Accounting procedure and control

Includes papers relating to Acts and Laws governing the arrangement of Accounts; Orders relating to cash transactions; books of authorities; minutes and letters of the Secret department of the Treasury and other miscellaneous papers relating to the procedures and controls for accounting.

For IOR/L/AG/9/12 'Reported prepared in H. M. Paymaster General's Office of a proposed method of keeping accounts at the India Office' see: IOR/L/AG/9/8/3

For recording entitlement, issue and payment of salaries, leave and duty pay, pensions and similar classes of recurring payments, books or ledgers of personal accounts date from 1795 and were in general use by 1860 - see section IOR/L/AG/19, 20 & 21. Some of the lists and personal accounts include those who served in St Helena, China, Strait Settlements, Java etc as well as India.

Unrestricted

From the earliest days of the Company until 1773 the rates of salary of its servants overseas were very low, it being understood that they would be supplemented by private trading. Only in exceptional circumstances did they receive any salary until taking up their appointment abroad. There were no provisions for the grant of salary while on leave out of India, or for the award of pension after long service, although ad hoc awards were made, the basis being meritorious service rather than lengthy service. For payments of salary or pension apart from final due pay on quitting the service, were therefore required to be made in London. Members of the Home Staff were required to service for five years (reduced to three years in 1778) after initial appointment before entitled to any salary, and even then the rates of salary were low for many years. Gratuities were awarded frequently, often on a regular annual basis. Throughout the whole period of the Company it was essential, before payment in England of any amount could be made, for the prior approval of the Court of Directors to be given on each occasion, even when general approval had previously been given. General approvals, including authorities for appointments, rates of salary and pensions, dates of commencement and termination of salaries etc., are recorded in the Court Minutes up to 1858. In order to reduce the burden on the Court, approval was often given for the payment to a member of the home staff of a round sum imprest, which he was required to disperse for a specified service and to render an account. But in course of time, and particularly after 1834, most payments of a routine nature were approved by one of the Committees appointed by the Court, especially the Committees of Accounts, Finance and Home, and Political and Military. The Company maintained cash accounts at the Bank of England from 1698. The earliest authorities for payments, as distinct from records of payments actually made, are lists submitted by the Accountant General or his deputy to a particular Committee, requesting that authority be given for the preparation of Court Warrants (i.e. authorities to the Bank of England to make payment and debit the Company's account) for the net amounts and for the services specified. The lists were returned with the signatures of the members of the Committee (six during the period from 1760 to 1803, and two or three subsequently), and were retained by the Accountant General as his authority. Each entry on a list records the name of the payee, his department, Presidency or other division as appropriate, the gross amount due, the period concerned if other than the period covered by the general heading, deductions for income tax, fund subscription etc and the net amount payable. From about 1828 it appears to have been the practice in paying salaries and pensions to maintain two series of lists, one for the full quarterly, or other term payments and another for broken periods (initial and final payments), payments due at irregular intervals and others which for some reason could not be entered on the regular payment list. Such lists therefore serve as detailed accounts of all descriptions of payments and take the place of, or supplement, the information in the volumes of personal pay and pension accounts and other records of particular classes of payments. The lists sometimes record dates of death, retirement or resignation which are not easily obtainable elsewhere. The total amounts, both gross and net, recorded in the lists were treated from the start as charges against the Company's cash, provision being made for the cancellation (annually from 1829 but it irregularly before then) of uncashed or cancelled warrants. The precise date or channel of encashment a particular warrant is not stated in the lists, and all warrants have been destroyed. It may be possible to trace an individual payment before 1860 by reference to the Appendices to the General Cash Journals (see L/AG/1/14) or to the General Cash Ledgers and Journals. For the channel of negotiation of a warrant see section L/AG/32, Powers of Attorney. Early in 1860 a departmental committee was appointed to report on the Accounts and Audit Departments of the India Office. Apart from recommending revisions of existing practice to reduce staffing and obtain better control of the accounting system, the committee recommended that the practice of obtaining the prior signature of three members of the Council of India before any payment could be made should cease. In its place the committee recommended that the Accountant General should have standing authority to make payment in any instance which was covered by statute or general regulations of the Secretary of State. It also recommended that the Auditor should no