1. MAINTENANCE OF ACCOUNTS IN PANCHAYAT RAJ INSTITUTIONS IN A.P.

2. Separate demand head be created in state budget for transfer of funds to local bodies Separate Minor Heads be created for transfer of funds to each category of local bodies Separate format be prescribed for preparation of Budget & keeping of accounts to ensure uniformity in Central, State & Local Body Accounts These formats should be amenable to Computerisation C & AG to prescribe the accounting formats Recommendations of EFC

3. Recommendations of C & AG 17 Accounting Formats have been prescribed by C&AG which are common for all the PRIs. Of this, 16 are for keeping accounts and 1 for preparing budget Classification of transaction structured on a function - cum – programme basis to provide uniformity at all 3 tiers of Government. LCFPA is given to classify the transactions. Addition & deletion of Major/Minor heads will be done only with the approval of State AG.

4. Adoption of New formats for PRIs Government AP issued orders in G.O.Ms. No.172 PR(Acct.I), Dt:16.05.05 adopting these new formats by PRIs Except these 17 forms, the others registers/ forms will continue to be maintained in the existing proforma

5. Mandatory Minor Heads A separate demand XXXI is created in State Budget for transfer of funds to PRIs. The following Minor Heads are operated to transfer funds to PRIs by various Departments Assistance to Zilla Parishads – code 196 Assistance to Block Panchayats –code 197 Assistance to Gram Panchayats – code 198

6. Classification of Transactions For Expenditure 4 tier classification Major Head Sub Major Head Minor Head Object Head For Receipt 3 tier classification Major Head Sub Major Head Minor Head

7. Classification & Codification CodeDescription 2202 – Major Head (Function) General Education 01- Sub Major Head (Sub- Function) Elementary Education 053- Minor Head (Programme/Schemes/ Activity) Maintenance of Buildings 27- Object Head (Purpose of Expenditure) Repairs to School Building

8. Classification of Grants All Grant receipts are shown under Major Head 1601 – Grants –in-aid. The Minor Head corresponds to program Minor Heads in the section “Expenditure Heads (Rev. Acct)”, to which the assistance relates are to be adopted. Alpha numerical codes to show the source of grant.

9. Classification of Grants A - Government of India grant B - State Non-Plan grant C - State Finance Commission grant D - State Plan grant E - Central Finance Commission grant F - MP Lads G - MLA Lads H - Schemes funded by Panchayats own sources

10. Accounting of Grants Example – Receipts 1601- Grants – in – Aid/Assistance from State/Centre 702-Minor Irrigation B 04- State Non-Plan Grant Payments 2702-Minor Irrigation 01-Surface water 102-Lift Irrigation scheme 27-Minor Works – Repairs & Maintenance

11. Effects of EFC Recommendations in A.P. The EFC recommendations are to operationalise the constitutional provisions The PR accounts are to be maintained on the lines of Government Accounts Common account formats are prescribed for all the 3 PRIs. All the revenues of PRIs are constituted into panchayat fund on the lines of consolidated fund of the state

12. Effects of EFC Recommendations The expenditure from Panchayat fund is classified functionally Due to uniform minor heads the total quantum of funds devolved through state budget to each PRI can be known Due to functional classification of expenditure the number of functions transferred and expenditure thereon can be known from PR accounts

13. Over view of Budget & Accounting Formats Receipts & Payments accounts are prepared in two parts. Part – I - Panchayat fund - Comprising of all receipts & expenditure Part – II - Deposit & Advances -comprising of Deposits & Advances and remittances. Distinction between Revenue & Capital Receipt & Payment Accounts contains columns for budget estimates of the current year, previous year accounts and reporting years account.

14. Over view of Budget & Accounting Formats Annual R&P accounts supported by four additional disclosure statements items : Statement of Capital Expenditure – (Form-2) Statement of Receivable & Payables– (Form-3) Statement of balances under Deposits & Advances & Loans – (Form-4) Statement of Provident Funds, investments etc. – (Form-5)

15. Only one main cash book is to be maintained for panchayat fund However, in case of multiple funds, subsidiary cash books can be maintained to facilitate reconciliation Single Cash Book

16. Over view of Budget & Accounting Formats The detailed estimates are divided into different heads of expenditure (Functions/ Programme/ Activities etc.) Format consists of columns for last year actual BE, RE & BE for next year The Budget is prepared only in part-I (Panchayat fund) Classification of receipts & expenditure is uniform for both account & budget.

17. Features of New Accounting System Each PRI is an accounting entity The accounting policies of PRIs are same as that of State Government The main feature of new accounting system is integration between accounting and budgeting Accounts are kept on cash basis The codification covers all activities under 29 subjects listed in 11 th schedule Accessible to Computerization and consolidation. The Annual Account facilities to compare the institutions actual performance against the forecast in the Annual Plan & Budget

18. Features of New Accounting System Recoveries of payment are taken as reduction in expenditure In case of funds are transferred from ZP to MP/GP for schemes, the transfers are shown as deduct receipts Money received which is not revenue of PRIs is accounted for in deposit account.

19. Features of New Accounting System The new accounting system secure internal control on Receipts & Expenditure. Facilitate introduction of performance audit Help in analysis of Expenditure / activities under MIS Budget expenditure (Amounts drawn from treasury) and PAO expenditure for ZP works is also captured in the Accounts.

20. Transition Issues - 1 Capacity Building –training to lower tiers at the District & Mandal level. Printing & dissemination of Budget & Accounts Formats with codes. Arrears of Accounts to be prepared in new formats Changes in relevant Act& Rules Computerization of Accounts. Creation of computerized database Development of Accounting manuals Changes related to computerized process Training of State Audit staff on new system

21. Transition Issues – 2 Computerization of Accounts Hardware Software Training Maintenance Creation of computerized database Integration of Accounts software & Audit Software

22. DIFFERENCE BETWEEN OLD AND NEW ACCOUNTS OLD FORMSNEW FORMS Receipt & expenditure was classified under Sec-I (Non development) Sec-II (Development) Receipts & Expenditure classified under Revenue & Capital Multiple cash booksSingle cash book Recoveries are shown as receipt Recoveries shown as reduction of expenditure Transfer of funds shown as expenditure Transfer funds shown as deduction of receipts

23. DIFFERENCE BETWEEN OLD AND NEW ACCOUNTS OLD FORMSNEW FORMS Funds directly drawn from treasury (other than grants) were not brought to accounts Funds drawn under Minor Heads 196 / 197 / 198 to be incorporated in the accounts There was provision to show the EMF under General fund account EMF have to be worked out separately and enclosed to the Accounts as an annexure The Non development grant were shown under sec-I and Development grants sec-II of the annual account All the grants development and non development are shown under 1601 grant- in - aid only.

24. DIFFERENCE BETWEEN OLD AND NEW ACCOUNTS OLD FORMSNEW FORMS The deposit and advances were shown as receipts under sec-II development Deposits and advance account is prepared separately under part-II of annual account Receipts & expenditures was classified as non development and development Receipts & expenditures are classified as revenue and capital Expenditure linked to the source of receipt Expenditure linked to the functions No uniformity in forms and registers Common formats for all the PRIs