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Overview of Model Accounting System for Panchayats http://accountingonline.gov.in

Overview of Model Accounting System for Panchayats http://accountingonline.gov.in . Simplified Accounting Structure for PRIs. Why Model Accounting System ?. One of the item of e-PRI (Mission Mode Project [MMP] under National e-Governance Plan [NeGP]). Recommendations of C & AG and MoPR.

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Overview of Model Accounting System for Panchayats http://accountingonline.gov.in

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  1. Overview of Model Accounting System for Panchayats http://accountingonline.gov.in Simplified Accounting Structure for PRIs

  2. Why Model Accounting System ? • One of the item of e-PRI (Mission Mode Project [MMP] under National e-Governance Plan [NeGP]). • Recommendations of C & AG and MoPR. • TFC incentives Grant • Performance based Grant Conditions for gettingRs.897 crores

  3. Wherewithal • IT Infrastructure • All Block Panchayats computerised : 11th FCA • All Gram Panchayats computerised : 12th FCA • Manpower • Qualified I T professionals : 11th FCA/ 12th FCA • e-Connection • All Block Panchayats connected : GRAMSAT • Additional Connectivity : BSNL VPN

  4. Precursor • PAMIS Accounting Software • Implemented as a trial version in ZP/BP for maintenance of Accounts • Advantages of the application • Follows double-entry accounting system • Daily transactions can be captured • Can be customised as per accounting requirements • Shortcoming in the application • No Standard Budget Head concept • Standalone version • Lack of security in the data-storage • Not in the public domain. • Can’t be integrated with NREGSoft, PlanPlus, AwasSoft at National Level.

  5. Rational for PRIASoft • Based on Standard Head of Accounts Concept • Complies to C& AG formats • Standard formats(8) prescribed by C&AG for al level of PRIs • Web based software application developed by NIC at National Level.

  6. Need of Standardised Formats • Preparation of Budget. • Analysis of Eexpenditure. • Maintenance of Accounts. • Self disclosure of financial transactions. • Reporting for Auditing.

  7. What is New? • 3-Tier Classification: Simple, robust, and easy to use. • Generation of Financial Reports through computers • 2-Part Accounts: • Part-I: Receipts & Expenditure • Part-II: PFs, Loans, Deposits, Advances, etc.

  8. 3-Tier classification

  9. Part-I –Panchayat Fund 4/3/2014 CAG of India

  10. Part-II –Provident fund & etc 4/3/2014 CAG of India

  11. Exception to 3-Tier • Central Schemes assigned 2-digit sub-heads & State Scheme Alpha-numeric 2-digit subhead: 4/3/2014 CAG of India

  12. Structure of Budget Head • Three layer Budget Head for receipt of Grants-in-Aid • First 4-digit classification - major head represent function • Second 3-digit classification - minor head represent the programme of expenditure. • Third 2-digit subhead only for schemes Contd..

  13. Structure of Budget Head • Four layer Budget Head for expenditure • First 4-digit classification - major head represent function • Second 3-digit classification - minor head represent the programme of expenditure. • Third 2-digit subhead only for schemes • Fourth 2-digit (00 to 99) - object head -represent the object item of expenditure.

  14. Major Heads Agriculture Soil and Water Conservation Minor Irrigation Animal Husbandry, Dairying, Poultry and Fuel and Fodder Fisheries Forestry and Minor Forest Produce Village and Small Scale Industries Rural Housing Water Supply and Sanitation Animal Husbandry, Dairying, Poultry and Fuel and Fodder Transportation Rural Electrification Non-conventional Sources of Energy Poverty Alleviation Programme Contd..

  15. Major Heads Education Technical Training and Vocational Education Art, Culture and Libraries Market and Fairs Health and Family Welfare Water Supply and Sanitation Women and Child Welfare Social Security and Welfare Welfare of Scheduled Castes, Scheduled Tribes and Other Weaker Sections Public Distribution System Maintenance of Community Assets Interest Receipts/Payment Pension and Other retirement benefits Panchayati Raj Programmes

  16. 3-Tier Classification • Major Heads: • 23 Major Heads to cover 29 functions • New Major Head: ‘2206 –Market and Fairs’ • Schemes: • Major GoI Schemes: Standardised 2-digit subheads. • State Schemes: 2-digit alpha-numeric subhead • Object Heads: • Standardized object heads for common types of expenditure (27) • Additional object heads: can be opened by Panchayats

  17. Standardised Sub-Heads for Some Central Schemes

  18. Standardised Object Head 01 Salaries (1) 02 Wages 03 Overtime Allowance 04 Pensionary charges 05 Honoraria 06 Medical treatment 07 Travel Expenses 08 Office Expenses (2) 09 Rent, Rates and Taxes 10 Audit Fee 11 Printing Other Administrative Expenses 13 Supplies and Materials 14 Petrol/Diesel 15 Advertising and Publicity 16 Other Contractual Services 17 Grants – in – aid 18 Contributions Contd..

