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Local Bodies Accounts

LB Division O/o CAG of India 18 Feb 2011. Local Bodies Accounts. Structure of presentation. Background Model Accounting System Issues and challenges. Background. FC-XI (2001)suggested technical guidance and support over LB accounts and audit should be entrusted to CAG

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Local Bodies Accounts

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  1. LB Division O/o CAG of India 18 Feb 2011 Local Bodies Accounts

  2. Structure of presentation • Background • Model Accounting System • Issues and challenges

  3. Background • FC-XI (2001)suggested technical guidance and support over LB accounts and audit should be entrusted to CAG • FC-XIII (2009)recommended that performance grant will depend inter alia on acceptance of a/c system consistent with MAS issued by MoPR & CAG in 2009 ( deadline-31 March’11)

  4. Model Accounting Structure(2009) • MAS built on Govt a/c system • Integration between accounting and budgeting • The codification covers all activities under 29 subject listed in the 11th schedule • Amenable to computerization and consolidation • Each PRI is an accounting entity

  5. Model Accounting Structure (MAS) • End product- R&P account • Preparation of subsidiary registers (assets, demand, receivable, payable, consolidated abstract , BRS) • COA- Four tier classification system (functions, programme, scheme, OH ) • Cash based single entry system • Subsidiary registers would enable migration to modified accrual accounting system. • MoPR & NIC are operationalizing MAS through PRIASoft, (www.accountingonline.gov.in) in collaboration with us. • States to amend budget and accounting rules to adopt MAS in consultation with AG.

  6. MAS -Governance • Does it address governance issues • How does it compare with state a/c, GPFS, IPSAS cash based reporting standards • No management responsibility statement, no ownership of accounts & notes to a/c • Format of audit opinion • Auditing standards • Budget, accounts & audit rules suggest transaction based audits

  7. MAS – Alignment 1 • Need to completely align with govt a/c system, chart of a/c (Revenue, Capital, DDR) ? • Presently 29 functions mapped 23MH in List of Major &Minor Heads. So conflicting coding at major & minor head levels • Uniform Object Heads across country • PRIASOFT is double entry book keeping at backend, so can generate B/S,I/E statement with minor change in COA

  8. MAS – Alignment 2 • PRIs receive large funds as Grants-in-aid from central & state govt • State AsG monitor UCs • Do UCs need classification as given state budget & sanction letter ? If yes, same COA required • LMMiH does not envisage PRI functions( no heads for unique PRI receipts or expenditure MH 2525 other RD programmes records PRI establishment)

  9. MAS – Alignment 3 • Finance Commission requirements • Template for SFC reports • Receipts for each tier in terms of tax, on tax revenue, capital receipts, scheme funds • Application of funds in each tier scheme and function wise ( health, edu, maintenance etc)

  10. Issues-2 Capacity • MAS is uniform for all 3 tiers of PRIs • Capacity of PRIs varies with tiers • Each unit(ZP,IP,GP) to prepare R&P a/c • Most ZP and IP used to preparing R&P a/c prior to 73rd CAA • Normally two sets of a/c rules-ZP/IP +GP • GPs vary in population ,area, fiscal size, staff,

  11. Issues-2 Capacity contd • Reporting entity definition -MAS and PRISOFT aligned to prepare a/c for each PRI separately -Maharashtra rules provide for single a/c of ZP & IP -need to revisit reporting entity definition

  12. Issues-2 Reporting entity • Suggestions: • For states with population per GP<10k and fiscal size < Rs 1cr reporting entity could be IP or ZP • For above states we could have “Distt AG” who could compile a/c of GPs and/or IPs

  13. Issues for discussion • Need to address governance issues in MAS • Chart of Account to completely align with govt a/c • Redefining reporting entity for GP a/c • GP a/c-simplified coding • Assistance in operationalizing PRIASOFT • Examining consistency between MAS & state Panchayat rules

  14. Thank you

  15. Table 13.1 - Segregation of duties • Though the standing committees were responsible for passing of bills and pay order but, due to non-functioning of these committees, Gram Pradhan and GPA jointly exercised these powers also. Segregation of duties * Though the standing committees were responsible for passing of bills and pay order but, due to non-functioning of these committees, Gram Pradhan and GPA jointly exercised these powers also Back

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