Day 6 – Session: 3 (b) Session Title : Preparation and usefulness of (i) “Accounts at a Glance” and (i) “Combined Finance and Revenue Accounts”
Session Overview In this session we will discuss about the usefulness of (i) “Accounts at a Glance” and (ii) “Combined Finance and Revenue Accounts”
Learning Objective By the end of the session, we will be enlightened with the usefulness of (i) “Accounts at a Glance” and (ii) “Combined Finance and Revenue Accounts”. The session will begin with discussion on preparation of each chapter of the ‘Accounts at a Glance’ and sources of data required for the preparation thereof. Thereafter, the usefulness of the “Combined Finance and Revenue Accounts” will be dealt with.
Part I – Accounts at a Glance
What is Accounts at a Glance ? ‘Accounts at a Glance’ is an important additional document to the Government from the C & A G, which provides a broad overview of Governmental activities, a macro analysis based on comparison between (i) the Financial Statement (Budget) of the Government and (ii) the Finance Accounts and Appropriation Accounts prepared and presented by the C & AG to the State Legislature.
Components of Accounts at a Glance The document is presented in 3 chapters: Chapter I : an overview on the principles of Government Accounting, Forms and Divisions in which the Government Accounts are maintained. It discloses the status of the presentation of Annual Accounts and Audit Reports to the Legislature. Data for various information are taken from the Chapter II – Highlights of Accounts.
Chapter II : projects the Highlights of Accounts. It is the main linkage and data provider for all other Chapters of the document. This Chapter brings out the following additional information also: (i) Revenue Disbursements, Capital Disbursements, Plan Disbursements and Non-Plan Disbursements. (ii) Sectoral distribution of expenditure and its percentage to total revenue expenditure. (iii) 5 years TREND OF EXPENDITURE of selected sectors. (iv) DEBTS AND LIABILITIES. (v) INVESTMENTS AND RETURNS. (vi) LOANS AND ADVANCES BY THE STATE GOVERNMENT. (vii) RUSH OF EXPENDITURE (viii) RECONCILIATION OF ACCOUNTS (ix) SUBMISSION OF ACCOUNTS BY TREASURIES
Chapter III : TRENDS IN GOVERNMENT REVENUE AND EXPENDITURE (5 years). This chapter further deals with : (i) LIABILITIES of the State Government (ii) STATE PROVIDENT FUND including interest. (iii) GUARANTEES given by the State Government. (iv) WAYS AND MEANS ADVANCES, GENERAL CASH BALANCES, and CONTINGENCY FUND
Part II - Combined Finance and Revenue Accounts
- An Overview Courtesy : Paper on “Overview of Combined Finance and Revenue Accounts (Union & the States)” by Shri M.C. Singhi, IES published in Indian Journal of Public Audit & Accountability, Institute of Public Auditors of India, New Delhi (April 2006 issue).
What is CFA? A user desired Annual Report showing the recognition of physical assets; actual liabilities on pension and ongoing programmes; tax expenditure; budgetary outcomes; measures of deficit; performance indicators and disaggregated information preferablyaccording to programme and region along with timeliness of their presentation.
Architecture of Governments Financial Information Flow Citizens Legislatures DonorsInternational Agencies Domestic Investors MediaSpecial Interests Groups Executive DepartmentsPlanning, Allocating and Raising of Resources Audit ReceiptsDisbursementsSurplus/ Deficit Fresh Liabilities AssetsDebt Stock Performance Indicators Economic and Social Well being FlowStockUse of resources Surrogate Performance Measure Broad architecture of government’s financial information
Balance Sheet of the Core Government The Liabilities of the government include its internal debt, external debt, small saving and provident funds, reserve funds and other deposits. The Assets of the government include its capital expenditure on creation of economic and social infrastructure and its loans & advances. Table (on next page) shows Assets & Liabilities and the Statement of Balances (as on 31 March 2000). It facilitates an analysis of assets & liabilities of the Union and States.
Assets and Liabilities and the Statement of Balances (Position as on 31 March 2000) (Rs. in crore) UnionStatesCombinedUnionStatesCombined Capital Expenditure General Services Internal Dept Social Services External Dept Economic Services Loans from CG Total Small Savings Loans and AdvancesReserve Fund General Services Others Social Services Total Liabilities (Available Funds) Economic Services State Governments Total Other Receipts03386 Cash Balances Cumulative Resource Gap (Revenue Deficit) Investments Total Assets Resource Use
Total Assets (Rs in Crore) Per Capita Assets (Rupees) Per Capita Assets Index (Percent) Ratio of Assets Liabilities (percent) Ratio of Assets to revenue receipt (ratio) Andhra Pradesh Bihar Delhi Goa Gujarat Haryana Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal Total and Per Capita Assets, ratio of Assets to Liabilities and Revenue Receipt (Inter-State variations)
Total Assets (Rs in Crore) Per Capita Assets (Rupees) Per Capita Assets Index (Percent) Ratio of Assets Liabilities (percent) Ratio of Assets to revenue receipt (ratio) Special Category States Pondicherry Arunachal Pradesh Assam Himachal Pradesh Jammu & Kashmir Manipur Meghalaya Miziram Nagaland Sikkim Tripura All States Total and Per Capita Assets, ratio of Assets to Liabilities and Revenue Receipt ( contd…)
Summary of Annual Accounts Shows the states ability to raise resources - both taxes and user charges from its various services, expenditure and cost of delivery of services, allocative priorities of its disbursement, revenue and fiscal deficit (or fiscal imbalances) and net annual increase in its liabilities, etc.
Revenue Receipts Revenue receipts of a government are composed of the receipts from the entities own taxes; receipts from entities’ sovereign functions, financial intermediation and user charges; devolution of taxes collected by the Union and transferred to the States and grants- in-aid.
Application of Resources – Revenue Expenditure The Union and the States raise resources to perform their sovereign functions, maintain their existing network of delivery of social and economic services, extend the network of these services through capital expenditure and investments and discharge their debt servicing obligations. Over 85% of the combined expenditure of the Union and States was in the nature of current or revenue expenditure, primarily to maintain the existing level of social economic services network and for their sovereign functions.
Total gross revenue expenditure of the Union and States as Rs.5763 billion in as shown in the table below: UnionStatesCombined Organs of States Fiscal Services Financial Intermediation Administrative Services Miscellaneous General Services Pensions Defence Total General Services Social Services Economic Services Grants in aid Total