  19. Standardised Object Head 19 Subsidies 20 Share of taxes / duties 21 Motor Vehicles/hiring charges 22 Machinery and Equipment 23 Major Works 24 Write off / losses 25 Deduct recoveries 26 Maintenance 80 Other Expenditure

  20. Items included in Salary & OE Salaries: includes in these object head (i) Pay of officers, (ii) Dearness pay of officers, (iii) Dearness Allowance of Officers, (iv)Pay of establishment, (v) Dearness pay of establishment, (vi) Dearness Allowance of establishment, (vii) Bonus , (viii) Interim relief, (ix) Other allowances (CCA, HRA & other fixed allowances), (x) Children education allowances, (xi) LTC, (xii) Transport allowance. Other Expenses (2) includes in these object head (i) Local purchase of stationery, (ii) Liveries, (iii) Telephone & trunk calls, (iv) Furniture, (v) Service postage stamps, (vi) Purchase of books & publications, (vii) Office expenses and miscellaneous , (viii) Staff car, (ix) Water cooler, (x) Typewriter, (xi) Purchase of accounting machine, (xii) Charges paid to the State Government for Police Guards, (xiii) Hot and cold weather charges, (xiv) Electricity & water charges, (xv) Purchase of photo copier, (xvi) Purchase of computer & laser printer.

  21. PART II - Other Heads 7610 Loans to Panchayat Employees 8009 Provident Fund 8011 Insurance 8443 Civil Deposit 8550 Civil Advances 8658 Suspense Accounts 4000 Capital Receipts Capital Heads relate to Revenue Heads

  22. Preparation of Accounts • Budget in prescribed (new) classification. • Accounts : on cash basis • Period of accounts : Financial year. (1st April ending 31st March) • Data/ Reports through IT Applications, PRIASoft developed by NIC • Provision for all prescribed (8) Report formats.

  23. Simplified Accounting Procedure: • The accounts are prepared on cash basis i.e. a transaction is only recorded when cash is received or paid. • Period of accounts is a financial year as a period of 12 months ending 31st March in any year. • Daily transactions shall be recorded in Cash Book. • The receipts be recorded on receipts side and payments on payments side. • Every day the cash book shall be closed and Closing Balance worked out would then form the Opening Balance for next day. • Classification / head of account for each transaction shall be clearly mentioned. • Every day the details of transactions as recorded in the cash book. • Transferred to Register of Receipts if the transaction is receipts • Transferred to Register of Payments if it is payment. Contd..

  24. Simplified Accounting Procedure: • Bank Reconciliation: • At the end of the month the bank and treasury reconciliation should be completed. • Differences between cash book, bank and treasury balances are to be rectified. • Corrections should be made then & there in the Register of Receipts and Register of Payments. • Totals in Register of Receipts and Payments can be struck which would give the total expenditure under each head of account for the month. • Where PRIs and Bank / Treasury are computerized, online reconciliation with Bank/Treasury may be followed. Contd..

  25. Simplified Accounting Procedure: At the end of each month, totals of Receipts and Payments (upto object head level) are to be posted to the Monthly Receipts and Payment Account. The figure is added to previous month’s progressive total and the figures up to the end of the current month can be worked out in the Consolidated Abstract. Annual Receipts and Payment Account can be worked out at the end of the year. After closing of March Accounts, Reconciliation of Receipts and Expenditure figures with the Departments (online, where facility is available) should be carried out to detect any misclassification clear the unclassified transaction booked in the Suspense accounts and all transactions appearing as Transfer entries. The final progressive figure under each head be worked which completes the accounting process for that year. Receipts and Payment account is prepared on the basis of figures from the Consolidated Abstract. Contd..

  26. Simplified Accounting Procedure: The Budget of PRIs for the year be prepared by adopting the classification prescribed in the Receipts and Payment Account/ List of Codes for functions, programmes and activities prescribed. Refund of revenues/re-imbursement of expenditure of the current year is to be accounted as reduction of receipts/expenditure. Bank/Treasury Reconciliation Statements. Register of Receivable and Payable, Register of Movable and Immovable property, Register of Inventory, Register of Demand, Collection and Balance form integral part of the annual accounts. Maintenance of these register would help in subsequent switch over to the modified accrual system of accounting. Contd..

  27. Simplified Accounting Procedure: Rectification of error/ misclassification – Transfer Entry In the Monthly and Annual Accounts , any mistakes noticed after closure of the monthly accounts and before closure of annual accounts, it can be rectified as detailed here under: Example 1: A sum of Rs.1000/- being Property Tax collected in the month of June 2008 has been misclassified as Entertainment Tax and the mistake is noticed after the closure of Monthly Accounts in the month of December 2008. Solution:Minus Credit under MH 0045-101 (to be deducted) is posted in Register of Receipts with a small note for the minus credit. Credit is given under MH 0035-101 in Register of Receipts with a small note for the plus credit. This has to be done in the month in which the error/misclassification is noticed and rectified. Contd..

