174. The incurring of expenditure by Government officers is governed by the following essential  conditions :

(1)    that there should be provision of funds authorised by competent authority fixing the limits within which expenditure can be incurred ;

(2)    that the expenditure incurred should conform to the relevant provisions of the Appropriation Act, the Constitution and the laws made thereunder and should also be in accordance with the financial rules and regulations framed by competent authority ;

(3)    that there should exist sanction, either special or general, accorded by competent authority, authorising expenditure ; and

(4)    that the expenditure should be incurred with due regard to broad and general principles of financial propriety [see para 12 (iii) of Chapter I].

It is difficult to define exactly and comprehensively the meaning of the term "financial irregularity." But a large majority of financial irregularities fall under one or the other of the following categories. The list is only illustrative and is not exhaustive :

(1)    Excess over a grant voted by the Assembly or over a charged appropriation.

(2) Defective or inaccurate budgeting, necessitating large surrenders or resulting in excesses.

(3)    Defective control of expenditure resulting in -

(a)    unnecessary or excessive supplementary grants,

(b)    unnecessary or excessive re-appropriations,

(c)    injudicious re-appropriations and surrenders, causing excess over allotments,

(d)    unspent and unsurrendered appropriations,

(e)    unremedied or uncovered excesses, and

(f)     late allotments.

(4)    Misclassification of expenditure.

(5)    Re-appropriations which are not made in accordance with the rules in this Manual or which have the effect of increasing expenditure on an item the provision for which has been specifically reduced by a vote of the Legislative Assembly.

(6)    Expenditure on a service not covered by a vote of the Assembly, unless the requisite funds have been arranged by obtaining an advance from the Contingency Fund before incurring expenditure.

(7)    Expenditure incurred without sufficient sanction.

(8)    Expenditure incurred without allotment of adequate funds.

(9)    Loss of public money or property due to fraud, misappropriation or carelessness in accounting.

(10) Drawing from treasuries of money not required for immediate use.

(11) Abandonment of revenue without proper sanction, e.g., sale of Government property below market rates, or reduction of dues payable under a license or lease without the sanction of the competent authority in each case.

(12) Any large claim against another Government, local body or other outside party allowed to remain outstanding for an unduly long time.

(13) Any irregularity connected with a contract, such as -

(i)     Placing of a contract without obtaining competitive tenders in an open and public manner except in cases where the necessity for obtaining such tenders has been waived by any general or special rule or order by the competent authority (see Appendix XIX to the Financial Handbook, Volume V, Part I);

(ii)    Acceptance without adequate reason, of a tender other than the lowest.

(iii)   inadequate scrutiny of tendered rates before acceptance ;

(iv)    unsuitability of the form of contract ;

(v)    failure to complete all necessary formalities connected with a contract, including the obtaining of expenditure sanction before permitting the contractor to start work ;

(vi)    deviation from the contractual terms in favour of the contractor or varying the terms without the approval of the competent authority ;

(vii)   omissions to enforce the conditions of a contract, such as those requiring the deposit of security or levy of penalty.

(14) Any irregularity connected with purchases, such as -

(i)     purchases which contravene the rules for the purchase of articles for the public service;

(ii)    purchase in excess of reasonably anticipated requirements ;

(iii)   purchase of materials of inferior quality.

(15) Any extraordinary or apparently unnecessary expenditure, such as-

(i)     payments made as acts of grace except where permitted by any rule or order ;

(ii)    compensation paid for damage sustained except in cases in which a claim for such damage could be enforced in a court of law or in which such compensation is admissible under any rule or order;

(iii)   payments in excess of amounts admissible under statute, contract or rule;

(iv)    payments necessitated by failure to enforce the terms of a contract ;

(v)    irrecoverable balances of advance payments made on account of services, etc., which were ultimately not rendered.

(16) Any uneconomical or apparently wasteful expenditure due to -

(i)     the inception of works without adequate investigation of their utility or feasibility and without conducting proper preliminary surveys and preparing detailed estimates of cost and obtaining necessary administrative and technical approval to the estimates ;

(ii)    the inception of deposit works for local bodies, etc., without the requisite deposits having been obtained from the parties concerned ;

(iii)   execution of works by a Government agency which lacks the ability or the facilities to execute them properly ;

(iv)    the unsatisfactory working of Government commercial undertakings ;

(v)    the fixation of incorrect rents of residential buildings ;

(vi)    other causes.

(17) Any irregularity connected with a grant-in-aid, such as neglect (i) by the sanctioning authority of conditions precedent to the grant or (ii) by the grantee of the conditions, expressed or implied, attached to the grant by the sanctioning authority.

(18) Any instance of the absence of administrative regulations and procedure sufficient to secure a proper and effective check upon monetary transactions.