Os when a unit is ordered to be mobilized are contained in para 17 and
Appendix ‘H’ to Section-I, Part-I of this Hand Book.

(i) Units under disbandment or demobilization. Before a unit is disbanded or

demobilized its public fund accounts will be inspected by the L.A.O. and it will,
inter alia, be seen that:-

(a) any credit balance in the office allowance fund has been credited to
Government and the stationery and office appliances purchased out of
that fund have been disposed of in accordance with the prescribed
rules;

(b) un-expended balance of any permanent advance has been paid into
the treasury and treasury receipts forwarded to C.M.A. through the
U.A. (if one is attached);

(c) all points raised in the current and previous reports are finally settled as
far as possible, before the unit is demobilized or disbanded, any
unsettled items being reported to the DCLA (DS) in whose audit
jurisdiction the centre and record of the Unit located.

(ii) If during the course of Local audit or inspection of a particular unit, the L.A.O.
receives an urgent call from another unit to inspect the accounts of the latter either
on account of its leaving the area or of any other emergent circumstances, he may
leave the accounts in hand at that stage, and take up the other unit provided he is,
from the general state of accounts of that unit, satisfied that he can safely do so, but
he should explain the position tactfully to the O.C. the unit, or formation whose Local
audit or inspection he has to suspend. He may return to that unit later on, if
necessary. Such a case as this will be very exceptional and should be reported to
the DCLA (DS) immediately.
(iii) In order to avoid any omission in the inspection of accounts and registers, a
list of all such accounts and registers required to be kept up, for Inspection by the
PMAD, by each unit or formation (particularly the special and miscellaneous
formations as have no settled organisation and small temporary formations which
close down at hill station after the summer months) will, after approval of DCLA
(DS)/CLA (DS) be maintained by each L.A.O. This list should be kept up-to-date and
handed over officially by him to his successor in the event of his being transferred or
going on leave. The list will be examined by Superior Service Officers when
reviewing the L.A.O. work.

(iv) The L.A.Os should bring to the personal notice of the DCLA (DS)/CLA (DS) by
a special report, all cases in which:

(a) the prescribed accounts and registers are non-existent or missing or

have not been produced (P.A.O. 170/49);

(b) the cash accounts maintained by a unit are in an un-satisfactory state

or the unit has departed seriously from the prescribed procedure (see
M.A.G. No. AT/SP/52, dated: 17th June 1949);

(c) the procedure followed in maintaining the accounts differs from that
prescribed by rules or orders.

(v) The L.A.O. will also be required under the orders of the CLA (DS) or the
DCLA concerned, to settle any pending cases between Officers Commanding Units
and the Audit Officers in the Main Office (or the Unit Accountants if any attached to
Units) and in doubtful cases he should take notes of difficulties brought to notice with
sufficient details and lucidity, so as to enable the CLA (DS) or the DCLA to issue final
orders thereon.

(vi) No audit or examination of the accounts or any enquiry into matters which it is
the duty of the Main Office of the CLA (DS) to look into or deal with, will be
undertaken by the L.A.O. unless specially instructed by the CLA (DS) to do so. While
refraining from encroaching on the functions of the Main Office, L.A.Os are expected
to give prima-facie advice and reasonable help to the officers Commanding on
matters connected with accounts when such advice or help is sought, or to refer the
officers to the CLA (DS) for orders or instructions when matters relate to audit points
or accounts instructions ordinarily dealt with by that office.

(vii) He will see that a proper system exists in units for dealing with accounts and
correspondence in connection therewith and for ensuring that prompt steps are
taken to comply with audit requirements. He will bring to the personal notice of the
officer commanding, all arrears of work and objection statement outstanding for 3
months or more with the Unit Accountant (if any).

(viii) In cases where an O.C/C.O desires that thorough examination and re-casting
of the current or old accounts should be undertaken by the L.A.O. or if the L.A.O.
finds that the accounts of a unit or formation etc., are in a state of confusion and
require detailed examination or recasting, the matter should be brought promptly to
the notice of the CLA (DS) with full particulars so that the M.A.G’s orders may be
obtained. The initial re-examination or re-casting of such accounts will not be
undertaken save in very exceptional circumstances and unless ordered by the
M.A.G.

(ix) The standard time in mandays as approved by the M.A.G. and notified in
circulars from time to time for each class of unit or formation represents the average
period required for inspection of that unit or formation and should be adhered to by
the L.A.O. in working out his programme. Copies of such circulars and amendments
thereto will be supplied by the Main Office to the L.A.O. for his guidance in the
preparation of his tour programme.

(x) If the inspection of a unit takes an L.A.O. a day or two more that the original
programme in order to settle up observations on the spot, etc., he should report such
circumstances to the DCLA (DS)/CLA (DS) for confirmation of his action.

(xi) In cases where the special circumstances connected with a unit or formation
render his prolonged stay absolutely necessary he should report the circumstances
to DCLA (DS)/CLA (DS) in detail by an express letter and obtain his concurrence by
time before such prolonged stay commences.

4. Inspection Reports:-

i) Inspection Reports should be written up concurrently with the progress

of inspection, so that the observations may be recorded at a time when
they can be most clearly and readily stated. The observations made in
the inspection reports should be concise and fully descriptive, so as to
obviate the necessity for any further reference to the accounts or
registers concerned.

ii) The office copy of the Inspection report (in which all observations made
during the course of inspection should be recorded neatly in ink) should
be shown to the O.C. the unit or formation concerned and the various
items contained therein, discussed with him or the Adjutant. All items
which are settled on the spot should be marked in the Inspection
Report as settled and the reasons for the settlement should be
recorded therein. The signature of the Officer Commanding or any
officer deputed by him for the purpose, should be taken at the bottom
of the Inspection Report in token of his having agreed with the reasons
recorded therein for dropping an observation or objection. In case the
executive authorities try to avoid discussion, a formal letter be issued
by the LAO or the CO and if the CO does not arrange discussion, the
fact should be clearly mentioned in the report. Unsettled observations,
etc., will then be fair copied and the Inspection Report sent to the
Officer Commanding immediately, the inspection has been completed
and before taking up the inspection of another unit, or leaving the
station. If, however, the report contains any matter of a confidential
nature (e.g. cases involving financial irregularities, serious defects in
accounts, or any other points of a special importance), it will be sent to
 the Officer Commanding unit under a confidential cover. Cases
involving financial irregularities or any other special importance should
be reported to the DCLA/CLA (DS) by the L.A.O in a confidential cover
forthwith.

iii) Extracts from items relating to verification of recoveries in subsequent

pay bills, etc., and points relating to the Audit Sections of the Main
Office should be sent to the Sections concerned. Responsibility for the
settlement of the observations/objections raised by the L.A.Os on the
Railway Warrants and Military Credit Notes will rest with them. They
may, however, call for the advice of the C.M.A (LC) MRC Section
where considered necessary. Acknowledgements of the parties in
token of receipt of extracts should be obtained and kept on record.

iv) The Inspection Report should not be burdened by a repetition of

matters which have been found to be correctly done. Particular care
should be devoted to the language and tone of the Inspection Report.

Whilst it is necessary to make clear as briefly as possible, how any loss

of public money has arisen or to indicate how loss might have arisen,
insinuations must be avoided. It is not sufficient to quote the rule or the
order violated. The extent to which the rules or orders have been
violated and the actual or possible effect of such deviation on the
financial interests of Government must be intelligently explained. In all
such cases, a special report should be made to the CLA (DS) under a
confidential cover. The names of the Officer in whose term of office the
irregularities have occurred should also be stated.

5. Inspection of Accounts Section (UA)

The L.A.Os will also carry out periodical inspection of the Accounts Section
(Unit Accountant) of the units in order to see:-

(a) That the Accounts Section of the Unit is properly accommodated.

(b) That the records are kept neat and tidy.

(c) That the prescribed registers (vide Annexure ‘A’ to Instructions for Unit
Accountant) are properly maintained, particularly the Demand and the
Payment Issue Registers and the registers of L.P.Cs to be issued.

(d) That the books of regulations required to be maintained by the U.A.

have been correctly kept and corrected up-to-date.

(e) That the articles of Dead Stock in possession of the Unit Accountant
agree with a inventory of the Dead Stock.

(f) The L.A.O. will also enquire into the general relations between the
Accounts Section and the Unit. Any complaint against or irregularities
 on the part of the U.A. will be investigated and, if necessary, brought to
the notice of DCLA (DS)/CLA (DS) by L.A.O. confidentially.

6. Visual Chart Register

The L.A.O. will keep a visual chart register (see detailed instructions
contained in M.A.G’s No. AT/SP/249-III, dated: 27th September, 1951) in order to
watch how the inspection of the accounts of units and formations (including field
units) in his area is progressing. The chart should show the names of units, etc., to
be inspected and the date on which the inspection of each unit is completed.

7. Railway Warrants etc.

Instructions with regard to scrutiny of (1) Railway Warrants, (2) Credit Notes,
(3) Books of Forms ‘D’ and ‘E’ P.A.F. T-1712 and Y-1954, (4) Service Books,
(5) Books of L.P.Cs and (6) Sheet Rolls/P.A.F. 958 are contained in Appendix ‘C’
Section-I, Part-I, of this Hand Book.

8. Audit / Review / Inspection Report

The L.A.O. will submit to the DCLA (DS) Audit/Review/Inspection Completion

Report (in duplicate) upto 10th of each month on the performance as per Annexure
‘B’, Part-I & II to preamble of this Hand Book.

(i) In the case of units or formations whose inspection is in progress and has not
been concluded during the period, the words, “In progress” will be entered against
items 9.

(ii) The detailed instructions given in this Book or issued from time to time are
intended to assist in securing an intelligent and efficient audit by the method of
“sampling”. They need not be followed literally when special circumstances arise, or
in circumstances which are out of the ordinary.

