CHAPTER 7
SUSPENSE HEADS UNDER PUBLIC WORKS SYSTEM

7.1     Offices maintaining Accounts on Public Works System.

7.1.1     The following Central (Civil) Ministries/Departments which are responsible for construction and maintenance of buildings, etc. maintain their accounts under the Public Works System:

(a) Central Public Works Department (C.P.W.D.), under the Ministry of Urban Development.

(b) Irrigation Department of the Ministry of Water Resources.

(c) Civil construction wing of All India Radio and Doordarshan in the Ministry of Information and Broadcasting.

(d) Roads Wing of the Ministry of Surface Transport.

7.2 Accounts Heads

7.2.1     Cash charges on works undertaken by the Public Works Department consist of payments (1) to labourers and members of work charged establishments and (2) contractors and others for work done or other services rendered. The cost of materials procured specially for works is debited to the respective work. For materials procured for keeping in stock, the cost is debited to the Suspense Head 'Stock' below the minor head '799— Suspense' which appears under the relevant functional major/ sub-major heads of the Ministry/Department concerned. Where the cost of materials procured is not paid in the same month of receipt of materials, the amount is credited to a Suspense Head '129 Material Purchase Settlement Suspense Account' under the major head '8658—Suspense Accounts' while the cost is debited to the work concerned or the suspense head 'Stock' as the case may be. Direct purchase of stores by the Divisions or inter-divisional transfer of stores from one Division to another Division is also a common feature of the functioning of the Public Works Divisions

7.2.2     All transactions relating to services rendered or supplies made by one Division to another Division, should be classified as debit under the minor head "107—Cash Settlement Suspense Account" below the Major Head "8658—Suspense Accounts". This head would be cleared on receipt of cheque/demand draft from the recipient Division. Beside the above two suspense minor head '799 Suspense' with its sub-heads. 'Stock', 'Miscellaneous Works Advances' and 'Workshop Suspense' are also operated in the Divisions. This suspense minor head has been provided under the respective functional major/sub-major heads of account in the List of Major and Minor Heads of Account. The remittance head '102 Public Works Remittances' appearing under the major head '8782 Cash Remittances etc' with sub-heads 'I Remittances into Banks', 'II Public Works Cheques' and 'III Other Remittances (b) Items adjustable by Public Works' is also operated in connection with Public Works transactions.

7.3     Minor Head '799 Suspense' under the functional Budgeted Heads of Account.

7.3.1     Whenever some material is purchased by a Division, the expenditure on the acquisition of the material is debited to the 'Works' if it is acquired for a specific work. In case the material is acquired for being kept in 'Stock' for subsequent use in any 'Work' or for meeting the requirement of other Divisions by the Central Stores Division, the cost is debited to the subhead 'Stock' below the minor head '799—Suspense' under the concerned functional major/sub-major heads. The sub-head 'Stock' is credited with the value of materials subsequently issued to any 'Work', sold, transferred to other Division/Department or otherwise disposed of.

7.3.2     When material lying in 'Stuck' is sold on credit to the contractor, the cost of such material sold on credit basis is debited to the sub-head 'Miscellaneous Works Advances' below this minor head, so that the account of 'Stock' or 'Work' from which the material is supplied may be kept correctly. This Head gets cleared as soon as amount is received in respect of sales on credit. Similarly, where expenditure on 'Deposit Work' in excess of the amount of 'Deposit' is incurred or some deficiency/loss of cash/stock is discovered or an expenditure which cannot immediately be classified to any head is incurred, the same is debited to the sub-head 'Misc. Works Advances'.

7.3.3     All expenditure on various jobs executed and other operations of workshop established for the purpose of manufacturing materials for various works is debited against the sub-head 'Workshop Suspense' below the above minor head. It is necessary to keep separate account for each 'job' or 'operation', so that all charges relating to each are suitably distributed all over the jobs/operations affected before the total cost recoverable is determined.

7.4     Material Purchase Settlement Suspense Account.

7.4.1     To meet the requirement of materials for construction and maintenance, the Divisions procure material; from the following four sources:—

1. Central Stores Division

2. Other Divisions

3. By placing indents on DGS&D, and

4. By local purchase

7.4.2     Whenever some material is received in a Division from any of the sources mentioned above, except at S. No. 3 the cost thereof is debited to (1) Work concerned, if the material has been procured for specific work or (2) 'Stock' in case the material cannot immediately be assigned to any specific work and payment thereof arranged by issue of 'Public Works Cheques'.  In case the payment on account of materials received is not made in the same month in which material is received, the following entry is made in the books of the Division:-

Dr. Functional Major/Sub-major heads concerned 
        799—Suspense or Work concerned 
        Stock

To

8658—Suspense Accounts
        129—Material Purchase Settlement 
        Suspense Account.

