MAINTENANCE OF ACCOUNTS IN PANCHAYAT RAJ INSTITUTIONS IN A.P.

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MAINTENANCE OF ACCOUNTS IN PANCHAYAT RAJ
INSTITUTIONS IN A.P.
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Recommendations of EFC

• Separate demand head be created in state budget
  for transfer of funds to local bodies
• Separate Minor Heads be created for transfer of
  funds to each category of local bodies
• Separate format be prescribed for preparation of
  Budget keeping of accounts to ensure uniformity
  in Central, State Local Body Accounts
• These formats should be amenable to
  Computerisation
• C AG to prescribe the accounting formats

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Recommendations of C AG

• 17 Accounting Formats have been prescribed by
  CAG which are common for all the PRIs.
• Of this, 16 are for keeping accounts and 1 for
  preparing budget
• Classification of transaction structured on a
  function - cum programme basis to provide
  uniformity at all 3 tiers of Government.
• LCFPA is given to classify the transactions.
• Addition deletion of Major/Minor heads will be
  done only with the approval of State AG.

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Adoption of New formats for PRIs

• Government AP issued orders in G.O.Ms. No.172
  PR(Acct.I), Dt16.05.05 adopting these new
  formats by PRIs
• Except these 17 forms, the others registers/
  forms will continue to be maintained in the
  existing proforma

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Mandatory Minor Heads

• A separate demand XXXI is created in State Budget
  for transfer of funds to PRIs.
• The following Minor Heads are operated to
  transfer funds to PRIs by various Departments
• Assistance to Zilla Parishads code 196
• Assistance to Block Panchayats code 197
• Assistance to Gram Panchayats code 198

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Classification of Transactions

• For Expenditure 4 tier classification
• Major Head
• Sub Major Head
• Minor Head
• Object Head
• For Receipt 3 tier classification
• Major Head
• Sub Major Head
• Minor Head

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Classification Codification
Code Description
2202 Major Head (Function) General Education
01- Sub Major Head (Sub- Function) Elementary Education
053- Minor Head (Programme/Schemes/ Activity) Maintenance of Buildings
27- Object Head (Purpose of Expenditure) Repairs to School Building
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Classification of Grants

• All Grant receipts are shown under Major Head
  1601 Grants in-aid.
• The Minor Head corresponds to program Minor Heads
  in the section Expenditure Heads (Rev. Acct),
  to which the assistance relates are to be
  adopted.
• Alpha numerical codes to show the source of grant.

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Classification of Grants

• A - Government of India grant
• B - State Non-Plan grant
• C - State Finance Commission grant
• D - State Plan grant
• E - Central Finance Commission grant
• F - MP Lads
• G - MLA Lads
• H - Schemes funded by Panchayats own sources

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Accounting of Grants

• Example Receipts
• 1601 -Grants in Aid/Assistance from
  State/Centre
• 702 -Minor Irrigation
• B 04 - State Non-Plan Grant
• Payments
• 2702 -Minor Irrigation
• 01 -Surface water
• 102 -Lift Irrigation scheme
• 27 -Minor Works Repairs Maintenance

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Effects of EFC Recommendations in A.P.

• The EFC recommendations are to operationalise the
  constitutional provisions
• The PR accounts are to be maintained on the lines
  of Government Accounts
• Common account formats are prescribed for all the
  3 PRIs.
• All the revenues of PRIs are constituted into
  panchayat fund on the lines of consolidated fund
  of the state

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Effects of EFC Recommendations

• The expenditure from Panchayat fund is classified
  functionally
• Due to uniform minor heads the total quantum of
  funds devolved through state budget to each PRI
  can be known
• Due to functional classification of expenditure
  the number of functions transferred and
  expenditure thereon can be known from PR accounts

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Over view of Budget Accounting Formats

• Receipts Payments accounts are prepared in two
  parts.
• Part I - Panchayat fund - Comprising of all
  receipts expenditure
• Part II - Deposit Advances -comprising of
  Deposits Advances and remittances.
• Distinction between Revenue Capital
• Receipt Payment Accounts contains columns for
  budget estimates of the current year, previous
  year accounts and reporting years account.

