fundamentals of government accounting s. sathyamoorthy independent consultant & former deputy...
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Fundamentals of Government Accounting
S. SATHYAMOORTHY
Independent Consultant &
Former Deputy CAG of India
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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
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Basis of Govt Accounting
• Generally Cash basis and not accrual basis– No Profit motive– Based on Receipts
• Period– 1 year April - March
• Currency– INR.
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System of Accounting
• Single Entry
• Double Entry
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Classification of Transactions
Receipts Payments
Constitutional Developmental
VotedCharged
RevenueCapital
PlanNon Plan
Longevity
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Classification Types
• Functional Classification
• Economic Classification
• Economic & Functional Classification
• To generate Government Financial Statistics in consonance with IMF requirements
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Functional Classification
• Government Accounting Rules 1990
• List of Major & Minor Heads of Account for Union & States
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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
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Consolidated Fund of India
• Division
• Section
• Sector
• Sub sector– Sub-Sub Sector
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Consolidated Fund
Revenue Other than Revenue
Receipts Expenditure Capital Public Debt
Loans & Advances
Receipts ExpenditureAppropriations to Contingency Fund
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Public Account
• Public Moneys like Trust Funds
• Moneys set aside out of Consolidated Fund
• Cash Balances
• Miscellaneous
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Public Account ….2• Small Savings & PF
• Trusts & Endowments
• Reserve Funds– Bearing interest– Not bearing interest
• Deposits– Bearing Interest– Not bearing interest
• Advances
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Public Account …3
• Suspense & Miscellaneous– Suspense Accounts– Coinage Accounts– Miscellaneous
• Remittances
• Inter-State Settlement
• Reserve Bank Deposits
• Cash Balance
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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
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OBJECT CLASS 1PERSONNEL SERVICES AND
BENEFITS
• Salaries
• Wages
• Overtime allowance
• Pensionary Charges
• Rewards
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OBJECT CLASS 2ADMINISTRATIVE EXPENSES
• Domestic travel expenses• Foreign travel expenses• Office Expenses• Rents, Rates and Taxes• Royalty• Publication• Other Administrative expenses
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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
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OBJECT CLASS 4GRANTS ETC
• Grants-in-Aid
• Contributions
• Subsidies
• Scholarships/Stipend
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OBJECT CLASS 5 OTHER EXPENDITURE
• Secret Service expenditure
• Lump Sum Provision
• Suspense
• Exchange Variations
• Interest
• Share of taxes/duties
• Other Charges
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OBJECT CLASS 6ACQUISITION of CAPITAL ASSETS, etc
• Motor Vehicles• Machinery & Equipment• Major Works• Investments• Loans & Advances• Repayment of borrowings• Other Capital Expenditure
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OBJECT CLASS 7ACCOUNTING ADJUSTMENTS
• Depreciation
• Reserves
• Inter-Account Transfer
• Write off/losses
• Deduct recoveries
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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
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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)
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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
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Banking Arrangements ....
PAO
Special AccountFocal PointBranch
CDDO AssignmentAccount
Dealing Branch
AccountDealing Branch
Ministry/Dept Accredited BankerAccredited Banker
NoN MONETISED accounts
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Flow of Receipts
Tax payer
BankBank
Focal Point BankFocal Point Bank
RBIRBI
PAOPAO
PrAOPrAO
CGACGA
Money
Scrolls
Accounts
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Payment Procedure
BANKBANK
PAO
Claimant
DDO
Claim
Bill
Cheque
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Outflow of Payments
Dealing BranchDealing Branch
Focal PointBankFocal PointBank
Link CellNagpurLink CellNagpur
PAOPAO
PrAOPrAO
RBI, CASNAGPURRBI, CASNAGPUR
consolidationat CGA
Money
Scrolls
Accounts
Put Thru
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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
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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
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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
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Accountal of Borrowings
• Original Receipt/repayment is by RBI
• PAO maintains headwise accounts
• RBI maintains loanwise accounts
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Accountal of borrowings - Drawbacks
Details not available with the Government
• Repayment schedule not available for monitoring
• Lender profile not available with Govt
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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
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Flow of AccountsParliamentParliament
CivilMinistries
CivilMinistries
RailwaysPostsTelecomDefence
RailwaysPostsTelecomDefence
CCA/CAsCCA/CAs
PAOPAO
Ministryof Finance
Ministryof Finance
CGACGA
C&AGC&AG
UTs/AGs
UTs/AGs