                                                                                        Cr.

On receipt of the claim or bill for the materials supplied by the Central Stores Division, other Division or the Supplier, the same is verified with reference to the materials received. The Division receiving the materials then issues a cheque. The following entries are made in the books of the Division when the cheque is issued

(—) Cr. 8658—Suspense Accounts
        129—Material Purchase Settlement
        Suspense Account. 

To 

8782—Cash Remittances etc.
        102 Public Works Remittances 
        II Public Works Cheques

                                                                                        Cr.

Thus clearing the original credit lying under the minor head '129 Material Purchase Settlement Suspense Account'.

7.4.3     In case materials are procured by placing indents on the Director General of Supplies & Disposals, the payments to the suppliers are made by the office of the Chief Controller of Accounts, Department of Supply. The above office raises an outward claim against the Pay and Accounts Office of the concerned Divisions. On receipt of the claim, the Pay and Accounts Office of the Division scrutinises the vouchers received with the claim and if the same prima facie pertains to the Divisions under its payment control, it makes payment to the Pay and Accounts Office, Department of Supply by cheque/draft.

The following classification is recorded by the Pay and Accounts Office of the Division on the claim:

Dr. 8782—Cash Remittances etc. 
    102 Public Works Remittances 
    III Other Remittances 
    (b) Items adjustable by Public Works.

The amount of cheque issued is as usual classified as credit in its accounts to the head '8670—Cheques and Bills 102 PAO Cheques'.

7.4.4     After despatch of the cheque to Pay and Accounts Office, Department of Supply, a 'PAO Memo' is prepared and sent to the concerned Division alongwith the paid vouchers received with the inward claim from Pay and Accounts Office, Department of Supply, for adjustment in the books of the Division. On receipt of the PAO Memo, the Division verifies the correctness of the payment with reference to the materials received by against the claim so received and prepares a Transfer Entry as under:—

(—) Cr. 8658—Suspense Accounts
        129 Material Purchase Settlement 
        Suspense Account

To

8782-—Cash Remittances etc.
        102 Public Works Remittances
        III Other Remittances
        (b) Items adjustable by Public Works

                                                                                    Cr.

The debit and credit under the head '(b) Items adjustable by Public Works' is paired off in the books of the Pay and Accounts Office of the Division.

From the above, it can be ascertained that the suspense head namely, 8658 Suspense Accounts 129 Material Purchase Settlement Suspense Account is credited only to reflect the position of stores for which no payment has been made by a Division due to its non-payment either by the Division itself or by the Pay and Accounts Office concerned on behalf of the Division. Whenever the monthly account is received from the Division in the Pay and Accounts Office, a schedule (CPWA 77) is received which mentions the amount adjusted by the Division under the head "8782 Cash Remittances etc. 102 P.W. Remittances." This shows the value of PAO Memos adjusted by the Division during a month. In addition, the Pay and Accounts Office also receives a schedule in Form CPWA 69 which shows the addition as well as clearance made by a Division under the head Material Purchase Settlement Suspense Account during a month.

7.5     ACTION TO BE TAKEN BY THE PAY AND ACCOUNTS OFFICE IN THE BROADSHEETS OF MATERIAL PURCHASE SETTLEMENT SUSPENSE ACCOUNT AND P.W. REMITTANCES - OTHER REMITTANCES - ITEMS ADJUSTABLE BY PUBLIC WORKS.

7.5.1     On receipt of Form CPWA-69 from the Division the same is passed on by the works audit section to the Accountant dealing with the broadsheet of "8658—Suspense Accounts 129 Material Purchase Settlement Suspense Account." The additions as well as clearances shown therein are entered against the Division concerned in the broadsheet and a closing balance is arrived at by adding the credit reflected in Form CPWA-69 with the progressive figure (closing balance of last month) and deducting the clearances made in the month to show the progressive credit balance at the end of a particular month.

