maintenance of accounts in panchayat raj institutions in a.p

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

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

Recommendations of EFC

Recommendations of C & AG

17 Accounting Formats have been prescribed by C&AG which are common for all the PRIs.Of this, 16 are for keeping accounts and 1 for preparing budgetClassification 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.

Adoption of New formats for PRIsAdoption of New formats for PRIs

Government AP issued orders in G.O.Ms. No.172 PR(Acct.I), Dt:16.05.05 adopting these new formats by PRIs

Except these 17 forms, the others registers/ forms will continue to be maintained in the existing proforma

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 DepartmentsAssistance to Zilla Parishads – code 196Assistance to Block Panchayats –code 197Assistance to Gram Panchayats – code 198

Classification of TransactionsClassification of TransactionsFor Expenditure 4 tier classification

Major HeadSub Major HeadMinor HeadObject Head

For Receipt 3 tier classification Major HeadSub Major HeadMinor Head

Classification & CodificationClassification & 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

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.

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

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

Effects of EFC Recommendations in A.P.

The EFC recommendations are to operationalise the constitutional provisionsThe PR accounts are to be maintained on the lines of Government AccountsCommon 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

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 knownDue to functional classification of expenditure the number of functions transferred and expenditure thereon can be known from PR accounts

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 & CapitalReceipt & Payment Accounts contains columns for budget estimates of the current year, previous year accounts and reporting years account.


Annual R&P 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)

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

Single Cash Book


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 yearThe Budget is prepared only in part-I (Panchayat fund)

Classification of receipts & expenditure is uniform for both account & budget.

Features of New Accounting System

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


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.


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.

Transition Issues - 1Capacity 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& RulesComputerization of Accounts.Creation of computerized databaseDevelopment of Accounting manualsChanges related to computerized processTraining of State Audit staff on new system

Transition Issues – 2

Computerization of AccountsHardwareSoftwareTrainingMaintenance

Creation of computerized databaseIntegration of Accounts software & Audit Software

DIFFERENCE BETWEEN OLD AND NEW ACCOUNTS

OLD FORMS NEW FORMSReceipt & 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


OLD FORMS NEW FORMSFunds 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.


OLD FORMS NEW FORMSThe 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

maintenance of accounts in panchayat raj institutions in a.p

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