(iii) If the Local Audit Officer is satisfied that it would be absurd or unjustifiable or
inexpedient in any particular case to adhere strictly to the “letter” of the instructions,
then he should regard himself as not only authorised but expected to depart from the
standing instructions, to expand contract them in any way and to proceed as, in his
judgment, the circumstances warrant, carrying out either more or less audit or
inspection than the detailed instructions prescribe.

(iv) The guiding consideration should always be whether or not the departure from
the usual procedure is likely to facilitate (or at least is unlikely to frustrate) the
attainment of the object aimed at by that procedure.

(v) Any such departure from the standard instructions should be recorded briefly
in writing, with brief reasons, and a copy should be sent atonce to the CLA (DS) for
information and record, and such action (if any) as the Controller may consider
desirable (by was of confirmation, issue of instructions or advice further study of the
particular problem raised, etc. etc.).
9. Points to be observed

While carrying out the inspection of any Unit/Formation, the following points
should be kept in `:-

i) The general state of accounts depicted in the previous inspection.

ii) Action taken by the unit for clearance of settlement of objections raised
in the previous report.

iii) The results of reminders issued by the L.A.O. to unit authorities

regarding outstanding objections of past period.

iv) In case of non compliance by the unit, the matter should be reported to
the higher Formation and CLA (DS).

v) The objections contained in the current inspection report must be

discussed by the L.A.O. personally with the O.C/C.O. or 2 IC and
explained to him the action to be taken in each case. (also refer to para
16 ii).

vi) Unit should be instructed for maintenance of cash accounts on correct

procedure under rules if deviated.

vii) Ensure that all inspectable documents have been produced for audit.

viii) Ensure availability of approved list of auditable documents by the

DCLA (DS).

ix) Physical stock verification of selected articles should be carried out

personally by the L.A.O. and results thereof recorded in the stock
verification reports as laid down in Section-X of S.A.I. and S.V.R.
(PAF-CMA 531) duly signed by the O.C. unit should be attached with
the Inspection report.

10. Certificate

A certificate as under should be recorded at the end of last month’s accounts

inspected. This certificate should be signed the AAO and countersigned by the
L.A.O. in token of having exercised necessary check.

“Certified that all the castings of receipts/payments from the last inspected
accounts upto and including the month now audited/inspected have been
checked in full and that general scrutiny over all transactions besides the
months accounts selected for detailed audit/inspection has also been
examined”.
 Cash in Hand/Bank should also be written below the certificate on the date of
inspection.
 Annexure ‘A’

( REFERRED TO IN PARA-I, PREAMBLE TO L.A.O’s HAND BOOK PART-II )

Definition. Public funds are funds financed entirely from public money, the
unexpended balance of which is refundable to Government in the event of its not
being devoted to the objects for which granted. They include fine fund, ordnance
establishment fund and those set out below. The general position is that, when a
fund does not fulfil both the conditions given above, it is to be classified as a
regimental fund, even though it may be financed entirely from public money:-

 Adjutants Cash Accounts.

 Company Cash Account.

 Estates of Deceased Men and Deserters.

 Permanent Advance and Local Purchase Imprest.

 M.T. Funds.

 Office Fund.

 Quartermasters’ Cash Account.

 Training Grant Fund.

 Un-issued pay and Allowances.

 Education Training Grant Fund.

 Amenities Grant Fund.

The above list is not exhaustive and serves as only a guide.

Annexure ‘B’
 Referred to Para 8

GOVERNMENT OF PAKISTAN
MINISTRY OF DEFENCE
LOCAL AUDIT OFFICE ________________

LOCAL AUDIT/ REVIEW / INSPECTION REPORT

1. Name of the Unit / Formation. ___________________

2. Name of the Formation HQrs. ___________________
3. Name of the CO/OC. ___________________
4. Name of the L.A.O. ___________________
5. Name of the A.A.O. ___________________
6. Period of:-
i. Audit/Review ___________________
ii. Inspection ___________________

7. Period Selected for Detail

i. Audit/Review ____________________
ii. Inspection ____________________
8. Date of Commencement of
i. Audit/Review/Inspection ____________________

9. Date of Completion of
i. Audit/Review/Inspection ____________________

10. General State of Accounts Satisfactory / Unsatisfactory

11. a. Cash Balance position in Public Fund Account
i. Date ____________________
ii. Banker ____________________
iii. A/C No. ____________________
iv. Cash in hand ____________________
v. Cash in Bank ____________________
vi. Bank Statement Attached / Awaited

11. b. Physical Verification of Stores

vii. Date ____________________
viii. Items Checked ____________________
ix. Items found Surplus ____________________
x. Items found Deficient ____________________
xi. Action taken ____________________

12. Outstanding Objections

i. Total Over 5 years ____________________
ii. Total Upto 5 years ____________________

13. Settlement
i. Total Objections settled during visit ____________________
 ii. Amount Deposited on TRs Rs._________________
iii. Amount Recovered on Pay Roll Rs._________________
iv. Amount regularized by CFA Rs._________________
v. Amount adjusted through Book debit Rs._________________

14. Current Audit

i. Total No. of Objections Raised ____________________
ii. Objections settled during discussion ____________________
iii. Amount deposited on TRs against
Objections dropped ____________________
iv. Total objections/observations included in the Report ____________________
v. Financial effect of the objections/observations
included in the report Rs._________________
15. No. of Contingent Bills Audited/reviewed ____________________
16. No. of cheque slips verified in cash book ____________________
17. No. of Acks of TRs verified ____________________

Certified that the information given above is correct and upto date.

(Name............................................)

Local Audit Officer____________________

*(By name Stamp of LAO to be affixed)

Station: __________________

Date: __________________

Annexure ‘B’
Part-II

REFERRED IN PARA 8 TO PREAMBLE

S/No. Name of Period of objection Financial By whom Remarks
Unit/Fmn Accounts No. Effect Objection
Detected

SIGNATURE OF THE L.A.O.

 SECTION - I

GENERAL

1. The accounts of public funds only (as defined in Financial Regulation see also
details in Annexure ‘A’ to the Preamble) will be subjected to inspection, no inspection
being made of accounts of regimental funds or those relating to the interior economy
for which the Officer Commanding is responsible, except under definite instructions
from the CLA (DS).

Note- The executive authorities have instructions that queries relating to

funds other than public funds should not be referred to the audit
authorities.

2. The half yearly programme of inspection will be drawn up by the L.A.O. and
submitted to the DCLA (DS), for approval. To enable the respective Officers
Commanding to arrange for all officers concerned to be present on the dates of
inspection and to have ready the points they may wish to discuss or on which they
require advise, the approved programme will be notified by the L.A.O’s to Officers
Commanding sufficiently in advance. The CLA (DS) when necessary will give special
instructions to the L.A.Os on matters requiring special action or investigation.

3. The L.A.O. before commencing the inspection of the accounts of a Unit or

formation must interview the Officer Commanding the unit or, in his absence, the
next senior officer and explain to him the object of his visit. When arriving at an
outstation for inspection he should first report to the O.C. of the station.

4. (i) The L.A.O. is not ordinarily required to verify the cash balances of
those units and formations whose accounts are subject to audit by Regimental Audit
Boards. In cases, however, where he considers that the state of the accounts of
particular unit or formation is unsatisfactory, he may verify the cash balance by
actual counting. In the case of remount and miscellaneous formations, which have
no regimental accounts, the cash balance will be verified.

(ii) The L.A.O. will proceed to count the cash (where necessary)
immediately after he has interviewed the O.C. (para 3 ante). He should ask the
Cashier to produce all monies in his possession before the actual counting is
taken up.

(iii) On the conclusion of the counting of cash (or where cash is not
required to be counted, before proceeding to inspect the accounts), the L.A.O.
should request the Cashier or the Accountant to complete the Cash Book as regards
any outstanding transactions for the day and to balance it.

(iv) A “Reconciliation Statement” should be prepared reconciling the bank

balances as per Cash Book with the balance shown in the bank statement on the
date of inspection. The statement should preferably by prepared by the “Cashier” or
the “Account Officer”.
 (v) The L.A.O. will then record the following certificate in cases in which
the cash is actually counted by him:-

“Certified that:-

(a) The Cash in the Treasure Chest counted by me today,

the .......... (date) amounted to Rs........................

(b) The balance shown in the public funds Bank statement

(reconciled as per “Reconciliation Statement” below) amounted
to Rs.................................................. and

(c) The book balance of public fund accounts amounted in the

agregate to Rs.................................... at the time of count”.

This certificate of fact should be signed by the L.A.O. and also by the
Cashier/Account Officer.

(vi) The L.A.O. accompanied by AAO will then check the castings of the
Cash Book (both cash and bank columns), and the “carry forward” of the monthly
closing balances, from the date of balancing the books at the last inspection to the
date of the present inspection.

In case where erasures, over-writing and unattested corrections etc., occur in

the accounts (whether “audited” or “scrutinized” the L.A.O. should verify the
particular entries from original documents, etc. He should also consider carefully
whether an extension of the “test” check is called for.

(vii) The L.A.O./A.A.O. will compare the Bank balances at the end of the
month preceding the inspection as shown in the advice of balance (Rule 47 Financial
Regulations, Part-II (1986) with that in the Bank Pass Book (produced for inspection)
on the corresponding date. The two balances should tally.

(viii) The reconciliation statement of the Bank balance at the end of the
month selected for detailed check should be verified. If it has not been prepared by
the unit or formation, the L.A.O./A.A.O. should prepare it.

(ix) The L.A.O./A.A.O. will verify the correctness of the Reconciliation

Statement prepared at the date of the previous inspection by seeing that all the
uncashed cheques and uncredited remittances to Bank, etc., in fact since been
brought fully to account in the Bank Statement Satisfactory explanation for any time-
lags (i.e. delay in accounting for in the Bank Statement) should be looked for.

