Content

8.3 Project Fund Management

All the project funds should flow into and flow from a single dedicated designated bank account referred as the project account. Project account will be the repository of all financial transactions by all the stakeholders in respect of the project. PIA should use the money exclusively for the project purposes and should not be diverted elsewhere including term deposits.

8.3.1 Operation of project account

8.3.1.1 Opening of bank account and mapping on PFMS

Overview

Item	Description
Purpose	To release funds to PIA and tracking utilization of funds
Reference to Guidelines	Para 3.2.1.7, page 26 Section vi, para 4.7, page 52 Para 5.6, page 58 Para 5.10, page 60 Para 6.5.7, page 64
Prerequisite/s	Sanction of the project
Time for completion	To be completed within15 days of signing of MoU
Instructions	SI 8.3A: Instruction for opening of bank account, SI 8.3B: Procedure first-time registration of PIA in PFMS, SI 8.3C: Procedure for adding Project Accounts for PIAs already registered on PFMS and SI 8.3D: Mapping project details on PFMS
Process owner	For APS: SRLM finance team For YPS: CTSA finance team

Activities

S No.	Activities	Actor	Time for completion	Relevant documents
1	Open a dedicated bank account for the project	PIA OP Team (Finance)	8 days before signing of MoU	As per the requirement / forms of bank
2	Submit details of designated bank account for the project to SRLM (in case of APS) and CTSA (in case of YPS)	PIA OP Team (Finance)	8 days before signing of MoU	SF 3.2 A Project account registration details (Accompanied by one cancelled cheque of the Project Account)
3	Forward the project account and PIA details to the nodal CTSA for PFMS registration	SRLM finance team (in case of APS) and CTSA finance team (in case of APS)	3 days after signing of MoU	PRN registration form, SF 3.2 A, Cancelled cheque
4	Register the PIA (if not registered already) and map the project account on http://pfms.nic.in	Designated nodal CTSA for PFMS registration	10 days after signing of MoU
5	Map the project details on PFMS	SRLM finance team (in case of APS) and CTSA finance team (in case of APS)	15 days after signing of MoU

8.3.1.2 Change of Project Account and Mapping into PFMS

In certain circumstances the PIA may need to change the Project Account that has already been established and mapped with PFMS. While such change should not be treated as a routine activity, the need for the same is recognised and the following process describes it.

Overview

Item	Description
Purpose	To change the Project Account if required To ensure that the new account is mapped to PFMS, To ensure that project funds are correctly transferred from the previous project account to the new project account. To ensure that previous Project Account is delinked from the Project and PFMS
Reference to Guidelines	NA
Prerequisite/s	Release of 1^st instalment
Time for completion	As per the activity table below
Instructions	SI 8.3A: Instruction for opening of bank account, SI 8.3B: Procedure first-time registration of PIA in PFMS, SI 8.3C: Procedure for adding Project Accounts for PIAs already registered on PFMS and SI 8.3D: Mapping project details on PFMS
Process owner	For APS: SRLM finance team For YPS: CTSA finance team

Activities

Step No.	Activities	Actor	Time for completion	Relevant documents
1	Open a new bank account for the project	PIA OP Team (Finance)	On requirement	As per the requirement / forms of bank
2	i) Add project account on PFMS[1] ii) Send request for change of project account to SRLM (in case of APS) and CTSA (in case of YPS)	PIA OP Team (Finance)	1 day after opening of new bank account	SF 8.3 A instructions for opening of a bank account, SF 3.2 A PIA bank account details along with a cancelled cheque of the new Project Account
3	i) Approve new project account on http://pfms.nic.in ii) Notify the change of project account	SRLM finance team (in case of APS) and CTSA finance team (in case of YPS)	Within 3 days of request by PIA for change of project account	SF 8.3 B Procedure for first time registration of PIA in PFMS
4	Transfer unspent project fund to the newly mapped bank account and inform SRLM (in case of APS) and CTSA (in case of YPS)	PIA OP Team (Finance)	Within 3 days of notification of the change of project account by SRLM finance team (in case of APS) and CTSA finance team (in case of YPS)
5	Send request to MoRD for delinking of previous project account from PFMS	SRLM finance team (in case of APS) and CTSA finance team (in case of YPS)	Within 1 day of information received about unspent fund transferred to the newly mapped bank account by PIA	SF 8.3 C Request letter from CTSA/SRLM to MoRD for delinking of a project account from PFMS on project closure
6	Send Delinking request of the previous project account from PFMS as per the request of SRLM / CTSA to the Office of CGA and get the delinking process completed	MoRD	Within 3 days of request by SRLM/CTSA for delinking of previous project account

8.3.1.3 Delinking of Project Account from PFMS on Project Closure

Overview

Item	Description
Purpose	To delink the project account from PFMS upon project closure
Reference to Guidelines	NA
Prerequisite/s	Issue of Project Closure Order
Time for completion	As per the activity table below
Instructions	-
Process owner	For APS: SRLM finance team For YPS: CTSA finance team

