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Preparing the Financial Preparing the Financial Records/Statements/Detai Records/Statements/Detai ls- ECR/Valuable ls- ECR/Valuable Register/Cash Register/Cash Book/Ledger/BRS/Receipt Book/Ledger/BRS/Receipt & Payment Account & & Payment Account & Additional Information Additional Information 1

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  1. 1. Preparing the FinancialPreparing the Financial Records/Statements/Details-Records/Statements/Details- ECR/Valuable Register/CashECR/Valuable Register/Cash Book/Ledger/BRS/Receipt &Book/Ledger/BRS/Receipt & Payment Account &Payment Account & Additional InformationAdditional Information 11
  2. 2. 22 Accounting basically means : The process of identifying, measuring, recording, classifying, summarising, analysing, interpreting and communicating the financial transactions and events in monetary terms. OBJECTIVES OF ACCOUNTING To keep systematic records To ascertain the net effect of financial operation e.g. surplus or deficit To know the financial position of the institution for the Internal control To provide information to DGCA, MHRD and Parliament
  3. 3. Accounts broadly means reflection of Receipts and Payments under the relevant & prescribed heads i.e. entering the classified Receipts & Payments and drawing Receipt & Payment Account , Income & Expenditure Account and Balance Sheet therefrom.
  4. 4. Receipts Payments Recoveries & Remittances
  5. 5. As and when a receipt is occurred or payment is made Voucher is to be created for each such transaction. All these vouchers are to be entered in their respective control registers (valuable register in respect of receipts and expenditure control/advance register in respect of payments) before its required deposits and payments.
  6. 6. 66 CLASSIFICATION OF EXPENDITURE The account will be classified under the broad classification heads indicating the expenditure programme-wise/activity-wise as per the heads precribed in the Budget estimates. The correct classification of expenditure as well as receipt therefore, is of paramount importance and a pre-requisite for evaluation of the financial performance.
  7. 7. 77 Suitable instructions for ensuring proper classification may have to be issued to the subordinate offices for maintaining programme- wise expenditure details. The bills submitted by the respective departments will be subjected to cent per cent scrutiny at the finance & accounts with reference to the transaction appearing in the supporting sub- voucher attached therewith so that correctness of the classification recorded is ensured and the results based thereon are reliable.
  8. 8. 88 Capital Expenditure and Revenue Expenditure Capital Expenditure : All Non-recurring expenditure made for purchase of Capital (basically movable & immovable assets) items are called Capital Expenditure For Example: Purchase of Land, Xerox Machine, UPS etc. Revenue Expenditure : All Recurring expenditure for day to day maintenance of the Office are Revenue Expenditure For example : Salary, Repair of equipment, Rent, Electricity charges, remuneration to staff etc.
  9. 9. IGNOU Regional CentreIGNOU Regional Centre Bill Passing cum ExpenditureBill Passing cum Expenditure Control RegisterControl Register S. No. Diary No. & Date of Receipt of bill in IGNOU, RC Learner Support Centre where from bill is received Name of Party/details of bill NO. & Date Bill Amount TDS SD Net Amount Head of Account Signature of AR/DR with date Cheque/ DD No. with date Remar ks
  10. 10. Valuable Register for AdmissionValuable Register for Admission Section/Finance & AccountsSection/Finance & Accounts Section at the Regional CentreSection at the Regional Centre S. No. DD No. Date Amount Bank Name Name of Student Progra mme Date of Deposit
  11. 11. 1212 CASH BOOK FEES ACCOUNT/SALE OF FORM/OTHER RECEIPTS FROM STUDENTS Month & Date Vr. Particulars of receipts & from whom received Receipt No. Chq/DD No. Amt. Cash Bank Ledger 1-04-131-04-13 2R2R FeesFees 562134562134 10,00,0010,00,00 00 -- IDBIIDBI 11 2-04-132-04-13 3R3R Sale of FormSale of Form 2645326453 5,0005,000 -- PNBPNB 22 3-04-133-04-13 4R4R Dup.I-CardDup.I-Card 8454184541 200200 -- SBISBI 33