5. (i) The L.A.O. will receive in weekly batches from C.M.A. all cheque slips
in respect of negotiable cheques (which will be numbered serially) issued in favour of
every O.C. a unit or formation in his area. He will watch that all such cheque slips
received by him are consecutive and that there has been no omission in sending him
any cheque slips. Cheque slips not received in time should be called for (para 284
OM Part-II refers).
 Cheque slips for one month (corresponding roughly to the month’s account
selected for detailed check) will be verified into the Cash Book from the cheque slips
(and not vice versa) at the time of each inspection. For this purpose cheque slips
bearing the L.A.Os Office “Receipt Date Stamp” for the month will be selected.

In the case of Not Negotiable cheques no cheque slips will be received by the
Local Audit Officer. All such cheques are entered by the treasuries or the Bank in the
Pass Book and the L.A.O. should test check the Cash Books from these Pass
Books, the monthly statement of accounts or the advice of balance. Any particulars
of individual cheques necessary for audit purposes should be obtained from the
cheque slips on record with the Officer Commanding concerned.

(ii) The L.A.O. will after verification of cheques prepare a statement

showing the number and date, and amounts of cheques accounted for in the cash
account which have not been shown in the list and vice versa and send it to the
C.M.A. for confirmation. Any discrepancies noticed between the amounts of the
cheques shown in Cash Book and those in the cheque slips as intimated by the
C.M.A. will be referred to C.M.A. (‘D’ Section) for reconciliation in the first instance,
and included in the inspection report if the cheque is found to have been incorrectly
accounted for or not been shown in the cash account.

(iii) The L.A.O. will see that:-

(a) All cheques and T.Rs are accounted for in the Adjutant’s cash
Books in the case of Infantry and Cavalry Units.

(b) In the case of all other arms of services and other formations,
the O.C. or the head of the office has accounted for all cheques
and T.Rs in Public Fund Cash Book.

(iv) Blank.

(v) In the case of public funds accounts selected for examination, it will be
seen that all transactions between individuals and public accounts, or between the
accounts of different public funds are easily traceable and that they agree and the
credits for the amounts transferred from the public to the Regimental Accounts are
afforded in the latter accounts in cases where the Regimental Audit Boards are held.
The L.A.O. will invariably verify credits of all transfers coming to notice during
inspection of cash account of public funds from one unit or formation, etc., to another
or within the accounts of the unit/formation inspected. When one of the unit
concerned happens to be located at the time in the audit area of another L.A.O.
necessary intimation of the transfer of cash will be sent to him by the L.A.O.
concerned for verification of credit and his acknowledgement for the receipt of the
intimation will be obtained.

When Regimental audit Boards are convened, the double entries in account
consequent on the transactions between public and regimental funds will be verified
by the Board; the L.A.O. will only see that the amounts transferred from public funds
are vouched against the receipts issued by the fund holders. In the case of small
units, however, where the same officer holds charge of both public and regimental
fund account and where it is not customary to issue receipts of inter-transfer
between the funds, L.A.O. should ensure that amounts transferred from the public
fund accounts to regimental funds are brought to account in the latter.

(vi) The L.A.O. will carry out the following checks in respect of the month’s
accounts selected for detailed check:-

(a) Mark off (from the “counterfoils” of cheques, of every entry in the Bank
Statement.

(b) “Pair” the entries in the Bank Statement with the relative items on the
Bank column of the cash book, paying particular attention to any “time-
lags” (e.g., that there is no undue delay between the date of a Bank
gives credit for cash or cheques paid in and the date the remittance is
paid in or ought to have paid in; similarly, that the “cashier” brings to
account promptly in the cash column any cash withdrawn from the
Bank).

(c) Verify every issue entry in the cash book (both cash and bank
columns) against the disbursement vouchers, etc., verify from the
“Counterfoils” of receipt books, check register of money orders in
regards to money orders returned undelivered (para 8 (iii) Section-II of
this Hand Book) etc., into the receipt entries in the cash book to see
that receipts have been accounted for. Verify all “contra entries” (in the
case of transfers from “Book” to “Cash” and vice versa).

6. (a) The L.A.O. will obtain from the C.M.A. a list of Officers Commanding or
heads of offices in his area, who have been granted permanent advances for
specified purpose and see at the time of inspection of those units, etc. :-

(i) That a regular account of expenditure against such advances is

maintained.

(ii) That no unauthorised advances are being made from that

account,

(iii) That an analysis of the amount to be recouped is recorded at

the end of the month.

(iv) That the permanent advance is not in excess of average

monthly expenditure.

(v) That the officer holding a permanent advance sends an

acknowledgement to the C.M.A. on the first of July each year,
that amount is due from and is to be accounted for by him.
6. (b) As regards the Field Imprest Accounts (maintained by Imprest Holders)
the L.A.O. will ensure that:-

(i) Balances of field imprest account have duly been checked by

the Regimental Audit Boards and found correct.

(ii) When action at (i) above has not been taken or when there are
discrepancies in their balances as shown in the proceedings of
Regimental Audit Boards he will put this in his Inspection Report
and pursue this in the normal manner enclosing a copy of the
objection to the C.M.A. under a registered cover.

7. The L.A.O. will ascertain the moneys deposited in Government or other banks
by units, etc, and will satisfy himself that the Controller’s sanction, where requires,
has been obtained for the account maintained. With a view to reducing to a minimum
the cash balances of public funds retained in regimental treasure chests and to avoid
losses from theft and other causes, such funds of units and formations may, if
necessary, be kept in a branch of the National Bank of Pakistan (or in a civil
treasury), a current account being opened in the official capacity of the officers
concerned. In no circumstances should public funds be kept in an officers own
possession or deposited to the credit of private account or with private banking
concern. Separate banking account should be maintained for public and regimental
funds.

8. The L.A.O. has full power and authority to examine the Treasure Chest
balances, cheque books, etc., and to call for any information, account, vouchers or
documents he may require in connection with Public Funds Accounts which are
being examined by him vide Rule-47 Financial Regulations Part-II 1986.

9. The L.A.O. will always refer to the previous report on a unit or formation when
inspecting its accounts with a view to seeing that all errors, etc., previously brought
to notice are not repeated.

10. In the case of units to which Unit Accountants are not attached, L.A.Os will
ensure that refunds due to Government on account of unused return journey
vouchers for rail fare claims of soldiers proceeding on leave, vide Rule 90 Financial
Regulations Part-II (Revised Edition 1986) and Sub-clause (b) of Note 6 or Rule 7
Passage Regulation, are properly realized in all cases.

In the case of units to which Unit Accountants are attached, the above check
will be exercised by them.

The check prescribed above should not be deferred till the time of inspection,
as claims over six months old will become time-barred.

11. The Inspection Report for the Officer Commanding will be drawn up on
fullscap in half margin, with plenty of space between the paragraphs.
 All suggestions as regards remedying defects or introducing improvements
will be entered in a separate memorandum which will be attached to the Inspection
Report so as to facilitate the Officer Commanding giving his personal attention. The
result of verification of cash and bank balances on the date of inspection will be
stated in terms of the certificate laid down in para 4(v) of this Section and
incorporated as an opening paragraph of the Inspection Report.

12. The Inspecting Officer should also inspect the accounts and land register in
respect of lands in possession of units and formations on the lines indicated in para
2, Section-I of this Hand Book.

13. The inspecting officer should also inspect the liability register required to be
maintained by drawing and disbursing officers. (Specimen as Annexure ‘A’ to this
Section).

In this Register should be entered only those items of expenditure for which:-

(i) payment is to be made by or through another officer,

(ii) budget allotment or sanction of a higher authority is to be obtained or

(iii) payment would be required partly or wholly during the next financial
year or years.

It should be seen that the Register is maintained in the proforma given in

Annexure to this Section and that all the liabilities required to be entered in the
register have been correctly recorded therein and have been/are being properly
progressed for quick liquidation.

14. The instructions in this Section and the subsequent sections are not
exhaustive. L.A.Os should apply any additional checks if these seem called for in the
particular circumstances of individual cases.
 (Referred to in para 13, Section – I)
LIABILITY REGISTER FOR THE YEAR 20 - 20 .
Balance
Ref : to carried
Reference Dated Dated
Pro- Action Amounts Adjustment forward to Item
to initial of initials of
Antici- Budget bable taken adjusted the next No. in
correspon Parti- Head of drawing drawing
pated allotment date of for in the year’s the next Remarks
dence etc cular account or dis- or
amount sanction adjust- adjust- current Month in Amount Register for years
or other bursing disbursing
ment ment year which adjust. in register
orders adjusted Officers Officers
adjusted the next
year’s
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Certified that the balance outstanding has been included in the Budget Estimate for the next year...........................................
Drawing and Disbursing Officer
 SECTION - II

UNITS

1. See that the cash balances of all the public funds accounts agree with the
balances shown in P.A.F.A. 120 (statement of funds). Verify the balance in Bank as
shown in the cash book (P.A.F.O. 1887 in the case of Ordinance Establishments and
P.A.F.A. 811 in other units) with the Bank Statement. In cases where there is a
discrepancy between the two balances obtain the counterfoils of Bank cheques and
see that the balance agreed with the cash account, after allowing for unpresented
cheque. Sign the cash book in token of having verified the cash and bank balance,
vide para 4, Section-I of this Hand Book.

2. If the aggregate amount of all funds in the treasure chest in excess of the
limits laid down in Rule 439 A.R. (R) and 389 AR (I) ascertain reasons and authority
for the excess.

3. Trace every items in the Summaries or recapitulation statements of the pay

bills of the month’s account selected for special examination, into the Cash Book of
the unit, and ascertain that no sums are being paid without proper acquittances
being taken.

See that all transactions between individuals and public fund accounts for
between the accounts of different public funds, are easily traceable and that they
agree.

4. It should be seen:-

(i) that no advances are made to officers and others or from one public
fund to another contrary to regulations.

(ii) that running accounts are not kept with officer.

(iii) that no money has been drawn from the bank/treasuries unless
actually required for disbursement.

5. Examine the Adjutant’s and Quartermaster’s cash accounts for one month,
trace every item therein to its origin, ticking of each item when satisfied with its
correctness.

