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

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

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

System of Accounting Single Entry Double Entry

Classification of Transactions Receipts Payments Constitutional Developmental Longevity Plan Non Plan Revenue Capital Voted Charged

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

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

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

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

Consolidated Fund Revenue Other than Revenue Receipts Expenditure Capital Public Debt Loans & Advances Receipts Expenditure Appropriations to Contingency Fund

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

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

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

Object Heads Class of Objects Personnel Services & Benefits Other Expenditure 1 5 Administrative Expenses 2 Acquisition of Capital Assets 6 Contractual Services & Supplies 3 7 Accounting Adjustments Grants, etc 4

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

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

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

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

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

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

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

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

What is New? Roles : 3 Mode of Payment: 1 RBI Advice Roles : 1 PAO AG (Accounts) 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

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

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

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

Payment Procedure Bill PAO Cheque DDO Claim BANK Claimant

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

Accounting Entries - Receipts Dr. 8999 Cash Balance -Dr. 8675 RB Deposits By CGA By PrAO based on RBI put thru Dr. 8675 RB Deposits -Dr. 8658 Suspense A/c PSB Suspense By PAO based on Credit Scrolls Dr. 8658 Suspense A/c PSB Suspense Cr. Receipt head

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

Borrowings MoF decides in consultation with RBI Scrolls sent to PAO, DEA, MOF Head wise entry made @PAO , DEA, MOF RBI Borrows money Dr. 8675 RB Deposits Cr. 6001 Internal Debt of Central Govt Credited to Govt. A/c with RBI

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

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

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

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