7.5.2     Items Adjustable by Public Works:-

Whenever reimbursement is made on behalf of a Division to Pay and Accounts Office (Supply) by the Pay and Accounts Office (CPWD), a PAO Memo is issued to the said Division by entering the details of the same in PAO Memo Register in the folio allotted for the said Division. At the end of the month each folio of the Division is totalled up and the amount so arrived at is entered in the broadsheet of P. W. Remittances III - Other Remittances (b) Items Adjustable by Public Works (Debit) and shown against the cage meant for particular division in the broadsheet. After entering the amount arrived at in the above mentioned manner against all the Divisions, the grand total is calculated vertically. The grand total so arrived at will denote the total booking made by the Pay and Accounts Office in the debit side of the head "8782—Cash Remittances etc. 102 - P. W. Remittances - III (b) Items adjustable by Public Works." It must be ensured that this amount should not differ with the total of the cheques issued by the Pay and Accounts Office for reimbursing the claims of Pay and Accounts Office (Supply) for the month under this head. On receipt of the monthly account, Schedule of Remittances in Form CPWA 77 is passed on by the Works Audit Section to the official responsible for the maintenance of broadsheet of P. W. Remmittances etc. The amount shown against Head "III (b) Items adjustable by Public Works" in the Form CPWA 77 (Credit) is entered in the broadsheet in the credit column of the Division concerned. The progressive outstanding balance is thereafter arrived at in respect of each of the Divisions by adding closing balance of the last month to the debit of the current month and deducting the credit as intimated in Form CPWA 77.

7.5.3     Clearance of PAO Memos which ultimately affect Material Purchase Settlement Suspense Account

The divisions are required to mention the details of the PAO Memo adjusted by them during the month in Form CPWA 77. When the same is received in the Pay and Accounts Office, the official who has issued the PAO Memos to the Divisions should keep a record in the PAO Memo Register against the original entry made at the time of the issue of the PAO Memo, shown in Form CPWA 77 to the effect that the Memo so issued has since been adjusted by the Division in the month to which the Form CPWA 77 relates. This will help to ascertain the details of the PAO Memos unadjusted by the Division. As long as these Memos are not cleared, they will be appearing as outstanding balances under the head Material Purchase Settlement Suspense Account of the particular Division.

7.6     CASH SETTLEMENT SUSPENSE ACCOUNT

The items appearing under this head represent amount recoverable by a Division functioning under Public Works System from other Departments or Divisions on account of service rendered or supplies made. They are called (a) Inter-departmental and (b) Inter-divisional transactions. Both types of transactions are detailed below:

7.6.1     Inter Departmental Transaction 

(A)    Action in supplying Division of CPWD:

Broadly speaking, the Divisions carry out the construction as well as maintenance work in respect of the buildings and other items of work which are covered by the budget grant of the Ministry of Urban Development. Divisions of CPWD also carry out these functions on behalf of other Departments of the Government of India which are not covered by the budget grant of Ministry of Urban Development. The expenditure incurred on this account is debitable to the budget provision of the department on whose behalf the work is carried out by the Divisions of CPWD.

In cases where materials are supplied by a Division to another Department on receipt of request from the latter, the following entry is made in the books of the supplying Division:-

Dr. 8658-Suspense Accounts
        107-Cash Settlement Suspense Account

To 

Concerned Functional major; sub-major head
        799—Suspense or Work concerned
        Stock                                                                             Cr.

Thereafter, a debit is raised by the Division concerned against the recipient Department for reimbursement of the amount by cheque/draft.

On receipt of the cheque/draft from the recipient Department the supplying Division will carry out the following adjustments in its books:-

Dr. 8782—Cash Remittances etc.
        102—Public Works Remittances 
        I Remittances into Bank

To

        8658—Suspense Accounts 
        107—Cash Settlement Suspense Account

                                                                                                Cr.

This will nullify the debit earlier raised in the book, of the Division.

(B)     Action in Pay and Accounts Office

Whenever the monthly account is received in a Pay and Accounts Office from a Division it is accompanied with the Form CPWA 76—A which shows the department-wise details of debits raised/expenditure incurred by the Division on behalf of the other Departments. This also contains the details (Department-wise) of the reimbursement made by the Department during the month. Apart from this, in the same form the Division shows the position of debit/credit in respect of inter-divisional transactions in the manner mentioned above. When both the transactions namely, Inter-departmental and Inter-divisional are clubbed together, this shows the overall position in respect of '8658—Suspense Accounts 107—Cash Settlement Suspense Account' of the Division for the month. It is taken in the account under the respective debit and credit heads of the broadsheet of "8658—Suspense Accounts 107—Cash Settlement Suspense Account of the Pay and Accounts Office.