6. See also that all public fund cash accounts are maintained as required by
Rule 444 et. seq. AR (R) and are closed, balanced and signed monthly. See that a
balance sheet (statement of assests and liabilities) is made out once a month for
each public fund.

7. Check fully the same month’s account of each public fund item by item and
see that entries are actually on account of such funds and that they are properly
vouchered. It should also be seen that items of undisbursed pay, etc., are not
credited to any fund accounts.
 Scrutinize unadjusted items in the Company Cash Accounts to see that action
is being taken to settle them where possible and to credit the amount of undisbursed
pay to Government.

8. (i) Examine the Squadron or Company Cash Account and see that the
account is closed and signed monthly and that the balance agrees with the balance
to the debit or credit of the Company in the treasure chest ledgers.

(ii) See that Company, Squadron or Unit maintains a check register of

money orders in the prescribed form and that payee’s receipts for these money
orders are on record and amounts on account of undelivered money orders have
been recredited in the Cash Book.

(iii) Select a few old items where payments have been made in arrears, to
examine whether these are genuine, e.g., if a payment is purported to have been
made in person to an absentee or a deserter it should be obvious to the L.A.O. that a
deserter would not come to receive his pay, etc.

9. When specially required to examine the Canteen, regimental clothing or other

similar accounts, see that the quantities of stores received and issued are correctly
accounted for, and that the amounts realized from the sale proceeds are correctly
credited to the account of the fund. It should also be seen that orders in P.A.O. 86 of
1951 are not being overlooked and that a balance sheet is made out quarterly and
that there are no old outstanding items.

10. Blank.

11. (i) Check the pay acquittance rolls of educational establishments and
followers of Quartermaster’s establishments and see that the names agree with
those given in the pay bills.

(ii) See that the Accounts Officer initials the Cash Book daily and the
balance shown therein agrees with the balance shown in the Accounts Officer’s cash
book.

(iii) Report to CLA (DS) any cases of losses for which officers on leave out
of Pakistan or transferred to U.K. etc., are responsible.

(iv) See that a register is maintained in respect of conservancy charges

recovered by Officers Commanding Units from non-entitled individuals.

12. In the case of units on field service, or when re-enforcements to units in the
field are sent, the instructions laid down in para 139 et seq, Accounts Manual (War)
will also be carried out.

13. Blank.

14. Examine the register of the Insurance Fee due under Rule 705 AR Vol-I and
879 AR Vol-II in respect of horses hired out or allowed to be played at Polo or used
for hunting and pigstickings and verify that the fee is promptly and regularly
recovered and credited to Government.

15. Examine the register of boarded out horses (see Chapter-XII, Part-I of this
Hand Book) and see that the Annual Insurance Premia are correctly and regularly
recovered and credited to Government.

16. Office Allowance Fund.- Examine the office allowance fund (see Army
Instruction (P) 33 of 1951) account and see:-

(i) that the expenditure charged against office allowance fund is

legitimately debited against that fund and that when required sanction of the
competent authority exists for purchase of articles.

(ii) that no bicycles, typewriters, duplicators, etc., are purchased out of this
fund;

Note- The cost of upkeep and repairs to typewriters and duplicators on

charges of all units and formations shall be met from their office
allowance or contingent grant (see detailed instruction in
A.I. (P)/21/1967.

(iii) that cost of conveyance of office records including coolies hire is not
debited to the office allowance fund.

17. Examine the register of duplicate requisitions for R.T.Rs. (P.A.F. A-610) and
see that columns 1 and 2 of the duplicate P.A.F.A. 610 have been filled in and that
R.T.Rs are issued on bonafide public service only.

18. See that provisions of the Rule 444 et. seq. A.R. (R) and Rule 36 et. seq.
Financial Regulation Part-I, regarding handling of cheques and money and safe
custody of account books are rigidly observed.

19. See the proceedings of quarterly Regimental Audit Board and verify that all
public funds accounts are being examined by the Board and that each account has
been signed by the Board (P.A.O. 86 of 1951 refers).

20. For check of Railway Warrants and Credit Notes Books of Forms ’D’ and ‘E’
(P.A.Fs. T-1712 and T-1954) Sheet Rolls/P.A.F.F. 958, Service Books and L.P.C.
Books, See Appendix ‘C’ Section-I, Part-I of this Hank Book.

21. Miscellaneous.

The L.A.O. will bear in mind that:-

(a) The expenditure of public money by Executive Authorities to avoid its

lapse to Government is forbidden and is not resorted to by Officers
Commanding Unit and formations (Financial Regulations Part-II, Rule
51 and P.A.O. 221 of 1948).
 (b) No further expenditure (including the issue of Government Stores) is
incurred by an Officer Commanding of a Unit the regularity of which
has already been challenged by the L.A.O. or by the Unit Accountant
without the previous written consent of the C.M.A. concerned (Financial
Regulations, Part-II Rule 48 and P.A.O. 85 of 1947).

(c) References to General Headquarter by Officers Commanding Units

which involve financial and accounts considerations or interpretations
of regulations and other Government orders etc., and submitted
invariably through the C.M.A. concerned and not direct (Rule 736
A.R. (II), Financial Regulations, Part-II Rule 49 and P.A.O. 220 of
1948).

22. Education Training/Amenity Grants. The L.A.O. will ensure that:-

(a) proper accounts are maintained for receipts and expenditure duly
supported by vouchers;

(b) all articles purchased out of the above grants are brought on charge;

(c) in the case of Education Training Grant, that the portions of the fund
remaining unexpended at the close of the year are refunded to the
State through field imprest (where field imprest is authorised) or in the
civil treasury;

Note. In the case of Amenity Grant the balance will be carried forward from
year to year (P.A.O. 168 of 1950 and Rule 47 -(e) -5) FR Vol-I 1986
refers.

(d) the provision of para 21 (a) above is strictly observed;

(e) the fund accounts are maintained in accordance with Army

Instructions/Army order issued every year.

Note. Instructions for the audit of Annual Training Grant are contained in Rule
208 to 219 FR-II 1986. The L.A.O. will particularly see that the general
rules regarding funds, cheques and drafts, etc., contained in Financial
Regulations are rigidly complied with by the Unit authorities.
 SECTION - III

I. A.S.C. OFFICES (INCLUDING S.T.Os)

1. Verify the cash in hand where no Regimental Audit Boards are held, with the
balance shown in the cash book (for the form of the cash book see para I of
Section-II) and office contingent register.

2. Select one month’s accounts (or more, if considered necessary) and

examine them.

3. Examine the general system of keeping the accounts, registers, etc.

and the supervision exercised by the A.S.C. Officers.

4. See whether registers, books etc., are maintained in the prescribed

forms, and regularly posted and inspected by the A.S.C. Officer.

5. Inspect the accounts, registers etc., as detailed below:-

(i) Register of earnest money (P.A.F.A. 300).

(ii) Accounts of permanent advances.

(iii) Pay bill of clerks and office menial.

(iv) Books of sale accounts (P.A.F.A. 58).

(v) Money order Check-Register (P.A.F.Z.-2067).

6. See that the rules regarding calling for tenders and their acceptance as
laid down in Rule 85 et. seq. Financial Regulations, Part-I, are strictly
observed.

7. See that acquittances have been taken for all payments made to the
office establishment, and that revenue stamps have been duly affixed
in the case of amounts exceeding Rs. 20

8. See that service books, etc., are maintained and kept up-to-date in the
manner explained in Rule 28 et. seq. Financial Regulations Part-II.
Check these records in accordance with detailed instructions given in
Appendix (C), Section-I, Part-I, of this Hand Book.

9. Check Railway Warrants, Credit Notes, Books of Forms ‘D’ and ‘E’ etc.,
and L.P.C. Books in accordance with the detailed instructions
contained in Appendix ‘C’ Section-I, Part-I of this Hank Book.

II. Station Transport Office

1. Verify the Cash in hand with balance shown in the Cash Book.
2. Select one month’s accounts (or more, if necessary) for check and see
that amounts recovered from Departments and entitled individuals,
etc., on account of A.T. or M.T. hired out have been promptly credited
to Government and Treasury Receipts sent to C.M.A.

3. For further instructions, see para 8 et. seq. Section-XIII, Part-I of this
Hand Book.
 SECTION - IV

TRANSPORT UNITS A.T. AND M.T.

1. The rule in Section-II will be generally followed.

2. Enquire into the disposal of sums received for credit into economic and other
public funds.

3. See that public fund accounts are maintained in the prescribed forms and in
accordance with the instructions for keeping the accounts of Transport Units A.T.
and M.T.

4. Examine the suspense fund account and see that action is being taken for
adjustment of all outstanding items effecting public funds.

5. See that no expenditure has been incurred in M.T. Units out of the office
allowance which legitimately pertains to the grant for Miscellaneous Expenditure.
 SECTION - V

‘A’ COMPANY OF A.M.C.

1. The rules in Section-II will be followed wherever applicable.

2. Examine Register of Security Deposits lodged in respect of civilian Hospital

Store-keepers, with the O.C. and see that it has been properly maintained.
 SECTION - VI

MILITARY DAIRY FARMS

1. The rules relating to the checking of the cash balance, cash in hand, etc., are
laid down in Section-VI, Part-I, of this Hand Book.

2. Scrutinise the Register of “Security Deposits” and see that it is kept

up-to-date.

3. Examine the service books of permanent establishment pensionable under

the C.S.R.

4. Examine Railway Warrants and Credit Note Books with reference to

instructions in Appendix ‘C’, Section-I, Part-I, of this Hand Book.

N.B. The L.A.O. will exercise the checks at items 2 to 4 above at the time of
his visit to the Dairy Farm for reviewing the Local Audit carried out by
his staff. No special visit to the Farm for the purpose of the above
checks should be made.
 SECTION - VII

REMOUNT DEPOTS

1. Count the actual cash in hand and see whether it agrees with book balances
and also see that one key of the Treasure Chest is kept with the O.C. and the other
with the Head Clerk.

