Accounting Education & Research with reference to
government accounting and audit


By
Dr. Vijay Pithadia
Assistant Professor & Kidevices Chair
School of Management Studies
Shri Lauva Patel Trust College For Women
Amreli-365 601 GJ
&
Dr. M. Gunasekaran
Asst. Professor in Management
Karpagam Institute Of Management
Karpagam Arts & Science College
Coimbatore–21
 


Abstract:
Business and merchant accounting methods are different than government accounting system because government accounting system is ruling over the nation and keeps various departments i.e. production, service utility or entertainment industry etc. The operations of department of government some times include under talking of a commercial or quasi-commercial character and industrial factory or a store. It is still necessary that the financial results of the undertaking should be expressed in the normal commercial form so that the cost of the services or undertaking may be accurately known. In the government account there are few problems affected adversely. In the case of central and stat government transaction communication procedure, bank accounts and uniformity are improper. In the paper i suggested central and stat government should adopt t fully computerized accounting system in routine procedure of all transactions and adopted accounting system should b familiar with global accounting standards. Improvement programs i.e. symposium, seminar is helpful for sustaining the accounting system. Graduate level accounting syllabus should be modified as per government accounting procedure and methods.

Key Words:
Controller General of Accounts, Consolidated Fund, Contingency Fund, and Public Accounts

Availability of Data:
Quoted data and information are available from public sources, which are mentioned in references.

Acknowledgement:
I reconcer P G Bhati [The Oriental Insurance Co Ltd],Nishith Bhatt [S K School of Business Management],R K Balyan [Gujarat Vidya Bharati Education Academy],Raju M Rathod [P G Department of Business Studies], P M Mungalpara [S B I Life Insurance Co Ltd], Anand P Mankodia [U V Patel College of Engineering], Dinesh Kanani [Shree Stationers] , Patricia A Bryant [Research Frontiers Incorporated], Yashwant Solanki [Yojna – Gujarati], David Jamison [South Carolina State University], M M Kothari [The Economic Challenger], Krishna Chaitanya V [Dhruva College of Management], D P S Verma [University of Delhi], A Kumar [Bhavnagar University], Ramji Shiyani [Junagadh Agricultural University], P F Kotur [J N Medical College & K L E S Hospital & M R C], Masooma Bharmal [The Times of India], R K Prabhakar [Sardar Patel University], Matin Khan [University of Lucknow], M R Bansal [Dr. Bhim Rao Ambedkar University, Agra], H S Ballal [Manipal Academy of Higher Education], S P S Virdi [Punjabi University], A K Koul [National Law University], N Balasubramanian [Bharthiar University], S Sundaramurhty [jaya Engineering College], B Sudhakar [G R G School of Management Studies], Naresh Kumar B N [Alliance Business Academy], Virat Dhebar [TUV SUD Group], Bret L Undem [Acacia Research Corporation], Manish Shah [L J College] & Achuyat Patel [M T Dhamsania] for conception & remarks. I appreciate the efforts of my MBA students Parul Bhati, Poonam Bhalara, Vasanti Boricha, Seema T P, J Nithya, Sabira Ali,Aiswarya Murli, Bindu Thomas, Tripti Kishan, Rajni Sethu Madhavan, Shabana Sidique, Shreeja K Subhash, & Namita Valsraj for research coad juvancy.

Prologue:
In the world there are number of accounting method are used. Business and merchant accounting methods are different than government accounting system because government accounting system is ruling over the nation and keeps various departments i.e. production, service utility or entertainment industry etc. government accounting system is wider than the any specific company accounts. In the paper I would like to discuss about Indian government accounting procedure & methods as well as few important problems. For same purpose first of all I discussed the definitions related to government accounting system:

[1] Controller General of Accounts: CGA designation are used in Ministry of Finance, Department of Expenditure and responsible for prescribing the form of accounting of the union and states and to frame or revise, rules and manuals relating there to on behalf of the president of India in terms of article 150 of the constitution of India.
[2] Consolidated Fund: Consolidated fund of Indian or of a state referred to in clause (1) of article 266 of constitution or of a union territory government referred to in section 47 of the union territories act 1963 or all the three as the context may imply.
[3] Contingency Fund: Contingency fund of India established in pursuance of clause (1) of article 267 of the constitution or the contingency fund of a state established in pursuance of clause (2) article 267 of constitution.
[4] Government: Means the central union government or state government or union territory government or all the three as the context may imply.
[5] Public Accounts: Means public accounts of India or state government referred in clause (2) of article 266 of the constitution or both as the context may imply.

