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Fundamentals of Government Accounting
S. SATHYAMOORTHY
Independent Consultant &
Former Deputy CAG of India
Taxes 3 DimensionalConsolidated
Fund ofIndia Development Exp
Social,Economic,&General Sectors
Both as Capital & Revenue Exp
&flows of loansAnd interest
Borrowings
Internal
External
Fees,etc
Interest
Dividends
Grants
ContingencyFund of India
Other Public Moneys
PublicAccount
1
2
3
Basis of Govt Accounting
• Generally Cash basis and not accrual basis– No Profit motive– Based on Receipts
• Period– 1 year April - March
• Currency– INR.
System of Accounting
• Single Entry
• Double Entry
Classification of Transactions
Receipts Payments
Constitutional Developmental
VotedCharged
RevenueCapital
PlanNon Plan
Longevity
Classification Types
• Functional Classification
• Economic Classification
• Economic & Functional Classification
• To generate Government Financial Statistics in consonance with IMF requirements
Functional Classification
• Government Accounting Rules 1990
• List of Major & Minor Heads of Account for Union & States
Functional Classification
• Should have closer reference to
– the purpose of the transactions
• than
– the department which incurs it.
• Rule 30 of the Government Accounting Rules
Consolidated Fund of India
• Division
• Section
• Sector
• Sub sector– Sub-Sub Sector
Consolidated Fund
Revenue Other than Revenue
Receipts Expenditure Capital Public Debt
Loans & Advances
Receipts ExpenditureAppropriations to Contingency Fund
Public Account
• Public Moneys like Trust Funds
• Moneys set aside out of Consolidated Fund
• Cash Balances
• Miscellaneous
Public Account ….2• Small Savings & PF
• Trusts & Endowments
• Reserve Funds– Bearing interest– Not bearing interest
• Deposits– Bearing Interest– Not bearing interest
• Advances
Public Account …3
• Suspense & Miscellaneous– Suspense Accounts– Coinage Accounts– Miscellaneous
• Remittances
• Inter-State Settlement
• Reserve Bank Deposits
• Cash Balance
Object Heads
Personnel Services & Benefits
Administrative Expenses
Contractual Services & Supplies
Other Expenditure
Acquisition of Capital Assets
Accounting Adjustments
Grants, etc
Class of Objects
1
2
3
4
5
6
7
OBJECT CLASS 1PERSONNEL SERVICES AND
BENEFITS
• Salaries
• Wages
• Overtime allowance
• Pensionary Charges
• Rewards
OBJECT CLASS 2ADMINISTRATIVE EXPENSES
• Domestic travel expenses• Foreign travel expenses• Office Expenses• Rents, Rates and Taxes• Royalty• Publication• Other Administrative expenses
OBJECT CLASS 3CONTRACTUAL SERVICES AND
SUPPLIES
• Supplies and Materials
• Arms and Amunition
• Cost of ration
• P.O.L.
• Clothing and Tentage
• Advertising and Publicity
• Minor Works
• Professional Services
• Other Contractual Services
OBJECT CLASS 4GRANTS ETC
• Grants-in-Aid
• Contributions
• Subsidies
• Scholarships/Stipend
OBJECT CLASS 5 OTHER EXPENDITURE
• Secret Service expenditure
• Lump Sum Provision
• Suspense
• Exchange Variations
• Interest
• Share of taxes/duties
• Other Charges
OBJECT CLASS 6ACQUISITION of CAPITAL ASSETS, etc
• Motor Vehicles• Machinery & Equipment• Major Works• Investments• Loans & Advances• Repayment of borrowings• Other Capital Expenditure
OBJECT CLASS 7ACCOUNTING ADJUSTMENTS
• Depreciation
• Reserves
• Inter-Account Transfer
• Write off/losses
• Deduct recoveries
Health WelfareEducation
DDOs at Nagpur
Treasury Office
NagpurPayment
AG, MaharashtraAccounts
DDOs at Nagpur
C G A
Health WelfareEducation
PAO
Health
PAO
Education
PAO
Welfare
PrAO
Health
PrAO
Education
PrAO
Welfare
Pay & A/cs
Consolidation
Consolidation
State Govts
System
GoIDepartmentalised system
What is New?