2. Select for inspection any one month’s account and carry out regular check as
detailed below to see:-

(a) That the cash book is kept on the prescribed form (P.A.F.A. 811).

(b) That the instructions for writing up the cash book as laid down in Rule
157 Financial Regulations, Part-II etc., have been followed.

(c) That no copies of schedules except schedule-IX are kept up.

(d) That money received for payment of office establishment is not brought
into the cash account.

(e) That temporary recoveries or payment such as cost of stamps for

indemnity bonds do not pass through cash book but through the office
contingent register.

3. That an authenticated list of all registers and books maintained in the depot is
hung up in the depot office.

4. Ascertain whether transactions in respect of any fund such as line fund,

clothing fund, etc., occur in the depot, and if so whether regular accounts are
maintained.

5. Examine the corresponding files to ascertain whether tenders for articles have
been invited and whether proper steps such as advertisement, etc., have been
taken.

6. Examine the register of earnest money deposits (P.A.F.A. 300) and security
deposits.

7. See that each transaction whether in Cash, Grant, Paper, Trust Bonds,
Provincial or Municipal Debentures, etc., is recorded in a register (P.A.F.A. 285) and
whether any indication exists to show that it was done at the time the transaction
took place. See that each depositer has a separate folio allotted to him and that
these deposits are approved annually on P.A.F.A. 287.

8. That no demand certificates (P.A.F.A. 451) are obtained in cases of refunds of

security deposits on the completion of the contract, when the security deposits are
held by the head of the office or the local administrative head of the department.
9. Check the acquittances in P.A.F.A.38 of permanent establishment to see that
these have been obtained in each case and that revenue stamps have been affixed
wherever the amount paid exceeds Rs.20 unless covered by the exceptions
enumerated in Rule 45 Financial Regulation, Part-II.

10. Trace the number of labourers such as carpenters, etc. shown as employed in
the bills of cattle and rolling stock or cultivation expenses and contingencies into the
daily return of forms workman and materials (P.A.F.R. 1486) and also in the return of
depot workman material etc. (P.A.F.R.1487 ) maintained in the depot.

11. Check the books maintained by workshops to see that the labour employed in
the workshop has been properly accounted for.

12. Check the register of Cash Assignments, (P.A.F.A 276) to see whether it is
properly maintained and is in the authorised form.

13. See that regular registers of leases and recoveries are maintained in the
depot and check any selected month’s transactions and, if found to have been
erroneously kept, check the entire account for the period from the last inspection.

14. Pay a surprise visit to the cultivation farms and workshops if this is possible to
see whether the number of labourers working agrees with the numer shown in the
muster rolls as present on that particular day.

15. Cash book of the remount squadron should be inspected in accordance with
the rules laid down for units wherever applicable.

16. As the Remounts Depots arrange for the maintenance of buildings, etc,
themselves and are not dependent on the MES the documents prescribed should be
inspected by the LAO in accordance with the instructions laid down in MES local
Audit Manual for check of similar documents in the M.E.S.

( See paragraph 6, Section VII, Part-I of this Hand Book )

17. For check of railway warrants, credits notes, books of forms D and E
( P.A.Fs. T-1712 and Y-1954 ) sheet rolls, L.P.C. books and service Books

See Appendix ‘C’ Section I, Part I of this Hand Book.

 SECTION - VIII

1. ARSENALS AND ORDNANCE DEPOTS

In addition to the checks prescribed in Sections-I and II of this Hand Book, the
instructions contained in the succeeding paragraphs will be observed by the L.A.O.
in the inspection of cash accounts of an Arsenal or Ordnance Depot.

2. CASH LEDGER AND SUBSIDIARY ACCOUNTS

The L.A.O will see that:-

(i) the cash account is maintained on P.A.F.O 1887 on modern

commercial system of book keeping;

(ii) all columns of the ledger have been correctly filled in ink;

(iii) cheques issued by C.M.A. are not accounted for until receipt of an
intimation from the Bank that the amount has been credited to the
accounts;

Note. The intimation slip issued by the C.M.A. is no authority for either
drawing cash or posting or completing cash ledger accounts in
advance;

(iv) cheques for service labels are passed through the cash accounts;

(v) in emergent cases, when charges are incurred by one public fund with
insufficient credit from another public fund, that the maximum amount
so incurred does not exceed the amount that will accure to the credit of
the former fund during the next six months and that the “creditor” fund
in reimbursed regularly as and when money is received in the “debtor”
fund;

Note. This applies to “loan” transactions between public funds and not
between public and regimental funds;

(vi) whenever cash, cheque, etc., is received or paid, the appropriate

accounts on the credit side of P.A.F.O. 1887 are posted immediately, in
addition to its entry, being posted on the debit side of the cash ledger in
“cash” or “Bank” column as necessary;

(vii) the rules regarding the transactions by cheques contained in rule 36 et.
seq., Financial Regulations, Part-I are observed;

(viii) payment to extra temporary and conservancy establishment is made in

accordance with Rule 21, Financial Regulations, Part-II (see detailed
instructions in para 20, Section-VIII, Part-I, of this Hand Book);

(ix) a balance sheet is prepared each month;

 (x) examine and check the pay bills subordinates and clerical
establishments, see the stamped receipts have been obtained where
necessary and that undisbursed pay is disposed of as required under
rules;

(xi) see that the amount shown in the Temporary Labour bill as drawn from
CMA agrees with that intimated by the CMA;

(xii) see that the register of Security deposit is maintained for recording the
security deposit recovered from the pay of store keepers, that the
amount shown therein have been deposited in postal saving Bank or
invested in Post Office Cash Certificates and that the Saving Bank
Pass Book is pledged in favour of the Commandant;

(xiii) Contingent Register ( P.A.F.A. 481 ) maintained by the Depot should

be checked to see that:-

(a) expenses are entered up as soon as they are incurred and

initialed by the officer concerned;

(b) at the end of each month a contingent bill is prepared for the
total amount of expenditure incurred during the month and
submitted to CMA for re-imbursement;

(xiv) Register of Local Purchase:- The LAO will ensure that this register is
properly maintained and that all the columns thereof are properly
completed. He will further ensure that powers of Local purchase are
not exceeded and that all local purchase order are not divided in such
a way as to bring the amounts within the powers of the lower
authorities. For detailed instructions on the subject, he will refer to
Rules 7 ( see also Appendix I ) and 43, Financial Regulations, part I.

3. CHECK REGISTER OF MONEY ORDERS:- This register should be

examined by the L..A.O in the manner stated in para 8 (ii) section II of this Hand
Book.

4. REGISTER OF R.T.RS:- This register will be inspected by the L.A.O. in

accordance with Para 17, section II of this Hand Book.

5. PERMANENT ADVANCE:- In examining this account the L.A.O should

be guided by the instructions contained in para 6, Section I of this Hand Book.

6. ORDNANCE ESTATE FUND:- In the examination of this Fund

account, the L.A.O. should particularly see that the provisions of Government of
Pakistan Ministry of Defence ( Army Br. Rawalpindi ) letter NO.4203/621/MG/OS-
10/17--M/61/D-9(B), dated 9th January, 1961 ( reproduced as Appendix to this
Section ) are observed by the Depot/ Establishment.
 While carrying out inspection of the “ordnance Estate Fund” the L.A.O. should
examine that a “Tree Account Register”, depicting the following information is
maintained by the ordnance Depot/Establishment in respect of trees grown within the
ordnance estate administered by it. The register should be checked to see that it is
properly maintained and that the revenue derived from the sale/disposal of fruit/trees
is correctly accounted for in the Ordnance Estate Fund and that there is no
unauthorised cutting/sale/disposal of trees etc.:-

(i) Serial number allotted to the trees.

(ii) Kind of trees ( Fruit Trees or other than Fruit trees ).

(iii) Life of trees ( if known ) ( Green/Dead).

(iv) Disposal ( with sale proceeds).

(v) Date of sale/disposal.

7. FINE FUND:- Fine Fund account will be examined by the L.A.O to see
that:-

(i) All realisations fine from employees subject to payment of wages Act
are credited to this fund;

(ii) the funds are applied for the benefit of such employees for such
purposes as are approved by the “Prescribed Authority”.

8. For check of Railway warrants, Credit Notes, Books of Forms “D” and
“E”,P.A.Fs.T.-1712 and Y-1954, Sheet Rolls P.A.FF-958 Service Books and LPC
Books, see Appendix “C” Section-I , Part-I of this Hand Book.
 APPENDIX

(Referred to in Para 6, Section-VIII)

COPY OF GOVERNMENT OF PAKISTAN, MINISTRY OF DEFENCE (ARMY

BRANCH), RAWALPINDI, LETTER NO. 4203/621/MG/OS-10/17-M/61/
D-9(B), DATED 9TH JANUARY, 1961 AS AMENDED BY THEIR
CORRIGENDUM NO. 4203/621/MG/OS-10/4186/D-2(B), DATED 27TH
SEPTEMBER, 1965, ADDRESSED TO THE M.G.O, GHQ, RAWALPINDI.

Subject :- Administration and Financing of Army Ordnance Corps Lands

Controlled by the M.G.O.

Sir,

I am directed to convey the sanction of the President to the laying down of

following instructions on the financing of measures for the maintenance and
settlement of lands under your control which are administered by the D.O.S., on your
behalf, through officers of Army Ordnance Corps Depots and Establishment. Where
the work “Depot” is used in the following paragraphs, it will be held to cover
Ordnance/ Ammunition Depots and ESSDs. ESDs as well as Ordnance
Establishments of other kind e.g. A.O.C. Centre.

2. The actual responsibility for the administration of these lands will be vested in
you and in the DOS and the Commandants/COOs of Army Ordnance Corps Depots,
Establishments, ESSDs/ESDs, as your representatives but the Military Estate Officer
of the circle concerned may be consulted on technical matters of land management
and administration, if the Commandants/COOs of the Depots/Establishments/
ESSDs/ESDs concerned may consider it necessary.