longer conduct pre-audits on proposed payments. As the result of the recommendations a series of establishment books to control the issue of pay, pension, etc was opened. The new system a personal account for each individual in receipt of pay or pension. For other classes of recurring payments, the various types of payment or payees were grouped together. In the pay and pension books each personal account contains the name of the attorney or the private address of the payee with a specimen signature. The exact date of each payment is recorded. When civil or military officers returned to India after leave or duty the date of departure and sometimes the name of the ship was recorded. The method of making a payment was also changed. Instead of a Court Warrant a form, described in the department as a 'form for payment', was prepared in the particular section. It included details of the gross amount, deductions and net amount, the heads of account involved and the Register (see section L/AG/6) into which the details of the payment were to be transcribed after it had been cashed. Those were the equivalent of the Payable Order Registers of UK Government Departments. Each form included a footnote to the effect that it was negotiable through any bank, but that the India Office would accept no responsibility for it until it had been presented to the India Office and passed for payment. After an individual form for payment had been prepared it was checked and signed in the section of origin and was sent direct to the attorney or payee. After it had been signed, dated and negotiated through a bank it was presented, as one of a batch, at the India Office. For the sake of speed and convenience the total of all forms presented by a bank each day was paid to that bank on the same day, the Cashier giving instructions to the Bank of England to debit the account of the Secretary of State. A deduction was made for any forms paid the previous day which, on examination, had been found not to be in order. At the earliest possible hour after the receipt by the Cashier of batches of presented forms, they were sorted according to the sections by whom they had been issued and were then passed to the sections for examination and certification. The originating officers were not allowed to authorise finally. Examination consisted firstly of a check that the voucher and its net amount agreed with the entry in the individual account of its issue. The voucher was examined to ensure that any declaration incorporated in it had been completed, that the signature of the declarant agreed with the specimen signature already in the account book, that it had not been completed or the form negotiated earlier than the date of entitlement, and that if payment was being claimed by a bank or company as attorneys, that the signatory was one of the panel authorised to sign and whose specimen signature had previously been furnished to the Accountant General. If the examiner was satisfied on all points he signed his name and inserted in the account the date of payment. If any form was refused the examiner stated the reason on the reverse and the Cashier returned it to the presenting bank. In order to save time all cases of regular payments of the same nature within a section or sub-section which were payable to a particular bank under powers of attorney were listed on one form which was totalled and treated as a single payment form. After the forms had been examined and returned to the Cashier they were re-sorted according to the number of the Register which appeared on each form. They were then totalled net daily for each Register and for the overall daily total, the latter amount being checked against the total daily payment made to all presenting banks plus the total of amounts paid to callers either in cash or by personal cheques. When final agreement had been reached the forms were passed to the Accounts and Estimates Section for entry in the Registers. The monthly totals so obtained were transferred to the main Ledgers and Ledger Abstracts, and were entered in the monthly cash account of the Secretary of State with the Government of India (see section L/AG/13). The whole system of initiating, checking and recording payments, although it may appear to have been cumbersome, worked smoothly and difficulties were remarkably few. The number of heads of account necessary for the wide range of accounting work in the department was far larger than in a conventional department of the Government. In 1939 the number of paid vouchers was probably about 250,000 per annum, more than doubling during the 1939-1945 War. A continuous audit was maintained by the Auditor of India Home Accounts and his staff, who made an annual report to the Auditor General of India. Transfer of payments from India to London and vice versa, particularly of leave pay and pensions, formed a regular feature of the duties of the department. In the case of a transfer from India to London the individual was required to produce, before payment in London could be commenced, a certified from a competent accounting officer in India that the holder's salary or pension had been paid in India to a certain date, and that payment at a specified rate should be made in London from the following day. In due course, those certificates were converted into standard 'Last Pay Certificates' or 'Last Pension Certificates'. Before payment in London was commenced, the rates issued in India, and stated to be payable in London, were checked against regulations wherever possible. The same procedure was in use in the reverse direction, and for transfers to and from the Dominions and Colonies.