The amount booked under the head 1 Remittances into Bank will be cleared by the Pay and Accounts Office on receipt of Datewise Monthly Statement of receipts from the bank as under after all the challans are posted in account:-

Dr. 8658—Suspense Accounts
        108 Public Sector Bank Suspense

To

8782—Cash Remittances etc. 
        102 P.W. Remittances 
        I. Remittances into Rank

                                                                                            Cr. 

Exception

In cases where the schemes/activities are identified and budget provision has been earmarked in the Demands for Grants of the functional Ministry/Department, the same could be got executed through the agency of the Public Works Department without any monetary settlement by issue of cheque/draft by the functional Ministry / Department under the revised procedure introduced with effect from 1-4-1987 on the recommendations of Geetha-krishnan Committee. The functional Ministry/Department would issue an administrative sanction in favour of the agent Ministry/Department for the execution of the work based on the budget provision and funds earmarked for the purpose. The sanction would clearly indicate the budget provision for such specified work during the financial year and the Head of Account under which the expenditure is debitable. A copy of the sanction would be endorsed to the Accounts Officer of the functional Ministry/Department to enable him to keep a note of this in the Expenditure Control Register maintained by him. He will then authorise the Accounts Officer of the agent Ministry/Department to incur the expenditure within the limits specified in the sanction and to book the same finally in his books. The Accounts Officer of the agent Ministry/Department will in no case honour any claim which would result in excess over the amount authorised by the functional Ministry/Department. The agent Ministry/Department would book the expenditure under the functional major/sub-major/minor-head of account of the functional Ministry/Department as indicated in the sanction. The monthly and progressive expenditure booked under the relevant heads of account would be communicated to the functional Ministry/Department by the agent Ministry/Department by 20th of the following month and the former after reconciliation of the expenditure with the Statement of Central Transactions would include the same in its annual Appropriation Accounts. This procedure dispenses with the procedure of initially booking the expenditure under the suspense minor head "101—Pay and accounts Office Suspense" by the agent Ministry/Department and issuance of cheque/draft by the functional Ministry/Department and eventual clearance of the suspense.

7.6.2     Inter-Divisional Transactions.

7.6.2.1     This head also accommodates all inter-divisional transactions where stores/materials are procured/supplied by one Division to other Division, say, by Division 'A' to Division 'B'.  In such cases, till payment through cheque/draft is not received by Division 'A' from Division 'B' the transaction is kept under the Suspense minor head "107 Cash Settlement Suspense Account" by Division 'A' as indicated in para 7.6.1 (A) above.

7.6.2.2     Likewise, for the above mentioned transactions the action to be taken by Division 'B' in its books is as under:

When the material is received, the following entries take place in its books.

Dr. Concerned Functional Major Head / Sub-Major Head 
        799—Suspense / or Work concerned 
            Stock

and 

Cr. 865S—Suspense Accounts
        129-Material Purchase Settlement 
        Suspense Account

On receipt of a claim from Division 'A' the same is verified and a cheque is issued by making the following entry:-

(—) Cr. 8658--Suspense Accounts
        129—Material Purchase Settlement 
        Suspense Account

and

Cr. 8782—Cash Remittances etc.
        102 Public Works. Remittances 
        11 Public Works Cheques.

7.6.2.3     The transactions mentioned at paras 7.6.1. and 7.6.2.1, 7.6.2.2 above take place in the records of Pay and Accounts Office which are monitored through the broadsheet of 8658 Suspense Accounts 107 Cash Settlement Suspense Account. Alongwith the monthly accounts, all the Divisions are required to forward a Schedule in Form CPWA 76-A. This contains information regarding material supplied to other Divisions (detailwise) as well as payment received from them on this account. The material supplied by Division 'A' in a month, is taken on the debit side of the broadsheet. When the amount appearing under the debit side is totalled with the closing balance of last month and the amount appearing under the Credit side (cheques received from supplied/recipient Divisions) is subtracted from the total so arrived at, the net amount thus arrived at represents the overall amount of outstanding balance at the close of the month under the head "8658 Suspense Accounts 107—Cash Settlement Suspense Account." If the amount is extraordinarily high, the Pay and Account Office should take up the matter with the Division to take suitable steps to clear it. The balance under the suspense sub-head 'II Public Works Cheques' will be cleared by the Pay and Accounts Office by a Transfer Entry in the same manner as is done in case of 'Pay and Accounts Offices Cheques'.