3. The Estates will be managed in such a way as to extract from them the
maximum economic profit so far as this is compatible with the requirements of the
Depots, No buildings of a permanent character (except those under works projects)
should be erected upon these lands, long leases should be avoided; quarrying and
excavations should not be permitted if such operations are likely to interfere with the
use of the land at any subsequent time, for the Army Ordnance Corps Depots and
ESSDs/ESDs.

4. Ordnance Estate will comprise all areas of lands directly administered by the
Commandants/COOs of Army Ordnance Corps Depots/Installations/ESSDs/ ESDs
with the exception of those lands forming part of the premises of residential quarters,
clubs or Messes.

5. Expenditure on any portion of the Estate (whether for the existence of the
Depots as working Organizations or situated outside Depots Premises) shall be met
from the Ordnance Estate Fund, subject to availability of funds in that account.
6. The maintenance and improvement of Ordnance Estate will involve the
following measures:-

(a) Grassing.

(b) Planting of trees.

(c) Garden Plants.

(d) Development of Land to Extract, maximum economic return such as

General Agriculture, orchards, vegetable or flower gardens etc.,

(e) Provision of tools, implements, seeds etc.

(f) Provision of ‘Malies’ and ‘Water Carriers’ (if necessary).

(g) Payment of water cess.

7. On the recommendation of O & M Team Chowkidars may be employed by the

Depots as under to check/control the movements of labourers brought by the
contractors inside the Depots to cut the grass. The expenditure may be met out of
Ordnance Estate Fund:-

Ordnance Depot, Kala ... ... ... 8 Chowkidars.

Ammunition Depot, Havalian. ... ... 10 Chowkidars.

8. All receipts (e.g. sale of grass, vegetables, flowers, gardens etc.) will be
recorded in the normal manner in the Ordnance Estate Fund.

9. If receipt exceed expenditure in any financial year, such excess will be

credited under “Miscellaneous Receipts”.

10. House rent, rent of electric installations and cost of electric energy consumed,
and conservancy tax on quarters and other buildings, which do not form part of the
Ordnance Estate in accordance with paragraph 4 above will be adjusted under
normal rules.

11. Conservancy, road lighting and maintenance of store houses quarter and
other authorised buildings will be responsibility of the authority concerned.

12. All Estate accounts will be open to local audit check and inspection.
 SECTION - IX
SUPPLY DEPOTS

1. WHERE NO REGIMENTAL AUDIT BOARDS ARE HELD, check the cash in

the chest and uncashed cheques for (i) Pay and Allowances, (ii) hired labour and (iii)
office and depot contingencies. Agree these figures with those shown in the cash
account separately for each item.

Note. For pay cheque of civilians, carry out checks prescribed in section VIII.

2. CHEQUE FOR ADVANCE OF PAY, T.A. AND MISCELLANEOUS

PAYMENTS. Trace details of payments and stamped receipts from the
Miscellaneous acquittance rolls maintained for the purpose.

3. CHEQUE FOR HIRED LABOUR. Temporary labour acquittance rolls are

maintained in two parts, one for the first and other for the second half of the month.
The acquittance rolls show the number of labourers engaged daily and their rate of
pay in respect of the following groups of the depot:-

Pakistan Troops Group

P.M. Group.
P.O.L. Group.
Fuel Group
Grain Group etc.

and total amount of wages due to each labourers for each group for the period
from 1st to 15th and from 16th to the end of the month respectively.

4. AGREE PAYMENTS SHOWN IN THE CASH ACCOUNTS. Account of hired

labour with the details recorded in the temporary labour acquittance rolls of the
month. See that the certificate as prescribed is given on the acquittance rolls.

In cases where hired labourers are engaged for work in the groups of the
depot through a contractor, it should be seen that a record is maintained for the
depot as a whole, to show the total number of Kgs handled each day and that the
total Kgs in a month is shown in the depot contingent return against labour charges.

N.B.- In addition to the hired labourers engaged for work in the groups of the
depot the work of loading and unloading of coal including bagging and
sewing coal bags is done on contract system of labour through a
contractor, at sanctioned contract rate per 40 Kg. The temporary labour
acquittance rolls show the total No. of Kgs of coal loaded and unloaded
each day, on contract system and the total amount due for payment
thereon for the period from 1st to 15th and from 16th to end of the
month respectively. Look for the stamped receipt of the contractor if a
 regular contract does not exist and receipts are not sent to the audit
office.

5. The rules in Section III will be applied as far as possible.

 SECTION – X

MILITARY LANDS AND CANTONMENTS REVENUE COLLECTIONS OFFICES

1. The detailed instructions in this section apply to the inspection of the cash
accounts and connected record of Military Estate Officers at circle headquarters.
These accounts, etc., embrace the transactions relating to the whole circle and
therefore include the transactions of outstation representatives in addition to those of
the circle headquarters.

2. The Cantonment Land Administration Rule (1937) prescribe that M.E.Os shall
maintain the following register and records in the forms indicated against each;-

(a) The General Land Register in Schedule I (Rule 3 and 10)

(b) Standard Table of Rents in Schedule II (Rule 8)

(c) M.E.O.s Land Revenue Register in Schedule III (Rule 12).

(d) M.E.O.s Grants Register (Building Sites) Loose leaf Register of original
applications (Rule 29).

(e) M.E.Os Grants Register (Agricultural Lands) in Schedule XIII (Rule 34).

(f) M.E.O.s Grant Register (Misc. sites) Loose leaf Registrer of original
applications (Rule 37(4).

(g) M.E.O.s Grant Register (Temporary Licences) in Schedule XVIII (Rule

39(3).

(h) Register of Trees/Tanks (Prescribed under Govt. of Pakistan Ministry

of Defence letter No. 15/2/L/D/5/50/767, dated 7th March, 1950).

It should be seen that the above registers and records are in fact maintained
and that they are generally up-to-date. The extent and manner of audit to be applied
to each of the above documents is described in paras 5 to 11.

3. In addition, the following account books and records are required to be

maintained by M.E.O.s:-

(a) Cash Book on P.A.F.A. 125.

(b) Receipt Books on P.A.F.A. 175.

(c) Sale Account Register on P.A.F.A. 58 (a Loose Leaf Register of Sale

Accounts).

(d) Contract Register on manuscript.

 (e) Security Deposit Register on manuscript form.

(f) Stock Book.

(g) Register of Credit Notes.

(h) Classified Abstract of Receipt and Expenditure relating to each

Cantonment, which Abstract need not be inspected.

(i) Contingent Register in P.A.F.A. 481 which need not be inspected.

(j) Service Books.

(k) Money Order Check Register.

(l) Register of Legal Books.

Detailed instructions for the inspection of the above documents are contained
in paras 12 to 22.

4. Immediately after he has interviewed to the M.E.O. the L.A.O. will proceed to
count the cash. The procedure laid down for the counting of cash in section 1 will be
followed:

MANNER AND EXTENT OF AUDIT OF THE VARIOUS REGISTERS

5. GENERAL LAND REGISTER:-

(a) The sale of land administered by the M.E.O. can be effected only with
the approval of the Central Government (i.e. Government of Pakistan)
Subordinate authorities are not competent to Sanction any such sale
(Rule 15 C.L.A. Rules) and no alteration in the classification of land can
be made without the sanction of the Central Government, or by such
other authority as they may empower in this behalf (Rule 7. C.L.A.
Rules). Accordingly, it should be seen in respect of the item taken up
for detailed check (e.g. clause (b) that the sanction of the central
Government or other competent authority exists.

N.B.---As regard agricultural lands which are leased out for a period not
exceeding four years and which are classified as B-3 while in such
occupation, it must be verified that such lands are automatically
reclassified as B-4 on vacation. Any entry under “Mutations” in the
General Land Register is required to be made when the land becomes
vacant.

(b) Approximately 10% of the direct postings, if any, into this register from
the various orders regarding sanction to sale leases, reclassification of
lands, etc., issued by the D.M.L.C. or other authority since the last
inspection, should be traced from these orders into the General Land
Register. The L.A.O. will keep a record of the particular items checked.
 In addition, a percentage of the postings from the M.E.O’s grants
Registers of Building sites and Miscellaneous sites (to the extent
defined under these registers) will be traced into the General Land
Register (See 8(c) below).

(c) This register is a permanent record and is not required to be re-written

at fixed intervals, should, however, the register be re-written for any
reason, the L.A.O. will test check the correctness of the entries in the
new register. To this end, the carry forward of one entry in every twenty
(after taking into account the effect of mutations recorded against the
items concerned) selected according to a formula or otherwise from the
old register into the re-written register will be checked.

6. STANDARD TABLE OF RENTS. It will be seen that a standard table of rents

suitable for application to sites for agricultural and non-agricultural purposes in the
cantonment is maintained and that it has been compiled in consultation with the
collectors concerned.

7. M.E.O’S LAND REVENUE REGISTER :-

(a) The postings into this register will be checked from the M.E.O.s Grants
Registers (i) for Building sites, (ii) for Agricultural lands, (iii) for
Miscellaneous sites and (iv) for temporary licenses, in the matter and to
the extent described under each of these Registers.

(b) The L.A.O will see that generally receipts from land are promptly
accounted for in the cash book and paid into the treasury without
undue delay.

(c) The L.A.O will trace approximately 33 per cent of realisations purposed
to have been made during the period covered by the inspection from
the Land Revenue Register into the Cash Book.

(d) A fresh register is opened annually in which the amount which remain
outstanding on the 30th June and shown in the column “Balance due”
are brought forward into the new register under the column “Arrears if
any”. The L.A.O. should generally see that the balances are correctly
brought forward from the old to the new register.

8. M.E.O’S GRANT REGISTER (BUILDING SITES):-

(a) Select one-third of the approved application since the last inspection
(under a formula to be recorded) and trace the postings from these
applications into the M.E.O’s. Land Revenue register.

