Introduction

The Scheme of Integrated Financial Adviser

currently operates in accordance with Office
Memorandum No. 10(29)-E-Coord/73 dated 6. 10.
1975 issued by the Department of
Expenditure, Ministry of Finance.
The scheme provides that the Financial Adviser
would be responsible both to the
Administrative Ministry and to the Ministry
of Finance
The scheme also briefly indicates the
functions of the Integrated Financial Adviser
1
along with the modalities for functioning

Reasons :Why dual responsibility & need ?

The Indian economy grown from a less

developed stage to one of the fastest growing
economies of the world. Role of IFA accordingly
changing along with
a plethora of reforms in monetary and fiscal
management of the country. (2006-2009)
Centralization doesn't work
Scrutiny for macro issues(subsidy etc)
Bring thinking of MOF and implement them
Scrutinize and prepare proposals which need higher
scrutiny
Sectorial considerations, PPP, downsizing,
outsourcing, costing etc
Plan requirements, interse distribution
2
,evaluation

ROLE IN ADMINSTRATIVE MINISTRIES

ROUTINE FUNCTIONS
Financial

Advisers

are
meant
to
assist
in
the achievement
of
objectives/goals of their
respective Administrative Ministries, as
approved by the competent authority;
that they must commit
themselves to facilitate
implementation of the
approved programmes,
with
due
financial
prudence, (ex road
metalling)
to ensure that monies allocated are spent on time, (qtr, 33%)

in the
prescribed manner, (pl, np, cap, rev, account,
progressive expdr)
to achieve the intended
outcomes defined in measurable and
monitorable terms. (phy, fin target, result)
Assisting Administrative Ministries in ensuring 'value for money' would be a
key objective for Financial Advisers, (type of computer, renovation)
with emphasis on improving the quality of expenditure and requisite
systemic improvements / capacity building for this purpose. (training,
rr)

It may also be reiterated that

the Ministry
matters.

of Finance in regard

FAs represent
to all financial
3

Not just responsibility but

authority too
The more complex responsibilities envisaged for
FAs must be accompanied by corresponding
authority and capacity.
FAs are suitably
empowered, and appropriate
measures are taken for capacity building
both institutionally and individually.
The organizational resources, structure and
processes themselves
may
need
to
be
augmented I modified, and IT enabled systems,
latest financial
management
practices,
knowledge management structures etc. put in
place.
4

Role of Financial Advisers

CURRENT SCENARIO
The role of Financial Adviser akin to the role of the
Chief Financial Officer in a corporate structure,
ensuring fiscal prudence and sound financial
management.
bring requisite financial expertise,
rendering professional advice to Adm Secretaries
Value for money will be the
most important
parameter in evaluating such schemes and
projects.
that
outlay
for
a scheme
is intrinsically
linked with
the Outcome
Budget
-how effectively each
penny spent?
Performance Budget-physical financial targets 5

In rendering their advice, the Financial Advisers would be expected to

accord priority to macro management with a view to help in achieving
the outcomes set by the Ministries as goals for themselves.

These macro issues could include

schematic appraisal and concept functions,
revenue management,
subsidy management,
fiscal resource transfer issues,
defining and evaluating outcomes
besides maintaining and safeguarding the budgetary integrity,
etc.
FAs would also be expected to look at the total picture of
resources for the sectors in which they are functioning, and
assist the Secretaries of the Administrative Ministries in moving
towards
greater resource mobilization,
including in terms of enabling policy and regulatory framework
to attract private sector funds.
FAs would
in no case be assigned
administrative functions of the Ministry.

any

routine
6

Some issues
1.Airport modernization: where/ how
much/returns/methodology
Whether ATC, Runway, unconnected area
2.Tendering: short listing, criteria
3.RR: Why people not applying, change in TOR
4.Phasing of expenditure: prioritisation; FTE,
OE, Conferences
5.NGO : Scrutiny: certification, audited
accounts, UC, outcome, output
6.Grants to States: actual implementation,
physical, financial progress, divertion
7
7.Subsidy: distribution methodology, agencies

IFD AND CHIEF ACCOUNTING

AUTHORITY
Normally views of FA should be adhered to
However in special circumstances the
Secretary can overrule in writing.
The sanction also should carry the decision.
In cases where the FA feel that administrative
ministry has taken decision in violation of
financial norms, a note can be sent Sec
8
Expenditure.

