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Fundamentals of Government Accounting S. SATHYAMOORTHY Independent Consultant & Former Deputy CAG of India.

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Presentation on theme: "Fundamentals of Government Accounting S. SATHYAMOORTHY Independent Consultant & Former Deputy CAG of India."— Presentation transcript:


2 Fundamentals of Government Accounting S. SATHYAMOORTHY Independent Consultant & Former Deputy CAG of India

3 Taxes 3 Dimensional Consolidated Fund of India Development Exp Social,Economic,& General Sectors Both as Capital & Revenue Exp &flows of loans And interest Borrowings Internal External Fees,etc Interest Dividends Grants Contingency Fund of India Other Public Moneys Public Account 1 2 3

4 Basis of Govt Accounting Generally Cash basis and not accrual basis –No Profit motive –Based on Receipts Period –1 year April - March Currency –INR.

5 System of Accounting Single Entry Double Entry

6 Classification of Transactions Receipts PaymentsConstitutionalDevelopmental Voted Charged Revenue Capital Plan Non Plan Longevity

7 Classification Types Functional Classification Economic Classification Economic & Functional Classification To generate Government Financial Statistics in consonance with IMF requirements

8 Functional Classification Government Accounting Rules 1990 List of Major & Minor Heads of Account for Union & States

9 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

10 Consolidated Fund of India Division Section Sector Sub sector –Sub-Sub Sector

11 Consolidated Fund Revenue Other than Revenue Receipts ExpenditureCapital Public Debt Loans & Advances ReceiptsExpenditure Appropriations to Contingency Fund

12 Public Account Public Moneys like Trust Funds Moneys set aside out of Consolidated Fund Cash Balances Miscellaneous

13 Public Account ….2 Small Savings & PF Trusts & Endowments Reserve Funds –Bearing interest –Not bearing interest Deposits –Bearing Interest –Not bearing interest Advances

14 Public Account …3 Suspense & Miscellaneous –Suspense Accounts –Coinage Accounts –Miscellaneous Remittances Inter-State Settlement Reserve Bank Deposits Cash Balance

15 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

16 OBJECT CLASS 1 PERSONNEL SERVICES AND BENEFITS Salaries Wages Overtime allowance Pensionary Charges Rewards

17 OBJECT CLASS 2 ADMINISTRATIVE EXPENSES Domestic travel expenses Foreign travel expenses Office Expenses Rents, Rates and Taxes Royalty Publication Other Administrative expenses

18 OBJECT CLASS 3 CONTRACTUAL 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

19 OBJECT CLASS 4 GRANTS ETC Grants-in-Aid Contributions Subsidies Scholarships/Stipend

20 OBJECT CLASS 5 OTHER EXPENDITURE Secret Service expenditure Lump Sum Provision Suspense Exchange Variations Interest Share of taxes/duties Other Charges

21 OBJECT CLASS 6 ACQUISITION of CAPITAL ASSETS, etc Motor Vehicles Machinery & Equipment Major Works Investments Loans & Advances Repayment of borrowings Other Capital Expenditure

22 OBJECT CLASS 7 ACCOUNTING ADJUSTMENTS Depreciation Reserves Inter-Account Transfer Write off/losses Deduct recoveries

23 HealthWelfareEducation DDOs at Nagpur Treasury Office Nagpur Payment AG, Maharashtra Accounts DDOs at Nagpur C G A HealthWelfareEducation PAO Health PAO Education PAO Welfare PrAO Health PrAO Education PrAO Welfare Pay & A/cs Consolidation State Govts System GoIDepartmentalised system

24 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 PAO AG (Accounts)

25 Banking Arrangements Bankers to Govt : Reserve Bank of India Central Govt. Account Other UTs & State AGs Railway Fund Railway Fund Postal Accoun t Postal Accoun t Telecom Account Telecom Account Defenc e Account Defenc e Account Dptmntlsd Ministries/ UTs Account Dptmntlsd Ministries/ UTs Account Proforma balances

26 Banking Arrangements.... PAO Special Account Focal Point Branch CDDO Assignment Account Dealing Branch Account Dealing Branch Ministry/Dept Accredited Banker NoN MONETISED accounts

27 Flow of Receipts Tax payer Bank Focal Point Bank RBI PAO PrAO CGA Money Scrolls Accounts

28 Payment Procedure BANK PAO Claimant DDO Claim Bill Cheque

29 Outflow of Payments Dealing Branch Dealing Branch Focal Point Bank Focal Point Bank Link Cell Nagpur Link Cell Nagpur PAO PrAO RBI, CAS NAGPUR RBI, CAS NAGPUR consolidation at CGA Money Scrolls Accounts Put Thru

30 Accounting Entries - Receipts By PAO based 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 PrAO based on RBI put thru By CGA

31 Accounting entries - Payments 1 1 Dr. nnnn Service heads Cr. 8670 PAO Cheques 2 2 - Cr. 8670 PAO Cheques Cr. 8658 Suspense A/c PSB Suspense 3 3 -Cr. 8658 Suspense A/c PSB Suspense Cr. 8675 RB Deposits 4 4 -Cr. 8675 RB Deposits Cr. 8999 Cash Balance By PAO on issue of Cheques By PAO based on Debit Scrolls By PrAO based on Put Thru statements By CGA

32 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

33 Accountal of Borrowings Original Receipt/repayment is by RBI PAO maintains headwise accounts RBI maintains loanwise accounts

34 Accountal of borrowings - Drawbacks Details not available with the Government Repayment schedule not available for monitoring Lender profile not available with Govt

35 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

36 Flow of Accounts Parliament Civil Ministries Civil Ministries Railways Posts Telecom Defence Railways Posts Telecom Defence CCA/CAs PAO Ministry of Finance Ministry of Finance CGA C&AG UTs/ AGs UTs/ AGs

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