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GOVERNMENT ACCOUNTS AND BUDGET- AN OUTLINE

GOVERNMENT ACCOUNTS AND BUDGET- AN OUTLINE. GOVERNMENT ACCOUNTS. 1.Accounts of Union Government - showing receipts and disbursements, surplus or deficit generated and changes in Govt. liabilities and assets shown- every year

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GOVERNMENT ACCOUNTS AND BUDGET- AN OUTLINE

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  1. GOVERNMENT ACCOUNTS AND BUDGET- AN OUTLINE

  2. GOVERNMENT ACCOUNTS 1.Accounts of Union Government - showing receipts and disbursements, surplus or deficit generated and changes in Govt. liabilities and assets shown- every year 2.Comptroller and Auditor General of India – certifies and submits to President of India 3.Laid in each House of Parliament.

  3. Government Accounts(contd) 4.Principles of Accounting prescribed in Government Accounting Rules, 1990 5.Subsidiary accounts by Department of Posts - separate Accounts Manuals 6.Cash Based Accounting – actual cash receipts and disbursements 7.Switching over to Accrual Based Accounting [ income/expenditure “recognized” ] under process

  4. Main Divisions and structure of Government Accounts • Consolidated Fund of India ( Part-I ) • Contingency Fund of India ( Part-II ) • [Transactions relating to Contingency fund] • Public Account ( Part –III ) • [Transactions relating to Debt, Reserve Funds, Deposits, Suspense, Remittances and cash balances]

  5. Consolidated Fund Revenue Capital Receipt Heads (Revenue A/c) Receipt Heads (Capital A/c) Expenditure Heads (Revenue A/c) Expenditure Heads (Capital A/c) Public Debt, Loans And Advances etc Divisions and Structure of Accounts

  6. Classification of transactions Major Head [ Correspond to functions of Govt ] Sub Major Head Minor Head [ Identify the programs ] Subordinate Head or Sub Head [ Represent Schemes ] Detailed Head [ Denotes sub – Scheme ] Object Head [ represents the primary unit of appropriation ] Divisions and Structure of Accounts

  7. ACCOUNT CODE • 1.15 Digit code is introduced to classify the account code heads properly which comprises the following fields. • 2. Major head 4 digits Sub Major head 2 digits Minor head 3 digits Sub Minor head 2 digits Detailed head 2 digits Object head 2 digits

  8. ACCOUNT CODE • Major Head 3201-Postal services • 01-General Administration • 02-Operation • 03-Agency services • 04-Audit &Accounts • 05-Engineering • 06-Amenities to staff • 07-Pension • 08-Stationery and printing • 09-Other Expenses

  9. ACCOUNTCODE • 1201-Revenue Receipt Head • 3201-Revenue Expenditure Head • 5201-Capital Head • Expenditure relating to CO is booked as follows

  10. BUDGET • 1.It is an estimate of the income and expenses needed to carry out programmes for a financial year in respect of a particular organisation. • 2.It can provide guidelines for managing the future investments and expenses. • 3.Financial year starts from April and ends in March. The current financial year is 2011-12. • 4.Normally, budget allotment is received during the month of June in a financial year

  11. Preparation of Budget Statement • 1.The following statements are used to prepare the budget in respect of a financial year. • 2.Head Office will prepare ‘A Statement’ monthly and submit to Divisional Office. • 3.Divisional Office will prepare ‘B Statement’ monthly after consolidating the ‘A Statement’ of the HOs in their jurisdiction and submit to Regional Office. • 4.Regional Office will consolidate the ‘B Statements’ received from the divisions under their jurisdiction and submit to Circle Budget. • 5.With the help of the above statements, the budget statements i.e. RE-BE statements, AFG statements and Variation statements are prepared at all levels. • 6.Whenever budget statements are prepared, the amount should be shown in thousands only. • 7.All the budget statements should be prepared separately for plan and non-plan

  12. What is RE-BE? • 1.RE means Revised Estimate and BE means Budget Estimate. • 2.The RE-BE statements are prepared during the month of September and submitted to RO by DO on or before 12 th September. • 3.The revised estimates are prepared by the Divisional Office for the current financial year based on the expenditure for the months from April to August. • 4.The budget estimate is for the next financial year and it will be prepared anticipating the expenditure by analysing the expenditure of the previous years.

  13. What is AFG? • AFG means Anticipated Final Grant. • The AFG statements are prepared during the month of January and submitted to RO by DO on or before 06 th February • The AFG statements are prepared by the Divisional Office based on the expenditure for the months from April to January • While preparing the AFG statements, the Divisional Office Accountant should be more cautious to ensure accuracy. • The revised allotments are normally received during the middle of January. • The final grants are normally received during the end of February or in the first week of March.

  14. Basic guidelines for incurring expenditure 1.The expenditure should always be proportionate to the total allotment. 2.By the end of December, 67% of the allotment should be spent. 3.Divisions are not allowed to spend more than 33% during the last quarter unless they receive any fresh allotment in the final grant.

  15. Basic guidelines for incurring expenditure • 1.When excess funds are available, all the funds should be surrendered to RO before 10th of March. The surrendered funds can be utilised by the needy divisions/regions. • 2.Rush of expenditure during the final stage of financial year should be avoided. • 3.Whenever expenditure exceeds the allotment, the divisional head should proper action to get additional funds from RO. • 4.In case of emergency, the DO has to address RO/Budget and get the clearance for spending any expenditure above the allotment. • 5.Otherwise, the divisional head will be held responsible for such excess expenditure.

  16. What is variation statement? • 1.The statement compares the final expenditure of a financial year with reference to original allotment as well as final allotment. • 2.For example, in a financial year, in respect of 02-101-01 Wages the original allotment is Rs.3 lakhs and final grant is Rs.4 lakhs. If the expenditure is Rs.4,00,500, the divisional head has to explain the reason for variation as follows: • Expenditure 4,00,500 Original allotment 3,00,000 • Variation 1,00,500 (1) • Expenditure4,00,500 Final Grant 4,00,000 Variation500 (2) • The reason for variation in respect of (1) and (2) has to be explained by the divisional head.

  17. Appropriation of Accounts • 1.The powers to appropriate funds within the object head rest with Chief PMG. • 2.The appropriation at Circle level is done at the time of preparation of AFG statements. • 3.Hence, the Divisional Heads should be more careful at the time of preparation of AFG and they have to surrender the unwanted funds. Such funds can be properly appropriated and allotted to divisions/regions by the Chief PMG. • 4.Even after appropriation, if excess funds are available, that will be surrendered directly to Directorate by the Circle Budget. • 5.Chief PMG is not competent to appropriate funds under OTA, Railway Haulage Charges, Pensionery funds, funds under printing heads.

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