Activities

Step No.	Activities	Actor	Time for completion	Formats for presenting the results
	Send request to MoRD for delinking of the Project Account from PFMS	SRLM finance team (in case of APS) and CTSA finance team (in case of YPS)	Within 5 days of Issue of Project Closure Order	SF 8.3 C Request letter from CTSA/SRLM to MoRD for delinking of a project account from PFMS on project closure
2.	Send Delinking request of the Project Account from PFMS as per the request of SRLM / CTSA to the Office of CGA and get the delinking process completed.	MoRD	Within 3 days of request by SRLM/CTSA for delinking of previous project account

8.3.2 Cash inflows to the Project Account

As stated earlier Project Account will be repository of all cash inflows utilized for the Project irrespective of the source of funds.

All funds will be released by CTSA for YPS/SRLM for APS after deduction of Income tax at source. The procedures related to Tax Deducted at Source (TDS) are detailed in "SI 8.3D1 Applicability and settlement of TDS".
Interest earned from the project account, if permitted,
Loans taken by PIA for the purpose of project –PIA is permitted to bring funds, from its own sources or through the normal banking system, into the Project Account as loan. In such a case, the PIA should only be allowed to book repayment of principal amount as allowable expenditure. Any payment of interest on such funds brought into the Project Account in form of Loan(s) shall not be eligible as allowable expenditure and a PIA shall not book any such payment of interest as expenditure in books of account under a project. This would often apply in cases where PIA has exhausted the funds and subsequent instalment is still not released.
In respect of CSR Funds/ Funds from other sources, received for the project, it shall be necessary for the PIA to inform the same to the MoRD through the CTSA/SRLM specifying the purpose for which the funds have been received and utilized. Such funds should not lead to double counting of targets. Furthermore, the PIA should have informed all the parties about funds received from MoRD. It shall be the sole responsibility of the PIA to ensure that such funds received are not classifiable as an offence under Chapter II of Prevention of Money Laundering Act, 2002, as amended from time to time.

8.3.3 Cash Outflows from the Project Account

Outflows from the Project Account would essentially be with respect to authorized Heads of Expenditure as explained below. However, if penalties are levied under conditions of default or under any other conditions the penalties cannot be paid from the project account.

8.3.3.1 Heads of Expenditure

The heads of expenditure on which data is to be reported is given in SI 8.3E: Heads of expenditure. All expenditure in general shall be booked to the final Head of Expenditure. These heads of expenditure are to be recorded in the PFMS as transfers made to the bank account of the final recipient except for exceptions mentioned in the next section.

It may be noted that PFMS is an expenditure tracking tool and not a full-fledged accounting tool. Therefore PIAs should maintain their Project related accounts on their accounting platform.

8.3.3.2 Booking of Expenditure

All transactions directly attributed to the project shall be paid through the project account registered on PFMS. The process for booking expenditure in PFMS is detailed in the PFMS manual notified by MoRD. The expenditure booked should be duly recorded in the accounting platform appropriately.

There could be exceptions to the specification that all project related payments should be made only from the designated project account to the final recipients only. A few examples of such exceptions are:

A trainer working on more than one project
A training centre where multiple projects are run simultaneously
Shared Q team resources

In all such cases one of the following course of action can be taken

The proportionate cost can be booked to the dedicated project account of DDU GKY.
Proportionate cost can be transferred from designated Project Account to another bank account from which the full cost/ expenditure has been paid.

PIA is allowed to book expenditure from the date of issue of sanction order. To allow the expenditure under the project the following should be fulfilled:

Open a project account as per ‘SI 8.3A: Instruction for opening of bank account’ before booking of expenditure.
Incur all expenditure through the project account only
Signing of the MoU by all the Authorised signatories.

A PIA should note that all the above three conditions are mandatory if expenditure has to be admitted in project book of accounts. Therefore, PIA may incur expenditure from the sanction order issue date at their own risk.

8.3.3.3 Imprest Management (Petty Cash Management)

As a general principle, all payments shall be made as bank transfers from the Project Account through PFMS only as per SI 8.3F: Procedure for recording and reconciling cash advances in PFMS,as an exceptional and interim measure the program allows PIA to pay in cash against expenditure not exceeding Rs. 40,000/- per month for each of these cost centres – (a) training centre, (b) residential facility and (c) project state office. To facilitate imprest management, a PIA can maintain cash imprest with a designated person at the cost centre. The exact amount of cash imprest is left to discretion of a PIA within the cap of Rs 40,000/- for each expenditure location.

In these cases, payment to the final recipients in lieu of their services or supply of goods need not be made directly from the Project Account. Cash Imprest will be transferred to bank account of designated person from the Project Account. The imprest transfer will be treated as an advance till the final booking of expenditure.

[1] For adding new Project Account in PFMS, follow the procedure described in 8.3.1.1.2