Simplified Accounting Structure for PRIs

Overview of Model Accounting System for Panchayats

http://accountingonline.gov.in

Government of Orissa Panchayati Raj Department www.orissapanchayat.gov.in

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 getting Rs.897 crores

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

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. Cant be integrated with NREGSoft, PlanPlus, AwasSoft at National Level.

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.

Need of Standardised Formats

Preparation of Budget.

Analysis of Expenditure.
Maintenance of Accounts. Reporting for Auditing.

Self disclosure of financial transactions

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.

Major head of Accounts

Part I Consolidated Fund Major Head Section I Receipt Head (Revenue Account ) Section II Receipt Head (Capital Account) Expenditure Head ( Capital Account) Section III Public Deptt., Loan & Advance Part-II Part III Contingency fund Public Account Code No. 0020-1999 4000 4046-5999 6001-7999 8000 8001-8999

Expenditure Head (Revenue Account) 2011-3999

Allotment of Code to each major head

First digit 0 or 1 Head of Account represent Revenue receipt. 2 or 3 Revenue Expenditure 4 or 5 Capital Expenditure 6 or 7 Loans & Advances field 4000 Capital Receipt

8000 Contingency fund and public fund

3-Tier classification
Major Head: 4 digit 1st tier
Relates to Functions given in 11th Schedule

23 Major Heads
Minor Head: 3 digit Programs/ Unit within Functions

2nd

tier

3rd

tier

Object Head: 2 digit Item of Receipt/ Expenditure

Part-I Panchayat Fund

Receipts Revenue Receipts (0-1) - Tax Receipts *Taxes on Profession, Land revenue, etc Payments Revenue Expenditure (2-3) -2049 Interest payment -2059 Maintenance of Community Assets, etc

-Non-Tax Receipts * Interest eared, etc

Capital Receipts (4000) Capital Expenditure (4-5) -Other Receipts (800) Part-II -Loan Section CAG of India 12/24/2013 - Provident fund & Pension

Part-II Provident fund & etc

Receipts (7000-8999) Loan Section -Loan Section-7610 Pension & Provident Section - Provident fund & Pension
(8009)

Payments (7000-8999) Loan Section -Loan Section-7610 Pension & Provident Section - Provident fund & Pension
(8009)

Insurance & Pension Section -Insurance (8011) Deposits & Advance Section -Civil Deposits (8443) -Civil Advances (8550) Suspense Account CAG of India - Suspense Accounts (8658)

Insurance & Pension Section -Insurance (8011) Deposits & Advance Section -Civil Deposits (8443) -Civil Advances (8550) Suspense Account 12/24/2013 - Suspense Accounts (8658)

Exception to 3-Tier
Central Schemes assigned 2-digit sub-heads & State Scheme Alpha-numeric 2-digit subhead: Receipts Payments 1601- Grants in aid 101-Grants from GOI 15- NRHM 02- Wages (object head) 2210-Health and Sanitation 101-Primary Health Centre 15-NHRM 02-wages (object head) 12/24/2013

CAG of India

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..

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.

Major Heads
Agriculture Soil and Water Conservation Rural Housing Water Supply and Sanitation Animal Husbandry, Dairying, Poultry and Fuel and Fodder Transportation

Minor Irrigation
Animal Husbandry, Dairying, Poultry and Fuel and Fodder Fisheries Forestry and Minor Forest Produce Village and Small Scale Industries

Rural Electrification
Non-conventional Sources of Energy

Poverty Alleviation Programme

Contd..

Major Heads
Education Technical Training and Vocational Education Art, Culture and Libraries Market and Fairs 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

Health and Family Welfare

Water Supply and Sanitation Women and Child Welfare

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

Standardised Sub-Heads for Some Central Schemes

Scheme Code (Sub Head)

Scheme Description Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) Sampoorna Gramin Rozgar Yojana (SGRY)

11 12

13 14 15 16 17
18 19 20 21 22

Swaranjayanti Gram Swarozgar Yojana(SGSY) Indira Awas Yojana (IAY) National Rural Health (NRHM) Accelerated Rural Water Supply Programme (ARWSP) Total Sanitation Campaign
Mid Day Meal Scheme Sarva Shiksha Abhiyan Pradhan Mantri Gram Sadak Yojana (PMGSY) Integrated Watershed Management Programme Integrated Child Development Services (ICDS)

Standardised Object Head

01 Salaries (1) 02 Wages 03 Overtime Allowance 04 Pensionary charges 05 Honoraria

11 Printing 12 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..

06 Medical treatment
07 Travel Expenses 08 Office Expenses (2) 09 Rent, Rates and Taxes 10 Audit Fee

Standardised Object Head

19
20 21 22 23

Subsidies
Share of taxes / duties Motor Vehicles/hiring charges Machinery and Equipment Major Works

