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A thought………………

A thought………………

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A thought………………

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  1. “The accounts of the government ought to be made as simple as those of the common farmerand capable of being understood by common farmers.” - Thomas Jefferson A thought………………

  2. The Finance Commission Mandate for PRIs • The Eleventh Finance Commission recommended that the C & AG prescribe the format in which local bodies should prepare their budgets and maintain their accounts. • C&AG and the Ministry of Panchayati Raj have finalised a Model Accounting System that uses a simplified cash-based system along with the list of codes for functions, programs and activities capturing receipts and expenditure in respect of all 29 subjects mentioned in Schedule XI of the Constitution.

  3. The Finance Commission Mandate for PRIs The 13th Finance Commission (13th FC) mandated that State Governments will be eligible for the General Performance Grant and the Special Areas Performance Grant only if they adopt accounting framework and codification pattern consistent with the Model Accounting System for Panchayats (MAS) as prescribed by the Comptroller and Auditor General (C&AG) of India and MoPR.

  4. Accounting Structure Uses simple Four Tier Coding System i.e. • Major Head – 4 digits -Represents Functions • Minor Head - 3 digits -Represents Programme • Sub Head - 4 digits - (Hidden) • Object Head - 2 digits -Represents Object item

  5. Accounting Structure A Capital Expenditure is money invested to acquire or upgrade fixed, physical, non-consumable assets, such as buildings and equipment or a new business. Expenditure which is not for increasing the value of fixed assets, but for running the business on a day to day basis, is known as revenue expenditure.

  6. Accounting Structure Example to book expenditure under Central Scheme 13 FC Major Head  2059  Maintenance of Community Assets Minor Head  101  Maintenance & Repairs Sub Head  (Hidden) Object Head  26 Maintenance

  7. Formats under Model Accounting System • Receipt & Payment Account • Consolidated Abstract Register • Reconciliation Register • Statement of Receivable and Payables • Register of Immovable Property • Register of Movable property • Inventory Register • Register of Demand, Collection of Balance.

  8. Entries in‘Priasoft’ • Master • Bank branch details; these are entered at the District Level • Mapping of Bank Branches • Bank account details; these are entered by the respective accounting units if the funds are kept in banks • Cheque book details pertaining to Treasury/Bank/Post Office Accounts • Opening Balance; these are entered by the respective accounting unit with respect to Treasury/Bank/Post Office Accounts corresponding to schemes till the scheme receipt head level • Transactions • PRIASoft captures the most distinctive feature of the accounting system—the classification and differentiation of financial transactions under both receipts and payments. • Also captures the details of contra entries—deposits and withdrawals. Adding bank reconciliation statements for a given month. • Each accounting unit begins recording voucher entries as and when a transaction occurs. • Four types of vouchers are supported by PRIASoft.

  9. Implementation Through ‘Priasoft’ The End User will only enter any of the following vouchers : • Receipt Voucher (For any fund received by PRI) • Payment Voucher (For any fund paid by PRI) • Contra Voucher (For withdrawing/depositing cash) • Journal Voucher (For making adjustment)

  10. Receipt Vouchers will be passed for following transactions: • Any money received on account of income from own sources • Funds received as Grants from Central/State/other sources directly or through Transfers from other PRIs • Funds received as Advance/Earnest Money/Deposit • Funds received on account of recovery of advance given. • Cancellation of Stale Cheques( not enchased) • Recovery of overpayment if any. Receipt Vouchers

  11. The PRIs could have inflow of funds in the form of: Direct Receipts Transfer Receipts Advance Receipts Refunds of Advance Receipts Cancellation of Cheque Refunds of Excess Payment Refunds Of OB Advance Diversion Receipt

  12. Payment Vouchers Payment Vouchers will be passed for following transactions • Payments made for Revenue like Salary, Telephone Bills, Electricity Bills etc. • Payments made for Capital Expenditure like Construction of Buildings & Infrastructure, Purchase of Vehicles & Machinery etc. • Transfer of Funds to other PRIs. • Advances given to Employees/contractors/other PRIs • Repayment of Advances/Loans and Interest • Refund of revenue. • Correction in wrong booking of Receipt if separate bank accounts are in operation.