  12. 12. 1313 CASH BOOK REMITTANCE SIDECASH BOOK REMITTANCE SIDE Month &Month & DateDate Vchr.No.Vchr.No. ParticulaParticula rs ofrs of PaymentPayment Chq.No/Chq.No/ AdviceAdvice No.No. Amt.Amt. CashCash BankBank LedgerLedger Folio/PaFolio/Pa ge No. 30-04-1330-04-13 9 P9 P Trnsfr.Trnsfr. To Hqtr.To Hqtr. 001001 10052001005200 -- IBIB 2424
  13. 13. 1414 CASH BOOK GRANT ACCOUNTCASH BOOK GRANT ACCOUNT RECEIPTS SIDERECEIPTS SIDE MonthMonth & Date& Date Vchr.No.Vchr.No. ParticularsParticulars of receiptsof receipts & from& from whomwhom receivedreceived ReceiptReceipt No.No. Chq.No./Chq.No./ CreditCredit Adv.No.Adv.No. AmtAmt CashCash BankBank LedgerLedger Folio/PaFolio/Pa ge No. 1-4-131-4-13 1-R1-R 11stst Qtrly.Qtrly. GrantGrant 112112 10000001000000 -- PNBPNB 55 30-4-1330-4-13 7-R7-R Int. fromInt. from BankBank 120120 20002000 -- PNBPNB 66
  14. 14. 1515 PAYMENT SIDEPAYMENT SIDE MonthMonth & Date& Date VoucherVoucher No.No. ParticularsParticulars ofof paymentpayment Chq.No.Chq.No. Amt.Amt. CashCash BankBank LedgerLedger Folio/Page No.Folio/Page No. 2-4-132-4-13 3-P3-P RentRent 126567126567 1000010000 PNBPNB 77 5-4-135-4-13 4-P4-P Tel.ChrgsTel.Chrgs 824654824654 10001000 PNBPNB 77
  15. 15. All accounting units shall maintain the cash books, in the prescribed form i.e. One for fee, Sale of Forms, other receipts and another separately for applicable Plan & Non-Plan Grant Accounts.
  16. 16. As and when any receipt is occurred based on the deposit slips/credit advice by the Bank, a receipt voucher should be created and entered in the respective Cash Book.
  17. 17. Similarly if payment made by cheque/DD should be recorded in appropriate column on payment side after having created a voucher. Any cash withdrawn by drawing self- cheques should be entered in the cash column on receipt side and appropriate bank column on payment side.
  18. 18. The Cash Book should be closed regularly at the end of the day on which a transaction occurs after having it completely checked.
  19. 19. 2020 Bank Reconciliation StatementBank Reconciliation Statement A statement which reconciles theA statement which reconciles the balance as per cash book and thebalance as per cash book and the balance as per pass book showing allbalance as per pass book showing all causes of difference between the twocauses of difference between the two Causes of differenceCauses of difference 1.1. Transaction that usually appear in theTransaction that usually appear in the cash book, but not in the pass bookcash book, but not in the pass book 2.2. Transactions that usually appear in theTransactions that usually appear in the pass book, but not in the cash bookpass book, but not in the cash book
  20. 20. 2121 Transactions that usually appear inTransactions that usually appear in the Cash Book but not in Passthe Cash Book but not in Pass BookBook Cheques/DDs deposited into bank but notCheques/DDs deposited into bank but not yet collectedyet collected Cheques/DDs issued but not yetCheques/DDs issued but not yet presented for paymentpresented for payment Cheques/DDs dishonored but no entryCheques/DDs dishonored but no entry made in the cash bookmade in the cash book Errors in the cash bookErrors in the cash book
  21. 21. 2222 Causes of ErrorsCauses of Errors Dr or Cr entry made twiceDr or Cr entry made twice Transaction of Dr side entered on the CrTransaction of Dr side entered on the Cr side or vice versaside or vice versa In the case of more than one Bank A/c theIn the case of more than one Bank A/c the cheque/deposit is entered in thecheque/deposit is entered in the unconnected A/csunconnected A/cs Error in BalancingError in Balancing
  22. 22. 2323 Transactions that usually appear inTransactions that usually appear in the Pass Book but not in the Cashthe Pass Book but not in the Cash BookBook Interest allowed by the BankInterest allowed by the Bank Amounts collected/paid as per theAmounts collected/paid as per the standing instructionsstanding instructions Bank ChargesBank Charges Errors in the Pass bookErrors in the Pass book