FINANCIAL ADVISOR

FOLLOWING
FOLLOWING ARE
ARE THE
THE SPECIFIC
SPECIFIC TASKS:
TASKS:
a)
a) BUDGET
BUDGET FORMULATION
FORMULATION

Itemized
Itemized budgetary
budgetary process
process

prev
prev year
year anaysis
anaysis

Yoy
Yoy

itemised
itemised assesment
assesment

sub
sub prog
prog

b)
b) OUT
OUT COME
COME BUDGET
BUDGET

late
late march
march

outlays-outcomes-measurable
outlays-outcomes-measurable terms
terms

appraisal
appraisal monitoring
monitoring systems
systems

evaluation
evaluation by
by independent
independent agency
agency

reasonability
reasonability of
of outcome
outcome vis
vis budget
budget est
est

SPECIFIC TASKS
c)

PERFORMANCE
BUDGET(now
performanceoutcome merged 2006 )-(chapter 4 review of
performance past)

WHILE BUDGET , OUTCOME BUDGET FOR ENSUING YEARS, PB FOR PREV

YEAR
)
Actual achievements,performance in the year gone by
)
Performance to link past, present, future in integrated manner

d) FISCAL RESPONSIBILITY & BUDGET MANAGEMENT( FRBM)

)
)

Disclosure statements-to parlia along with budget,dd for

grant
Quarterly review by FM

e)
)
)
)
)
)

EXPENDITURE AND CASH MANAGEMENT

projected cash flows mutually agreed bet MOF PSU,
Autonomous body, Ministries
Convergence of expenditure and Revenue ,
Reduce debt borrowing
Unspent balances of states
10
Closely linked to outcome budget

FOLLOWING ARE THE

SPECIFIC TASKS
f)
g)
c)
)
)
)
)

PROJECT / PROGRAMME FORMULATION,

APPRAISAL, MONITORING AND EVALUATION

SCREENING OF PROPOSALS
LEVERAGING
OF
NON-BUDGETORY
RESOURCES FOR SECTORAL DEVELOPMENT
OPTIMISING PRIVATE SECTOR INVESTMENT
PUBLIC PRIVATE PARTERNERSHIP
EXTERNAL FUNDING
IEBR

11

FOLLOWING ARE THE

SPECIFIC TASKS
c) NON TAX RECEIPTS
) Help in limiting fiscal-revenue deficit
) See market trends and review non tax
receipts
) User charges
) Dividends, licence fee, royalty

c) TAX EXPENDITURE
)

Revenue forgone for activities

12

FINANCIAL ADVISOR

k) MONITORING OF ASSETS
l)
m)
n)
)
o)

AND LIABILITIES

ACCOUNTS AND AUDIT

PROCUREMENT & CONTRACTS
FINANCIAL MANAGEMENT SYSTEM
Projects, programmes, PERT
NOMINEE DIRECTOR ON BOARDS OF
PUBLIC SECTOR UNDERTAKINGS

) govt watch dog along with adminstrative nominee

) FINANCIAL EXPERTISE,MOF guidelines

p) USE OF TECHNOLOGY
) Public
service,transparency,eco,efficiency,effective
ness

INTERNAL FINANCIAL ADVISOR

WILL BE OVERALL IN-CHARGE OF BUDGET AND
ACCOUNTS IN ADDITION TO INTERNAL FINANCE
SECTION
DUTY OF IFA-BUDGET
- ENSURE ADHERENCE SCHEDULE FOR PREPRATION
OF BUDGET AND AS PER INSTRUCTION OF MINISTRY
OF FINANCE
- SCRUTINISE BUDGET PROPOSALS BEFORE SENDING
THEM MINISTRIES
- MAINTENANCE OF DEPARTMENTAL ACCOUNTS
IN ACCORDANCE WITH GENERAL FINANCIAL
RULES

INTERNAL FINANCIAL ADVISOR

- WATCH AND REVIEW PROGRESS OF EXPENDITURE
THROUGH CONTROL REGISTERS
- AND ISSUE TIMELY WARNINGS TO BUDGET
CONTROLLING AUTHORITIES WHERE PROGRESS
OF EXPENDITURE IS NOT EVEN.
- PROPER MAINTENANCE OF LIABILITY REGISTERS
AND COMMITMENTS TO FACILTATE REALISTIC
PREPERATION OF BUDGET ESTIMATES,
BOOKING OF EXPENDITURE AND TIMELY
SURRENDER OF SAVINGS.
- SCREEN THE PROPOSALS FOR SUPPLEMENTARY
DEMAND FOR GRANTS
- ADVISE THE ADMINISTRATIVE MINISTRY ON ALL
MATTERS FALLING WITHIN THE FIELD OF

