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Contract-Bills And Accounts

INTRODUCTION


          The payment to the contractors for works or supply or material, road metal and plants etc. are made on the basis of measurements recorded in the measurement books.  When the work or supply is completed or sufficiently progressed, the detailed measurements are taken usually by the section officer and recorded in the measurement book and an abstract of quantities are prepared and the cost is calculated at the rate of the contract agreement.  From the abstract of quantity and the rate, a bill is prepared for payment.
2. Bill and Voucher
          Bill: Bill is the account of work done or supply of materials made and includes the particulars and quantities of work done or material supplied and amount due.  Reference to the agreement number, order number are also given in the bill.
          Voucher: Voucher is a written document with details which is kept in record as a proof of payment.  For any payment, a bill is prepared and payment is made on the bill, duly checked and acknowledged by the payee, by signature or revenue stamp as required and after payment is made, bill becomes voucher which is kept in record.
3. Types of Bills
          The various standard forms of bills and vouchers are used for payment, according to the nature of works.  White forms are used for running bills and yellow forms are used for final bills.  The following  are the different types of bills.

  1. First and Final bill
  2. Running account Bill – form A
  3. Running account Bill – form c
  4. Lump sum contract  Bill
  5. Hand receipt
    1. First and Final Bill:  This form is used for making payment to the contractor both for works and suppliers, when a single payment is to be made on the completion of the whole work or supply as final payment.  This type of bill is generally adopted for petty works or split up works in projects.
    2. Running Account Bill – Form A: This form is used for advance payment without any measurement.  It may be used for running bill payment for advance for unmeasured work only or combination of unmeasured work and measured work or if ‘on account’ payment is to be made but an advance payment already made for the same work is outstanding.
    3. Running Account Bill – Form C: This form is used for contracts both for works executed on piece work system and for suppliers received.  This form is widely used specially for medium sized works executed through K2 contract or split up works or projects entrusted on nomination to a number of contractors.
    4. Lump Sum Contract Bill: In the L.S. contract methods, a number of intermediate payments are made in L.S. contract running account bill form before final payment is made.  Intermediate payment is made for (i) value of measure up items of work executed forming part of the contract. (ii) value of authorized extra work done on account of additions or modifications in the work executed supported by details in either case.

In the final L.S. bill, the full amount as entered in the contract is paid adding the amount of authorised extras and deducting authorised omission and the intermediate payments already made.

    1. Hand Receipt: Hand receipt is a simple form of voucher intended to be used for small miscellaneous payments and advances for which none of the above forms is suitable.  The purpose of payment and the designation of the officer making payment duly supported by measurement book entry should be furnished on the hand receipt No agreement is necessary for payments made through Hand receipt form.

4. Types of payment
Payment to contractors are made in a variety of ways, as listed below:

  1. First and Final Payment
  2. Running on Interim or ‘on account’ payment.
  3. Final payment
  4. Advance payment
  5. Secured Advance payment
  6. First and Final Payment:  The term indicates a single payment made for a job or contract on its completion.  In this case the payment finished by one payment after the completion of the work.  This is usually applicable for small work.
  7. Running or interim ‘on account’ payment:  This means payment made on a running account to a contractor for works done or supplies made by him, duly measured and entered in measurement book.  This is effected when only a part of the whole work or supply has been done and the work or supply is in progress.  During the progress of the work, the contractor is paid from time to time.
  8. Final Payment:  This is the last payment made to a contractor on a running account, on completion of this contract and the full settlement of the account.
  9. Advance Payment:  This means the payment made on a running account to a contractor for work done by him but not measured.  Advance payment is not generally made to the contractor, but may be made under special circumstances when the work is sufficiently progressed, but measurement cannot be taken for certain valid reasons.  The value of work done shall not be less than the advance proposed.  Detailed measurements shall be taken as soon as possible and advance payment adjusted in the final bill.
  10. Secured Advance Payment:  This payment is made on the security of materials brought by the contractor to the site of work, when the contract is for the completed items of work.  This type of payment may be allowed by the Executive Engineer in the interest of work upto an amount not exceeding 75% of imperishable materials.  Lime, sand, paint and varnishes are considered as perishable materials and no advance is permissible.

5. Preparation, Examination and Payment of Bills
The bills for payment shall be prepared with respect to the measurements recorded in the measurement book.  All entries in the measurement book with regard to the description and quantities of work or supplies made are checked.  Arithmatical calculations of the contents or area are verified.  When, the bill is on running account then it is compared with the quantities etc. with the previous bill.  It is checked whether deduction in respect of the following have been properly made.

    1. Recovery for advance payment
    2. Recovery in respect of departmental materials issued to the contractors.
    3. Hire charges for departmental materials issued to the contractors.
    4. Amount to be withheld towards security deposit.
    5. Recovery towards penalty for slow progress, non return of empty gunny bags etc.

