government of orissa panchayati raj department overview of model accounting system for panchayats

Government of OrissaPanchayati Raj Department

www.orissapanchayat.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.

• 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.» Can’t 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 Eexpenditure.

• Maintenance of Accounts.

• Self disclosure of financial transactions.

• Reporting for Auditing.

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.

3-Tier classification

04/19/23CAG of India

Part-I –Panchayat FundReceipts Payments Revenue Receipts (0-1) Revenue Expenditure (2-3)

- Tax Receipts *Taxes on Profession,

Land revenue, etc

-2049 Interest payment -2059 Maintenance of Community Assets, etc

-Non-Tax Receipts * Interest eared, etc

Capital Receipts (4000) -Other Receipts (800)

Capital Expenditure (4-5)

Part-II -Loan Section - Provident fund & Pension -Insurance -Civil Deposits & Advances - Suspenses Accounts


Part-II –Provident fund & etc

Receipts (7000-8999) Payments (7000-8999)

Loan Section -Loan Section-7610Pension & Provident Section - Provident fund & Pension (8009)Insurance & Pension Section -Insurance (8011)Deposits & Advance Section -Civil Deposits (8443) -Civil Advances (8550)Suspense Account - Suspense Accounts (8658)

Loan Section -Loan Section-7610Pension & Provident Section - Provident fund & Pension (8009)Insurance & Pension Section -Insurance (8011)Deposits & Advance Section -Civil Deposits (8443) -Civil Advances (8550)Suspense Account - Suspense Accounts (8658)


• Central Schemes assigned 2-digit sub-heads & State Scheme Alpha-numeric 2-digit subhead:

Exception to 3-Tier

Receipts Payments

1601- Grants in aid 2210-Health and Sanitation

101-Grants from GOI 101-Primary Health Centre

15- NRHM 15-NHRM

02- Wages (object head)

02-wages (object head)

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 HeadsAgriculture

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..

Major HeadsEducation

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

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

11 Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)

12 Sampoorna Gramin Rozgar Yojana (SGRY)

13 Swaranjayanti Gram Swarozgar Yojana(SGSY)

14 Indira Awas Yojana (IAY)

15 National Rural Health (NRHM)

16 Accelerated Rural Water Supply Programme (ARWSP)

17 Total Sanitation Campaign

18 Mid Day Meal Scheme

19 Sarva Shiksha Abhiyan

20 Pradhan Mantri Gram Sadak Yojana (PMGSY)

21 Integrated Watershed Management Programme

22 Integrated Child Development Services (ICDS)

Standardised Object Head01 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

12Other 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 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

Standardised Object Head

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.

Items included in Salary & OE

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

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..

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..

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 month’s 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..

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..

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..


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..

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..

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..


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. 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/-)

ii. 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/-

iii. ZP –Receipt: 8550-Civil Advance-102- Advance to Agencies for works & Supplies-10-BRGF –<Object Head> Receivable- Rs.2000/- & UC for Rs.8,000/-

•

Data Maintenance/ 8 - Formats

1. Format I : Monthly/Annual Receipts & Payment Accounts

2. Format II : Consolidated abstract register

3. Format III : Reconciliation Statement with Bank and Treasury

4. Format IV : Statement of Receivable and Payable

5. Format V : Register of Immovable of Property

6. Format VI : Register of Movable property

7. Format VII: Inventory Register

8. Format VIII: Register of Demand, Collection and Balance

Above formats designed to facilitate Switch Over to Accrual System

Sl. No.

Letter No. and Date Subject

1 1385 14-01-2010

Maintenance and Rationalisation of Gram Panchayat Accounts - Uploading of daily financial transactions of two GPs from each Block for the month of December,2009 in PRIASoft on pilot basis along with instruction manual.

2 5999 25-02-2010

Maintenance and Rationalisation of Gram Panchayat Accounts – Administrative Readiness, Proposed job of Chartered Accountant Firms.

3 15987 31-05-2010

Maintenance of daily financial transactions and Organizing State Level sensitization workshop on 3rd June, 2010.

INSTRUCTIONS FROM P.R. DEPARTMENT

Sl. No.

Letter No. and Date

Subject

4 1848825-06-2010

PRIASoft Data Entry – Master Data Entry, training-cum-awareness generation workshop of GRS.

5 2534030-08-2010

Maintenance of Accounts in 8-formats prescribed by CAG.

6 2681013-09-2010

Uploading of Financial Transactions (Vouchers) in PRIASoft from 1st April 2010.

INSTRUCTIONS FROM P.R. DEPARTMENT

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.

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.

Steps taken so far

Government of OrissaPanchayati Raj Department

www.orissapanchayat.gov.in

Thanks ….

Simplified Accounting Structure for PRIs

government of orissa panchayati raj department overview of model accounting system for panchayats

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