(b) Select one-third of the applications chosen at (a), under a formula to be

recorded. This gives one-ninth of all the leases and see that:-

(i) The application of the highest bidder has been accepted (Rule
22, C.L.A. Rules).
 (ii) The lease has been drawn up correctly and in the prescribed
form.

(iii) Sanction of the competent authority (quoted on the from itself)

exists to the lease.

(iv) The cost of the survey and demarcation, if any, and the
proportionate expenditure, if any, incurred whether by the
M.E.O. or through the M.E.S. agency in preparing and laying out
the land (Rule 20, C.L.A. Rules) has been recovered from the
applicant and credited promptly in the Cash Book.

(v) The annual rent charged is not less than that fixed by the
standard table of rents (Rule 19(2), C.L.A. Rules), and

(vi) The amount of the accepted bid is not less than the reserve
price fixed for premium on, the lease (Rule 22, C.L.A. Rules).

Note. The Central Government alone is competent to :-

(i) Dispense with the deposit of cost of survey and demarcation.

(ii) Dispense with the auction lease; and

(iii) Lease any site by private agreement (Rule 26, C.L.A. Rules).

(c) The postings into the General Land Register of the applications
selected at (b) above will then be verified from the accepted
applications into the General Land Register.

9. M.E.O’s GRANT REGISTER (AGRICULTURAL LANDS):-

(a) Select one-third of the leases executed since the Last inspection
(under a formula to be recorded) and trace from these leases the
relevant posting into the M.E.O.s. Land Revenue Register.

(b) Select one-third of the leases chosen at (a) (under a formula to be

recorded, this gives, one-ninth of all the leases) and see that :-

(i) The leases have been made out on the form prescribed in
schedule XIV of the C.L.A. Rules.

(ii) Sanction of the competent Authority (indicated in Rule 32 and

the foot notes to the form) exists to the lease.

(iii) The yearly, quarterly or monthly rent fixed (i.e. reserve price) is
not less than the rate prescribed in the standard table of rents
(Rule 33 C.L.A. Rules).
 (iv) If the lease has been concluded as a result of a tender and not
on auction, sanction of the prescribed authority was obtained to
this course (Rule 33 (i) C.L.A. Rules).

(v) The amount of the accepted bid or tender is not less than the
reserve price (Rule 33 (2) C.L.A. Rules), except where the
prescribed authority has in the case of a lease for a period not
exceeding one year, as a special case and for special reasons
to be recorded in writing, authorised the acceptance of a lease
for a leasser price owing to the reserve price not having been
reached.

(vi) The application of the highest bidder is accepted (Rule 33(i)

C.L.A. Rules).

(vii) The relevant entries have been made in the M.E.O’s Grants
Register (Agricultural Lands).

(c) The posting into the General land Register of the leases selected (b)
above will then be verified from the leases into the G.L. Register.

10. M.E.O’S GRANT REGISTER (MISC. SITES):-

(a) Select one-third of the approved leases since the last inspection (under
a formula to be recorded) and trace the postings from the leases into
the M.E.O’s Land Revenue Register.

(b) Select one-third of the applications chosen at (a) (under a formula to be

recorded, this given one-ninth of the all leases) and see that:-

(i) The lease has been drawn up correctly and in the prescribed
form.

(ii) That the lease has been granted by the M.E.O. with the previous
sanction of the Central Government or other “approved”
authority who should also determine the terms of the lease (Rule
37 C.L.A. Rules).

(iii) The cost of the survey and demarcation if any and proportionate
expenditure, if any, incurred in preparing and laying out the land
(Rules 20 and 38 of the C.L.A. Rules) has been recovered from
the applicant and credited promptly into the Cash Book.

11(A) M.E.O’S GRANTS REGISTER (TEMPORARY LICENCES):-

This register is maintained in the form set out in Schedule XVIII of the C.L.A.
rules. Lease are drawn up in the form set out in Schedule XVII. The M.E.O. is
competent to conclude such leases and to determine the amount of fee to be
charged in each case. The L.A.O. should carry out the following check:-
 (a) Select one-third of the leases since the last inspection (under a formula
to be recorded), and trace the postings from these leases into the
M.E.O’s Land Revenue Register.

(b) Select one-third of the leases chosen at (a) since the last inspection
under a formula to be recorded, this gives one-ninth of all the leases),
examine them to see that they are correct in all respects and then trace
the postings from these into the Register.

11(B) REGISTER OF TREES/TANKS :-

This register is maintained to show the number of trees/tanks situated in each

survey No. The check of this register consists in a general scrutiny. It should
particularly be seen that revenue derived from the disposal of fruits and fish obtained
from fruit bearing trees and tanks respectively is correctly accounted for.

12. CASH BOOK (P.A.F.A. 125):-

One completed month’s transactions will be selected for detailed check in

each inspection. The general instructions contained, in section I and II, so far as
these are applicable in respect of receipts and disbursements of money will be
followed.

In addition, the following checks should be exercised in the month’s accounts

selected for detailed check :-

RECEIPTS:-

(i) Verify from the counter-foils of official receipts issued in P.A.F.A. 175
the receipt entries in the Cash Book and ensure that unauthorised
receipts forms are not used or temporary receipts are not passed.

(ii) See that all realisations for which receipts were issued during the
month were credited in the Cash Book on the due date.

(iii) Trace the individual credits, other than those already checked under
para 7(c), 14,15(d) and 16(b) into the M.E.O’s Land Revenue Register
or Register of Contract or the Account Sale Register or the Register of
Security Deposits.

(iv) See that nothing in the nature of a private fund is maintained since all
receipts and expenditure are required to be passed through the
Government Accounts.

(v) See that the M.E.O has endorsed a certificate of correctness of entries
(receipts and payments) made by a clerk or other Assistant during his
absence on tour.
 PAYMENTS:-

(i) See that all realisations of revenue are paid promptly into the Treasury
and the Treasury receipt is forwarded to the C.M.A. without delay.

(ii) In the case of refund of the cost of survey and demarcation (Rule 20(2)
C.L.A. Rules) verify from the original lease that the amount refunded is
correct.

(iii) As regard refunds of security deposits verify the correctness of the

amount refunded by reference to the security deposit register.

13. RECEIPT BOOKS (P.A.F.A. 175):-

The detailed check is prescribed at 12(i) and (ii). It should be seen in addition
that the receipts are issued over the signature of the M.E.O., that the forms are used
in consecutive order and that for defaced or cancelled receipt forms the reason for
defacement or cancellation is recorded on the counter foil over the signature of the
M.E.O. An account of the receipt books should be kept on the lines indicated in para
84(i) of the Cantonment Account Code, 1924 (Page 27).

14. SALE ACCOUNT REGISTER (P.A.F.A. 58):-

Sale account are generally prepared in connection with the sale of

miscellaneous produce, etc., which are not noted in the various registers of grants,
etc. Select approximately 10 per cent of sale account since the last inspection (under
a formula to be recorded) and see that the sale was made to the highest bidder and
that the sale proceeds were credited promptly and correctly in Cash Book. The
direction of the check will be from the sale Accounts into the Cash Book.

15. CONTRACT REGISTER:-

(a) The Contract Register is intended for contracts relating to sale of earth,
leases for grass cutting and other Miscellaneous items of revenue
which are not recorded in other register.

(b) It should be seen that the form used confirms to the above
requirements.

(c) Approximately 10 per cent of the contracts concluded since the last
inspection should be examined to see that they are drawn up correctly
and that the tender of the highest tenderer was accepted.

(d) If the whole or a part of the contracted amount in respect of the

contracts referred to at (c) has been recovered up to the time of the
inspection, trace the credit from the contract register into the Cash
Book.
16. SECURITY DEPOSIT REGISTER:-

This register is required to be maintained in a manuscript form (on the lines of

Cantonment Form 29-B) (sample given on page 70 of the Cantonment Account
Code, 1924).

(a) See that:-

(i) The register is maintained in the above form.

(ii) Security deposits have been taken from contractors and clerks
who handle money, in respect of 10 per cent of the transactions
occurring since the proceeding inspection, and

(b) Trace the credit of the realisations at (a) (ii) from the Register of
contracts into the Cash Book.

17. STOCK BOOK:-

It should be seen that a register of non-expendable articles purchased from

the contingent grant is maintained and that with reference to the vouchers, etc.,
furnished by the different sections of C.M.A. all non-expendable articles are brought
to account. Typewriters and Duplicators will also accounted for in this Book.

18. CREDIT NOTES:-

The instructions laid down in Appendix ‘C’ Section I, Part I, of this Hand Book
will be followed.

19. SERVICE BOOKS:-

The instructions laid down in Appendix ‘C’ Section I, Part I, of this Hand Book
will be followed.

20. MONEY ORDER CHECK REGISTER:-

The instructions contained in para 8(ii) of Section II, Part II, of this Hand Book
will be followed.

21. REGISTER OF LEGAL BOOKS:-

It should be seen that the register contains the number of all legal publications
and whenever new books are purchased, they are immediately brought on charge.

22. REVENUE FROM CLASS B(3) AND B(4) LAND VESTED IN CANTONMENT
BOARDS, IF ANY:-

With the cantonment of the Cantonment Land Administration Rules 1937, the
management of all classes of land, the revenue from which is creditable to
Government, is vested in the M.E.O. The Central government may, therefore, entrust
the management of any Class B(3) and B(4) land to Cantonment Board on such
terms as may in each case be determined by Government (Rule 9(5) of the C.L.A.
Rules).

Where any land is so entrusted to the management of Cantonment Boards,

the L.A.O should ensure that such proportion of the revenue derived from such land
as is creditable to Government according to the terms prescribed by the Central
Government in each case, has in fact been paid to the M.E.O. and brought to
account by him.