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Over view of Budget Accounting Formats

• Annual RP accounts supported by four additional
  disclosure statements items
• Statement of Capital Expenditure (Form-2)
• Statement of Receivable Payables (Form-3)
• Statement of balances under Deposits Advances
  Loans (Form-4)
• Statement of Provident Funds, investments etc.
• 
  (Form-5)

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Single Cash Book

• Only one main cash book is to be maintained for
  panchayat fund
• However, in case of multiple funds, subsidiary
  cash books can be maintained to facilitate
  reconciliation

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Over view of Budget Accounting Formats

• The detailed estimates are divided into different
  heads of expenditure (Functions/ Programme/
  Activities etc.)
• Format consists of columns for last year actual
  BE, RE BE for next year
• The Budget is prepared only in part-I (Panchayat
  fund)
• Classification of receipts expenditure is
  uniform for both account budget.

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Features of New Accounting System

• Each PRI is an accounting entity
• The accounting policies of PRIs are same as that
  of State Government
• The main feature of new accounting system is
  integration between accounting and budgeting
• Accounts are kept on cash basis
• The codification covers all activities under 29
  subjects listed in 11th schedule
• Accessible to Computerization and consolidation.
• The Annual Account facilities to compare the
  institutions actual performance against the
  forecast in the Annual Plan Budget

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Features of New Accounting System

• Recoveries of payment are taken as reduction in
  expenditure
• In case of funds are transferred from ZP to MP/GP
  for schemes, the transfers are shown as deduct
  receipts
• Money received which is not revenue of PRIs is
  accounted for in deposit account.

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Features of New Accounting System

• The new accounting system secure internal control
  on Receipts Expenditure.
• Facilitate introduction of performance audit
• Help in analysis of Expenditure / activities
  under MIS
• Budget expenditure (Amounts drawn from treasury)
  and PAO expenditure for ZP works is also captured
  in the Accounts.

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Transition Issues - 1

• Capacity Building training to lower tiers at the
  District Mandal level.
• Printing dissemination of Budget Accounts
  Formats with codes.
• Arrears of Accounts to be prepared in new formats
  
• Changes in relevant Act Rules
• Computerization of Accounts.
• Creation of computerized database
• Development of Accounting manuals
• Changes related to computerized process
• Training of State Audit staff on new system

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Transition Issues 2

• Computerization of Accounts
• Hardware
• Software
• Training
• Maintenance
• Creation of computerized database
• Integration of Accounts software Audit Software

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DIFFERENCE BETWEEN OLD AND NEW ACCOUNTS
OLD FORMS NEW FORMS
Receipt expenditure was classified under Sec-I (Non development) Sec-II (Development) Receipts Expenditure classified under Revenue Capital
Multiple cash books Single cash book
Recoveries are shown as receipt Recoveries shown as reduction of expenditure
Transfer of funds shown as expenditure Transfer funds shown as deduction of receipts
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DIFFERENCE BETWEEN OLD AND NEW ACCOUNTS
OLD FORMS NEW FORMS
Funds directly drawn from treasury (other than grants) were not brought to accounts Funds drawn under Minor Heads 196 / 197 / 198 to be incorporated in the accounts
There was provision to show the EMF under General fund account EMF have to be worked out separately and enclosed to the Accounts as an annexure
The Non development grant were shown under sec-I and Development grants sec-II of the annual account All the grants development and non development are shown under 1601 grant- in -aid only.
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DIFFERENCE BETWEEN OLD AND NEW ACCOUNTS
OLD FORMS NEW FORMS
The deposit and advances were shown as receipts under sec-II development Deposits and advance account is prepared separately under part-II of annual account
Receipts expenditures was classified as non development and development Receipts expenditures are classified as revenue and capital
Expenditure linked to the source of receipt Expenditure linked to the functions
No uniformity in forms and registers Common formats for all the PRIs
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