Financial Accountability Sundar Shrestha Gobinda Bhandari Nepal Administrative Staff College

Financial Accountability  Financial Planning  Accounting Information System  Government Accounting System and Financial Reporting System  Internal Control System

Accounting Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss/ surplus or deficit for a given period, and value and the nature of a firm's assets, liabilities and owner's equity.

Accounting Information System  Input - Transactions or Events  Process - Principles, Procedures and accounting basis  Output - Financial Statement

Process Principles  Money measurement concept Only those transactions are recorded which can be expressed in monetary units such as rupee. and dollar, etc.  Matching concept Cost or expenses of a particular period are matched or compared with the revenue of that period in order to calculate profit or loss.

Process  Going concern concept Business continuous to exist forever  Accounting period The entire life of business is divided into different period(generally one year) to know the result of business operation

Process  Realization concept Revenue is recorded at time when goods are sold or service is rendered.  Business entity concept Business is treated as a separate unit from the owner of a business  Cost concept Transactions are recorded at cost price.

Process Procedures  Transactions Identification,measurement and documentation  Recording Journal and subsidiary books  Classification Posting in to ledger and balancing of ledger

Process  Summarizing Trial balance, Trading a/c, P/L a/c or I/E and balance sheet  Interpretation and Evaluation Balance sheet are analyzed to draw conclusions about the financial positions of the organization.  Communication Conclusions are communicated to the concerned parties/stakeholders

Process Cash Basis Accounting Under the cash basis accounting, revenues and expenses are recognized as follows:  Revenue recognition: Revenue is recognized when cash is received.  Expense recognition: Expense is recognized when cash is paid.

Accounting Basis  Accrual Basis Accrual method recognizes income when it is earned (for example, when the terms of a contract are fulfilled or Goods are sold ) and expenses when they are incurred (for example Furniture are purchased)  Hybrid Basis Those methods that are neither strictly cash nor strictly accrual but combine elements of both.

Output Financial Statement  Balance Sheet  Income Statement  Cash Flow Statement  Statement of Changes in Equity  Notes, comprising a summary of significant accounting policies and other explanatory notes.

Income Statement (Aarthik Bibaran) of GoN  Income Statement will prepare (Aarthik Bibaran) of  Revenue  Expenditure  Deposit  Inventory  Others  Types of Income Statement  Aarthik Bibaran  Integreted Aarthik Bibaran  Central Aarthik Bibaran  Subsidiary Aarthik Bibaran  (Revenue: Tax Revenue and other revenue and Expenditure: Recurrent, Capital and Financing)  Approved budget- Budget release – Expenditure = Balance Expenditure = Budget release

Treasury Single Account  TSA is a unified structure of a government bank accounts that gives a consolidated view of government cash resources based on the principle of unity of cash and the unity of treasury, a TSA is a bank account or set of linked accounts through which is the government transactions all its receipt and payments. This system was started from Bhaktapur district.

Features of Accounting System of GoN  Double Entry System  Cash Basis  Budgetary Control over expenditure  Uniform Chart of accounts  Operating and central level

Features of Accounting System of GoN  Easy to maintain  Does not require substantiality skilled people

Weaknesses /Shortcomings of Government Accounting System  Treats advance as either income or expenses  Non cash financial transaction do not pass through the formal book keeping system and accounting system  Ignores contingencies liabilities and assets  Does not support assets  Inter fund transactions are not properly treated  Activities costing is not possible under this accounting

Internal Control System  Internal Checking  Internal Audit

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