23. OUTSTATION REPRESENTATIVES ACCOUNTS:-

The outstation representatives of M.E.O.s maintained such of the books and

records set out in para 2 and the Land Revenue Register (The schedule III
maintained in the circle office being furnished by that office to the outstation
representative), as enable them to keep a vigilant watch over the collection of
revenue and a Cash Book to record realisation of revenue and expenditure. Since
the activities of outstation representatives are depicted in the circle accounts, it is not
essential to apply detailed and meticulous inspection to the registers maintained by
M.E.Os outstation representative, but it should be seen generally that the requisite
registers (e.g. stock register for garden tools, tree guards, accounts sale register for
sale of wood, etc)., are maintained, that they are posted up-to-date and that the
collection of revenue is not seriously in arrears.

The cash book of these outstation representatives should, however, be

checked to the extent indicated in para 12 and the method of check will be the same
as for the circle headquarters Cash Book.

In addition, where local administrative orders required that extracts of the

monthly Cash Book should be sent to the circle office and that one copy thereof
should be returned by the circle officer to the outstation representatives duly
endorsed, the L.A.O should compare the certified extract relating to the month
selected for test check, with the Cash Book to ensure that the extract shows the
complete transactions for the month.

It should be seen that the receipts (P.A.F.A. 175) are issued under the
signature of the M.E.Os Agent and as soon as a book is complete, it is returned to
the circle office for record.

The accounts of M.E.Os outstation representatives will be audited/inspected

locally (at the place where maintained) by the respective L.A.O’s.
 SECTION XI

HEADQUARTERS, DIVISION, CORPS, LOG SUB AREA AND BRIGADE OFFICES,

MILITARY HOSPITALS, VETERINARY HOSPITALS, DETENTION BARRACKS,
FORT ARMAMENT, STATION STAFF OFFICES, STAFF COLLEGE AND OTHER
SPECIAL AND MISCELLANEOUS UNITS AND FORMATIONS.

1. In the case of formations whose accounts are not examined by Regimental

Audit Boards, balance the public fund account and count the cash in hand belonging
to that account and see whether the cash in hand agrees with that shown in the cash
book. Similarly verify the Bank Balance, if any, shown in the Cash Book with that in
the Bank Statement, after taking into consideration any unpresented cheques and
subsequent withdrawals from and deposits into the Bank. The reason for any
unpresented cheque remaining outstanding for a long time should be investigated.
Sign the cash book in the token of having certified the cash and Bank balance, vide
also para 4 section I.

In case of a serious discrepancy between the cash book and treasure chest or
Bank balance, the matter should be brought to the notice of the O.C. or head of the
office and also reported to the CLA (DS) forthwith.

2. Examine one month’s cash book (or more if considered necessary) of public
funds in details with supporting vouchers and see that a statement of balances of all
public funds is made out immediately after close of the month. In like manner, check
fully the same month’s subsidiary accounts (ledger account) of each Public Fund
item by item and see that the entries are actually on account of such funds, also see
that balance sheet (statement of assets and liabilities) on the last day of the month is
made out.

Strike the balances of all public funds up to the date of inspection, prepare a
statement of fund balances and agree the total of the balances with the cash and
Bank balances shown in the cash book on the day of inspection.

3. In checking the cash book and the subsidiary accounts, also see that :-

(i) The cash book is maintained on P.A.F.A. 811.

(ii) All money received either by cash or by cheque are properly accounted
for;

(iii) Entries of receipts and payments are made in the cash book
immediately a cheque or cash is received or paid, and not periodically,
and that serial No. is given separately to each receipt and payment
entry;

(iv) At the end of each month the cash book (including the ledger Account)
is balanced and signed by the Officer-in-Charge;
 (v) Acquitances are signed in ink, that vernacular signatures are translated
into English, that seal or thumb impressions are authenticated by the
officer who makes payments and not by a subordinate (Rule 32
Financial Regulations, Part II).

(vi) Payments of sums exceeding Rs. 20 are stamped where necessary;

(vii) All corrections are attested by the officer making payment;

(viii) There is no over-writing of figures;

(ix) A separate guard book is maintained for recording acquittances

pertaining to the General Ledgers accounts;

(x) In the case of disbursements of pay, the acquittances are taken on the
pay bills, that summary of the payments is made out and signed by the
Officer-in-Charge and that the total of the summary is entered in the
cash book.

(xi) The summary is attached to the pay bills and that the details of
undisbursed pay are recorded on the summary, and that the amount of
undisbursed pay is either adjusted in the next pay bill or remitted into
the treasury;

(xii) The general rules regarding the custody of public funds, etc., contained
in Rule 438 et. seq. Army Regulation Vol I, are observed;

(xiii) Private deposits of officers and others are not kept in the Treasure
chest;

(xiv) Sums are not advanced from one public fund to another or to officers
from public money, contrary to regulations;

(xv) In the case of formations in receipt of office allowance, the check

prescribed in para 16 section II, ante, is exercised on the office
allowance fund account.

(xvi) The general rules for the preparation, submission and disposal of bills
and vouchers contained in Rule 32 Financial Regulations, Part II, are
strictly adhered to.

4. See that a check register of money orders (P.A.F.Z. 2067) is maintained and
the payee’s receipts are on record, and the amount of un-delivered money orders
has been re-credited to Government.

5. See with reference to the vouchers and lists furnished in accordance with
para 27, section III, Part I of this Hand Book, that all non-expendable articles
purchased from the contingent grant are brought to account in Dead Stock Register.
6. In case the unit or formation has been granted a permanent advance, the
L.A.O. will, at the time of his inspection, audit the account in accordance with the
instructions contained in Para 6, Section I, Part II of this Hand Book.

7. Blank.

8. Examine the Railway warrants, credit Notes, Books of Form ‘D’ and ‘E’
P.A.F.s. T-1712 and Y-1954, L.P.C. Books, service Books and sheet Rolls/ P.A.F.F.
958 in accordance with the instructions in Appendix ‘C’ Section I, Part I of this Hand
Book.

9. See the proceedings of the Quarterly Audit Board and verify that all public
funds accounts are being subjected to examination by the Board and that each
account has been signed by the Board.

10. See that a proper account is kept for the expenditure incurred from the Annual
Library Grant for the up-keep of Government Libraries and Books Purchased are
entered in a catalogue maintained for the purpose.

11. In the case of station headquarters or other formations which are authorised
to issue Emergency Cash Requisition the L.A.O will see that the E.C.Rs. have been
issued duly for the authorised advances in accordance with Rule 446 to 450, AR(R)

In addition to above he will at the time of inspection also see the points as
shown in Annexure ‘A’.

ANNEXURE ‘A’

a. While carrying out the inspection of Station Hqrs. the L.A.O will particularly
see that :-

(i) No. ECR SR No is missing from the book.

(ii) All ECRs issued are marked “payee’s A/C” only.

(iii) That ECRs have not been issued without proper authority or requisition
for demand of funds by unit.

(iv) Triplicate copies of ECRs have been forwarded to CMA concerned at

the time of issue.

(v) SSO has given a certificate at the end of each book that all the
counter-foils have been checked and found correct.

(vi) Bank confirmation for encashment of ECRs is obtained promptly by the

issuing authority.
 (vii) Advance instructions to State Bank of Pakistan bringing into use of new
ECRs Book has been given.

(viii) Certificate of actual counting of contents of ECR Books when brought

into use has been recorded by issuing authority.

(ix) Acknowledgements in r/o all ECRs issued, have been obtained from
Regional Controllers and recorded by the issuing authority.

b. Besides, the above audit checks, the L.A.O. will prepare a cross check
schedule of the ECR issued during the period under review and forwarded the same
to the L.A.O. of the unit to whom ECR has been given for 100% verification of the
credit in the cash book.

c. 33% of counter-foils of ECRs will be paired to see that entries in the ECRs are
identical with those in the counter-foils at the time of the Review by the L.A.O.

d. Stock taking of ECRs book will be carried out by the L.A.O. at the time of
inspection & recorded in the register of ECRs.

e. Date of brought in to use & completion of each ECR Book has been recorded
in the ECR register & checked by the L.A.O. at the time of inspection.

12. In the case of hospitals see:-

(i) That receipts from hospitals gardens, e.g., cash value of produce sold,
etc., are credited to Government.

(ii) Examine the register of fees realised for work done for private
individual by:-

(a) the Medical Officer-in-Charge, X-Ray apparatus.

(b) the Officer-in-Charge, Military Laboratories.

 SECTION XII

ORDNANCE AND CLOTHING FACTORIES

The Audit Accounts Officers of Factory Accounts in charge Accounts Section

of Ordnance and Clothing Factories also functions as L.A.O’s in respect of the
Factories and Inspectorates attached thereto. Detailed instructions with regard to
their functions are contained in office Manual, Part VI.
 LAO’s Hand Book Part-II (Army)

TABLE OF CONCORDANCE

No. of Corresponding Remarks No. of Corresponding Remarks

Para in Para in the Para in Para in the
Existing Revised Existing Revised
Edition Edition Edition Edition
Preamble
1 1
2 (ii)
3 (iii)
4 (vi)
5 (viii)
6 (xii)
7 2
8 3
8a 3-(i)
9 (ii)
10 (iii)
11 (iv)
12 (v)
13 (vi)
14 (viii)
15 (ix)
16 4
17 5
18 6
19 7
20 8
21 (ii)
22 9
23 10
Annex A Annex A
Annex B Annex B Pt I – New Add
Pt II
Sec-I
1 1
2 2
3 3
4 4
5 5
6A 6A
6B 6B
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
Annex A Annex A
Sec-II
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 Blank 10 Blank
11 11
12 12
13 Blank 13 Blank
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 22
Sec-III
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
Sec-IV
1 1
2 2
3 3
4 4
5 5
Sec-V
1 1
2 2
 Sec-VI
1 1
2 2
3 3
4 4
Sec-VII
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
Sec-VIII
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 - Deleted
Appex Appex
Sec-IX
1 1
2 2
3 3
4 4
5 5
Sec-X
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11a, b 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 22
23 23
Sec-XI
1 1
2 2
3 3
4 4
5 5
6 6
7 blank 7 blank
8 8
9 9
10 10
- 11 New Add
Annex A New Add
Sec-XII New Add
- 1 New Add