In case of final bills the field officers should certify about the due fulfillment of contract and satisfactory completion of work.
The memorandum of payment is then made.  The competent officer records a formal pay order specifying both in words and figures the net amount payable.  However the contractor is required to acknowledge the gross amount payable inclusive of recoveries proposes in the bill.
When the bill is passed for payment, every page containing the detailed measurement will be scored out by a diagonal red ink line.  The number and date of the voucher for payment will be entered in the measurement book.

CONTRACTOR'S LEDGER

       Contractor’s ledger is a personal account of a contractor where all transactions regarding the particular contractor are entered.  It is maintained in the divisional officer in a prescribed form.  All payments recoveries of adjustments etc.  are taken in the ledger.  Recoveries of debit balance of the ledger should be made from the contractor regularly at the first available chance to avoid accumulation of arrears.  For every contractor a separate ledger is maintained and each contractor’s ledger is closed and balanced monthly.
          The contractor’s ledger is maintained by the division and a specimen page of a contractor’s ledger is given in Table – 1.
Table – 1
Name of Contractor for the month of ………………………………………….


Date
Voucher No.
Sl.
No.
of Bill
Net Transaction
Name of work or account and particulars of transaction
Gross Transaction
Total upto date value of work or supplies
Remarks
Advance Payment
Other Transactions
Debit
Credit

 

 

 

 

 

 

 

 

 

 

COMPLETION REPORT

          When a work is completed and the accounts have been settled a note below the final entries is made in ink.  Work completed on …………20 ….. and this note is signed by the divisional officer.  If the total expenditure is in excess of the sanctioned estimate, and if the excess is within the power of the divisional officer, it is passed by him and the certificate to the effect that “effect passed by me” is recorded.  A completion plan should accompany a completion report.

COMPLETION CERTIFICATE

                    After completion of the work of construction of other department, a certificate for satisfactory completion should be prepared in a prescribed form and got signed by a local head of the department.  The completion certificate will read as Certified that works and repairs were completed on ………20 ….. and that it is in good satisfactory order.  The completion certificate is signed by the Assistant executive Engineer and Executive Engineer and then got accepted and signed by the local head of the department, for whom the construction was carried out.

REFUND OF DEPOSIT

                 The deposits of the contractor and refunded after six months from the date of satisfactory completion of the works or on the expiry of one rainy season.  During this period of observation, the contractor is responsible for any defects or mishaps in the works.  He shall have to make good all such defects and damages.

MAINTENANCE OF CASH BOOK

           The definition of following terms are taken before, the maintenance of cash book is discussed.

  1. Cash: The term ‘cash’ as used in accounts includes legal tender coins, cheques, deposit-at-call receipts of scheduled banks and drafts payable on demand.  A small supply of one rupee revenue stamps is also treated as part of cash balance.
  2. Debit and Credit: Debit means expenditure and credit means that the amount is shown as expenditure on the work.  Similarly when an amount is credited to a work it means that the amount is to be shown as receipts under the work.
  3. Cash Book: The transactions relating to the actual receipts and payment of cash are recorded in a register known as cash book.  The cash book is one of the most important records of the office.

     The pages of the cash book are machine number and each page is divided into ‘receipt side’ and ‘payment side’.  The receipt side has got five columns and payment side has got seven columns.  The specimen page of a cash book is shown in Table – 2.
Table – 2 Cash Book


Receipt Side
Payment side
Date of Receipt
No of vouchers or receipt
From whom received
Amount Cash
Classification of receipt
Date of payment
No of voucher
To whom paid etc
Payment side
Classification of charges
Cash
Bank or Treasury
No of Cheque
Amount
1
2
3
4
5
6
7
8
9
10
11
12

 

 

 

 

 

 

 

 

 

 

 

 

          Every government officer is personally responsible for the public money with which he deals and for recording the transaction of receipts and payments promptly.  Private cash or accounts are in no case to be mixed up with public cash or accounts.
The following instructions are to be followed in the maintenance of cash book

  1. Entries should be made continuously and no line should be left blank.  If any line is left blank due to the fact that the other side of the folio has been completely written up, a diagonal line should be drawn to cancel the blank space.
  2. Interpolation of entries, or over writings must be avoided but, if unavoidable, these must be initiated and dated by the disbursing officer.  Erasure of entries is strictly prohibited.
  3. Transactions should be entered as soon as they occur in the order of occurrence.
  4. If the cash transaction of private cheques received is too many, these may first be entered in a “Register of cheques received and adjusted” and only the totals of daily receipts and remittances entered in the cash book.
  5. Every entry must be concise.  The date, number of voucher and the name of the work together with a brief description to clearly indicate the nature of transaction must be entered against each item.
  6. No receipt other than cash should be entered in the book.
  7. When a cheque is drawn to replenish the chest, its number and amount to be entered.
  8. When an impreset is given, it should be noted in red ink in the cash book.
  9. When amount of unspent imprest is received back, it is shown on the receipt side in red ink.
  10. The disbursement of salary of regular establishment is recorded in a separate cash book known as subsidiary cash book.
  11. Bills paid and entered in the cash book are known as vouchers.  Vouchers are allotted serial numbers in a continuous series each month.
  12. It is advisable to check that the cash balance is counted every time a balance is struck or at convenient intervals.