Where works are executed through the Public Works Department or other Government Agencies, they may consist of either (a) Deposit works or (b) Delegated Loan Works.
(a) Deposit Works: In respect of deposit works carried out by Public Works Department or any other Government Agency on behalf of the Municipality, the following accounting procedure shall be observed:—
(i) The gross estimated expenditure of the work shall be paid to the Public Works Department or concerned Government Agency in either one lump sum or in such instalments as agreed. The amounts paid shall be treated as advance to the Public Works Department or the concerned Government Agency. The Public Works Department or the concerned Government Agency shall send to the Municipality every month, a statement showing the outlay incurred during each month and upto-date outlay on the works concerned. On receipt of this 45 statement, the amount shown as spent during the month shall be adjusted against the advance paid earlier and also accounted in the ‘Capital Works in Progress’
(ii) After completion of the deposit works, the statement of the deposit work shall be sent by the Public Works Department or the concerned Government Agency to the Municipality. On receipt of such statement the expenditure under ‘Capital Works in Progress’ pertaining to that work shall be capitalized.
(iii) The unspent balances of completed works shall be refunded to the Municipality by the Public Works Department or concerned Government Agency, which shall be adjusted against the un-cleared advance.
(b) Delegated Loan Works: (1) When loans are raised by any other agency including Government Agency on behalf of the Municipality for capital works, the works are called as ‘delegated loan works’.
(2) The following procedure shall be observed in respect of delegated loan works:
(i) The Municipality shall enter into a legally valid agreement enabling the agency to raise loan on its behalf and undertake to repay the principal and interest as per the terms and conditions of the loan and the said agreement.
(ii) Once the agency raises the loan, it shall send an advice indicating the loan raised, date of loan, period of repayment, rate of interest and terms and conditions of the loan in KMF NO 36.
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(iii) On receipt of such advice, the Municipality shall make necessary entries in the books of account. It shall also record it in the Register of Loans and Register of Advances
(iv) The agency shall send a monthly statement of outlay incurred during each month showing the progress on the works concerned in KMF NO 37. On receipt of this statement, the amount shown as spent during the month shall be adjusted by passing necessary entries.
(v) On receipt of completion report the Capital Work in Progress shall be capitalised.
Note. —The delegated loan works shall be shown separately in the Budget estimate of the Municipality.