  13. Out Flow of fund IAY MGNREGA DDP 2216 (Rural Housing) 102 – (Construction of Houses) 56 (Individual Housing) 2515 : Panchayati Raj Programmes 101 : District Panchayat Programmes 17 : Grants in Aid 3054 : Transportation 101 : Roads 02 : Wages Capital expenditure Revenue Expenditure

  14. Payment Vouchers • A Payment Voucher is required by accounting entity to record or capture the details of any outflow of funds from the Panchayat. • The accounting entity could record expenditure incurred by them in the form of • Expenditure Payments • Transfer Payments • Advance Payments • Receipt Cancellation • Fund Diversion

  15. Contra Vouchers will be entered for following transactions: • Withdrawing cash from the Bank for making payments in cash. • Depositing funds in the Bank received in Cash on accounting of revenue income or EM etc. • It may be noted that Contra Voucher shall not be used for transferring funds from one Bank account to another Bank Accounts related to separate schemes. Contra Vouchers

  16. Journal Voucher • Journal Voucher are adjustment vouchers and will be passed for non cash transactions like: • Correction in source of receipt when the accounts of both the sources are in same Bank • Correction in Payment transactions when accounts of both the Payers are in same Bank • Deductions from Payments to be paid to respective authorities later on.

  17. Types of Journal Vouchers : • Receipt Rectification • Expenditure Rectification • Advance Rectification • Advance Adjustment • OB Advance Adjustment • Deduction

  18. Pre-conditions:: • The Day Book must be closed for the date on which the voucher was recorded, against which you want to make the rectification entry in the Journal Voucher. • Post-conditions :: • Once the day book is closed for date on which journal voucher was recorded it will not be available for further unfreezing and deletion. • Once the journal voucher is saved you can view its details in Journal Book under reports.

  19. Vouchers to be booked for different Transactions

  20. Reconciliation Procedure • Bank Reconciliation • Reconciliation of Receivable • Reconciliation of Payable • Reconciliation of Advances • Reconciliation of Loans

  21. Bank Reconciliation • Need of Bank Reconciliation Statement • Pin pointing mistakes in the Cash Book maintained by the PRI and Pass Book of the concerned Bank. • Identifying delay in the clearance of cheques / remittances • Checking on embezzlement /mis appropiation • Checking the accuracy of Cash Book. • Accounting for Bank charges levied by the Bank and Credit of interest given by Bank.

  22. Bank Reconciliation • Causes Responsible for the Difference Between the Balances of Cash Book and Pass book. • Cheques issued by PRIs but not yet presented for payment. • Cheques deposited into the bank but not yet collected by the bank. • Cheques directly deposited by the Lessee etc in PRIs account in the bank. • Interest credited by the bank but not recorded in the Cash Book. • Interest, bank charges charged by the bank but not recorded in the Cash Book. • Dishonored cheques not recorded in the Cash Book.

  23. Bank Reconciliation • Steps for Preparation of Bank Reconciliation Statement. • PRIs must prepare the Bank Reconciliation Statement on monthly basis and should be completed by end of the first week of the next month. Bank reconciliation statement includes the following steps. • Firstly tick-out the transactions appearing in both Cash Book and Pass Book / Bank Statement of the relevant month.

  24. Bank Reconciliation Secondly list out the transactions of Cash Book and Pass Book which are not ticked-out. Separate list of each of the following is to be prepared. • Un-ticked items of receipt side of the Cash Book. • Un-ticked items of payment side of the Cash Book. • Un-ticked items of deposit column of Pass Book / Bank statement. • Un-ticked items of withdrawal column of Pass Book / Bank statement. • Bank Reconciliation statement shall be prepared separately for each Bank

  25. Bank Reconciliation

  26. Voucher No – DDP/R1/2012-13/1 Voucher Successfully Saved / Freezed