  28. Simplified Accounting Procedure: • Example 2: A sum of Rs.9000/- for the month of November 2008 towards payment of overtime allowance to Primary School Teachers of Education Department was misclassified as office expenditure of Primary Health Centre of Health Department. • This mistake is noticed after the closure of Monthly Accounts of November 2008. • Solution: Minus Debit (to be deducted from the expenditure of the head) is to be posted in the Register of Payments against the 2210-101-08-office expenses with a small note for the minus debit. • Similarly a contra debit is given in the Register of Payments against the 2202-101-03-overtime allowance with a small note for the contra debit to be done in the current month in which the error/misclassification is noticed and rectified. Contd..

  29. Simplified Accounting Procedure: Example 3 : If misclassification occurs in scheme expenditure and noticed after the closure of Annual Accounts and the items of expenditure are related to different schemes under Revenue/ Capital Heads. Solution : The progressive figures have to be changed by ‘+’ and ‘-’entries against the heads concerned in order to arrive the correct figures if the scheme are continued further next financial year. Contd..

  30. Simplified Accounting Procedure: • Example 4 : A GP received an advance of Rs. 10,000/- under BRGF>Development Grant from ZP for doing Deposit Work. GP may also have received its own funds under BRGF. While any expenditure incurred from its own BRGF funds will be booked under BRGF, how about expenditure incurred out of advance given by ZP? Will a separate head be required? • Solution : • When ZP gives advance to GP/BP for deposit works; • Payment – 8550-Civil Advance -102-Advance to Agencies for works & Supplies-10-BRGF - <object Head> Receivable -Rs.10000/- (UC or fund) • BP/GP receives the advance • Receipts – 8550-Civil Advance-102- Advance to Agencies for works & Supplies-10-BRGF.-Rs.10,000/-. Contd..

  31. Simplified Accounting Procedure: • Other Examples : • BP/GP make expenditure of Rs.8000/- and shall book under expenditure head i.e 2049 up to 3054 major head (Exp: for Construction of Road) • 3054-Transportation-101-Roads-10-BRGF-52-Cement Concrete Road – Rs.8,000/-. • BP/ GP shall have to book their expenditure of own BRGF (transfer) fund from ZP also in same head as mentioned above after receiving under the major head 1601-101-10-BRGF. • (Case Record no. is the only key to identify the exact amount of expenditure under that project/ deposit works) Contd..

  32. Simplified Accounting Procedure: • Refund of Advance • ZP gives an advance of Rs.10,000/- to BP/GP to do some deposit works. GP spends Rs.8,000 and completes the work and refunded the remaining Rs.2,000 to ZP. (Which heads of account will be debited and credited in the entire process?) • Answer: • BP/GP make the expenditure of Rs.8000/- and shall book under expenditure head i.e 2 or 3 1st digit of major head (Example for Construction of Road) (3054- Transportation-101-Roads- 10-BRGF-52-Cement Concrete Road – Rs.8000/-) • Refund- Payment : 8550-Civil Advance-102- Advance to Agencies for works & Supplies-10-BRGF – <Object Head> - Advance Payable - Rs.2000/- & U.C for Rs.8,000/- • ZP –Receipt: 8550-Civil Advance-102- Advance to Agencies for works & Supplies-10-BRGF –<Object Head> Receivable- Rs.2000/- & UC for Rs.8,000/-

  33. Data Maintenance/ 8 - Formats Format I : Monthly/Annual Receipts & Payment Accounts Format II : Consolidated abstract register Format III : Reconciliation Statement with Bank and Treasury Format IV : Statement of Receivable and Payable Format V : Register of Immovable of Property Format VI : Register of Movable property Format VII: Inventory Register Format VIII: Register of Demand, Collection and Balance Above formats designed to facilitate Switch Over to Accrual System

  34. INSTRUCTIONS FROM P.R. DEPARTMENT

  35. INSTRUCTIONS FROM P.R. DEPARTMENT

  36. Steps taken so far • Creation of master treasury along with DDO and TC code. • Creation master of all the banks functioning in along with MICR, RTGS and BSR Code details. • Account-wise balance of each scheme and each bank account as on 1.4.2010. • Advances against all, including • current and old employees, • executants and agencies including line department has to be recorded and entered in to the application to arrive at current and correct level of money being available at each tier and with each unit of PRIs. • The cheque book details including cheque LEAF NUMBER be entered to facilitate transaction at later date. • The old practice of “release to the block” by DRDA being shown as expenditure or advance and becoming eligible for subsequent installment is no longer true. • Unless we do it now and right now, we may be caught and loose the Government money despite good work at field level.

  37. Steps taken so far • Transfer Entry • Release from DRDA to Block and from Block to GP is a transfer entry & vice -versa • Can be treated as utilised only when the voucher of payment to the case record is recorded in the system. • Advantage of new PRIASoft • Total availability of fund. • Unspent funds of various closed schemes under PRIs • Additional Connectivity • If required, any other connectivity tool from BSNL or any other service provider can be availed out of 6% contingency available in MG NREGA • Capacity Building • Training-cum-awareness generation workshop” for all the GRS and CPs at block level . • Performance based Incentives • Online entry is one of the conditions for gettingRs.897 crores under 13th FCA.

  38. Thanks …. Simplified Accounting Structure for PRIs

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