  23. 23. 2424 Causes of Errors in Pass BookCauses of Errors in Pass Book Ommission of EntryOmmission of Entry Recording of receipt & payment in theRecording of receipt & payment in the wrong side of A/cwrong side of A/c Recording of receipt & payment whichRecording of receipt & payment which belongs to some other A/cbelongs to some other A/c
  24. 24. 2525 Format of Bank ReconciliationFormat of Bank Reconciliation Dr. Cr.Dr. Cr. Balance as per cash bookBalance as per cash book AmtAmt -- Cheques issued but not paid by theCheques issued but not paid by the bankbank AmtAmt -- Interest given by the BankInterest given by the Bank AmtAmt -- Interest collected but not recorded in theInterest collected but not recorded in the Cash bookCash book AmtAmt -- Cheque deposited but not collected byCheque deposited but not collected by the Bankthe Bank -- AmtAmt Bank ChargesBank Charges -- AmtAmt Errors in Cash Book/Pass BookErrors in Cash Book/Pass Book AmtAmt AmtAmt
  25. 25. 2626 Amount received as per standingAmount received as per standing instructionsinstructions AmtAmt -- Amount paid as per standingAmount paid as per standing instructionsinstructions -- AmtAmt Balance as per Pass bookBalance as per Pass book -- AmtAmt
  26. 26. 2727 LedgerLedger Ledger is a book containing all accountsLedger is a book containing all accounts affected by various transactions in theaffected by various transactions in the institution it could be termed as a classifiedinstitution it could be termed as a classified and summarized record of transactionsand summarized record of transactions relating to all the head of Accounts.relating to all the head of Accounts.
  27. 27. LEDGERLEDGER RECEIPTS SIDERECEIPTS SIDE Month &Month & DateDate Vr. NoVr. No ParticularParticular s ofs of receiptreceipt GrantGrant FeesFees SOFSOF InterestInterest OtherOther FromFrom StudentStudent 1-4-131-4-13 1-R1-R 11stst Qtrly.Qtrly. GrantGrant 10000001000000 55 1-4-131-4-13 2-R2-R FeesFees 10000001000000 99 2-4-132-4-13 3-R3-R Sale ofSale of formform 50005000 99 3-4-133-4-13 4-R4-R Dup.I.Dup.I. CardCard 200 10200 10 7-4-137-4-13 7-R7-R Int.Int. BankBank 20002000 1111 Cash book folio no.
  28. 28. LEDGER - PAYMENT SIDELEDGER - PAYMENT SIDE Month &Month & DateDate Vr.Vr. No.No. Amt.Amt. RentRent Tel.ChargesTel.Charges RemittaRemitta ncesnces CashCash BookBook FolioFolio No.No. 2-4-132-4-13 3-P3-P 1000010000 1000010000 22 5-4-135-4-13 4-P4-P 10001000 10001000 22 30-4-1330-4-13 9-P9-P 10052001005200 10052001005200 33
  29. 29. LEDGER MAINTENANCE Head-wise Ledgers (for example T.A, Remuneration, etc.,) are to be maintained for all expenditure and for receipts (fees, sale of forms etc,) and thus each and every transaction are to be recorded in the ledgers mentioning the page no. in which the corresponding entry is made in the cash book. With the page no. of ledger.
  30. 30. 3131 Monthly/Quarterly/Yearly Receipt &Monthly/Quarterly/Yearly Receipt & Payment AccountPayment Account Basically subordinate units accounts endsBasically subordinate units accounts ends at the periodic preparation of Receipt &at the periodic preparation of Receipt & Payment Account which they are to send toPayment Account which they are to send to Headquarters Monthly/Quarterly/Yearly.Headquarters Monthly/Quarterly/Yearly. Only at the end of Financial year they areOnly at the end of Financial year they are supposed to send the Additional informationsupposed to send the Additional information which are detailed aheadwhich are detailed ahead
  31. 31. 3232 Accounting Systems 1.Cash Accounting- The cash basis accounting measures the flow of cash resources. It recognises transactions and events only when cash is received or paid. Financial statements produced under the cash basis of accounting cover cash receipts, cash disbursements, and opening and closing cash balances. A cash accounting system has the advantage of simplicity. Presently Regional centres are submitting Receipt and payment Account on cash basis and after additional information obtained from RCs are merged at Hqrs, it is converted into Accrual Accounting.