INTERNAL FINANCIAL ADVISOR

- TO IDENTIFY, IN PARTICULAR, SPECIFIC SAVINGS
IN CASES OF CREATION OF POSTS
- SCRUTINISE PROPOSALS FOR REDELEGATION
OF POWERS TO SUBORDINATE AUTHORITIES
- CLOSELY ASSOCIATE WITH THE FORMULATION
OF SCHEMES AND IMPORTANT EXPENDITURE
PROPOSALS FROM INITIAL STAGES
- ASSOCIATE
WITH
THE
EVALUATION
OF
PROGRESS/PERFORMANCE IN CASE OF PROJECTS AND
OTHER CONTINUING SCHEMES

INTERNAL FINANCIAL ADVISOR

- TO WATCH THE SETTLEMENT OF AUDIT

PARAS, INSPECTION REPORTS, DRAFT
AUDIT PARAS, ETC.
- PROMPT ACTION ON AUDIT REPORTS AND
APPROPRIATION ACCOUNTS, REPORTS OF
PUBLIC ACOUNTS COMMITTEE, ESTIMATES
COMMITTEE AND COMMITTEE ON PUBLIC
UNDERTAKINGS
- SCREEN ALL EXPENDITURE PROPOSALS
REFERRED TO FINANCE MINISTRY
- REGULAR AND TIMELY SUBMISSION OF
QUARTERLY STAFF STATEMENTS AND
OTHER REPORTS AND RETURNS REQUIRED
BY FINANCE MINISTRY

INTERACTION WITH MOF

AS STATED EARLIER
EFC/ PIB/CABINET/CABINET SUB COMMITEES
QUARTERLY REPORTS
AUSTERITY MEASURES
OTHER GUIDELINES
18

REPORTING SYSTEM
ANNUAL FINANCIAL REPORT
UC, DIVIDEND, AREAS OF TAX, NON TAX
REVENUE, UNSPENT BALANCES,
RESOURCE MANGEMENT
DISCLOSURE REPORT OF DEVIATION,
VIOLATIONS
CAPACITY BUILDING
19

CHIEF CONTROLLER OF ACCOUNTS /

CONTROLLER OF ACCOUNTS

PROVIDING BASIC ACCOUNTING AND FINANCIAL INPUTS TO FAs.

RECEIPTS,PAYMENTS AND ACCOUNTS

-

ACCURATE AND TIMELY PAYMENTS AS PER PRESCRIBED RULES AND

REGULATIONS

TIMELY REALISATION OF RECEIPTS

TIMELY AND ACCURATE

COMPLIATION
MONTHLY ANNUAL ACCOUNTS

EFFICIENT SERVICE DELIVERY BY THE BANKING SYSTEM

ADHERENCE TO PRESCRIBED ACCOUNTING STANDARDS, RULES AND

PRINCIPLES.

TIMELY, ACCURATE, COMPREHENSIVE,

FINANCIAL REPORTING.

AND CONSOLIDATION OF

RELEVANT

AND

USEFUL

CHIEF CONTROLLER OF ACCOUNTS /

CONTROLLER OF ACCOUNTS
OTHER FINANCIAL MANAGEMENT ACTIVITIES
- BUDGET FORMULATION INCLUDING
AND PERFORMANCE BUDGET

THE

OUTCOME

- EXPENDITURE AND CASH MANAGEMENT

- ESTIMATION
RECEIPTS

AND

FLOW

OF

NON

TAX

REVENUE

- MONITORING OF ASSETS AND LIABILITIES

- DISCLOSURE AND REPORTING REQUIREMENTS UNDER
FRBM ACT.
21

CHIEF CONTROLLER OF ACCOUNTS /

CONTROLLER OF ACCOUNTS
INTERNAL AUDIT / PERFORMANCE AUDIT
- ADEQUACY AND
CONTROLS AND

EFFECTIVENESS

OF

INTERNAL

- SOUNDNESS OF FINANCIAL SYSTEMS/

- RELIABILITY OF FINANCIAL
REPORTS IN PARTICULAR

AND

ACCOUNTING

- IDENTIFICATION AND MONITORING OF RISK FACTORS

- PROVIDING AN EFFECTIVE MONITORING SYSTEM TO
FACILITATE COURSE CORRECTIONS.