• Roles : 3 – Payment
– Receipts
– Accounting
• Mode of Payment: 1– Cheque
• RBI Advice
• Roles : 1 – Accounting
• Treasuries handle Payment & Receipts
• Mode of Payment: 3– Cash
– Payment Order
– Cheques
• RBI Advice
PAOPAO AG (Accounts)AG (Accounts)
Banking Arrangements
• Bankers to Govt : Reserve Bank of India
Central Govt. AccountCentral Govt. AccountOther UTs & State AGs
Other UTs & State AGs
Railway Fund
Railway Fund
PostalAccount
PostalAccount
TelecomAccount
TelecomAccount
DefenceAccount
DefenceAccount
DptmntlsdMinistries/UTs Account
DptmntlsdMinistries/UTs Account
Proforma balances
Banking Arrangements ....
PAO
Special AccountFocal PointBranch
CDDO AssignmentAccount
Dealing Branch
AccountDealing Branch
Ministry/Dept Accredited BankerAccredited Banker
NoN MONETISED accounts
Flow of Receipts
Tax payer
BankBank
Focal Point BankFocal Point Bank
RBIRBI
PAOPAO
PrAOPrAO
CGACGA
Money
Scrolls
Accounts
Payment Procedure
BANKBANK
PAO
Claimant
DDO
Claim
Bill
Cheque
Outflow of Payments
Dealing BranchDealing Branch
Focal PointBankFocal PointBank
Link CellNagpurLink CellNagpur
PAOPAO
PrAOPrAO
RBI, CASNAGPURRBI, CASNAGPUR
consolidationat CGA
Money
Scrolls
Accounts
Put Thru
Accounting Entries - Receipts
By PAObased on Credit Scrolls
Dr. 8658 Suspense A/c PSB Suspense
Cr. Receipt head
Dr. 8675 RB Deposits
-Dr. 8658 Suspense A/c PSB Suspense
Dr. 8999 Cash Balance
-Dr. 8675 RB Deposits
By PrAObased onRBI put thru
By CGA
Accounting entries - Payments
11Dr. nnnn Service headsCr. 8670 PAO Cheques
22- Cr. 8670 PAO Cheques Cr. 8658 Suspense A/c PSB Suspense
33-Cr. 8658 Suspense A/c PSB Suspense Cr. 8675 RB Deposits
44-Cr. 8675 RB Deposits Cr. 8999 Cash Balance
By PAO on issueof Cheques
By PAO based onDebit Scrolls
By PrAO based onPut Thru statements
By CGA
Borrowings
MoF decides in consultation with RBI
RBI Borrows money
Credited to Govt. A/c with RBI
Scrolls sent to PAO, DEA, MOF
Head wise entry made @PAO , DEA, MOF
Dr. 8675 RB Deposits
Cr. 6001 Internal Debt of
Central Govt
Accountal of Borrowings
• Original Receipt/repayment is by RBI
• PAO maintains headwise accounts
• RBI maintains loanwise accounts
Accountal of borrowings - Drawbacks
Details not available with the Government
• Repayment schedule not available for monitoring
• Lender profile not available with Govt
Proforma Accounts
• Normal Govt accounts on Cash Basis
• Additional & Separate Accounts
• On Mercantile Basis
• Departmental Commercial Undertakings
– Atomic Power Plants
– Delhi Milk Scheme
• Not by autonomous bodies/corporate
bodies
Flow of AccountsParliamentParliament
CivilMinistries
CivilMinistries
RailwaysPostsTelecomDefence
RailwaysPostsTelecomDefence
CCA/CAsCCA/CAs
PAOPAO
Ministryof Finance
Ministryof Finance
CGACGA
C&AGC&AG
UTs/AGs
UTs/AGs