General Outline of the system of accounts:
There are basically two parts, one related to central government and other related to state government:

(1) Central government and union territory administration:
(a) All receipts is on behalf of the central government shall be paid in to the bank. Drawls are on behalf of the central government from the bank shall made by cheque drawn thereon. There shall be accounted for by the bank as receipt and payments on behalf of the concerned Ministry and or department of the central government.
(b) At present some miscellaneous receipt and transactions take place at state treasuries. Such transactions excluding those pertaining to civil pensions are accounted for by the treasuries in the state section of accounts under head 8658 suspense accounts for necessary cash settlement with the account officer concerned.
(c) Officers of the civil ministries department of the central government who are allowed to pay their receipt in the consolidated fund or public accounts in lump for expenditure or from the contingency fund It shall submit detailed accounts of their transactions to their respective account officer.
(d) Received accounts from the bank and department officer and from the book adjustment initiated in an account officer.
(e) The pay and account officer will send to his/her principal office in the ministry department or union territory administration a monthly-complied account.
(f) In respect of central transaction taking place at state/central treasuries account are at present maintained by SAG
(g) The cash balance of central government in the books of CGA at close of each month will be reconciled with the statements of closing cash balance.

(2) State government and union territory administration:
(a) All receipts are on behalf of each state government and on behalf of each union territory shall be paid into its treasury or the banks.
(b) Receipts realized in the public works, forest and any other department, which may be authorized on behalf and shall be paid into a treasury or the bank in lump.
(c) Payments are on behalf of state government and on behalf of union territory shall ordinarily be made either at its treasury or the bank.
(d) At the beginning of each month each Accountant General will receive from the treasuries under his/her jurisdiction monthly account supported by the requisite schedules, vouchers in receipt of transactions.
(e) From the account furnished by the treasury and civil department officers are referred to in clause (b) and (c) above.
(f) The transaction relation to department, deposit and remittance head's appearing in the treasury cash account and list of payments and in the department and other abstracts will be collected for the whole circle of accounts under each head of accounts.
(g) The Accountant General concerned will submit a copy of the monthly account of each state government.

Performa Accounts:
The operations of department of government some times include under talking of a commercial or quasi-commercial character and industrial factory or a store. It is still necessary that the financial results of the undertaking should be expressed in the normal commercial form so that the cost of the services or undertaking may be accurately known. This implies the maintenance of suitable capital. Manufacturing, trading and profit & loss account and as the government system of accounting being on a purely cash basis is unsuitable for each commercial accounts. They will usually be kept on a Performa basis outside the general accounts of Government of India. The department authorities shall maintain these Performa accounts themselves in such form as may be prescribed.

Basic Structure of the form of the accounts:

(1) Period of Accounts:
The annual accounts of the central, state and union territory government shall record transactions, which take place during financial year running from 1st April to 31st March.

(2) Cash basis Accounts:
With the exception of such book adjustments as may be authorized by these rules on the advice of the CAGI The transaction in government accounts shall represents the actual cash receipt and disbursement during a financial year.

(3) Currency in which accounts are kept:
The account of government shall be maintained in Indian currency i.e. rupee

(4) Form of Accounts:
There are mainly three parts i.e. consolidated fund, contingency fund and public account.

In consolidated fund there are two divisions i.e. revenue consisting of section for receipts heads [Revenue Accounts] and expenditure heads [Revenue Accounts] capital, public debts, loan consisting of section of receipts heads [capital accounts] where as contingency fund accounts shall be recorded to the transactions connected with the government set up under article 2670 of the constitutional section 48 of the union territory act 1963 Public account transactions relating to the debt deposit, advances, remittances and suspense shall be recorded.

Problems of government accounting:
In the government account there are few problems affected adversely. In the case of central and stat government transaction communication procedure, bank accounts and uniformity are improper. Compare with private and merchant accounting, government accounting having primarily procedure, as well as loops of numbers of business laws therefore it becomes infective in real situation.

Suggestions for Improvement:
Central and stat government should adopt fully computerized accounting system in routine procedure of all transactions and adopted accounting system should b familiar with global accounting standards. Improvement programs i.e. symposium, seminar is helpful for sustaining the accounting system. Graduate level accounting syllabus should be modified as per government accounting procedure and methods. University Grants Commission [UGC] and All India Council for Technical Education [AICTE] Deleting unusual business laws should suggest it because they create more problems in routine government transaction. Reduce communication gaps between central, union territory and state government accounting system. Thus accounting system should be simple, high speed and adopted appropriate accounting model of accounting standards for government system.

Conclusion:
In the age of globalization Indian government accounting system has a wide range of characteristics, laws and connection with all state government accounting system. Some basic problems should be improved harmoniously for effectiveness of government accounting systems in reality.

References:
# Bidwai, Chenoi & Ghosh, " India under Seize"
# CAGI, "Accounting Code Vol. -1", 1st Edition
# CAGI, "Accounting Code Vol. -4", 1st Edition
# Frank Wood, "Business Accounting", 5th Edition, Pitman publishing, London
# MJK Thavaraj, "Financial Management of Government"
# Ministry of Finance Department of Expenditure Controller General of Accounts," Government Rules - 1990", Revised Edition.
 


Dr. Vijay Pithadia
Assistant Professor & Kidevices Chair
School of Management Studies
Shri Lauva Patel Trust College For Women
Amreli-365 601 GJ
&
Dr. M. Gunasekaran
Asst. Professor in Management
Karpagam Institute Of Management
Karpagam Arts & Science College
Coimbatore–21
 

Source: E-mail June 25, 2005

 

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