24
25 26 80

Write off / losses

Deduct recoveries Maintenance Other Expenditure

Items included in Salary & OE

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

PART II - Other Heads

7610 8009 8011 8443 Loans to Panchayat Employees Provident Fund Insurance Civil Deposit

8550
8658

Civil Advances
Suspense Accounts

4000

Capital Receipts

Capital Heads relate to Revenue Heads

 FORMAT-I: Cash Book of Receipt & Expenditure

See Rule 100,108,133(1), 133(3), 138,206(e), 206(j), 234,236(b))

Formats Prescribed by CAG for PRIs

(See Rule 100 (2),120,234, 236(b))

FORMAT-II: Consolidated Abstract Register

FORMAT-III: Reconciliation Register

(See Rule 119(2),134|(a), 234,236(b))

FORMAT-IV: Receivable and Payable Register

(See Rule 43(1), 100 (3),138,234,236(b))

FORMAT-V :Register of Immovable Property

FORMATVI:Register of Movable Property
(See Rule 55, 66(3), 71,143, 234,236(b) )
(See Rule 55, 66(3), 71, 234,236(b)) (a) Road (b) Land Others

FORMAT-VII :Inventory Register

(Rule 32(6), 143, 234,236(b))

FORMAT-VIII :Demand Collection & Balance Register

(See Rule 118(1),206(f), 234,236(b))

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.

Simplified Accounting Procedure:

a) The accounts are prepared on cash basis i.e. a transaction is only recorded when cash is received or paid. b) Period of accounts is a financial year as a period of 12 months ending 31st March in any year. c) 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.

d) 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..

Simplified Accounting Procedure:

e) 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..

Simplified Accounting Procedure:

f) 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. g) The figure is added to previous months progressive total and the figures up to the end of the current month can be worked out in the Consolidated Abstract. h) Annual Receipts and Payment Account can be worked out at the end of the year. i) 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. j) Receipts and Payment account is prepared on the basis of figures from the Consolidated Abstract.
Contd..

Simplified Accounting Procedure:

k) 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.

l)

Refund of revenues/re-imbursement of expenditure of the current year is to be accounted as reduction of receipts/expenditure.

m) 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. o) Maintenance of these register would help in subsequent switch over to the modified accrual system of accounting.

Contd..

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..

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..

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..

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 inc urred 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..

Simplified Accounting Procedure:

Other Examples : BP/GP make expenditure of Rs.8000/- and shall book under any expenditure head from 2049 up to 3054 major head as it is a untied fund (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..

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: i. Expenditure : BP/GP make the expenditure of Rs.8000/- and shall book under expenditure head i.e 1st digit either 2 or 3 of major head (Example for Construction of Road) (3054- Transportation-101-Roads- 10-BRGF-52Cement Concrete Road Rs.8000/-)

ii. Refund of Advance by G.P- Payment : 8550-Civil Advance-102Advance to Agencies for works & Supplies-10-BRGF <Object Head> Advance Payable - Rs.2000/- & U.C for Rs.8,000/-.
iii. ZP Receipts the refunded Advance by ZP Receipt: 8550-Civil Advance-102- Advance to Agencies for works & Supplies-10-BRGF <Object Head> Receivable- Rs.2000/- & UC for Rs.8,000/-.

INSTRUCTIONS FROM P.R. DEPARTMENT

Sl. No. Letter No. and Date Subject

Maintenance and Rationalisation of Gram Panchayat Accounts - Uploading of daily financial 1385 transactions of two GPs from each Block for the 14-01-2010 month of December,2009 in PRIASoft on pilot basis along with instruction manual. Maintenance and Rationalisation of Gram 5999 Panchayat Accounts Administrative Readiness, 25-02-2010 Proposed job of Chartered Accountant Firms. Maintenance of daily financial transactions and 15987 Organizing State Level sensitization workshop on 31-05-2010 rd 3 June, 2010.

INSTRUCTIONS FROM P.R. DEPARTMENT

Sl. No. Letter No. and Date Subject

PRIASoft Data Entry Master Data Entry, 18488 training-cum-awareness generation workshop 25-06-2010 of GRS. 25340 Maintenance of Accounts in 8-formats 30-08-2010 prescribed by CAG. 26810 Uploading of Financial Transactions (Vouchers) 13-09-2010 in PRIASoft from 1st April 2010.

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.

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 getting Rs.897 crores under 13th FCA.

Simplified Accounting Structure for PRIs

Thanks .

Government of Orissa Panchayati Raj Department www.orissapanchayat.gov.in