  32. 32. 3333 Accrual Accounting - 1.The accrual basis accounting recognises transactions and events when they occur irrespective of when cash is paid or received. 2. Revenues reflect the amounts that came due during the year, whether collected or not. 3. Expenses reflect the amount of goods and services consumed during the year, whether they are paid or not in that period. 4. The costs of assets are deferred and recognised when the assets are used to provide service. Expenses are the costs of goods and services consumed as well as any increase in liabilities or decrease in assets over the accounting period( e.g. depreciation and losses which can occur in the absence of any transactions also.
  33. 33. What & how the accounts are prepared at Headquarters In this context, let us see the process as to what and how the accounts are prepared at headquarters. Creation of vouchers in respect of receipt, occurs through cash/DD/IPO deposit, credit advice or receipt book and in respect of expenditure, occurs through cash/cheque/DD payment or debit advice. All these vouchers are to be routed through their respective control registers (valuable register in respect of receipts and expenditure control/advance register in respect of payments) before its respective deposit and payment.
  34. 34. Arranging the vouchers date/serial number-wise on a given date and checking them from the ODL generated Cash Book. As the entries are automatically transferred to Ledgers. Hence the Trial Balance gets drawn there after. Entering separately the quarterly accounts received from Regional Centers in MS-Excel after having the following check points :-
  35. 35. a) Opening Balances as on 1st April is as per the closing balance as on 31st March of the previous financial year b) All Grants remitted by Hqrs are shown c) Expenditure have been booked under proper heads d) Recoveries made during the period have been duly remitted. e) Head-wise/Sub-headwise totals are correct f) Overall totalling is correct g) The unspent balances tally with the Closing balances shown at the end of the respective period.
  36. 36. After carrying out, the checking of the subordinate offices account / corrections (after the receipts of clarifications) the merger of accounting heads take place. Preparation of quarterly Trial Balance, Income & Expenditure & Balance Sheet.
  37. 37. 3838 All the above steps are for Monthly/Quarterly/Periodical Statements and at the end of respective financial year the cash accounts are converted to Accrual Accounts by adding the following additional information sought from the Schools, Divisions, Units. 1.Outstanding liabilities 2.prepaid expenses 3. Prior period expenses 4.Outstanding Income, if any 5.Closing stock held (Stationery, Study material ,Stamps, consumables and non-consumables stores etc.
  38. 38. 3939 For this the following AdditionalFor this the following Additional information is collected frominformation is collected from Schools/Divisions/UnitsSchools/Divisions/Units Prior Period Expenditure :: Expenditure made during the current year but pertains to previous financial year. For example salary for the month of March is paid in the month of April of next financial year Prepaid income Any Income received in advance which pertain to next financial year ; for example Fees /Rent received in advance Prepaid Expenditure:: Any expenditure paid during the year the benefit of the same extends to next financial year-For Example- Insurance /Rent/AMC paid in advance
  39. 39. 4040 Outstanding Expenditure/PendingOutstanding Expenditure/Pending ExpenditureExpenditure:: Any expenditureAny expenditure pertaining to the current year but notpertaining to the current year but not paid in the current financial year due topaid in the current financial year due to various reasons like scarcity of fund/billsvarious reasons like scarcity of fund/bills received late.received late. Closing StockClosing Stock:: At the end of theAt the end of the financial year (as on 31st March) somefinancial year (as on 31st March) some portion of the stationery / study materialportion of the stationery / study material may be lying unused out of the stockmay be lying unused out of the stock purchased during the year.purchased during the year.
  40. 40. Once the feeding of connected cash and accrual details is complete Receipt & Payment Account, Income and Expenditure Account , and Balance sheet are drawn. The Annual Accounts so compiled is placed before Finance Committee ,BOM for its Approval. After approval by the Finance Committee and BOM the Annual Accounts are sent to DGACR for Audit who in turn conducts Statutory Audit, points deficiencies, issues draft audit report, get clarifications and issues audit certificate.
  41. 41. The Finance & Accounts Division then gets the approval of Annual Accounts alongwith Audit Report from FC & BOM. Once the approval is obtained the Annual Accounts of the particular year is printed and forwarded to MHRD for laying it in both the houses of Parliament.